<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K/A
AMENDMENT NO. 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): OCTOBER 2, 1997
------------------------
AXIOHM TRANSACTION SOLUTIONS, INC.
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 0-13459 94-2917470
(State or jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
15070 AVENUE OF SCIENCE
SAN DIEGO, CALIFORNIA 92128
---------------------------------------------------
(Address, including zip code, of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 451-3485
-------------------------------------------------------
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Amendment No. 1 to the Registrant's Current Report on Form 8-K dated
October 2, 1997 (the "Form 8-K"), originally filed with the Securities and
Exchange Commission (the "SEC") on October 17, 1997, is being filed solely for
the purpose of amending Item 7, Financial Statements and Exhibits, to the Form
8-K.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants...................................................... 4
Consolidated Balance Sheet of Axiohm S.A. as of December 31, 1996 and December 31,
1995................................................................................. 5
Consolidated Statement of Income of Axiohm S.A. for the Years Ended December 31, 1996,
1995 and 1994........................................................................ 6
Consolidated Statement of Cash Flows of Axiohm S.A. for the Years Ended December 31,
1996, 1995 and 1994.................................................................. 7
Consolidated Statement of Shareholders' Equity of Axiohm S.A. for the Years Ended
December 31, 1996, 1995 and 1994..................................................... 8
Notes to the Consolidated Financial Statements......................................... 9
Unaudited Consolidated Balance Sheet of Axiohm S.A. as of June 30, 1997 and Audited
Consolidated Balance Sheet of Axiohm S.A. as of December 31, 1996.................... 25
Unaudited Consolidated Statement of Income of Axiohm S.A. for the Six Months Ended June
30, 1997 and 1996.................................................................... 26
Unaudited Consolidated Statement of Cash Flows of Axiohm S.A. for the Six Months Ended
June 30, 1997 and 1996............................................................... 27
Notes to the Unaudited Consolidated Financial Statements............................... 28
</TABLE>
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Axiohm S.A.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Axiohm S.A.
and its subsidiaries at December 31, 1996 and 1995 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 United States generally accepted accounting
principles. 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 of these statements in
accordance with United States generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Paris,
September 12, 1997
4
<PAGE>
AXIOHM S.A.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
NOTE 1995 1996
----- --------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 636 $ 1,839
Accounts receivable, net............................................................ 3 9,700 10,552
Inventories, net.................................................................... 4 13,506 13,900
Loan to related party............................................................... 17 -- 1,832
Other current assets................................................................ 2,435 1,454
--------- ---------
Total current assets.............................................................. 26,277 29,577
Property, plant and equipment, net.................................................... 5 11,002 11,235
Goodwill.............................................................................. 6 2,254 2,606
Other assets.......................................................................... 651 560
--------- ---------
Total assets...................................................................... $ 40,184 $ 43,978
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................... $ 6,675 $ 7,480
Bank overdraft...................................................................... 545 --
Current portion of long-term debt................................................... 8 1,748 1,267
Current portion of capital lease and financing obligations.......................... 9 84 139
Current portion of government grant obligations..................................... 11 327 916
Other current liabilities........................................................... 7 4,185 5,703
--------- ---------
Total current liabilities......................................................... 13,564 15,505
Long-term debt........................................................................ 8 13,087 4,821
Capital lease and financing obligations............................................... 9 1,662 1,543
Government grant obligations.......................................................... 11 2,600 1,846
Deferred income taxes................................................................. 13 1,482 1,557
Other long-term liabilities........................................................... 14 1,812 2,273
--------- ---------
Total liabilities................................................................. $ 34,207 $ 27,545
--------- ---------
Commitments and contingencies......................................................... 10 -- --
Shareholders' equity:
Common stock, ordinary shares "A" par value FF 100 at December 31, 1995 and FF 500
at December 31, 1996; 38,000 shares authorized and outstanding at December 31,
1995; 38,405 shares authorized and outstanding at December 31, 1996............... 15 $ 616 $ 3,579
Common stock, ordinary shares "B" par value FF 500, 2,735 shares authorized and
outstanding at December 31, 1996.................................................. -- 262
Capital in excess of par value...................................................... 66 326
Retained earnings................................................................... 5,434 12,149
Foreign currency translation adjustment............................................. (139) 117
--------- ---------
Total shareholders' equity........................................................ 5,977 16,433
--------- ---------
Total liabilities and shareholders' equity........................................ $ 40,184 $ 43,978
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
AXIOHM S.A.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
NOTE 1994 1995 1996
----- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Net sales........................................................ 3 $ 23,952 $ 72,155 $ 95,302
Other income..................................................... 12 858 -- --
---------- ---------- ----------
24,810 72,155 95,302
Costs and expenses:
Costs of products sold........................................... (15,095) (52,202) (66,390)
Selling, general and administrative.............................. (4,506) (9,200) (11,013)
Research and development......................................... (3,310) (5,836) (6,648)
Goodwill amortization............................................ 6 -- (161) (200)
---------- ---------- ----------
Total costs and expenses........................................... (22,911) (67,399) (84,251)
---------- ---------- ----------
Income from operations............................................. 1,899 4,756 11,051
Interest income.................................................... 90 158 158
Interest expense................................................... (244) (1,889) (1,032)
Other income....................................................... 12 167 -- 1,033
---------- ---------- ----------
Income before income taxes......................................... 1,912 3,025 11,210
Provision for income taxes......................................... 13 (482) (1,095) (4,406)
---------- ---------- ----------
Net income......................................................... $ 1,430 $ 1,930 $ 6,804
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
AXIOHM S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
<S> <C> <C> <C>
1994 1995 1996
---------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................... $ 1,430 $ 1,930 $ 6,804
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................... 1,070 2,696 2,921
Deferred income taxes....................................................... 756 (155) 458
Provision for inventory obsolescence........................................ 57 1,040 87
Provision for long-term liabilities......................................... 94 184 461
Other....................................................................... -- 36 213
Effect on cash of changes in operating assets and liabilities:
Decrease/(increase) in accounts receivable.................................. 580 (4,659) (2,215)
Increase in inventories..................................................... (1,411) (1,896) (823)
Increase in other current assets............................................ (220) (248) (517)
(Decrease)/increase in accounts payable..................................... (437) 160 2,700
Increase in other current liabilities....................................... 720 1,371 1,137
(Decrease)/increase in income tax payable................................... (420) 678 618
Decrease in deferred revenue................................................ (58) (130) (107)
---------- --------- ---------
Net cash provided by operating activities....................................... $ 2,161 $ 1,007 $ 11,737
---------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
IPB acquisition, net of cash acquired (Note 2)................................ $ (15,644) $ -- $ --
Capital expenditures.......................................................... (2,190) (2,955) (3,056)
Proceeds from disposition of property, plant and equipment.................... -- 53 71
Other......................................................................... (203) (123) (12)
---------- --------- ---------
Net cash used in investing activities........................................... $ (18,037) $ (3,025) $ (2,997)
---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft................................................................ $ (540) $ 409 $ (545)
Net borrowings under lines of credit.......................................... 645 953 (128)
Proceeds from long-term debt.................................................. 15,301 1,000 --
Principal repayments under long-term debt..................................... (371) (4,992) (8,446)
Proceeds from government grants............................................... 716 2,204 338
Proceeds from financing arrangements (Note 9)................................. -- 1,600 --
Repayment of government grants................................................ -- (196) (308)
Principal repayments under financing obligations.............................. -- (36) (119)
Payment of dividends.......................................................... (342) -- (411)
Proceeds from stock issuance, net of issuance costs (Note 15)................. -- -- 3,807
Net loans/repayments to related parties....................................... 602 -- (1,851)
---------- --------- ---------
Net cash provided by/(used in) financing activities............................. $ 16,011 $ 942 $ (7,663)
---------- --------- ---------
Effect of foreign exchange rate changes on cash and cash equivalents............ $ 399 $ 216 $ 126
---------- --------- ---------
Change in cash and cash equivalents............................................. $ 534 $ (860) $ 1,203
Cash and cash equivalents at beginning of year.................................. 962 1,496 636
---------- --------- ---------
Cash and cash equivalents at end of year........................................ $ 1,496 $ 636 $ 1,839
---------- --------- ---------
---------- --------- ---------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
CASH PAID DURING THE YEAR FOR:
Interest...................................................................... $ 157 $ 1,649 $ 845
Income taxes, net of refunds.................................................. 140 604 3,245
NON-CASH TRANSACTIONS:
Capital lease obligations..................................................... -- $ 1,750 $ 163
Accrual for contingent purchase price consideration (Note 10)................. -- -- 552
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
AXIOHM S.A.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS OF U.S. DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
NUMBER OF SHARES COMMON STOCK
-------------------- -------------------- CAPITAL
IN FOREIGN
CLASS CLASS EXCESS CURRENCY
-------------------- -------------------- OF PAR RETAINED TRANSLATION
A B A B VALUE EARNINGS ADJUSTMENT
--------- --------- --------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993................. 38,000 -- $ 616 $ -- $ 66 $ 2,416 $ (225)
Net income................................... -- -- -- -- -- 1,430 --
Dividends.................................... -- -- -- -- -- (342) --
Currency translation adjustment.............. -- -- -- -- -- -- 341
--------- --------- --------- --------- --------- ----------- ------
BALANCE AT DECEMBER 31, 1994................. 38,000 -- $ 616 $ -- $ 66 $ 3,504 $ 116
Net income................................... -- -- -- -- -- 1,930 --
Currency translation adjustment.............. -- -- -- -- -- -- (255)
--------- --------- --------- --------- --------- ----------- ------
BALANCE AT DECEMBER 31, 1995................. 38,000 -- $ 616 $ -- $ 66 $ 5,434 $ (139)
Issuance of Common Stock "A"................. 405 -- 8 -- 489 -- --
Issuance of Common Stock "B"................. -- 2,735 -- 52 3,297 -- --
Stock issuance costs......................... -- -- -- -- (39) -- --
Increases in nominal value of each share from
FF 100 to FF 500........................... -- -- 2,955 210 (3,165) -- --
Allocation to restricted reserves............ -- -- -- -- (322) 322 --
Dividends.................................... -- -- -- -- -- (411) --
Net income................................... -- -- -- -- -- 6,804 --
Currency translation adjustment.............. -- -- -- -- -- -- 256
--------- --------- --------- --------- --------- ----------- ------
BALANCE AT DECEMBER 31, 1996................. 38,405 2,735 $ 3,579 $ 262 $ 326 $ 12,149 $ 117
--------- --------- --------- --------- --------- ----------- ------
--------- --------- --------- --------- --------- ----------- ------
<CAPTION>
TOTAL
---------
<S> <C>
BALANCE AT DECEMBER 31, 1993................. $ 2,873
Net income................................... 1,430
Dividends.................................... (342)
Currency translation adjustment.............. 341
---------
BALANCE AT DECEMBER 31, 1994................. $ 4,302
Net income................................... 1,930
Currency translation adjustment.............. (255)
---------
BALANCE AT DECEMBER 31, 1995................. $ 5,977
Issuance of Common Stock "A"................. 497
Issuance of Common Stock "B"................. 3,349
Stock issuance costs......................... (39)
Increases in nominal value of each share from
FF 100 to FF 500........................... --
Allocation to restricted reserves............ --
Dividends.................................... (411)
Net income................................... 6,804
Currency translation adjustment.............. 256
---------
BALANCE AT DECEMBER 31, 1996................. $ 16,433
---------
---------
</TABLE>
The accompanying notes are integral part of the consolidated financial
statements.
