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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MAY 6, 1997
XIONICS DOCUMENT TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-20777 04-3186685
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NO.) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
70 BLANCHARD ROAD 01803
BURLINGTON, (ZIP CODE)
MASSACHUSETTS
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
(617) 229-7000
(REGISTRANT'S TELEPHONE
NUMBER, INCLUDING AREA CODE)
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<PAGE>
ITEM 2. ACQUISITION OF ASSETS.
Acquisition of Gesellschaft fur Computer Anwendung mbH
On February 21, 1997, Xionics Document Technologies, Inc.'s ("Xionics")
wholly-owned German subsidiary, Xionics Document Technologies GmbH, of
Dortmund, Germany ("Xionics GmbH"), pursuant to a written agreement dated as of
February 21, 1997 (the "Purchase Agreement"), consummated the purchase of all
of the equity of Gesellschaft fur Computer Anwendung mbH ("GCA"), of Freiberg,
Germany. Pursuant to the Purchase Agreement, Xionics GmbH acquired all of the
shares in GCA, having a nominal value of 100,000 deutschmarks from Wilfried
Welsch and Oliver Fohr (together, the "Sellers") in exchange for $5,000,000 in
cash, $4,000,000 of which was paid at the closing of the transaction and the
remaining $1,000,000 of which was deferred in accordance with the Purchase
Agreement (see below). The acquisition is being accounted for as a purchase.
Under the terms of the Purchase Agreement, each of the Sellers is
entitled to receive the deferred portion of the purchase price for his shares,
or $500,000, on August 20, 1998, provided that such Seller is employed by
Xionics or one of its affiliates or successors on such date. In the event that
either of the Sellers is not employed by Xionics or one of its affiliates or
successors on August 20, 1998, such Seller shall not receive the $500,000
deferred portion until February 21, 2000.
Xionics filed a Current Report on Form 8-K on March 7, 1997, reporting
consummation of the acquisition. Xionics hereby files (a) the Historical
Financial Statements of GCA and (b) Unaudited Pro Forma Combined Financial
Statements and Notes thereto of Xionics in connection with the acquisition for
the periods
presented therein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Historical financial statements of Xionics (Incorporated by
reference to Xionics' Registration Statement on Form S-1, as amended
(Registration No. 333-4613) filed with the Securities and Exchange
Commission on May 28, 1996.
(b) Historical financial statements of GCA (Exhibit 99.1)
(c) Unaudited Pro Forma Combined Financial Statements and Notes thereto
(Exhibit 99.2)
(d) Exhibits
23.1 Consent of Arthur Andersen LLP (concerning Xionics financials)
<PAGE>
99.1 Historical financial statements of GCA
99.2 Unaudited Pro Forma Combined Financial Statements and Notes
thereto
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
Xionics Document Technologies, Inc. has duly caused this Report to be signed on
its behalf by the undersigned hereunto duly authorized.
Xionics Document Technologies, Inc.
/s/ Robert E. Gilkes
________________________________
Robert E. Gilkes
President
/s/ Gerard T. Feeney
________________________________
Gerard T. Feeney
Vice President, Treasurer and Chief
Financial Officer
Dated: May 6, 1997
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 8-K of our report dated July 23, 1996 included in the
Form S-1 Registration Statement File No. 333-4613. It should be noted that
we have not audited any financial statements of the company subsequent to
June 30, 1996 or performed any audit procedures subsequent to the date of
our report.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
May 6, 1997
Exhibit 99.1
GCA
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE>
GCA
INDEX
PAGE
REPORT OF ARTHUR ANDERSEN LLP F-2
BALANCE SHEETS AS OF DECEMBER 31, 1995 AND 1996 F-3
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1994, 1995 AND 1996 F-4
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 F-5
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1994, 1995 AND 1996 F-6
NOTES TO FINANCIAL STATEMENTS F-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of GCA:
We have audited the accompanying balance sheets of GCA as of December 31,
1995 and 1996, and the related statements of operations, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GCA as of December 31, 1995
and 1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
March 27, 1997
<PAGE>
GCA
BALANCE SHEETS--DECEMBER 31, 1995 AND 1996
ASSETS
1995 1996
CURRENT ASSETS:
Cash and cash equivalents $ 31,546 $ 45,864
Accounts receivable 163,550 305,935
Other receivables 284,984 160,638
Inventories 150,358 134,559
Prepaid expenses and other current assets 9,958 3,631
-------- --------
Total current assets 640,396 650,627
------- -------
DEFERRED TAX ASSET 105,522 3,611
PROPERTY AND EQUIPMENT, NET 105,035 83,748
INTANGIBLES, NET OF ACCUMULATED AMORTIZATION 10,965 3,221
Total assets $861,918 $741,207
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Term loans 187,442 168,053
Accounts payable 212,557 246,054
Accrued expenses 492,086 251,889
------- -------
Total current liabilities 892,085 665,996
------- -------
COMMITMENTS (Note 3)
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value 57,720 57,720
Retained earnings (deficit) (91,459) 14,124
Cumulative translation adjustment 3,572 3,367
--------- -------
Total stockholders' equity (deficit) (30,167) 75,211
Total liabilities and stockholders' $861,918 $741,207
equity (deficit)
The accompanying notes are an integral part of these financial statements.
