<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 28, 1996
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Memry Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction
of incorporation)
0-14068 06-1084424
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(Commission (IRS Employer
File Number) Identification No.)
57 Commerce Drive, Brookfield, Connecticut 06804
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 740-7311
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(Former name or former address, if changed since last report)
Page 1 of 15 pages
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The Current Report on Form 8-K of Memry Corporation initially filed with
the Securities and Exchange Commission (the "Commission") on July 15, 1996, is
hereby amended by this Form 8-K/A as follows:
Subsections (a) and (b) of ITEM 7 -- FINANCIAL STATEMENTS AND EXHIBITS are
hereby amended in their entirety to read as follows:
(a) Financial Statements of the Business Acquired
--------------------------------------------
The following financial statements of the business acquired on June 28,
1996 from Raychem Corporation are filed in this report:
Report of Independent Accountants
dated August 30, 1996
Statement of Assets Acquired
as of June 28, 1996
Statements of Operations
for years ended June 30, 1996 and 1995
Notes to Statements of Assets Acquired and Statements of Operations
(b) Pro Forma Financial Information
-------------------------------
The following pro forma consolidated statements of operations reflecting
the business acquired on June 28, 1996 from Raychem Corporation are filed in
this report:
Pro Forma Consolidated Statement of Operations
(unaudited) for year ended June 30, 1995
Pro Forma Consolidated Statement of Operations
(unaudited) for year ended June 30, 1996
Notes to Pro Forma Financial Information
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SIGNATURES
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.
MEMRY CORPORATION
Date: September 13, 1996 By: /s/ James G. Binch
--------------------
James G. Binch
Title: President
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Report of Independent Accountants
To the Board of Directors of
Raychem Corporation
We have audited the accompanying statement of assets acquired of the Nickel-
Titanium Alloy Product Line (the "Product Line") of the Electronics Business
Segment of Raychem Corporation as of June 28, 1996, and the statements of
operations of the Product Line for each of the two years in the period ended
June 30, 1996. These statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statements were prepared solely to present the assets of the
Product Line acquired by Memry Corporation and the statements of operations
of the Product Line for each of the two years in the period ended June 30,
1996, in order to comply with the requirements of the Securities and Exchange
Commission (for inclusion in the Current Report on Form 8-K/A of Memry
Corporation) as described in Note 1 and are not intended to be a complete
presentation of the assets and liabilities of the Product Line.
In our opinion, the statements referred to above present fairly, in all
material respects, the assets acquired of the Product Line at June 28, 1996
and the results of operations of the Product Line for each of the two years
in the period ended June 30, 1996, in conformity with generally accepted
accounting principles.
As discussed in Notes 1 and 3 to the statements, the Product Line has had
extensive transactions and relationships with its parent, Raychem
Corporation. It is possible that the terms of these transactions are not the
same as those which would result from transactions among wholly unrelated
parties.
/s/ Price Waterhouse LLP
San Jose, California
August 30, 1996
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Nickel-Titanium Alloy Product Line
(A Business Unit of Raychem Corporation)
Statement of Assets Acquired
June 28, 1996
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Assets acquired:
<TABLE>
<S> <C>
Inventory $1,393,000
Property and equipment, net 1,681,000
----------
$3,074,000
==========
</TABLE>
See accompanying notes to statement of assets acquired and statements of
operations.
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Nickel-Titanium Alloy Product Line
(A Business Unit of Raychem Corporation)
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
June 30,
1996 1995
<S> <C> <C>
Revenues $11,169,000 $ 6,238,000
Cost of goods sold 4,897,000 3,856,000
---------- -----------
Gross profit 6,272,000 2,382,000
---------- -----------
Operating expenses:
Research and development 1,884,000 2,035,000
Selling and marketing 1,427,000 1,314,000
General and administrative 1,051,000 1,643,000
Restructuring charge 678,000 280,000
---------- -----------
5,040,000 5,272,000
---------- -----------
Income (loss) before income taxes 1,232,000 (2,890,000)
Provision for income taxes 40,000 -
---------- -----------
Net income (loss) $1,192,000 $(2,890,000)
========== ===========
</TABLE>
See accompanying notes to statement of assets acquired and statements of
operations.