8
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Axiohm S.A. ("Axiohm") designs, develops, manufactures and services printers,
printer components and printing systems utilizing thermal and impact
technologies. Axiohm's customers include major point-of-sale providers, gasoline
pump manufacturers, banking systems suppliers and other manufacturers of
equipment printing slips, tickets or receipts. Axiohm operates on a worldwide
basis with significant activities in North America and Europe.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PRESENTATION
The financial statements of Axiohm include the accounts of its wholly owned
subsidiaries in the United States, Hong Kong and Japan. All intercompany
accounts and transactions have been eliminated.
These accompanying financial statements have been presented in accordance with
accounting principles generally accepted in the United States of America ("US
GAAP").
B. USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities as
of the date of the consolidated financial statements and the reported amount of
revenue and expenses during the reporting period. Actual results could differ
from estimates.
C. GOODWILL
Axiohm amortizes costs in excess of the fair value of net assets acquired using
the straight-line method over an estimated useful life of fifteen years.
D. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and depreciated using the
straight-line method over the following estimated useful lives of the related
assets:
<TABLE>
<S> <C>
Buildings....................................... 20 to 40
years
Machinery and equipment......................... 3 to 5 years
Molds and tooling............................... 3 to 5 years
Furniture and fixtures.......................... 3 to 7 years
Computer software............................... 1 to 3 years
</TABLE>
E. INVENTORIES
Inventories are valued at the lower of cost or market, cost being determined
using the first-in, first-out ("FIFO") method.
9
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
F. CASH AND CASH EQUIVALENTS
Cash equivalents consist principally of short-term highly liquid money market
funds with original maturities of less than three months.
G. REVENUE
Revenue from product sales is recognized at the time of shipment. Service
revenue is recognized upon completion of the service activity and the shipment
of the repaired product to the customer.
H. RESEARCH & DEVELOPMENT COSTS
Research and development costs are expensed as incurred. Certain government
research grants, which are repayable in the event that the related research
project proves to be successful, are recognized as a deduction to expenses when
the research project has been determined to be unsuccessful and all other
conditions of the grant have been satisfied.
I. TRANSLATION OF FINANCIAL STATEMENTS
Axiohm's financial results have been reported in U.S. dollars. The functional
currencies of Axiohm's subsidiaries are the local currencies where the
subsidiaries operate. When translating local currency based financial statements
into U.S. dollars, assets and liabilities are translated at the year end rate
unless hedged by forward foreign exchange contracts, in which case the rates
specified in such forward contracts are used, while income and expenses are
translated using the average rate for the year. Translation differences are
presented as a component of shareholders' equity.
J. FOREIGN CURRENCY HEDGES
Axiohm uses forward foreign exchange contracts and options in its management of
currency risks and Axiohm does not hold or issue financial instruments for
trading purposes. Unrealized gains and losses on forward contracts to hedge
specific future currency transactions are deferred and recognized against the
matching losses and gains on the specific transactions.
K. CONCENTRATION OF CREDIT RISK
Axiohm sells products to various customers across several industries throughout
the world. Axiohm performs on-going credit evaluations of its customers and
maintains reserves for potential credit losses. Such losses have been within
management's expectations. Axiohm generally requires no collateral from its
customers.
L. INCOME TAXES
Axiohm follows Statement of Financial Accounting Standard No. 109 ("SFAS 109"),
ACCOUNTING FOR INCOME TAXES. Under SFAS 109, the tax provision is determined
under the liability method. Under this method deferred tax assets and
liabilities are recognized based on the differences between the financial
reporting and the tax bases of assets and liabilities using presently enacted
tax rates. Valuation allowances are
10
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
established on deferred tax assets when management estimates that it is more
likely than not that some or all of deferred tax benefits will not be realized.
M. GOVERNMENT GRANTS AND SUBSIDIES
Grants received from government agencies for the acquisition of property and
equipment are netted against the related capital expenditure. Grants for
investments in foreign countries are deferred and recognized as a deduction to
expenses if and when the conditions for the grant have been satisfied. Subsidies
received for employee training are recognized as a deduction to expenses during
the period in which the related costs are incurred.
N. FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1994, 1995 and 1996, the carrying amount of Axiohm's financial
instruments, including cash and cash equivalents, trade receivables, trade
payables and other accrued liabilities, approximates their fair value due to
their short-term maturities. Based on quoted market prices and rates of interest
available to Axiohm, the carrying amount of its debt instruments and other
long-term liabilities at December 31, 1994, 1995 and 1996 also approximates fair
value.
O. PROFIT SHARING AND RETIREMENT INDEMNITY PLANS
Substantially all Axiohm employees participate in statutory profit sharing and
retirement indemnity plans. Amounts owed under the profit sharing plan are based
on a formula prescribed by French law. Benefit obligations under the retirement
indemnity plan are determined based on length of service, annual remuneration
and job grade. These obligations and the related compensation expense are
recorded in the financial statements of the period during which the related
benefits are earned.
P. POST-RETIREMENT MEDICAL PLAN
Certain Axiohm employees participate in a defined benefit post-retirement
medical plan. Axiohm's projected benefit obligation relating to such benefits is
calculated and recorded in accordance with Statement of Financial Accounting
Standards No. 106 ("SFAS 106"), ACCOUNTING FOR POST-RETIREMENT BENEFITS.
Q. NEW ACCOUNTING STANDARDS
In March 1995, Statement of Financial Accounting Standards No. 121 ("SFAS 121"),
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO
BE DISPOSED OF was issued. This statement requires that long-lived assets held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. This statement was implemented for the year ended December 31,
1996. The adoption of this accounting standard had no significant impact on the
financial position or results of operations of Axiohm. Axiohm will continually
assess impairment of long-lived assets and certain identifiable intangibles
whenever changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.
11
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Effective January 1, 1996, Axiohm adopted Statement of Accounting Standards No.
123 ("SFAS 123"), ACCOUNTING FOR STOCK-BASED COMPENSATION. This statement
defines a fair value based method of accounting for employee options or similar
equity instruments and encourages all entities to adopt that method of
accounting. However, it also allows an entity to continue to measure
compensation costs using the intrinsic value based method of accounting
prescribed by Accounting Principle Board Opinion No. 25 ("APB 25"), ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES. Axiohm has elected to account for its employee
stock compensation plan under the provisions of APB 25.
2. IPB ACQUISITION
On December 29, 1994, Axiohm acquired the net assets of the printer division of
NCR ("the Seller") (formerly AT&T Global Information Solutions Company). The
acquisition was accounted for using the purchase method and the results of the
division have been included since that date.
The aggregate purchase price of the net assets acquired was $15.6 million
including acquisition costs and was financed through 12 year term loans
subscribed for a total amount of approximately $15.0 million and credit line
facilities of approximately $0.6 million. The agreement also provides for
additional contingent consideration for up to $5.0 million for each of the three
years ending December 31, 1995, 1996 and 1997 to be paid to the Seller to the
extent that sales made by Axiohm to the Seller exceed certain minimums specified
in the purchase agreement. Any additional cosideration is allocated to goodwill.
In the year ended December 31, 1996, sales of products to the Seller did exceed
such minimums and an adjustment of $552 was made to goodwill (See Note 10).
The purchase price has been allocated to the assets acquired and liabilities
assumed based upon fair market values at the date of acquisition. The fair value
of assets acquired and liabilities assumed is as follows:
<TABLE>
<S> <C>
Current assets.................................................... $ 8,032
Property, plant and equipment..................................... 8,664
Other assets...................................................... 298
Goodwill.......................................................... 2,415
Current liabilities............................................... (2,568)
Long-term liabilities............................................. (1,197)
---------
$ 15,644
---------
---------
</TABLE>
The following unaudited statement of revenue, gross margin, income from
operations and net income for the year ended December 31, 1994 is presented as
if the acquisition had been made at the beginning of the period. The financial
information utilized for the division in computing the following pro forma has
been derived from unaudited financial records carved out from the Seller's own
accounts and presented by the Seller to Axiohm at the time of acquisition. These
records include actual results for the nine-month period ended September 30,
1994 and an estimate of the results for the three-month period ended December
31, 1994 as provided by the Seller.
12
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
2. IPB ACQUISITION (CONTINUED)
The unaudited pro forma information is not necessarily indicative of the
revenue, gross margin, income from operations or net income that would have
occurred had the purchase been made at the beginning of the period.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
PRO FORMA (UNAUDITED)
---------------------
<S> <C>
Revenue.................................................................................... $ 66,218
Gross margin............................................................................... 18,923
Income from operations..................................................................... 4,142
Net income................................................................................. 3,032
</TABLE>
In connection with this acquisition, Axiohm and the Seller entered into a three
year OEM purchase agreement under which the Seller undertakes to purchase at
least 75% of its requirements for certain products from Axiohm at prices
specified in the agreement. On September 2, 1997, Axiohm entered into a new
three-year contract with NCR. The New NCR contract does not obligate NCR to
purchase a minimum of 75% of its requirements for transaction printers of the
type manufactured by Axiohm, but does provide that NCR and Axiohm intend and
expect that NCR will purchase from Axiohm substantially all of its requirements
for transaction printers.