<PAGE>
GCA
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1994 1995 1996
NET REVENUE $1,255,304 $1,837,096 $1,794,741
COST OF REVENUE 583,824 889,641 685,567
Gross profit 671,480 947,455 1,109,174
OPERATING EXPENSES:
Research and development 550,617 785,030 683,409
Selling, general and administrative 183,539 261,677 227,803
Income (loss) from operations (62,676) (99,252) 197,962
OTHER INCOME (EXPENSE):
Interest expense (47,933) (52,010) (28,895)
Interest income 11,768 9,563 7,281
Other income 57,838 87,560 67,953
------ ------ ------
Net (loss) income before (41,003) (54,139) 244,301
benefit (provision) taxes
BENEFIT (PROVISION) FOR INCOME 66,464 4,969 (138,718)
TAXES
Net (loss) income $ 25,461 $(49,170) $ 105,583
========= ======== =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
GCA
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
COMMON TOTAL
STOCK RETAINED CUMULATIVE STOCKHOLDERS'
NO PAR EARNINGS TRANSLATION EQUITY
VALUE (DEFICIT) ADJUSTMENT (DEFICIT)
BALANCE, DECEMBER 31, 1993 $57,720 $(67,750) $3,392 $(6,638)
Net income 25,461 ______ 25,461
Translation adjustment _______ ________ 180 180
BALANCE, DECEMBER 31, 1994 57,720 (42,289) 3,572 19,003
Net loss _______ (49,170) ______ (49,170)
Translation adjustment _______ _______ ______ _______
BALANCE, DECEMBER 31, 1995 57,720 (91,459) 3,572 (30,167)
Net income ______ 105,583 ______ 105,583
Translation adjustment ______ ________ (205) (205)
BALANCE, DECEMBER 31, 1996 $57,720 $14,124 $3,367 $75,211
======= ======= ====== =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
GCA
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1994 1995 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $25,461 $(49,170) $105,583
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities-
Depreciation and amortization 47,311 60,493 52,423
Deferred income taxes (90,991) (7,368) 94,831
Change in asset and liabilities-
Accounts receivable (54,716) 1,474 (153,358)
Inventories (20,588) 99,542 5,711
Accounts payable 167,740 10,141 47,757
Accrued expenses 37,443 59,834 (89,291)
Net cash provided by operating
activities 111,660 174,946 63,656
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment, (48,632) (46,542) (30,066)
net Increase in other assets (7,008)
Net cash used in investing activities (48,632) (46,542) (37,074)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of term loans, net (55,109) (119,653) (6,814)
------- -------- --------
Net cash used in financing activities (55,109) (119,653) (6,814)
------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES ON 1,502 1,581 (5,450)
CASH ------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 9,421 10,332 14,318
CASH AND CASH EQUIVALENTS, 11,793 21,214 31,546
BEGINNING OF PERIOD ------- ------- -------
CASH AND CASH EQUIVALENTS, END OF $21,214 $31,546 $45,864
PERIOD ======= ======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
GCA
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996
(1) OPERATIONS
GCA Gesellschaft fur Computeranwendung mbH (the Company) is engaged in
developing printer driver software and selling computer hardware and
software. The Company was established in 1982.
(2) SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue Recognition
Net revenue includes software license fees, hardware products, services,
software maintenance and royalty revenue. Revenue from software and
hardware product sales is recognized upon shipment of the product to
customers, provided that there are no significant obligations remaining
and collectibility of the revenue is probable. The Company provides for
estimated hardware products returns upon shipment of the hardware
products. The Company recognizes revenue from software license fees,
services and maintenance in accordance with the provisions of the
American Institute of Certified Public Accountants, Statement of
Position No. 91-1 (SOP 91-1), Software Revenue Recognition.
