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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OF 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
APRIL 9, 1997
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Date of Report
(Date of earliest event reported)
1-7744
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(Commission File Number)
PACIFIC SCIENTIFIC COMPANY
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(Exact name of registrant as specified in charter)
CALIFORNIA
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(State or other jurisdiction of incorporation)
94-0744970
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(IRS Employer ID Number)
620 Newport Center Drive, Suite 700, Newport Beach, California
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(Address of principal executive offices)
92660
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(Zip Code)
(714) 720-1714
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(Registrant's telephone number, including area code)
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ITEM 5) OTHER EVENTS
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On April 9, 1997, the Registrant announced that it would seek a
strategic buyer for its Solium technology and equipment and will
phase out of the Solium subsidiary. Solium will be reclassified
as a discontinued operation on the financial statements of the
Registrant.
The loss on the disposal of the assets of the Solium subsidiary
is as follows:
<TABLE>
<S> <C>
Estimated loss on disposal
of net assets of segment ..................... $12,919,000
Estimated operating loss through
expected date of disposal of segment ......... 6,484,000
Less income tax benefit .......................... (7,363,000)
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Estimated loss on disposition................. $12,040,000
</TABLE>
It is expected that the disposal of the Solium subsidiary will be
completed within a twelve-month period. The specific date for
such a transaction cannot be determined at this time.
Attached hereto and incorporated herein is a copy of the
Registrant's press release, dated April 9, 1997, announcing the
intent to seek a strategic buyer for its Solium subsidiary.
This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Act of 1934, as amended. The
Registrant intends that such statements shall be protected by the
safe harbors provided for in such sections.
Such statements are subject to risks and uncertainties that could
cause actual results to vary materially from those projected in
the forward-looking statements. The Registrant may experience
significant fluctuations in future operating results due to a
number of economic, competitive and other factors, including,
among other things, the size and timing of customer orders,
changes in laws, new or increased competition, delays in new
products, changes in market demand, market acceptance of new
products, seasonality in product purchasers, changes in foreign
exchange rates and others.
These factors and others could cause operating results to vary
significantly from those in prior periods, and those projected in
forward-looking statements. Additional information with respect
to these and other factors that could materially affect the
Company and its operations are included in the Registrant's
filings with the Securities and Exchange Commission and are
incorporated herein.
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ITEM 7) FINANCIAL STATEMENTS, PRO FORMA
FINANCIAL INFORMATION AND EXHIBITS
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(a) Financial Statements of Business Acquired. None.
(b) Pro Forma Financial Information. None.
(c) Exhibits.
The following exhibit is filed with this report:
99 Press Release
SIGNATURES
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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 thereunto duly authorized.
PACIFIC SCIENTIFIC COMPANY,
a California corporation
By: //s// Richard V. Plat
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Richard V. Plat, Secretary
Dated: April 21, 1997
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<PAGE>
EXHIBIT 99
PRESS RELEASE
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PACIFIC SCIENTIFIC COMPANY
620 Newport Center Drive
Suite 700
Newport Beach, CA 92660
T: (714) 720-1714
F: (714) 720-1083
Contact: Richard V. Plat
Executive Vice President
FOR RELEASE APRIL 9, 1997, 8:30 AM EDT
- --------------------------------------
PACIFIC SCIENTIFIC COMPANY
TO SEEK STRATEGIC BUYER FOR ITS SOLIUM BUSINESS
AND WILL TAKE ONE-TIME CHARGE
NEWPORT BEACH, CALIFORNIA (April 9, 1997) Pacific Scientific
Company (NYSE-PSX) announced today that it will seek a strategic
buyer for its Solium technology and equipment and will phase out
of its Solium subsidiary. As a result, the Company will report a
one-time charge of approximately $12 million, net of taxes, which
will be recognized in the first fiscal quarter of 1997, ended
March 28th. Solium will be reclassified as a discontinued
operation on the financial statements of the Company.
Chairman, President & CEO Lester Hill stated that the Company
continues to believe in the viability of the Solium technology.
However, after careful evaluation of the Solium operations over
the past nine months, management has concluded that Pacific
Scientific does not have the market and industry position to
achieve sufficient success in the near term. Moreover, he added,
"Continuing the Solium business would result in ongoing losses
and the need for significant additional cash investment over some
period of time to gain market share from already well-established
producers in the ballast and lamp business."
Over the past two years, Solium operations have resulted in a
$0.94 per share charge against the Company's reported earnings.
After the Solium discontinuance, the Company's earnings from
continuing operations will be restated to $1.15 in 1995 and $0.81
in 1996, versus the previously reported $1.01 for 1995 and $0.01
for 1996.
Hill said that he is encouraged by the prospects for the
Company's base business. "We look forward to enhancing overall
performance by concentrating on our basic businesses of
electrical equipment and safety equipment," he added.
Page 1 of 4
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Pacific Scientific Company
April 9, 1997
Hill said that the Company's financial position is strong. At
year-end 1996, the Company had working capital of $83 million and
a debt-to-capital ratio of 42%. The cash to be expended in the
discontinuance of Solium is not expected to adversely affect the
Company's ability to finance operations and fund planned capital
expenditures.