3. ACCOUNTS RECEIVABLE, NET
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1995 1996
--------- ---------
Trade accounts receivable.................................................................... $ 9,838 $ 10,690
Less: allowance for doubtful accounts........................................................ (138) (138)
--------- ---------
Accounts receivable, net..................................................................... $ 9,700 $ 10,552
--------- ---------
--------- ---------
</TABLE>
For the years ended December 31, 1994, 1995 and 1996, revenue in the amount of
$2,063, $46,278 and $49,502, respectively, came from sales to NCR representing
approximately 9%, 64% and 52%, respectively, of Axiohm's total net sales. At
December 31, 1995 and 1996, accounts receivable from this customer were $4,239
and $2,860, respectively. All amounts are due within one year.
13
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
4. INVENTORIES, NET
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1995 1996
--------- ---------
Raw materials and components............................................ $ 11,992 $ 13,345
Work in process......................................................... 2,152 949
Semi-finished and finished goods........................................ 1,555 1,793
--------- ---------
15,699 16,087
Less: allowance for obsolescence........................................ (2,193) (2,187)
--------- ---------
Inventories, net........................................................ $ 13,506 $ 13,900
--------- ---------
--------- ---------
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT, NET
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Land.................................................................... $ 803 $ 755
Buildings............................................................... 5,085 5,355
Machinery and equipment................................................. 1,763 1,797
Molds and tooling....................................................... 5,788 6,471
Furniture, fixtures and fittings........................................ 3,845 4,704
--------- ---------
17,284 19,082
Less: accumulated depreciation.......................................... (6,282) (7,847)
--------- ---------
Property, plant and equipment, net...................................... $ 11,002 $ 11,235
--------- ---------
--------- ---------
</TABLE>
Depreciation expense for the years ended December 31, 1994, 1995 and 1996 was
$1,044, $2,421 and $2,721, respectively.
6. GOODWILL
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Goodwill................................................................ $ 2,415 $ 2,967
Less: accumulated amortization.......................................... (161) (361)
--------- ---------
Goodwill, net........................................................... $ 2,254 $ 2,606
--------- ---------
--------- ---------
</TABLE>
Amortization expense for the years ended December 31, 1994, 1995 and 1996 was
$0, $161 and $200, respectively.
14
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
7. OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Accrued salaries and benefits................................................ $ 2,172 $ 2,501
Customer advances............................................................ 654 989
Accrued warranty expenses.................................................... 485 718
Income taxes................................................................. 371 500
Other taxes.................................................................. 224 381
NCR earnout.................................................................. -- 552
Relocation accrual........................................................... 262 --
Other........................................................................ 17 62
--------- ---------
Total other current liabilities.............................................. $ 4,185 $ 5,703
--------- ---------
--------- ---------
</TABLE>
8. LONG-TERM DEBT
Axiohm has entered into borrowing arrangements with various banks for loans
denominated in French Francs ("FF"), U.S. Dollars ("USD") and Japanese Yen
("JPY").
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Revolving credit line up to $8,000, the first $3,000 at lender's prime rate
plus three quarters (9.75% at December 31, 1995 and 9.5% at December 31,
1996), the next $5,000 at lender's prime plus one quarter (9.25% at
December 31, 1995 and 9.00% at December 31, 1996), payable in full January
1, 1998, secured by inventory, accounts receivable, contract rights,
equipment and general intangibles.......................................... $ 1,302 $ 1,174
Revolving credit line in FF, USD or JPY up to an equivalent
amount of FF 4.5 million at the quarterly weighted average interest rate on
the Interbank Money Market plus 1.0% or lender's prime rate plus 1.0%
(5.75% at December 31, 1995 and 4.31% at December 31, 1996),
payable in full January 1, 1998, secured by Axiohm's accounts receivable... 301 --
Business loan at 10% collateralized by various assets; balance paid
in full in July 1996....................................................... 3,045 --
Bank mortgage loan at lender's prime rate plus three quarters (9.75% at
December 31, 1995 and 9.5% at December 31, 1996), payable in monthly
installments of $44 (including interest) through 1997, amortized on
twelve-year schedule beginning in 1998, with balloon for full outstanding
balance due January 1, 2000; payment collateralized by building, machinery
and equipment.............................................................. 4,019 3,868
Three bank loans in FF at rates between 4.6% and 7.25%, payable
from 1997 to 2002, secured by Axiohm's equipment........................... 1,328 1,046
Bank loan in FF to acquire IPB assets at PIBOR one year rate plus
1.2% payable in seven yearly installments through 2001, secured by
IPB shares; balance paid in full in 1996................................... 4,373 --
Five business loans in FF at rates between 5.75% and 8.75%, secured
by Axiohm's equipment; balance paid in full in 1996........................ 467 --
--------- ---------
$ 14,835 $ 6,088
Less current portion......................................................... (1,748) (1,267)
--------- ---------
Total long-term debt......................................................... $ 13,087 $ 4,821
--------- ---------
--------- ---------
</TABLE>
Commitment fees on the total amount of the revolving credit line in USD are
payable annually at an annual rate of 0.25%.
15
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
8. LONG-TERM DEBT (CONTINUED)
At December 31, 1996, annual maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- -----------------------------------------------------------------------------------------
<S> <C>
1997..................................................................................... $ 1,267
1998..................................................................................... 391
1999..................................................................................... 750
2000..................................................................................... 3,427
2001..................................................................................... 165
2002 and thereafter...................................................................... 88
---------
Total................................................................................ $ 6,088
---------
---------
</TABLE>
9. CAPITAL LEASE AND FINANCING OBLIGATIONS
a. CAPITAL LEASES
Axiohm and its subsidiaries lease office equipment and vehicles under various
capital lease contracts with terms extending through December 31, 2000.
b. FINANCING ARRANGEMENT
In 1994, Axiohm negotiated a FF 8.0 million ($1.6 million) grant from various
agencies of the government of France to subsidize the purchase and improvement
of certain properties in France. The agreement is structured as a sale/leaseback
transaction in which title to the purchased property was sold to a government
agency in exchange for a cash payment of FF 16 million ($3.2 million) and
subsequently leased back for a fifteen year period. The terms of the agreement
provide for a bargain purchase option at the conclusion of the lease term, hence
the sale/leaseback transaction has been accounted for as financing arrangement
in which the related assets and a corresponding obligation are recorded in
Axiohm's financial statements. A financing obligation representing the proceeds
for the sale/leaseback component of the transaction has been netted against the
underlying capital expenditure. At December 31, 1996, Axiohm has a contingent
liability to repay, in whole or in part, grants received of approximately FF 8.0
million ($1.6 million), in the event Axiohm does not meet the requirements of
the grant including minimum employment levels through 1997, minimum capital
expenditures and continued use of the building throughout the lease term.
16
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
9. CAPITAL LEASE AND FINANCING OBLIGATIONS (CONTINUED)
Future minimum lease commitments under capital leases and the financing
arrangement at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
CAPITAL
YEAR ENDING DECEMBER 31, LEASES FINANCING TOTAL
- --------------------------------------------------------------- ----------- ----------- ---------
<S> <C> <C> <C>
1997........................................................... $ 102 $ 189 $ 291
1998........................................................... 102 189 291
1999........................................................... 47 189 236
2000........................................................... 19 189 208
2001........................................................... -- 189 189
2002 and thereafter............................................ -- 1,600 1,600
----- ----------- ---------
Total minimum lease payments................................... $ 270 $ 2,545 $ 2,815
----- -----------
----- -----------
Less: amounts representing interest............................ (1,133)
---------
Present value of minimum lease payments........................ 1,682
Current portion................................................ (139)
---------
Long-term portion of capital lease obligations................. $ 1,543
---------
---------
</TABLE>
Included in property, plant and equipment in the accompanying consolidated
balance sheets are the following assets under capital leases and the financing
arrangement:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Building at cost......................................................... $ 1,634 $ 1,527
Equipment at cost........................................................ 150 310
--------- ---------
1,784 1,837
Less: accumulated depreciation........................................... (64) (210)
--------- ---------
Assets under capital leases and financing arrangement, net............... $ 1,720 $ 1,627
--------- ---------
--------- ---------
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
In connection with the 1994 acquisition of what is now its Axiohm IPB
subsidiary, Axiohm is contingently liable to the Seller for up to $5.0 million
for each of the three years ending December 31, 1995, 1996 and 1997, for
additional purchase consideration (See Note 2). As of December 31, 1996, Axiohm
had accrued $552 for contingent payments resulting from 1996 sales performance.
17
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
11. GOVERNMENT GRANT OBLIGATIONS
French government agencies provide various long-term grants to promote
fundamental research programs and to encourage commercial implementation
overseas. The reimbursement of such grants is contingent upon the success of the
related program.
These grants are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Fundamental research........................................ $ 1,709 $ 1,488
Commercial implementation in Asia........................... 1,218 1,274
--------- ---------
2,927 2,762
Less: current portion....................................... (327) (916)
--------- ---------
Long-term portion........................................... $ 2,600 $ 1,846
--------- ---------
--------- ---------
</TABLE>
12. SUPPLEMENTARY INCOME STATEMENT DISCLOSURES
A. REVENUE
In 1994, Axiohm received revenue in respect of liquidation damages from
three customers for a total amount of $ 0.9 million. This amount represents
indemnities to Axiohm for the non-fulfillment of contractual terms by these
customers.
B. OTHER INCOME
At the end of 1995 and into 1996, Axiohm received insurance proceeds of
$ 1.0 million in compensation for the loss of revenue and commercial damage
caused by water in the thermal head clean room of the Puiseaux facility. The
insurance proceeds have been included in other income.
13. INCOME TAXES
Axiohm operates internationally and tax rates are subject to applicable tax
legislation in the country in which it operates. The domestic and foreign
components of pre-tax income are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Domestic (France) pre-tax income/(loss).......... $ 1,979 $(1,011) $ 4,780
Foreign pre-tax (loss)/income.................... (67) 4,036 6,430
------- ------- -------
Total............................................ $ 1,912 $ 3,025 $11,210
------- ------- -------
------- ------- -------
</TABLE>
18
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
13. INCOME TAXES (CONTINUED)
The provision for income tax consists of:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
CURRENT INCOME TAX EXPENSE/(CREDIT)
Domestic.......................................... $ (283) $ (359) $ 1,159
Foreign........................................... 9 1,609 2,789
--------- --------- ---------
Total............................................... $ (274) $ 1,250 $ 3,948
--------- --------- ---------
--------- --------- ---------
DEFERRED INCOME TAX EXPENSE/(CREDIT)
Domestic.......................................... $ 661 $ (280) $ 577
Foreign........................................... 95 125 (119)
--------- --------- ---------
Total............................................... $ 756 $ (155) $ 458
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the differences between income tax expense computed at
the French statutory rate and Axiohm's reported income tax provision is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Statutory rate....................................... 33.3% 36.7% 36.7%
Tax research credit................................ (14.8) (11.9) --
Non utilized foreign entities losses............... 5.9 6.8 1.7
Effect of tax rate differences in foreign
jurisdictions.................................... 0.8 1.7 1.1
Effect of change in tax rate on domestic deferred
taxes............................................ -- 2.8 --
Other.............................................. -- 0.1 (0.2)
--------- --------- ---
Effective Tax Rate................................... 25.2% 36.2% 39.3%
--------- --------- ---
--------- --------- ---
</TABLE>
A tax research credit of approximately $285 and $359 was recorded at December
31, 1994 and 1995, respectively. The tax research credit was based on an
increase in research and development expenditure. Additionally, certain tax
losses in foreign jurisdictions were unavailable for offset against taxable
income.