(b) Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less at the time of purchase to be cash equivalents.
(c) Inventory
Inventories, which include material, labor and manufacturing overhead,
are stated at the lower of cost (first-in, first-out) or market and
consist of the following:
<PAGE>
GCA
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996
(Continued)
(2) SIGNIFICANT ACCOUNTING POLICIES (Continued)
DECEMBER 31,
1995 1996
Raw materials and work in $ 71,699 $70,135
process
Finished goods 78,659 64,424
------- -------
$150,358 $134,559
(d) Property and Equipment
The Company records property and equipment at cost and provides for
depreciation and amortization on a straight-line basis over the
estimated useful lives of the assets as follows:
ESTIMATED
USEFUL DECEMBER 31,
LIFE 1995 1996
Asset
Classification--
Software 3-4 years $20,740 $ 9,683
Furniture,
fixtures and 4-5 years 148,164 164,329
equipment
Leasehold
improvements 10 years 86,460 86,460
------- -------
255,364 260,472
Less-- Accumulated
depreciation and
amortization 150,329 176,724
------- -------
$105,035 $83,748
(e) Other Current Assets
The other current assets consist primarily of receivables due from the
Company's two principal stockholders.
(f) Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
(g) Foreign Currency Translation
The Company's functional currency is the German deutsche mark (DM).
For financial statement purposes the assets and liabilities have been
translated at the exchange rate in effect at December 31, 1996.
Revenues and expenses have been translated at the average exchange rate
during the years ended December 31, 1994, 1995 and 1996. A cumulative
translation adjustment has been recorded at December 31, 1995 and 1996,
to reflect the difference in these exchange rates.
(3) COMMITMENTS
Operating Lease Commitment
The Company occupies its facilities under various operating lease
agreements. In addition, the company leases certain machinery and equipment
under operating leases. Future minimum lease payments required under
operating leases in the years subsequent to December 31, 1996 is
approximately $318,000.
(4) SUBSEQUENT EVENT
In February 1997, Xionics Document Technologies, Inc. agreed to acquire
the outstanding stock of the Company for a purchase price of $5,000,000.
Exhibit 99.2
XIONICS DOCUMENT TECHNOLOGIES, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
In February 1997, the Registrant purchased the equity of GCA Gesellschaft
fur Computeranwendung mbH (GCA) for approximately $5 million in cash. The
Registrant also accrued approximately $700,000 in direct costs related to the
acquisition resulting in a total purchase price of approximately $5.7 million.
This acquisition is being accounted for as a purchase. A significant
portion of the purchase price, as outlined in the attached notes to these pro
forma financial statements, has been identified in an appraisal as intangible
assets, including approximately $5.4 million of purchased in-process research
and development. (See discussion in Note 1.)
The accompanying pro forma combined balance sheet as of December 31, 1996
assumes that the acquisition of GCA took place as of December 31, 1996. The
accompanying pro forma combined condensed statement of operations assumes that
the acquisition of GCA took place on July 1, 1995, the beginning of the
Registrant's fiscal year ended June 30, 1996. The pro forma combined condensed
statement of operations does not include the effect of any nonrecurring charges
directly attributable to the acquisition.
The accompanying pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the financial position or
results of operations which would have been reported had the acquisition been
in effect during the periods presented, or which may be reported in the future.
The accompanying pro forma combined condensed financial statements should
be read in conjunction with the historical financial statements and related
notes thereto for the Registrant and GCA.