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Nickel-Titanium Alloy Product Line
(A Business Unit of Raychem Corporation)
Notes to Statement of Assets Acquired and Statements of Operations
- --------------------------------------------------------------------------------
1. Basis of Presentation
Raychem Corporation ("Raychem") invents, makes and sells high-performance
products based on its expertise in materials science, product design and
process engineering. Raychem serves customers that fall into three business
segments --industrial, electronics and telecommunications. The nickel-
titanium alloy product line (the "Product Line") has operated as part of the
electronics business segment ("Electronics"). The Product Line has been
engaged in designing, developing, processing, manufacturing and marketing
nickel-titanium alloy components for OEM applications. All activities of the
Product Line were combined with Electronics' other activities for purposes
of both external and internal reporting and, therefore, except for
inventory, property and equipment, net and statement of operations
information which was maintained at the Product Line level, separate
financial statement information for the Product Line is not available. The
accompanying financial information presents the net book value of the assets
of the Product Line acquired by Memry Corporation ("Memry") on June 28,
1996. This information is not intended to be a complete presentation of the
assets and liabilities of the Product Line. The accompanying statements of
operations for the two years ended June 30, 1996 were prepared to comply
with the requirements of the Securities and Exchange Commission (for
inclusion in the Current Report on Form 8-K/A of Memry).
The accompanying financial information has been prepared from the historical
accounting records of Raychem and does not purport to reflect the assets and
liabilities or results of operations that would have resulted if the Product
Line had operated as an unaffiliated independent company. The financial
information presented is based on Raychem's historical cost and does not
give consideration to the adjustments that will result from Memry's
acquisition. Since only certain assets are being acquired and no liabilities
are being assumed by Memry, a statement of cash flows is not applicable. On
June 28, 1996, the assets of the Product Line reflected in the accompanying
Statement of Assets Acquired were acquired by Memry for $4 million in cash,
and warrants which provide Raychem the right to acquire up to 1,250,000
shares of Memry common stock at $2.00 per share and up to 1,130,000 shares
of Memry common stock at $0.01 per share. In addition, pursuant to a private
label/distribution agreement entered into between Raychem and Memry
concurrent with the acquisition, Raychem will be the exclusive distributor
for an initial term of five years for non-implant applications of products
in the Product Line to certain customers which comprised approximately 70%
of fiscal 1996 revenues. Sales to Raychem under the distributor agreement
will be discounted to allow Raychem to recover its sales and marketing
expenses and to realize a profit upon resale of such products to its
customers.
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Nickel-Titanium Alloy Product Line
(A Business Unit of Raychem Corporation)
Notes to Statement of Assets Acquired and Statements of Operations
- --------------------------------------------------------------------------------
The accompanying Statements of Operations reflect the "carved-out" results
of operations of the Product Line as if the Product Line had been operating
as a separate company. Certain corporate, general and administrative
expenses of Raychem have been allocated to the Product Line (discussed in
Note 3) on various bases which, in the opinion of management, are
reasonable. However, such expenses are not necessarily indicative of, and it
is not practicable for management to estimate the level of, expenses which
might have been incurred had the Product Line been operating as a separate
company.
The preparation of the accompanying statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, revenues and
expenses. Actual results could differ from those estimates.
2. Summary of Significant Accounting Policies
Revenue Recognition
The Product Line recognizes revenue upon shipment of product. Bad debt
expense is included as an element of general and administrative expenses in
the accompanying statements of operations and was not material for the
periods presented.
For the year ended June 30, 1996, revenues from two customers represented
32% and 17% of total revenues. For the year ended June 30, 1995, revenues
from one customer represented 41% of total revenues. Revenues from shipments
to customers outside the United States, primarily in Europe and Asia,
represented 38% and 24% of total revenues for the years ended June 30, 1996
and 1995, respectively. Revenues from sales to European customers
represented 33% and 16% of total revenues for the years ended June 30, 1996
and 1995, respectively. All sales are denominated in U.S. dollars.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or
market. The cost of inventory includes material, labor and manufacturing
overhead.
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Nickel-Titanium Alloy Product Line
(A Business Unit of Raychem Corporation)
Notes to Statement of Assets Acquired and Statements of Operations
- --------------------------------------------------------------------------------
Property and equipment
Machinery and equipment, and leasehold improvements are stated at cost.
Depreciation and amortization are computed using the straight-line method
over the estimated useful lives of the assets, generally three to ten years,
or the life of the lease, whichever is shorter. Depreciation and
amortization expense related to the property and equipment acquired by Memry
totaled $569,000 and $552,000 for the years ended June 30, 1996 and 1995,
respectively.
Income taxes
The results of the Product Line's operations are included in Raychem's
consolidated U.S. federal and applicable state income tax returns. The
provision for income taxes of $40,000 recorded for the year ended June 30,
1996 primarily represents alternative minimum taxes the Product Line would
have provided on a standalone basis. No current provision or benefit for
income taxes would have been provided on a standalone basis for the year
ended June 30, 1995 as the Product Line incurred a net operating loss for
income tax purposes and had no carryback potential. In addition, no deferred
provision or benefit for income taxes would have been recorded on a
standalone basis for fiscal 1995 as the Product Line was in a net deferred
tax asset position for which a full valuation allowance would have been
provided.
