SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 23, 1997
WESTERN MICRO TECHNOLOGY, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-11560 94-2414428
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
254 EAST HACIENDA AVENUE, CAMPBELL, CA 95008
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(Address of principal executive offices) (Zip Code)
(408) 379-0177
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(Registrant's telephone number,
including area code)
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Item 5. OTHER EVENTS.
DELAWARE REINCORPORATION
On August 1, 1997, Western Micro Technology Inc., a California
corporation, effected a change in its domicile from the State of California to
the State of Delaware (the "reincorporation") through a merger of the Company
with and into the Savoir Technology Group, Inc., a Delaware corporation.
Appropriate consents and approvals were obtained for the reincorporation,
including the approval of the shareholders of Western Micro Technology, Inc.
MERGER TO EFFECT A NAME CHANGE
On August 7, 1997, the Savoir Technology Group, Inc. effected a merger
of Western Micro Technology, Inc., a Delaware corporation and wholly owned
subsidiary of the Savoir Technology Group, Inc., into the Savoir Technology
Group, Inc. with Savoir Technology Group, Inc. continuing as the surviving
corporation. Upon the effective date of the merger, the name of the surviving
corporation was changed to Western Micro Technology, Inc.
The term "Registrant" or the "Company" as used herein shall refer to
Western Micro Technology, Inc., a Delaware corporation, and its predecessors,
the Savoir Technology Group, Inc., a Delaware corporation, and Western Micro
Technology, Inc., a California corporation.
PRESS RELEASE
On July 23, 1997, the Registrant issued the press release attached
hereto as Exhibit 99.1 and incorporated by reference. The press release related
to the Registrant's announcement that it had signed a letter agreement with the
stockholders of Star Management Services, Inc. ("Star") to extend the closing
date of the proposed acquisition by the Registrant of the outstanding capital
stock of Star from July 31, 1997 (the closing date specified in the Stock
Purchase Agreement dated June 4, 1997 by and among the Registrant, Star, Harvey
E. Najim and Carlton Joseph Mertens II, filed as Exhibit 2.1 to Amendment No. 2
of the Registrant's Current Report on Form 8-K filed on July 16, 1997 (the
"Stock Purchase Agreement")) to August 31, 1997.
The letter agreement provides, among other things, that: (1) the
Registrant pay a $500,000 deposit to Star, 100% of which would be applied by
Star to any termination charge that the Registrant would owe Star per the terms
of the Stock Purchase Agreement and 50% of which would be applied towards the
purchase price if the closing occurs on or before August 31, 1997, with the
remaining 50% to be retained by Star as consideration for granting the 30-day
extension; (2) the termination fee will be $1,000,000 if the Registrant is
unable to close the transaction on August 31, 1997 and Star has met all of its
conditions to closing as specified in the Stock Purchase Agreement; provided,
however, that the termination fee will be $500,000 if the Registrant is unable
to close because the stockholders of Star would not waive the condition with
respect to the Registrant's obtaining financing
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<PAGE>
pursuant to terms that do not require repayment of principal during the first 24
months afterclosing; and (3) the Registrant shall pay Mr. Najim his share of the
total purchase price in full at the closing and may adjust the number of shares
of the Registrant common stock to be issued to Mr. Mertens based on a
calculation of the average closing price of the Registrant's common stock five
days prior to closing.
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<PAGE>
The following table sets forth selected unaudited pro forma combined
financial information of the Company and Star at the dates and for the fiscal
year ended December 31, 1996 and six-month period ended June 30, 1997, as
revised to reflect changes made as a result of the terms of the letter agreement
summarized above. The pro forma information contained herein supersedes in their
entirety the pro forma information contained in Amendment No. 1 and Amendment
No. 2 to the Registrant's Current Report on Form 8-K dated June 18, 1997 and
July 16, 1997, respectively, and in the Registrant's Current Report on Form 8-K
dated July 23, 1997, as filed on August 6, 1997 and in Amendment No. 1 to the
Registrant's Current Report on Form 8-K dated July 23, 1997, as filed on August
11, 1997. The pro forma information is presented for informational purposes
only, and is not necessarily indicative of the operating results or financial
position that would have occurred if the Star Acquisition had been consummated
at the beginning of the periods presented, nor is it necessarily indicative of
future operating results or financial position. The parties intend that the Star
Acquisition will be accounted for as a purchase in accordance with Accounting
Principles Board Opinion Number 16. For pro forma purposes, the Star financial
data covers the approximate comparable financial reporting periods used by the
Company (see footnote 1 below).