19
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
13. INCOME TAXES (CONTINUED)
The components of deferred tax assets/(liabilities) are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Deferred tax assets:
Post-retirement benefit obligation...................... $ 643 $ 677
Investment grants....................................... 578 504
Operating loss carry forwards........................... 815 388
Other................................................... 403 720
--------- ---------
Total deferred tax assets................................. 2,439 2,289
Less: valuation allowance............................... (260) (388)
--------- ---------
Net deferred tax assets................................... $ 2,179 $ 1,901
--------- ---------
--------- ---------
Deferred tax liabilities:
Long-term tax reserve................................... $ (1,756) $ (1,603)
Plant and equipment..................................... (576) (639)
Goodwill................................................ (436) (407)
Provisions.............................................. -- (304)
Other................................................... (27) (22)
--------- ---------
Total deferred tax/liabilities............................ $ (2,795) $ (2,975)
--------- ---------
--------- ---------
</TABLE>
Axiohm recorded a valuation allowance of $260 and $388 at December 31, 1995
and 1996, respectively, for net operating loss carry forwards in certain tax
jurisdictions since realization of these future benefits cannot be reasonably
assured. These net operating loss carry forwards expire at varying dates through
2001.
14. OTHER LONG-TERM LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Provision for post-retirement benefit....................... 1,341 1,436
Other....................................................... 471 837
--------- ---------
Total....................................................... 1,812 2,273
--------- ---------
--------- ---------
</TABLE>
Axiohm is currently obligated to provide certain post-retirement medical and
life insurance benefits to approximately 100 employees who have met certain
requirements as to age (generally 55) and length of service (generally 10 years,
which includes a minimum of 5 years after January 1, 1995). Axiohm accounts for
the cost of these benefits in accordance with SFAS 106. Axiohm funds these costs
on a pay-as-you-go basis. The post-retirement benefit expense for the years
ended December 31, 1994, 1995 and 1996 amounts to $0 to $144 and $96,
respectively.
20
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
14. OTHER LONG-TERM LIABILITIES (CONTINUED)
The total obligation recognized in the balance sheet at December 31, 1995
and 1996 was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Accumulated post-retirement benefit obligation:
Active--not fully eligible................................ $ 1,471 $ 374
Retired................................................... -- 66
--------- ---------
Total................................................. 1,471 440
Unrecognized prior service cost............................. -- 1,690
Unrecognized net loss....................................... (130) (694)
--------- ---------
Accrued post-retirement benefit obligation.................. $ 1,341 $ 1,436
--------- ---------
--------- ---------
</TABLE>
Significant assumptions employed in this valuation include a discount rate
of 7.25% at December 31, 1995, and 7.50% at December 31, 1996. The pre-Medicare
eligible healthcare cost trend rate is 8.0% for 1996 (6.0% for post-Medicare)
declining by one percent each year through the year 2000 (1998 for post-
Medicare), after which a rate of 5.0% is utilized for each year.
The annual costs of post-retirement benefits are based on assumed discount
rates set to reflect market conditions. If the healthcare cost trend rate was
increased by one percentage point, the net post-retirement benefit expense for
the year ended December 31, 1994, 1995 and 1996 and the accumulated post-
retirement benefit obligation, as of December 31, 1995 and 1996 would not
increase by a material amount.
Axiohm sponsors an employee savings plan for certain U.S. employees which
conforms to the provisions of Section 401(k) of the Internal Revenue Code.
Axiohm also provides certain defined pension benefits (based on years of
service) to certain categories of employees.
Axiohm's obligations under these plans for 1994, 1995 and 1996 were not
material.
15. SHAREHOLDERS' EQUITY
A. SHARE CAPITAL
On June 24, 1996, Axiohm completed a private offering of 405 Common
Shares "A," and 2,735 Common Shares "B" to an employee of Axiohm and two
institutional investors, respectively, from which it received total proceeds
of $3,807, net of offering costs of $39.
Common Shares "B" have substantially the same terms as Common Shares "A"
except for their economic rights (represented by CERTIFICATS
D'INVESTISSEMENTS) and their voting rights (represented by CERTIFICATS DE
DROIT DE VOTE) which can be separated and sold individually.
On the same date, Axiohm increased the par value of its Common Shares
from FF 100 to FF 500.
B. RETAINED EARNINGS
At December 31, 1996, Axiohm's distributable retained earnings amounted
to $11,025 and would be subject to $2,851 of additional withholding tax,
"PRECOMPTE," in case of distribution. The withholding tax would be recorded
in equity as part of the dividend paid to shareholders and shareholders
21
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
15. SHAREHOLDERS' EQUITY (CONTINUED)
receiving the dividend would be entitled to a tax credit "AVOIR FISCAL" at
least equal to the withholding tax paid, under conditions provided for in
relevant tax treaties under French law.
C. STOCK OPTIONS
On December 15, 1995, the shareholders of Axiohm implemented a stock
option plan authorizing the Board of Directors to issue stock options for
the subscription of a maximum of 1,583 shares of Axiohm's Common Stock.
On February 19, 1996, the Board of Directors granted all 1,583 options
(to acquire one share of Common Stock each) to an officer of Axiohm at an
exercise price of FF 6,050 which approximated the fair value of the
underlying shares on the date of grant.
The options are valid for ten years (until December 31, 2005) and become
exercisable ratably over five years. Non-vested options become void upon
termination of employment. The plan also allows for accelerated vesting upon
certain conditions and events including a public offering of Axiohm's stock
and specified changes in the existing ownership of Axiohm.
As of December 31, 1996, all 1,583 options (none of which are
exercisable) remained outstanding.
Had compensation costs for Axiohm's stock option plan been determined
consistent with the fair value approach set forth in SFAS No. 123, Axiohm's
net income for the year ended December 31, 1996 would have been reduced to
$6,726. The fair value of the options granted is estimated on the date of
grant using the minimum value method with the following assumptions: 3.9%
dividend yield, a risk free interest rate of 6.35%, an expected option life
of 10 years and no forfeitures.
16. FOREIGN CURRENCY HEDGES
At December 31, 1996, Axiohm's portfolio consisted of five foreign exchange
contracts to sell $4.5 million at an average rate of $1 = FF 5.17 and one option
to sell $3.0 million at August 29, 1997 at the rate of FF 5.15 for $1. The
option was acquired at a cost of $76.
17. RELATED PARTY TRANSACTIONS
Axiohm purchased from Dardel Technologies, a significant shareholder (44%
ownership) of Axiohm, services including insurance coverage, telecommunications
and legal and management assistance. These services amounted to $1,029, $995 and
$991 in fiscal years 1994, 1995 and 1996, respectively. In addition, Dardel
Technologies sub-leases to Axiohm S.A. office space that it leases from a
company owned by three directors of Axiohm S.A. These sub-lease payments to
Dardel Technologies amounted to $130, $291 and $279 in 1994, 1995 and 1996,
respectively. This same company also provided office management services to
Axiohm S.A. for an amount of $202, $288 and $263 in 1994, 1995 and 1996,
respectively. The terms of such transactions approximate those of an arm's
length transaction with an unrelated party.
Axiohm provided selling and commercial services to Enerdis S.A., a
subsidiary of Dardel Technologies for an amount of $0, $93 and $132 in the years
ended December 31, 1994, 1995 and 1996, respectively. The terms of such
transactions approximate those of an arm's length transaction with an unrelated
party.
22
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
17. RELATED PARTY TRANSACTIONS (CONTINUED)
In 1994, 1995 and 1996, Axiohm participated in a cash pooling agreement with
Dardel Technologies allowing it to borrow or loan cash as considered necessary.
At December 31, 1996, Axiohm S.A. had an outstanding loan with Dardel
Technologies amounting to $1,832 and bearing interest at 6.42% which was
recorded in other current assets. This loan was reimbursed in April 1997 and the
cash pooling agreement has been subsequently terminated. The terms of such
transactions approximate those of an arm's length transaction with an unrelated
party.
18. GEOGRAPHICAL INFORMATION
Axiohm operates predominantly in a single industry as a manufacturer and
service provider of thermal and impact printing equipment. Axiohm has operations
in France, the United States, Hong Kong and Japan. Transfers between geographic
areas primarily represent intercompany export sales of approximately $3.7
million, $8.7 million and $17.3 million in 1994, 1995 and 1996, respectively.
These produced goods are accounted for based on established sales prices between
the related companies. In computing income from operations for foreign
subsidiaries, no allocations of general corporate expenses, interest or income
taxes have been made.