Earnings per share
Since there is no separate capitalization, nor are any shares of stock
specifically attributable to the Product Line upon which a per share
calculation can be based, earnings per share data is not presented in the
accompanying statements.
3. Relationship and Transactions with Raychem Corporation
The statements of operations include allocations to the Product Line of
certain administrative costs incurred by Raychem Corporation related to
facilities, sales, purchasing, human resources, management information
systems, accounting, credit and certain other corporate expenses. For the
years ended June 30, 1996 and 1995, these allocated costs were $3,049,000
and $2,285,000, respectively.
In the opinion of management, these allocations of expenses were made on a
reasonable basis. However, they are not necessarily indicative of the level
of expenses which may have been experienced on a standalone basis. The
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Nickel-Titanium Alloy Product Line
(A Business Unit of Raychem Corporation)
Notes to Statement of Assets Acquired and Statements of Operations
- --------------------------------------------------------------------------------
amounts that would have or will be incurred on a separate company basis
could differ significantly from the allocated amounts due to economies of
scale, differences in management and/or operational practices or other
factors.
4. Details of Inventory and Property and Equipment
Inventory consists of the following:
<TABLE>
<S> <C>
Raw materials $ 204,000
Work in progress 1,037,000
Finished goods 152,000
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$1,393,000
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Property and equipment consist of the following:
Machinery and equipment $2,636,000
Leasehold improvements 2,050,000
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4,686,000
Less accumulated depreciation and amortization (3,005,000)
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$1,681,000
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</TABLE>
5. Restructuring Charges
During the year ended June 30, 1996, the Product Line recorded a
restructuring charge totaling $678,000. The restructuring charge primarily
represents severance costs for employees that will not be retained by Memry
or Raychem. In addition, during the year ended June 30, 1995, the Product
Line recorded a restructuring charge totaling $280,000, primarily
representing severance costs for employees of the Product Line, in
connection with steps taken by Raychem to streamline its operations.
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Pro Forma Financial Information
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The accompanying unaudited pro forma consolidated statements of operations
are presented to illustrate the effect of the June 28, 1996 acquisition by Memry
Corporation of Raychem Corporation's Nickel-Titanium Alloy Product Line on Memry
Corporation's Statements of Operations for the fiscal years ended June 30, 1995
and 1996, as if such acquisition had occurred at July 1, 1994. While Memry's
stand-alone results of operations for the fiscal year ended June 30, 1995 have
been audited, the audit on Memry's results of operations for the fiscal year
ended June 30, 1996, has not yet been completed, and there can be no assurances
that the final audited results may not vary from the unaudited results set forth
herein.
The accompanying unaudited pro forma consolidated statements of operations
should be read in conjunction with the notes thereto appearing immediately
following the statements. The pro forma consolidated statements of operations
are presented for informational purposes only and are not necessarily indicative
of what actual results would have been had the acquisition taken place on July
1, 1994, nor do they purport to represent results of future operations of Memry.
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PRO FORMA FINANCIAL INFORMATION
MEMRY CORPORATION AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
----------------------------
Historical Raychem Other Pro Forma
----------- ----------- -- ----------- -----------
<S> <C> <C> <C> <C>
PRODUCT SALES $4,729,000 $6,238,000 A ($1,268,000) $9,699,000
COST OF SALES 4,147,000 3,856,000 B (775,000)
C (267,000)
D 335,000 7,296,000
----------- ----------- ----------- -----------
Gross profit 582,000 2,382,000 (561,000) 2,403,000
OPERATING EXPENSES
General, selling and administrative 2,374,000 2,957,000 B (1,461,000)
C (12,000)
E (884,000)
F 496,000
D 574,000 4,044,000
Research and development - 2,035,000 B (49,000)
C (25,000)
E (1,609,000)
F 85,000
D 50,000 487,000
Depreciation and amortization 240,000 - G 591,000 831,000
Restructuring charge - 280,000 J (280,000) -
----------- ----------- ----------- -----------
Total operating expenses 2,614,000 5,272,000 (2,524,000) 5,362,000
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) (2,032,000) (2,890,000) 1,963,000 (2,959,000)
Interest expense, net 360,000 - - 360,000
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (2,392,000) (2,890,000) $1,963,000 (3,319,000)
----------- ----------- ----------- -----------