<TABLE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS DATA
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 (1) SIX MONTHS ENDED JUNE 30, 1997 (1)
--------------------------------------------- ---------------------------------------------
Western Pro Forma Pro Forma Western Pro Forma Pro Forma
MICRO STAR ADJUSTMENTS COMBINED MICRO STAR ADJUSTMENTS COMBINED
-------- ------- ----------- --------- -------- ------- ----------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales(A)................ $131,697 $76,495 $ -- $208,192 $ 75,836 $42,398 $ -- $118,548
Cost of goods sold.......... 114,389 66,383 -- 180,772 63,274 36,982 -- 100,569
-------- ------- -------- -------- ------- ------- --------- --------
Gross profit................ 17,308 10,112 -- 27,420 12,562 5,416 -- 17,979
Selling, general and
administrative expenses,
including amortization.. 14,123 7,217 2,856(2) 20,884 10,603 3,772 1,428 (2) 14,725
(2,312)(3) (578)(3)
(1,000)(4) (500)(4)
----------- --------- -------- ----------- -------- ------- --------
Operating income............ 3,185 2,895 456 6,536 1,959 1,644 (350) 3,253
--------- ------- -------- --------- -------- ------- -------- ---------
Interest expense............ 978 81 3,476 (5) 4,535 928 -- 1,738 (5) 2,666
Other expense (income)...... (407) -- -- (407) (231) -- -- (231)
Income tax expense.......... 276 963 (275)(6) 964 312 -- 16 (6) 328
--------- -------- -------- --------- -------- ------- -------- --------
Net income(B)............... $ 2,338 $ 1,851 $ (2,744) $ 1,445 $ 950 $ 1,644 $ (2,104) $ 490
========= ======= ======== ========= ======== ======= ======== ========
Net income per share:(C)
-- Primary............... $ 0.51 $ -- $ -- $ 0.26 $ 0.19 $ -- $ -- $ 0.08
-- Fully diluted......... 0.50 -- -- 0.25 0.19 -- -- 0.08
Number of shares used in per share calculations:
-- Primary............... 4,510 -- 1,106 (7) 5,613 5,080 -- 1,106 (7) 6,186
-- Fully diluted......... 4,663 -- 1,106 5,769 5,106 -- 1,106 6,212
(See footnotes on following page)
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<PAGE>
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(1) For purposes of the pro forma combined data, Star's financial data for its
fiscal year ended October 31, 1996 and its fiscal six months ended April 30,
1997 have been combined with the Company's financial data for the fiscal
year ended December 31, 1996 and the six months ended June 30, 1997,
respectively.
(2) Increase in amortization of goodwill and other intangibles associated with
the Star Acquisition.
(3) Reduction in Star's executive compensation to reflect Star Acquisition.
(4) Cost reductions as a result of consolidation of certain facilities and
elimination of duplicate back-office functions.
(5) Increase in interest expense associated with the proposed Loan Financing,
$10.0 million overadvance, $15.0 million subordinated debt, and $6.5 million
original principal amount of notes proposed to be issued to the selling
stockholders in the Star Acquisition ("Seller Notes").
(6) Tax adjustment to reflect 40% overall tax rate applicable to pro forma
results.
(7) Issuance of restricted Common Stock as consideration in proposed Star
Acquisition and amortization of warrants which the Company believes it will
be required to issue in connection with obtaining the Loan Financing.
(A) If the IRA Agreement had been entered into as of the beginning of the
periods indicated, the Company believes that the pro forma combined net
sales of the Company for the year ended December 31, 1996 and the six months
ended June 30, 1997 would have been approximately $246,914,000 and
$139,138,000, respectively.