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
NORTH
EUROPE AMERICA ASIA ELIMINATIONS CONSOLIDATED
--------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers....................... $ 20,613 $ 3,339 $ -- $ -- $ 23,952
Other revenues........................................ 858 -- -- -- 858
Transfer between geographic areas..................... 3,188 507 21 (3,716) --
--------- --------- --------- ------------ ------------
Total revenues........................................ $ 24,659 $ 3,846 $ 21 $ (3,716) $ 24,810
--------- --------- --------- ------------ ------------
--------- --------- --------- ------------ ------------
Operating profit/(loss)............................... $ 1,889 $ 342 $ (332) $ -- $ 1,899
Net income/(loss)..................................... $ 1,499 $ 268 $ (337) $ -- $ 1,430
Total assets at December 31, 1994..................... $ 22,578 $ 21,327 $ 103 $ (9,255) $ 34,753
</TABLE>
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
NORTH
EUROPE AMERICA ASIA ELIMINATIONS CONSOLIDATED
--------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers....................... $ 17,317 $ 54,099 $ 739 $ -- $ 72,155
Transfer between geographic areas..................... 8,716 -- -- (8,716) --
--------- --------- --------- ------------ ------------
Total revenues........................................ $ 26,033 $ 54,099 $ 739 $ (8,716) $ 72,155
--------- --------- --------- ------------ ------------
--------- --------- --------- ------------ ------------
Operating profit/(loss)............................... $ 68 $ 5,540 $ (528) $ (324) $ 4,756
Net income/(loss)..................................... $ (177) $ 2,862 $ (561) $ (194) $ 1,930
Total assets at December 31, 1995..................... $ 24,089 $ 26,184 $ 318 $ (10,407) $ 40,184
</TABLE>
23
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT AS OTHERWISE STATED)
18. GEOGRAPHICAL INFORMATION (CONTINUED)
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
NORTH
EUROPE AMERICA ASIA ELIMINATIONS CONSOLIDATED
--------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers....................... $ 20,367 $ 73,625 $ 1,310 $ -- $ 95,302
Transfer between geographic areas..................... 17,335 -- -- (17,335) --
--------- --------- --------- ------------ ------------
Total revenues........................................ $ 37,702 $ 73,625 $ 1,310 $ (17,335) $ 95,302
--------- --------- --------- ------------ ------------
--------- --------- --------- ------------ ------------
Operating profit/(loss)............................... $ 4,075 $ 7,613 $ (445) $ (192) $ 11,051
Net income/(loss)..................................... $ 3,100 $ 4,265 $ (504) $ (57) $ 6,804
Total assets at December 31, 1996..................... $ 25,732 $ 28,640 $ 599 $ (10,993) $ 43,978
</TABLE>
19. SUBSEQUENT EVENTS: MERGER WITH DH TO COMBINE OPERATIONS
On August 12, 1997, Axiohm closed a tender offer to acquire approximately
7,000,000 shares of DH Technology Inc. ("DH"). The tender offer was made
pursuant to the Agreement and Plan of Merger (the "Merger Agreement") dated July
14, 1997 between both companies. The Merger Agreement provides for a subsequent
merger of Axiohm into DH which will result in Axiohm becoming a wholly-owned
subsidiary of DH; however, as a result of the tender offer and related
transactions, the former shareholders of Axiohm will own approximately 85% of
the merged entities and, therefore, for financial purposes, the transaction will
be accounted for in a manner similar to a reverse acquisition whereby Axiohm
will be the acquiror and DH will be the acquired entity.
The Tender Offer was financed through the incurrence of $166.2 million of
senior indebtedness (the "Tender Credit Facility") and the issuance of $24.0
million of preferred stock of Axiohm IPB, a wholly owned subsidiary of Axiohm
(collectively the "Tender Financing"). The Tender Credit Facility is repayable
on the earlier of (i) the effective time of the Merger or (ii) October 3, 1997.
The Preferred Stock is mandatorily redeemable on the earlier of (i) February 17,
1998 and (ii) the closing date of the merger. In the event the Merger does not
close and if the Preferred Stock is not redeemed by February 17, 1998, Axiohm is
committed to take actions which would have a material adverse effect on Axiohm's
existing security holders and Axiohm's financial condition, results of
operations and liquidity. Management expects to refinance the Tender Financing
through the issuance of $100.0 million of senior subordinated notes and the
incurrence of debt under a new credit facility. In the event Axiohm does not
issue the senior subordinated notes, management expects to refinance the Tender
Financing through the incurrence of debt under alternative financing facilities.
24
<PAGE>
AXIOHM S.A.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
NOTE DECEMBER 31, 1996 JUNE 30, 1997
----- ----------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents.............................................. $ 1,839 $ 1,932
Accounts receivable, net............................................... 2 10,552 15,519
Inventories, net....................................................... 3 13,900 14,526
Loan to related party.................................................. 1,832 --
Other current assets................................................... 1,454 1,518
------- -------------
Total current assets................................................. 29,577 33,495
Property, plant and equipment, net....................................... 11,235 11,839
Goodwill................................................................. 2,606 2,504
Other assets............................................................. 560 992
------- -------------
Total assets......................................................... $ 43,978 $ 48,830
------- -------------
------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................................... $ 7,480 $ 8,525
Bank overdraft......................................................... -- 935
Current portion of long-term debt...................................... 4 1,267 3,089
Current portion of capital lease and financing obligation.............. 139 139
Current portion of government grant obligations........................ 916 875
Other current liabilities.............................................. 5,703 5,504
------- -------------
Total current liabilities............................................ 15,505 19,067
Long-term debt........................................................... 4 4,821 4,239
Capital lease and financing obligation................................... 1,543 1,323
Government grant obligations............................................. 1,846 1,018
Deferred income taxes.................................................... 1,557 1,501
Other long-term liabilities.............................................. 2,273 2,358
------- -------------
Total liabilities.................................................... $ 27,545 $ 29,506
------- -------------
Commitments and contingencies............................................ 6 -- --
Shareholders' equity:
Common stock, ordinary shares "A" par value FF 500, 38,405 shares
authorized and outstanding at June 30, 1997.......................... 5 $ 3,579 $ 3,579
Common stock, ordinary shares "B" par value FF 500, 2,735 shares
authorized and outstanding at June 30, 1997.......................... 262 262
Capital in excess of par value......................................... 326 326
Retained earnings...................................................... 12,149 15,357
Foreign currency translation adjustment................................ 117 (200)
------- -------------
Total Shareholders' Equity........................................... 16,433 19,324
------- -------------
Total Liabilities and Shareholders' Equity........................... $ 43,978 $ 48,830
------- -------------
------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
25
<PAGE>
AXIOHM S.A.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
NOTE
----------- FOR THE SIX MONTHS
ENDED JUNE 30,
----------------------------------
1996 1997
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenue............................................................ 2 $ 46,409 $ 56,614
Costs and expenses:
Costs of products sold........................................... (31,576) (38,799)
Selling, general and administrative.............................. (5,283) (5,664)
Research and development......................................... (3,057) (3,624)
Goodwill amortization............................................ (92) (102)
-------- --------
Total costs and expenses........................................... (40,008) (48,189)
-------- --------
Income from operations............................................. 6,401 8,425
Interest income.................................................... 13 63
Interest expense................................................... (679) (362)
Other income....................................................... 1,193 62
-------- --------
Income before income taxes......................................... 6,928 8,188
Provision for income taxes......................................... (2,690) (3,212)
-------- --------
Net income......................................................... $ 4,238 $ 4,976
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
26
<PAGE>
AXIOHM S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
------------------------
1996 1997
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................................................ $ 4,238 $ 4,976
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization....................................................... 1,364 1,681
Deferred income taxes............................................................... 540 (205)
Provision for inventory obsolescence................................................ 267 166
Provision for long-term liabilities................................................. 155 (39)
Other............................................................................... (49) 3
Effect on cash of changes in operating assets and liabilities:
(Increase) in accounts receivable................................................... (3,725) (5,370)
(Increase)/decrease in inventories.................................................. 2,105 (1,241)
(Increase)/decrease in other current assets......................................... 70 160
(Increase) in other assets.......................................................... -- (483)
Increase in accounts payable........................................................ 1,096 1,615
Increase in other current liabilities............................................... 746 3
Increase in income tax payable...................................................... 622 894
----------- -----------
Net cash provided by operating activities........................................... $ 7,429 $ 2,160
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additional purchase price consideration for the acquisition of IPB.................... -- (552)
Capital expenditures.................................................................. (1,404) (2,421)
Other................................................................................. 19 11
----------- -----------
Net cash used in investing activities................................................. $ (1,385) $ (2,962)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in bank overdraft............................................................ 134 943
Net borrowings under/repayments of lines of credit.................................... (336) 1,565
Principal repayments under long-term debt............................................. (7,738) (196)
(Repayments of)/Proceeds from government grants....................................... 100 (581)
Principal repayments under financing obligations...................................... (55) (84)
Payment of dividends.................................................................. (411) (1,768)
Proceeds from stock issuance, net of issuance costs................................... 3,807 --
Proceeds/(repayment) of loans to/(from) related parties............................... (200) 1,713
----------- -----------
Net cash provided by/(used) in financing activities..................................... $ (4,699) $ 1,592
----------- -----------
Effect of foreign exchange rate changes on cash and cash equivalents.................... $ 81 $ (697)
----------- -----------
Change in cash and cash equivalents..................................................... 1,426 93
Cash and cash equivalents at beginning of period........................................ 636 1,839
----------- -----------
Cash and cash equivalents at end of period.............................................. $ 2,062 $ 1,932
----------- -----------
----------- -----------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
CASH PAID DURING THE PERIOD FOR:
Interest.............................................................................. $ 635 $ 351
Income taxes, net of refunds.......................................................... 1,500 2,433
NON-CASH TRANSACTIONS
Capital lease obligation.............................................................. $ 163 $ 20
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
27
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL AMOUNTS IN THOUSANDS OF US DOLLARS, EXCEPT AS OTHERWISE STATED)
1. BASIS OF PRESENTATION
The Axiohm unaudited consolidated interim financial statements presented
herein have been prepared in accordance with United States generally accepted
accounting principles. In the opinion of management, these interim financial
statements reflect all adjustments, which include only those of a normal
recurring nature, necessary to fairly present Axiohm's financial position,
results of operations and cash flows as of and for the six months ended June 30,
1997 and 1996. These interim financial statements should be read in conjunction
with the audited financial statements and notes thereto for the years ended
December 31, 1994, 1995 and 1996.
2. ACCOUNTS RECEIVABLE, NET
<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
(UNAUDITED)
Trade accounts receivable................................... $ 10,690 $ 15,607
Less allowance for doubtful accounts........................ (138) (88)
------- -------------
Accounts receivable, net.................................... $ 10,552 $ 15,519
------- -------------
------- -------------
</TABLE>
For the six months ended June 30, 1996 and 1997, revenue in the amounts of
$25,735 and $26,657, respectively, came from sales to NCR (formerly AT&T GIS),
representing approximately 55% and 47% of Axiohm's total revenue, respectively.
At December 31, 1996 and June 30, 1997, accounts receivable from this customer
were $2,860 and $6,981, respectively. All amounts are due within one year.
3. INVENTORIES, NET
<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
(UNAUDITED)
Raw material and components................................. $ 13,345 $ 15,101
Work in progress............................................ 949 563
Semi-finished and finished goods............................ 1,793 1,129
------- -------------
16,087 16,793
Less allowance for obsolescence............................. (2,187) (2,267)
------- -------------
Inventories, net............................................ $ 13,900 $ 14,526
------- -------------
------- -------------
</TABLE>
28
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL AMOUNTS IN THOUSANDS OF US DOLLARS, EXCEPT AS OTHERWISE STATED)
4. LONG-TERM DEBT
Axiohm has entered into borrowing arrangements with various banks for loans
denominated in French Francs (FF), US Dollars (USD) and Japanese Yen ("JPY").