Provision for income taxes - - - -
----------- ----------- ----------- -----------
NET INCOME (LOSS) ($2,392,000) ($2,890,000) $ 1,963,000 ($3,319,000)
=========== =========== =========== ===========
Average Shares Outstanding
Including Common Stock Equivalents 5,353,222 - I 2,000,000 7,353,222
LOSS PER SHARE ($0.45) ($0.45)
=========== =========== =========== ===========
</TABLE>
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PRO FORMA FINANCIAL INFORMATION
MEMRY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
----------------------------
Historical Raychem Other Pro Forma
----------- ----------- -- ----------- -----------
<S> <C> <C> <C> <C>
PRODUCT SALES $3,691,000 $11,169,000 A ($2,804,000) $12,056,000
COST OF SALES 3,323,000 4,897,000 B (830,000)
C (283,000)
D (329,000) 7,436,000
----------- ----------- ----------- -----------
Gross profit 368,000 6,272,000 (2,020,000) 4,620,000
OPERATING EXPENSES
General, selling and administrative 2,123,000 2,478,000 B (1,864,000)
C (58,000)
E (548,000)
F 436,000
D 572,000 3,139,000
Research and development - 1,884,000 B (356,000)
C (28,000)
E (1,132,000)
F 85,000
D 50,000 503,000
Depreciation and amortization 90,000 - G 591,000 681,000
Restructuring charge - 678,000 J (678,000) -
----------- ----------- ----------- -----------
Total operating expenses 2,213,000 5,040,000 (2,930,000) 4,323,000
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) (1,845,000) 1,232,000 910,000 297,000
Interest expense, net 297,000 - - 297,000
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (2,142,000) 1,232,000 910,000 -
----------- ----------- ----------- -----------
Provision for income taxes - 40,000 H 30,000 70,000
----------- ----------- ----------- -----------
NET INCOME (LOSS) ($2,142,000) $1,192,000 $880,000 ($70,000)
=========== =========== =========== ===========
Average Shares Outstanding Including
Common Stock Equivalents 8,280,452 - I 1,995,838 10,276,290
LOSS PER SHARE ($0.26) ($0.01)
=========== =========== =========== ===========
</TABLE>
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Notes to the Unaudited Pro Forma Financial Information
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A Pursuant to an agreement between Memry Corporation ("Memry") and Raychem
Corporation ("Raychem"), Raychem will act as Memry's exclusive distributor
for certain products within a defined Field of Use, and Memry will sell
such products to Raychem at a discount from the anticipated resale price by
Raychem to its customers. Because the historical information reflects
sales by Raychem to its customers, the adjustment reflects the discount at
which Memry would have sold such products to Raychem.
B To reflect the elimination of Raychem's corporate allocations which include
sales, marketing and distribution costs relating to the sale of certain
products now sold to Raychem pursuant to the agreement as described in Note
A above. Pursuant to Note D, pro forma Memry corporate allocations are
provided for.
C To reflect the elimination of Raychem's depreciation expenses. Pursuant to
Note G, depreciation and amortization in the manner that Memry will be
depreciating and amortizing the property acquired from Raychem is provided
for.
D To provide for Memry's corporate allocations. See also Note B above.
E To reflect the elimination of all Raychem's payroll expenses. Pursuant to
Note F, pro forma Memry payroll expenses are provided for. Much of the
eliminated payroll relates to research and development activities relating
to certain medical applications which were not acquired by Memry.
F To provide for Memry's pro forma payroll expenses to operate the acquired
business, based upon actual post-acquisition costs. See also Note E above.
G To provide for Memry's pro forma depreciation and amortization of the
assets acquired from Raychem. This includes: depreciation of $2,700,000
of machinery and equipment over an estimated annual life of 7 years, for
$385,714 per year; (ii) amortization of $2,000,000 of patents and patent
rights over an estimated useful life of 15 years, for $133,333 per year;
(iii) amortization of $321,500 of acquisition costs over an estimated
useful life of 15 years, for $21,433 per year; (iv) amortization of $36,000
of deferred financing costs over the 5 year life of the related debt, for
$7,200 per year; and (v) amortization of $666,779 of acquired goodwill over
15 years, for $44,452 per year.
H To provide for the difference between (i) $70,000 of California state
income taxes, which would have been recorded based on the pro forma
profitability of Memry's California operations, minus (ii) the $40,000 of
federal alternative minimum taxes recorded by Raychem (which would not have
been recorded due to Memry's operating losses on a pro forma basis).
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I To treat the sale of 2,000,000 shares of Memry's Common Stock that occurred
on June 28, 1996, in order to finance the acquisition as if the sale had
occurred on July 1, 1994. The pro forma adjustment for fiscal 1996 is less
than 2,000,000 shares because the shares were included in actual numbers
for the last three days of fiscal 1996.
J To reflect the elimination of restructuring charges taken by Raychem.