(B) If the IRA Agreement had been entered into as of the beginning of the
periods indicated, the Company believes that the pro forma combined net
income of the Company for the year ended December 31, 1996 and the six
months ended June 30, 1997 would have been approximately $2,460,000 and
$1,292,000, respectively.
(C) If the IRA Agreement had been entered into as of the beginning of the
periods indicated, the Company believes that the pro forma combined net
income per share of the Company would have been, for the year ended December
31, 1996, approximately $.44 (Primary) and $.43 (Fully Diluted) and, for the
six months ended June 30, 1997, approximately $.21 (Primary) and $.21 (Fully
Diluted).
</TABLE>
<TABLE>
UNAUDITED PRO FORMA BALANCE SHEET DATA AT JUNE 30, 1997(1)
<CAPTION>
Western Pro Forma Pro Forma
MICRO STAR ADJUSTMENTS COMBINED
------- ---- ----------- --------
(in thousands)
<S> <C> <C> <C> <C>
Working capital.................................. 7,997 4,370 (25,228)(2) (12,839)
Net trade accounts receivable.................... 36,869 8,297 (1,000)(3) 44,166
Inventories...................................... 19,542 5,597 (500)(4) 24,639
Total assets..................................... 69,407 20,673 50,673 (5) 140,753
Long-term debt................................... 662 -- 23,102 (6) 23,764
Shareholders' equity............................. 19,051 5,079 3,844 (7) 27,974
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(1) For purposes of the pro forma combined data, Star's financial data at
April 30, 1997 have been combined with the Company's financial data at
June 30, 1997.
(2) Increase in accounts receivable and inventory reserves estimated at
$1,500,000, required increase in short-term borrowings under new
Revolver of $12,712,000, increase in current portion of long-term debt
of $5,000,000 to reflect amortization of overadvance facility and
$3,377,000 to reflect discounted current portion of Seller Notes and an
increase in accrued expenses of $2,638,000 to reflect Star acquisition
costs.
(3) Estimated increase in accounts receivable reserves.
(4) Estimated increase in inventory reserves.
(5) Increase in goodwill and other intangibles net of $1,500,000 increase
in specific balance sheet reserves.
(6) Increase in overadvance of $5,000,000, in Seller Notes of $3,102,000,
and in subordinated debt of $15,000,000.
(7) Issuance of $5,000,000 in restricted Common Stock to Seller at closing
and increase of $2,063,000 attributable to warrants which the Company
believes it will be required to issue in connection with obtaining the
Loan Financing, net of a $3,219,000 reduction to reflect a transfer of
$2,500,000 net assets at closing.
</TABLE>
The foregoing unaudited pro forma combined financial data do not
include any pro forma adjustments which reflect the potential effect of (i) the
sales revenues and other operating results that would have occurred if the IRA
Agreement, pursuant to which the Sirius End-user Business will purchase IBM
systems from the Company upon consummation of the Star Acquisition, had been
entered into as of the beginning of the periods indicated
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<PAGE>
(except as described in footnotes (A), (B) and (C) to the pro forma statement of
operations data), (ii) any efficiencies which may result from combining the
Company's and Star's operations (other than $1.0 million attributable to
facilities consolidation and elimination of duplicate back-office functions), or
(iii) the costs of restructuring, integrating or consolidating such operations.
Certain statements in this Memorandum concerning the Star Acquisition,
including descriptions of the Star Acquisition and pro forma financial
information, are forward-looking statements that involve risks and
uncertainties. There can be no assurance that the Star Acquisition will have the
desired benefits or that it will not have an adverse effect on the Company's
business, financial condition or results of operations. Actual results could
differ materially from those discussed herein.
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<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Exhibits.
2.1+ Agreement of Merger and Plan of Reorganization between
Western Micro Technology, Inc., a California
corporation, and the Savoir Technology Group, Inc., a
Delaware corporation, dated as of August 1, 1997.
2.2+ Certificate of Ownership and Merger dated as of August
7, 1997.
3.i+ Certificate of Incorporation of the Savoir Technology
Group, Inc., a Delaware corporation.