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ -----------
<S> <C> <C>
(UNAUDITED)
Revolving credit line up to $8,000, the first $3,000 at lender's prime rate plus
three quarters (9.50% at December 31, 1996 and 9.25% at June 30, 1997), the next
$5,000 at lender's prime rate plus one quarter (9.00% at December 31, 1996 and
8.75% at June 30, 1997); payable in full January 1, 1998; secured by inventory,
accounts receivable, contract rights, equipment and general intangibles........... $ 1,174 $ 2,414
Revolving credit line in FF, USD or JPY up to an equivalent amount of FF 4.5 million
at the quarterly weighted average interest rate on the Interbank Money Market plus
1.0% or lender's prime rate plus 1.0%, respectively, at June 30, 1997; payable in
full January 1, 1998; secured by accounts receivable.............................. -- 325
Bank mortgage loan at lender's prime rate plus three quarters; (9.50% at December
31, 1996 and 9.25% at June 30, 1997), payable in monthly instalments of $44
(including interest) through 1997, amortized on twelve-year schedule beginning in
1998, with balloon for full outstanding balance due January 1, 2000;
collateralized by building, machinery and equipment............................... 3,868 3,776
Two bank loans in FF (three in 1996) at rates between 4.60% and 7.25% payable from
1997 to 2002; secured by equipment................................................ 1,046 813
------------ -----------
$ 6,088 $ 7,328
Less current portion................................................................ (1,267) (3,089)
------------ -----------
Total long-term debt................................................................ $ 4,821 $ 4,239
------------ -----------
------------ -----------
</TABLE>
Commitment fees on the total amount of the revolving credit line in USD are
payable annually at an annual rate of 0.25%.
5. SHAREHOLDERS' EQUITY
A. SHARE CAPITAL
On June 24, 1996, Axiohm completed a private offering of 405 Common
shares (A), and 2,735 Common shares (B) to an employee of Axiohm and two
institutional investors, respectively, from which it received total proceeds
of $3,807, net of offering costs of $39.
Common Shares (B) have substantially the same terms as common shares (A)
except for their economic rights (represented by CERTIFICATS
D'INVESTISSEMENTS) and their voting rights (represented by CERTIFICATS DE
DROIT DE VOTE) which can be separated and sold individually.
On the same date Axiohm adjusted the par value of its common shares from FF
100 to FF 500.
29
<PAGE>
AXIOHM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(ALL AMOUNTS IN THOUSANDS OF US DOLLARS, EXCEPT AS OTHERWISE STATED)
5. SHAREHOLDERS' EQUITY (CONTINUED)
B. DIVIDENDS
On June 24, 1996, Axiohm declared a cash dividend of FF 50 per share on
Axiohm's Class A and B Common Stock which was paid to shareholders of record
on June 24, 1996. The dividend was charged to retained earnings in the
amount of $411.
On May 14, 1997, Axiohm declared a cash dividend of FF 245 per share on
Axiohm's Class A and B Common Stock which was paid to shareholders of record
on May 14, 1997. The dividend was charged to retained earnings in the amount
of $1,768.
6. COMMITMENTS AND CONTINGENCIES
In connection with the 1994 acquisition of what is now its Axiohm IPB
subsidiary, Axiohm is contingently liable to the seller for up to $5.0 million
annually for additional purchase consideration through December 31, 1997, based
upon the subsidiary achieving certain sales levels. Any additional consideration
paid will be treated as additional acquisition cost. During the six month period
ended June 30, 1997, Axiohm paid $552 for contingent consideration resulting
from fiscal 1996 sales performance.
In connection with the purchase and improvement of manufacturing facilities
in France, Axiohm negotiated in 1994 a $1.6 million grant (the "Grant") from
various agencies of the French government. Axiohm is contingently liable to
those agencies for the repayment, in whole or in part, of the Grant in the event
that Axiohm does not meet the requirements of the Grant, which include minimum
employment levels through 1997, minimum capital expenditures and continued use
of the building throughout the lease term.
7. SUBSEQUENT EVENTS: MERGER WITH DH TO COMBINE OPERATIONS
On August 12, 1997, Axiohm closed a tender offer to acquire approximately
7,000,000 shares of DH Technology Inc. ("DH"). The tender offer was made
pursuant to the Agreement and Plan of Merger (the "Merger Agreement") dated July
14, 1997 between both companies. The Merger Agreement provides for a subsequent
merger of Axiohm into DH which will result in Axiohm becoming a wholly-owned
subsidiary of DH; however, as a result of the tender offer and related
transactions, the former shareholders of Axiohm will own approximately 85% of
the merged entities and, therefore, for financial purposes, the transaction will
be accounted for in a manner similar to a reverse acquisition whereby Axiohm
will be the acquiror and DH will be the acquired entity.
The Tender Offer was financed through the incurrence of $166.2 million of
senior indebtedness (the "Tender Credit Facility") and the issuance of $24.0
million of preferred stock of Axiohm IPB, a wholly owned subsidiary of Axiohm
(collectively the "Tender Financing"). The Tender Credit Facility is repayable
on the earlier of (i) the effective time of the Merger or (ii) October 3, 1997.
The Preferred Stock is mandatorily redeemable on the earlier of (i) February 17,
1998 and (ii) the closing date of the merger. In the event the Merger does not
close and if the Preferred Stock is not redeemed by February 17, 1998, Axiohm is
committed to take actions which would have a material adverse effect on Axiohm's
existing security holders and Axiohm's financial condition, results of
operations and liquidity. Management expects to refinance the Tender Financing
through the issuance of $100.0 million of senior subordinated notes and the
incurrence of debt under a new credit facility. In the event Axiohm does not
issue the senior subordinated notes, management expects to refinance the Tender
Financing through the incurrence of debt under alternative financing facilities.
30
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION
INDEX TO PRO FORMA FINANCIAL INFORMATION
<TABLE>
<S> <C>
Unaudited Pro Forma Combined Balance Sheet as of June 30, 1997......................... 33
Unaudited Pro Forma Combined Statements of Operations for the Year Ended December 31,
1996................................................................................. 34
Unaudited Pro Forma Combined Statements of Operations for the Six Months Ended June 30,
1996................................................................................. 35
Unaudited Pro Forma Combined Statements of Operations for the Six Months Ended June 30,
1997................................................................................. 36
Notes to the Unaudited Pro Forma Combined Financial Statements......................... 37
</TABLE>
31
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The Unaudited Pro Forma Combined Financial Information set forth below is
based on the historical financial statements of Axiohm S.A. and DH after giving
effect to the purchase method of accounting and other adjustments relating to
the Transactions (exclusive of the effect of the Tender Financing) for the
periods ended and as of the dates indicated. The Unaudited Pro Forma Combined
Balance Sheet gives effect to the Transactions (exclusive of the effect of the
Tender Financing) as of June 30, 1997. The Unaudited Pro Forma Combined
Statements of Operations are presented to give effect to the Transactions
(exclusive of the effect of the Tender Financing) as if each had been
consummated on January 1, 1996 for the fiscal year ended December 31, 1996 and
the six months ended June 30, 1996 and on January 1, 1997 for the six months
ended June 30, 1997.
The Unaudited Pro Forma Combined Financial Information set forth below
reflects pro forma adjustments that are based upon available information and
certain assumptions that the Company believes are reasonable. In preparing the
Unaudited Pro Forma Combined Financial Information, the Company believes it has
utilized reasonable methods to conform the basis of the presentation. The
Unaudited Pro Forma Combined Financial Information is intended for informational
purposes only and is not necessarily indicative of the future financial position
or results of operations of the Company had the Transactions described above
occurred on the indicated dates or been in effect for the periods presented.
The Unaudited Pro Forma Combined Financial Information should be read in
conjunction with, and is qualified in its entirety by, the historical
consolidated financial statements of Axiohm S.A. and DH, including in each case,
the related notes thereto, included elsewhere herein, and with other financial
information pertaining to the Company including "Use of Proceeds,"
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Offering
Memorandum.