<PAGE>
<TABLE>
<CAPTION>
XIONICS DOCUMENT TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996
(UNAUDITED)
HISTORICAL
ASSETS
PRO FORMA
XIONICS GCA ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and short-term investments $28,792,103 $ 45,864 $(5,000,000) $23,837,967
Accounts receivable, net 3,853,383 466,573 4,319,956
Inventory 1,379,270 134,559 1,513,829
Prepaids and other current assets 3,806,647 7,242 ____________ 3,813,889
Total current assets 37,831,403 654,238 (5,000,000) 33,485,641
PROPERTY, PLANT AND EQUIPMENT, NET 2,612,767 83,748 2,696,515
OTHER ASSETS 870,094 3,221 873,315
GOODWILL AND INTANGIBLE ASSETS 132,500 ______ 350,000(1) 482,500
$41,446,764 $741,207 $(4,650,000) $37,537,971
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Term loan $ $168,053 $ $ 168,053
Accounts payable and accrued expenses 5,978,993 497,943 700,000(1) 7,176,936
accrued expenses
Deferred revenue 859,653 _______ _______ 859,653
Total current liabilities 6,838,646 665,996 700,000 8,204,642
STOCKHOLDERS' EQUITY:
Common stock 107,959 57,720 (57,720)(1) 107,959
Treasury stock (151,246) (151,246)
Additional paid-in capital 43,782,004 43,782,004
Retained Earnings (deficit) (9,130,599) (5,288,913)(1) (14,405,388)
Cumulative translation adjustment 3,367 (3,367)
Total stockholders' equity 34,608,118 75,211 (5,350,000) 29,333,329
$41,446,76 $741,207 $(4,650,000) $37,537,971
</TABLE>
The accompanying notes are an integral part of these pro forma combined
condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
XIONICS DOCUMENT TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
(UNAUDITED)
HISTORICAL
PRO FORMA
XIONICS GCA ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
NET REVENUE $23,809,322 $1,929,395 $ $25,738,717
COST OF REVENUE
5,791,055 844,467 ________ 6,635,522
Gross profit 18,018,267 1,084,928 19,103,195
RESEARCH AND DEVELOPMENT 10,037,240 784,298 10,821,538
SELLING, GENERAL AND ADMINISTRATION
EXPENSES 9,394,876 261,432 70,000(2) 9,726,308
Income (loss) from operations (1,413,849) 39,198 (70,000) (1,444,651)
INTEREST INCOME 163,686 8,642 (29,879)(3) 142,449
INTEREST EXPENSE (286,613) (39,048) _______ (325,661)
OTHER INCOME 4,099 86,832 _______ 90,931
Income (loss) before provision for (1,532,677) 95,624 (1,36,932)
taxes (99,879)
PROVISION FOR INCOME TAXES _________ 69,330 _______ 69,330
Net income (loss) $(1,532,677) 26,294 $(99,879) $(1,606,262)
=========== ======== ======= ==========
NET LOSS PER COMMON AND COMMON
EQUIVALENT SHARE $ (0.18) $ (0.19)
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 8,320,392 8,320,392
========= =========
</TABLE>
The accompanying notes are an integral part of these pro forma combined
condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
XIONICS DOCUMENT TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED)
HISTORICAL
PRO FORMA
XIONICS GCA ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
NET REVENUE $17,945,50 $872,776 $ $18,818,283
COST OF REVENUE 3,586,205 320,864 __________ 3,907,069
Gross profit 14,359,302 551,912 14,911,214
RESEARCH AND DEVELOPMENT 7,284,247 342,748 7,626,995
SELLING, GENERAL AND ADMINISTRATION 4,571,166 114,250 35,000(2) 4,720,416
EXPENSES
Income from operations 2,503,889 94,914 (35,000) 2,563,803
INTEREST INCOME 351,574 3,939 (54,500)(3) 301,013
INTEREST EXPENSE (84,926) (15,085) (100,011)
OTHER INCOME 8,751 33,060 _________ 41,811
Income before provision for 2,779,288 116,828 (89,500) 2,806,616
taxes
PROVISION FOR INCOME TAXES 552,857 66,376 _________ 619,233
Net income $2,226,431 $50,452 $ (89,500) $2,187,383
========== ======= ========= ==========
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.20 $0.19
=========== ==========
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 11,330,226 11,330,226
========== ==========
</TABLE>
The accompanying notes are an integral part of these pro forma combined
condensed financial statements.
<PAGE>
XIONICS DOCUMENT TECHNOLOGIES, INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(1) Allocation of Purchase Price
The following outlines the allocation of purchase price for the
acquisition of GCA:
Purchased in-process R&D $5,400,000
Assembled workforce 150,000
Goodwill 200,000
5,750,000
Net book value of assets 50,000
acquired as of December 31,
1996
$5,700,000
(1) For purposes of these pro forma combined condensed financial
statements, the purchased in-process R&D was assumed to have been
written off prior to the period presented herein, in order that
the statements of operations presented have only recurring costs
included.
(2) Pro Forma Adjustments
The following is a description of each pro forma combining adjustment:
1. To record purchase price of $5,400,000 outlined in Note 1.
2. Amortization of intangibles of $350,000 based
on their estimated useful life of 5 years.
3. Reduce interest income as a result of utilizing
cash for acquisition.