3.ii Restated Certificate of Incorporation of Savoir
Technology Group, Inc. a Delaware corporation.
3.iii++ Bylaws of the Savoir Technology Group, Inc., a
Delaware corporation.
3.iv+++ Amended and Restated Bylaws of Western Micro
Technology, Inc., a Delaware corporation.
99.1+ Press Release dated July 23, 1997.
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+ Previously filed.
++ Previously filed as Exhibit 3.ii to the Registrant's Current Report on
Form 8-K filed on August 6, 1997.
+++ Previously filed as Exhibit 3.iii to Amendment No. 1 to the
Registrant's Current Report on Form 8-K filed on August 11, 1997.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 14, 1997
WESTERN MICRO TECHNOLOGY, INC.
By /s/ James W. Dorst
---------------------------------------
James W. Dorst
Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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2.1+ Agreement of Merger and Plan of Reorganization between
Western Micro Technology, Inc., a California
corporation, and the Savoir Technology Group, Inc., a
Delaware corporation, dated as of August 1, 1997.
2.2+ Certificate of Ownership and Merger dated as of August
7, 1997.
3.i+ Certificate of Incorporation of the Savoir Technology
Group, Inc., a Delaware corporation.
3.ii Restated Certificate of Incorporation of Savoir
Technology Group, Inc. a Delaware corporation.
3.iii++ Bylaws of the Savoir Technology Group, Inc., a
Delaware corporation.
3.iv+++ Amended and Restated Bylaws of Western Micro
Technology, Inc., a Delaware corporation.
99.1+ Press Release dated July 23, 1997.
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+ Previously filed.
++ Previously filed as Exhibit 3.ii to the Registrant's Current Report on
Form 8-K filed on August 6, 1997.
+++ Previously filed as Exhibit 3.iii to Amendment No. 1 to the
Registrant's Current Report on Form 8-K filed on August 11, 1997.
-8-
RESTATED CERTIFICATE OF INCORPORATION
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OF
--
SAVOIR TECHNOLOGY GROUP, INC.
-----------------------------
SAVOIR TECHNOLOGY GROUP, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: The original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of Delaware on
July 24, 1997.
SECOND: The Restated Certificate of Incorporation of the Corporation in
the form attached hereto as Exhibit A has been duly adopted in accordance with
the provisions of Sections 245 and 242 of the General Corporation Law of the
State of Delaware by the directors and stockholders of the Corporation.
THIRD: The Restated Certificate of Incorporation so
adopted reads in full as set forth in Exhibit A attached hereto
and is hereby incorporated herein by this reference.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by the President, its authorized officer this 1st day of August, 1997.
SAVOIR TECHNOLOGY GROUP, INC.
By /s/ P. Scott Munro
--------------------------------
P. Scott Munro
President
<PAGE>
EXHIBIT A
---------
CERTIFICATE OF INCORPORATION
OF
SAVOIR TECHNOLOGY GROUP, INC.
I.
The name of the Corporation is Savoir Technology Group,
Inc.
II.
The address of the registered office of the Corporation in the State of
Delaware is located at 1209 Orange St., in the City of Wilmington, Delaware, New
Castle County. The name of the registered agent of the Corporation at such
address is The Corporation Trust Company.
III.
The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware as the same exists or hereafter may be amended.
IV.
1. The Corporation is authorized to issue two classes of stock to be
designated Common Stock ("Common Stock") and Preferred Stock ("Preferred
Stock"), respectively. The total number of shares which the Corporation is
authorized to issue is Thirty-Five Million (35,000,000). The number of shares of
Common Stock authorized to be issued is Twenty-Five Million (25,000,000), $0.01
par value. The number of shares of Preferred Stock authorized to be issued is
Ten Million (10,000,000), $0.01 par value.
2. The Board of Directors is expressly authorized to provide for the
issue, in one or more series, of all or any shares of the Preferred Stock and,
in the resolution or resolutions providing for such issue, to establish for each
such series:
<PAGE>
(a) the number of its shares, which may thereafter (unless forbidden in
the resolution or resolutions providing for such issue) be increased or
decreased (but not below the number of shares of the series then outstanding)
pursuant to a subsequent resolution of the Board of Directors;
(b) the voting powers, full or limited, of the shares of such series,
or that such shares shall have no voting powers; and
(c) the designations, preferences and relative, participating, optional
or other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof.