32
<PAGE>
AXIOHM TRANSACTION SOLUTIONS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL THE COMPANY
------------------------ PRO FORMA PRO FORMA
AXIOHM S.A. DH ADJUSTMENTS COMBINED
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (including short-term
investment securities held to maturity).............. $ 1,932 $ 45,911 $ (47,843) (7) $ --
Accounts receivable, net............................... 15,519 15,205 -- 30,724
Inventories............................................ 14,526 12,947 -- 27,473
Other.................................................. 1,518 2,855 -- 4,373
----------- ----------- ----------- -------------
Total current assets................................. 33,495 76,918 (47,843) 62,570
Property, plant and equipment, net....................... 11,839 8,648 -- 20,487
Intangible assets........................................ 2,504 4,971 82,960(8) 90,435
Other assets............................................. 992 3,254 6,750(7) 10,996
----------- ----------- ----------- -------------
Total assets......................................... $ 48,830 $ 93,791 $ 41,867 $ 184,488
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank overdraft......................................... $ 935 $ -- $ -- $ 935
Accounts payable....................................... 8,525 6,005 -- 14,530
Current portion of long-term debt and other long-term
obligations.......................................... 4,103 550 -- 4,653
Accrued payroll........................................ -- 2,547 -- 2,547
Other accrued expenses................................. 5,504 3,799 -- 9,303
Income taxes payable................................... -- 2,631 -- 2,631
----------- ----------- ----------- -------------
Total current liabilities............................ 19,067 15,532 -- 34,599
Long-term debt and other long-term obligations........... 6,580 2,339 162,097(9) 171,016
Other long-term liabilities.............................. 2,358 -- -- 2,358
Deferred taxes........................................... 1,501 -- -- 1,501
----------- ----------- ----------- -------------
Total liabilities.................................... 29,506 17,871 162,097 209,474
----------- ----------- ----------- -------------
Shareholders' equity (deficit):
Common Stock........................................... 3,841 13,340 6,874 (10 24,055
Additional paid in capital............................. 326 -- (326) 10) --
Retained earnings (deficit)............................ 15,357 62,590 (126,788) 10) (48,841)
Foreign currency translation adjustment................ (200) (10) 10 (10 (200)
----------- ----------- ----------- -------------
Total shareholders' equity (deficit)................. 19,324 75,920 (120,230) (24,986)
----------- ----------- ----------- -------------
Total liabilities and shareholders' equity
(deficit).......................................... $ 48,830 $ 93,791 $ 41,867 $ 184,488
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
33
<PAGE>
AXIOHM TRANSACTION SOLUTIONS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL THE COMPANY
----------------------- PRO FORMA PRO FORMA
AXIOHM S.A. DH ADJUSTMENTS COMBINED
----------- ---------- ------------ --------------------
<S> <C> <C> <C> <C>
Net sales.............................................. $ 95,302 $ 115,784 $ -- $ 211,086
Costs and expenses:
Cost of net sales.................................... 66,390 74,847 -- 141,237
Selling, general and administrative.................. 11,013 15,207 -- 26,220
Research and development............................. 6,648 5,805 -- 12,453
Amortization of goodwill............................. 200 790 27,653(11) 28,643
----------- ---------- ------------ --------
Total costs and expenses............................... 84,251 96,649 27,653 208,553
----------- ---------- ------------ --------
Income (loss) from operations.......................... 11,051 19,135 (27,653) 2,533
Other income........................................... 1,033 -- -- 1,033
Interest income........................................ 158 1,491 (1,649) (12) --
Interest expense....................................... (1,032) (149) (16,243) (13) (17,424)
----------- ---------- ------------ --------
Income (loss) before income taxes...................... 11,210 20,477 (45,545) (13,858)
Income taxes (benefit)................................. 4,406 7,450 (6,620) (14) 5,236
----------- ---------- ------------ --------
Net income (loss)...................................... $ 6,804 $ 13,027 $ (38,925) $ (19,094)
----------- ---------- ------------ --------
----------- ---------- ------------ --------
OTHER DATA:
EBITDA (15)............................................ $ 36,937
Depreciation and amortization.......................... 34,404
Cash interest expense (16)............................. 16,460
Capital expenditures................................... 7,925
Ratio of EBITDA to cash interest expense............... 2.2x
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
34
<PAGE>
AXIOHM TRANSACTION SOLUTIONS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL THE COMPANY
------------------------ PRO FORMA PRO FORMA
AXIOHM S.A. DH ADJUSTMENTS COMBINED
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net sales......................................... $ 46,409 $ 57,406 $ -- $ 103,815
Costs and expenses:
Cost of net sales............................... 31,576 37,441 -- 69,017
Selling, general and administrative............. 5,283 7,509 -- 12,792
Research and development........................ 3,057 2,702 -- 5,759
Amortization of goodwill........................ 92 396 13,827 (11 14,315
----------- ----------- ----------- -------------
Total costs and expenses.......................... 40,008 48,048 13,827 101,883
----------- ----------- ----------- -------------
Income (loss) from operations..................... 6,401 9,358 (13,827) 1,932
Other income...................................... 1,193 -- -- 1,193
Interest income................................... 13 719 (732) 12) --
Interest expense.................................. (679) (90) (8,122) 13) (8,891)
----------- ----------- ----------- -------------
Income (loss) before income taxes................. 6,928 9,987 (22,681) (5,766)
Income taxes (benefit)............................ 2,690 3,662 (3,276) 14) 3,076
----------- ----------- ----------- -------------
Net income (loss)................................. $ 4,238 $ 6,325 $ (19,405) $ (8,842)
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
OTHER DATA:
EBITDA (15)....................................... $ 18,647
Depreciation and amortization..................... 16,715
Cash interest expense (16)........................ 8,409
Capital expenditures.............................. 4,255
Ratio of EBITDA to cash interest expense.......... 2.2x
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
35
<PAGE>
AXIOHM TRANSACTION SOLUTIONS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL THE COMPANY
------------------------ PRO FORMA PRO FORMA
AXIOHM S.A. DH ADJUSTMENTS COMBINED
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net sales........................................ $ 56,614 $ 44,653 $ -- $ 101,267
Costs and expenses:
Cost of net sales.............................. 38,799 29,342 -- 68,141
Selling, general and administrative............ 5,664 8,004 -- 13,668
Research and development....................... 3,624 2,933 -- 6,557
Amortization of goodwill....................... 102 315 13,827 (11 14,244
In-process technology, acquisition and other
charges...................................... -- 11,680 (17 -- 11,680
----------- ----------- ----------- -------------
Total costs and expenses......................... 48,189 52,274 13,827 114,290
----------- ----------- ----------- -------------
Income (loss) from operations.................... 8,425 (7,621) (13,827) (13,023)
Other income..................................... 62 -- -- 62
Interest income.................................. 63 816 (879) 12) --
Interest expense................................. (362) (81) (8,122) 13) (8,565)
----------- ----------- ----------- -------------
Income (loss) before income taxes................ 8,188 (6,886) (22,828) (21,526)
Income taxes (benefit)........................... 3,212 (786) (3,330) 14) (904)
----------- ----------- ----------- -------------
Net income (loss)................................ $ 4,976 $ (6,100) $ (19,498) $ (20,622)
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
OTHER DATA:
EBITDA (15)...................................... $ 15,645
Depreciation and amortization.................... 16,988
Cash interest expense (16)....................... 8,083
Capital expenditures............................. 3,376
Ratio of EBITDA to cash interest expense......... 1.9x
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
36
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The Unaudited Pro Forma Combined Financial Statements have been prepared
using the following facts and assumptions:
(1) Purchaser acquired 7.0 million shares (87.6%) of DH's outstanding Common
Stock at $25 per share for approximately $175.0 million.
(2) DH acquired approximately 877,000 outstanding DH stock options for an
aggregate consideration of $12.2 million.
(3) The purchase price for DH, including the ownership in the Company
represented by the non-tendered shares, based on a per share price of $20
per share and the cost of acquiring the 877,000 employee options, plus
transaction costs of $3.8 million is approximately $210.9 million. The
purchase price has been preliminarily allocated to the net assets (tangible
and intangible) and in-process technology of DH (representing research and
development for which there is no alternative future use) based on the
estimated fair values at the date of acquisition with the excess of cost
over fair value of the identifiable tangible and intangible assets and
in-process technology allocated to goodwill.
Goodwill is amortized over three years and the value of in-process
technology will be written off immediately subsequent to consummation of the
Merger.
(4) Concurrently with the closing of this Offering, Purchaser will purchase all
of the outstanding capital stock of Axiohm S.A. from Axiohm S.A.
shareholders acquired in the Exchange for an aggregate of 5,518,524 of DH
shares and an aggregate of $12.2 million in cash. Simultaneously with the
Exchange, Axiohm S.A., Axiohm IPB and DH will effect the Acquisition of
Purchaser in which Axiohm S.A. will cause Axiohm IPB to sell to DH, and DH
will purchase from Axiohm IPB, all of the outstanding shares of the capital
stock of Purchaser in exchange for DH's assumption, on a joint and several
basis with Purchaser, of any and all obligations with respect to
indebtedness incurred, or preferred stock issued, by Purchaser or Axiohm
IPB in connection with the Tender Offer and the Exchange. Following the
Exchange and the Acquisition of Purchaser, DH will effect the Merger in
which Purchaser will be merged with and into DH and the DH shares owned by
Purchaser (which have not been transferred in the Exchange) will be
canceled. A reconciliation of the outstanding shares of DH from immediately
preceding the Tender Offer to immediately following the Merger follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------
<S> <C>
DH shares outstanding immediately preceding the Tender Offer.................. 7,994
DH shares canceled in the Merger.............................................. (1,481)
------
DH shares outstanding immediately after the Merger............................ 6,513
------
------
</TABLE>
(5) The allocation of the purchase price of DH to the fair market value of net
assets acquired is based on preliminary estimates and may change based on
the completion of additional analysis. Specifically, the allocation of the
purchase price to the in-process technology as well as the potential
allocations to other intangible assets and property, plant and equipment
will ultimately be based on a valuation performed by an independent third
party and is very preliminary in nature. In addition, the estimated life of
the resulting goodwill is also preliminary and based upon further analysis,
may also change.
The Company anticipates that such analysis will be finalized within three
months following the consummation of the Merger. Based on the preliminary
analysis performed to date, the Company expects that the final purchase
price allocation for in-process technology and goodwill will range from
$45.0 million to $55.0 million and from $85.0 million to $95.0 million,
respectively. The Unaudited Pro Forma Combined Statements of Income do not
reflect the write-off of the anticipated $52.0 million of in-process
technology that will be recorded in the financial statements of the combined
company
37
<PAGE>
immediately following the consummation of the Merger. The Unaudited Pro
Forma Combined Financial Statements do not reflect anticipated charges
related to the settlement of common stock options of Axiohm S.A. outstanding
immediately prior to the Merger. The total estimated charge of $3 million
will be incurred ratably over a five-year period commencing at the Merger
date.
The Unaudited Pro Forma Combined Statements of Operations for the six months
ended June 30, 1997 include the results of operations of the American
Magnetics Corporation ("AMC") acquisition by DH only from April 1, 1997
(date of acquisition) to June 30, 1997.
The Company believes that there are certain synergies resulting from the
Merger that should result in cost savings which are not reflected in the
Unaudited Pro Forma Combined Statements of Operations. The Company has
identified over $11.0 million of potential annual cost savings it expects to
achieve over a period of four years following the Merger. The Company
expects to incur integration costs of approximately $6.0 million over the
course of 1998 and 1999 related to the Merger and the aforementioned
potential cost savings. In addition, the Company expects to realize
approximately $1.6 million of annual cost savings related to lower personnel
and occupancy costs resulting from the relocation of AMC's operations to
Tijuana, Mexico from Carson, California, the effects of which are not
reflected in the Unaudited Pro Forma Combined Statements of Operations.
(6) Axiohm S.A.'s debt in the amount of $6.0 million will be repaid as a part
of the Transactions.
Pro forma adjustments reflect estimates which will be refined as additional
information is obtained.
BALANCE SHEET:
(7) Net adjustment to cash:
<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
-----------
<S> <C>
Sources of cash:
Indebtedness under New Credit Facility.......................................... $ 48,100
Proceeds from issuance of the Notes............................................. 120,000
-----------
Total sources of cash......................................................... 168,100
Uses of cash:
Cash payment to acquire DH shares and options................................... $ 187,192
Debt issuance and transaction costs............................................. 10,550
Cash payment to Axiohm S.A. shareholders in the Exchange........................ 12,198
Repay existing current and long-term debt of Axiohm S.A......................... 6,003
-----------
Total uses of cash............................................................ $ 215,943
-----------
Pro forma adjustment to cash...................................................... (47,843)
Combined Axiohm S.A. and DH cash prior to Merger................................ 47,843
-----------
Pro forma cash.................................................................. $ --
-----------
-----------
</TABLE>
38
<PAGE>
(8) Excess of the purchase price over the fair value of net assets acquired,
which will be recorded as goodwill to be amortized over three years,
determined as follows:
<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
-----------
<S> <C>
Cash tendered for DH shares....................................................... $ 175,000
Cash paid for redemption of DH options............................................ 12,192
Cash paid for transaction costs................................................... 3,800
Fair value of non-tendered DH shares.............................................. 19,888
-----------
Total purchase price.............................................................. 210,880
Less estimated fair value of net assets acquired.................................. (75,920)
Less estimated purchase price allocated to in-process technology.................. (52,000)
-----------
Goodwill.......................................................................... $ 82,960
-----------
-----------
</TABLE>
(9) Adjustment to long-term debt:
<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
-----------
<S> <C>
Indebtedness under New Credit Facility............................................ $ 48,100
Issuance of the Notes............................................................. 120,000
Repay existing current and long-term debt of Axiohm S.A........................... (6,003)
-----------
Pro forma adjustment.............................................................. $ 162,097
-----------
-----------
</TABLE>
(10) Elimination of retired portion of DH Common Stock, historical retained
earnings (including the write-off of the portion of the purchase price
allocated to in-process technology of $52.0 million) and foreign currency
translation equity adjustment, recording of $12.2 million cash payment to
Axiohm S.A. shareholders in the Exchange and the non-cash portion of the
purchase price.
STATEMENTS OF OPERATIONS:
(11) Amortization of goodwill calculated on a straight line basis over three
years.
(12) Since a portion of the acquisition is to be funded by existing cash, a pro
forma adjustment is required to adjust for the interest income lost.
Interest income not earned as a result of the use of cash to partially fund
the transaction was approximately $1.5 million, $700,000 and $900,000 for
the year ended December 31, 1996 and the six months ended June 30, 1996 and
1997, respectively.
39
<PAGE>
(13) Adjustment to interest expense:
<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
-----------
<S> <C>
For the year ended December 31, 1996:
Interest expense on historical Axiohm S.A. debt repaid in the Merger.............. $ (450)
Interest on New Credit Facility and Senior Subordinated Notes (at an assumed
weighted average interest rate of 9.4%)......................................... 15,729
Amortization of deferred debt issuance costs...................................... 964
-----------
Pro forma total adjustment........................................................ $ 16,243
-----------
-----------
For the six months ended June 30, 1997 and 1996:
Interest expense on historical Axiohm S.A. debt repaid in the Merger.............. $ (225)
Interest on New Credit Facility and Senior Subordinated Notes (at an assumed
weighted average interest rate of 9.4%)......................................... 7,865
Amortization of deferred debt issuance costs...................................... 482
-----------
Pro forma total adjustment........................................................ $ 8,122
-----------
-----------
</TABLE>
A 0.125% increase or decrease in the assumed weighted average interest rate
would change annual pro forma interest expense by $210,000. The pro forma
net losses would change by $132,000.
(14) Income tax effects of pro forma adjustments. Income taxes have been
provided for all applicable adjustments at an assumed rate of 37% assuming
that the amortization of goodwill is not deductible for tax purposes.
(15) EBITDA is defined as income (loss) from operations before depreciation and
amortization, and in-process technology, acquisition and other charges.
EBITDA does not represent cash flows as defined by generally accepted
accounting principles and does not necessarily indicate that cash flows are
sufficient to fund all of a company's cash needs. EBITDA is presented
because it is a widely accepted financial indicator of a company's ability
to incur and service debt. However, EBITDA should not be considered in
isolation or as a substitute for net income (loss) or cash flow data
prepared in accordance with generally accepted accounting principles or as
a measure of a company's profitability or liquidity. EBITDA as defined here
may differ from EBITDA as defined in other similar offerings and as such
may not be comparable.
(16) Cash interest expense represents pro forma interest expense less
amortization of deferred financing costs.
(17) Represents infrequent and unusual charges totaling $11.7 million consisting
of $1.6 million of acquisition and other integration charges associated
with the April 1997 acquisition of AMC and the Merger, a $7.2 million write
down of intangible assets related to a prior acquisition, a $2.5 million
write down of in-process technology and a $400,000 charge in connection
with the discontinuance of certain product lines.
40
<PAGE>
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of July 14, 1997, among the Registrant, Axiohm S.A. and AX
Acquisition Corporation--incorporated by reference to Exhibit (c)(1) of the Registrant's Schedule 14D-9
dated July 16, 1997.
2.2* Purchase and Assumption Agreement, dated October 2, 1997, among Axiohm IPB, Purchaser and the
Registrant.
3.1* Certificate of Ownership of the Registrant filed with the California Secretary of State on October 2,
1997.
3.2* Amended and Restated Bylaws of the Registrant.
4.1* Indenture, dated as of October 2, 1997 among the Registrant, the Guarantors named therein and The Bank
of New York, as trustee.
4.2* $117,300,000 9 3/4% Senior Subordinated Note due 2007 and Subsidiary Guarantee.
4.3* $2,350,000 9 3/4% Senior Subordinated Note due 2007 and Subsidiary Guarantee.
4.4* $350,000 9 3/4% Senior Subordinated Note due 2007 and Subsidiary Guarantee.
10.1* Registration Rights Agreement, dated as of October 2, 1997 among the Registrant, Axiohm S.A., Axiohm
IPB, Inc., Dardel Technologies S.A., Stadia Colorado Corp., Cognitive Solutions, Inc. and Lehman
Brothers Inc.
10.2* Purchase Agreement, dated September 25, 1997, among the Registrant, Axiohm IPB Inc., Cognitive
Solutions, Inc., Stadia Colorado Corp. and Lehman Brothers Inc.
10.3* Employment Agreement between the Registrant and William H. Gibbs dated as of July 14, 1997.
10.4* Employment Agreement between the Registrant and Walter Sobon dated as of July 14, 1997.
10.5* Employment Agreement between the Registrant and Janet Shanks dated as of July 14, 1997.
10.6* Employment Agreement between the Registrant and David Ledwell dated as of July 14, 1997.
10.7 Global Amendment and Assignment and Acceptance, dated as of October 20, 1997, among the Registrant, the
several lenders and other financial institutions listed on the signature pages thereto, Union Bank of
California, N.A., as successor administrative agent, Lehman Brother Inc., as arrangers, and Lehman
Commercial Paper Inc. as resigning administrative agent and as Syndication agent and as a
Lender--incorporated by reference to Exhibit 10.7 of the Registrant's registration statement on Form S-4
(No. 333-41245) filed on November 28, 1997.
10.8* Guarantee and Collateral Agreement, dated as of October 2, 1997, between the Registrant, Lehman Brothers
Inc., Lehman Commercial Paper Inc. and certain of Registrant's subsidiaries.
23.1 Consent of Independent Accountants.
</TABLE>
- ------------------------
*Previously filed.
<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.
<TABLE>
<S> <C> <C>
AXIOHM TRANSACTION SOLUTIONS, INC.
By: /s/ JANET W. SHANKS
-----------------------------------------
Janet W. Shanks
Dated: December 15, 1997 Chief Accounting Officer
</TABLE>
<PAGE>
INDEX TO EXHIBITS FILED WITH THE CURRENT REPORT ON FORM 8-K
DATED OCTOBER 2, 1997
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of July 14, 1997, among the Registrant, Axiohm S.A. and AX
Acquisition Corporation--incorporated by reference to Exhibit (c)(1) of the Registrant's Schedule 14D-9
dated July 16, 1997.
2.2* Purchase and Assumption Agreement, dated October 2, 1997, among Axiohm IPB, Purchaser and the
Registrant.
3.1* Certificate of Ownership of the Registrant filed with the California Secretary of State on October 2,
1997.
3.2* Amended and Restated Bylaws of the Registrant.
4.1* Indenture, dated as of October 2, 1997 among the Registrant, the Guarantors named therein and The Bank
of New York, as trustee.
4.2* $117,300,000 9 3/4% Senior Subordinated Note due 2007 and Subsidiary Guarantee.
4.3* $2,350,000 9 3/4% Senior Subordinated Note due 2007 and Subsidiary Guarantee.
4.4* $350,000 9 3/4% Senior Subordinated Note due 2007 and Subsidiary Guarantee.
10.1* Registration Rights Agreement, dated as of October 2, 1997 among the Registrant, Axiohm, Axiohm IPB,
Dardel Technologies S.A., Stadia Colorado Corp., Cognitive Solutions, Inc. and Lehman Brothers Inc.
10.2* Purchase Agreement, dated September 25, 1997, among the Registrant, Axiohm IPB, Cognitive Solutions,
Inc., Stadia Colorado Corp. and Lehman Brothers Inc.
10.3* Employment Agreement between the Registrant and William H. Gibbs dated as of July 14, 1997.
10.4* Employment Agreement between the Registrant and Walter Sobon dated as of July 14, 1997.
10.5* Employment Agreement between the Registrant and Janet Shanks dated as of July 14, 1997.
10.6* Employment Agreement between the Registrant and David Ledwell dated as of July 14, 1997.
10.7 Global Amendment and Assignment and Acceptance, dated as of October 20, 1997, among the Registrant, the
several lenders and other financial institutions listed on the signature pages thereto, Union Bank of
California, N.A., as successor administrative agent, Lehman Brother Inc., as arrangers, and Lehman
Commercial Paper Inc. as resigning administrative agent and as Syndication agent and as a
Lender--incorporated by reference to Exhibit 10.7 of the Registrant's registration statement on Form S-4
(No. 333-41245) filed on November 28, 1997.
10.8* Guarantee and Collateral Agreement, dated as of October 2, 1997, between the Registrant, Lehman Brothers
Inc., Lehman Commercial Paper Inc. and certain of Registrant's subsidiaries.
23.1 Consent of Independent Accountants.
</TABLE>
- ------------------------
*Previously filed.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No 333-02499 and No 33-50532) of Axiohm Transactions
Solutions, Inc. (formerly DH Technology, Inc.), of our report dated September
12, 1997 relating to the consolidated financial statements of Axiohm S.A. which
appears in the Amendment No. 1 to the Current Report on Form 8-K of Axiohm
Transaction Solutions, Inc. dated October 2, 1997.
Price Waterhouse
/s/ Price Waterhouse
Paris, France
December 12, 1997