3. In furtherance of the foregoing authority and not in limitation of
it, the Board of Directors is expressly authorized, in the resolution or
resolutions providing for the issue of a series of Preferred Stock:
(a) to subject the shares of such series, without the consent of the
holders of such shares, to being converted into or exchanged for shares of
another class or classes of stock of the Corporation, or to being redeemed for
cash, property or rights, including securities, all on such conditions and on
such terms as may be stated in such resolution or resolutions; and
(b) to make any of the voting powers, designations, preferences, rights
and qualifications, limitations or restrictions of the shares of the series
dependent upon facts ascertainable outside this Certificate of Incorporation.
4. Whenever the Board of Directors shall have adopted a
resolution or resolutions to provide for:
(a) the issue of a series of Preferred Stock;
(b) a change in the number of authorized shares of a
series of Preferred Stock; or
(c) the elimination from this Certificate of Incorporation of all
references to a previously authorized series of Preferred Stock by stating that
none of the authorized shares of a series of Preferred Stock are outstanding and
that none will be issued;
the officers of the Corporation shall cause a certificate, setting forth a copy
of such resolution or resolutions and, if applicable, the number of shares of
stock of such series, to be executed, acknowledged, filed and recorded, in order
that the certificate may become effective in accordance with the provisions of
the General Corporation Law of the State of Delaware, as from time to time
amended. When any such certificate becomes effective, it shall have the effect
of amending this Certificate of Incorporation, and whenever such
<PAGE>
term is used in this Certificate of Incorporation, it shall be deemed to include
the effect of the provisions of any such certificate.
5. As used in this Article IV, the term "Board of Directors" shall
include, to the extent permitted by the General Corporation Law of the State of
Delaware, any duly authorized committee of the Board of Directors.
6. Holders of shares of Common Stock shall be entitled to receive such
dividends or distributions as are lawfully declared on the Common Stock; to have
notice of any authorized meeting of stockholders; to one vote for each share of
Common Stock on all matters which are properly submitted to a vote of such
stockholders; and, upon dissolution of the Corporation, to share ratably in the
assets thereof that may be available for distribution after satisfaction of
creditors and of the preferences, if any, of any shares of Preferred Stock.
V.
The name and mailing address of the incorporator are as follows:
Dawn C. Steele
Pillsbury Madison & Sutro LLP
2700 Sand Hill Road
Menlo Park, California 94025
VI.
The number of Directors which constitute the whole Board of Directors
of the Corporation shall be as specified in the Bylaws of the Corporation.
VII.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, amend, rescind
or repeal the Bylaws of the Corporation.
VIII.
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws of the Corporation may provide. The books of the
Corporation may be kept (subject to any provision contained in the General
Corporation Law of the State of Delaware) outside the State of Delaware at such
place or
<PAGE>
places as may be designated from time to time by the Board of
Directors or in the Bylaws of the Corporation.
IX.
1. A Director's liability to the Corporation for breach of duty to the
Corporation or its stockholders shall be limited to the fullest extent permitted
by the laws of the State of Delaware as now in effect or hereafter amended. In
particular, no Director shall be liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a Director,
except for liability (i) for any breach of the Director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, as the same
exists or hereafter may be amended, or (iv) for any transaction from which the
Director derived an improper personal benefit.
2. Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a Director existing at the time of such repeal or modification.
3. If the General Corporation Law of the State of Delaware is amended
to authorize corporate action further eliminating or limiting the liability of
directors, then a Director, in addition to the circumstances in which he or she
is not now liable, shall be free of liability to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.
X.
This Corporation shall indemnify its officers, Directors, employees and
agents to the maximum extent permitted by the General Corporation Law of the
State of Delaware, which power to indemnify shall include, without limitation,
the power to enter into indemnification agreements and amendments thereto upon
such terms as the Board of Directors shall deem advisable.