Hill said that the decision to sell Solium was made with the full
realization that there may be significant long-range potential
for the Solium product line. He added, however, that it has
become clear that other companies are better positioned to
realize Solium's potential.
Over the past nine months, Solium has been reengineering its line
of electronic ballasts, which now appear to meet performance
goals. These ballasts are being shipped to customers in modest
quantities and provide low cost dimming and Sense-A-Volt
capability. Solium has applied for 23 patents and three have
been issued to date.
Hill said that Pacific Scientific will offer for sale the Solium
technology, patents, designs, and manufacturing equipment. The
Company will also make available its experienced Solium key
technical staff. No negotiations are presently underway which
would result in transferring the Solium product line to another
company. The final outcome of any such future negotiations
cannot be determined at this time.
The Solium discontinuance charge will include the net cost of
closing-out its Randolph, Massachusetts facility; inventory
revaluation; write-down of machinery and equipment, including
customized automation equipment; write-off of intangibles and
certain other assets; severance expense and the expected costs of
transitioning the business to a new owner. The Company does not
presently expect further charges with regard to Solium's
operations, Hill stated.
Pacific Scientific Company designs, manufactures and markets
electrical equipment and safety equipment.
PSC-364
04/09/97
Page 2 of 4
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Pacific Scientific Company
April 9, 1997
QUESTIONS AND ANSWERS FOR THE PRESS RELEASE
PACIFIC SCIENTIFIC COMPANY
TO SEEK STRATEGIC BUYER FOR ITS SOLIUM BUSINESS
AND WILL TAKE ONE-TIME CHARGE
1. What will the restated earnings of Pacific Scientific for
1995 and 1996 be after the discontinuance of Solium?
<TABLE>
INCOME (LOSS) PER SHARE
------------------------------------------------------------
1995 1996
----------------------------- -----------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Q-1 Q-2 Q-3 Q-4 TOTAL Q-1 Q-2 Q-3 Q-4 TOTAL
---- ---- ---- ---- ----- ---- ---- ---- ---- -----
<S>
Continuing
Operations $.24 $.28 $.30 $.33 $1.15 $.25 $.18 $.18 $.20 $.81
Discontinued
Operations - (.02) (.05) (.07) (.14) (.10) (.48) (.11) (.11) (.80)
- -------------------------------------------------------------------------
Total $.24 $.26 $.25 $.26 $1.01 $.15 ($.30) $.07 $.09 $.01
</TABLE>
2. What effect will the disposition of Solium have on the
remaining "core" or "base" business of Pacific Scientific?
Solium has been the recipient of a considerable amount of the
Company's cash flow for the last two years. This cash flow in
the future can be concentrated on the base business. The only
other interplay between Solium and the other operating units has
been circuit board assembly and testing. The ongoing nature of
this function is discussed in answer 7.
3. What has been the cost to date of Solium to the
shareholders?
The loss through the end of 1996 was 94 cents per share. The
expected 1997 first quarter Solium operating loss and charge for
discontinuance will be approximately $1.10 per share. As a
result, the total expected loss from Solium will be approximately
$2.04 per share. The Company does not presently expect further
charges relating to Solium operations.
4. Why has Pacific Scientific decided to phase out of the
Solium business?
The Company believes that the Solium business can become viable
more quickly if Solium was part of another company that is
already a well established producer in the ballast and lamp
business.
5. Why did Solium not meet Pacific Scientific's expectations?
Certain Solium products have been reengineered and now appear to
meet and demonstrate their technical objectives of low cost
dimming and Sense-A-Volt capability. However, the time schedule
for meeting these objectives has been longer than expected, and
the task of gaining an acceptable market share is more difficult
than originally anticipated.
Page 3 of 4
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Pacific Scientific Company
April 9, 1997
6. What price do you expect to receive for the Solium
business?
The Company will attempt to get the best price possible. Payment
may be in the form of an outright purchase or a long-term license
agreement. The consideration to be received will be the subject
of negotiation. The Company does not speculate on an amount,
which might be received. No negotiations are presently underway.
7. How many employees does Solium have at this time?
The Solium facility in Randolph, Massachusetts has 75 employees.
Of these, 29 are directly involved in engineering and sales of
Solium products. It is expected that approximately half of the
Solium engineering and sales employees will be retained as a
staff of key employees for the future owners of the business.
The remaining 46 employees are involved with inserting components
on circuit boards and testing the boards for internal use in
other Pacific Scientific divisions, primarily the Motion
Technology Division. This activity will continue. Additional
employees are expected to be hired for this ongoing circuit board
activity and it may be relocated to improve productivity in
support of the Motion Technology Division.
8. How does this decision to sell the Solium business affect
the pending class action litigation?
The decision to sell the Solium business is expected to have no
effect on the defense of the class action litigation. The
Company will continue to defend these cases vigorously.
9. Will Solium continue its engineering, take orders and ship
products while a buyer for the business is being sought?
Yes, the Company will continue to work on several engineering
projects, build some products and stay in contact with the Solium
customers.
10. How do you expect to proceed in selling the Solium
business?
An offering memorandum is being prepared which fully describes
the business and assets to be transferred. This memorandum will
be made available to specific potential purchasers.
11. How long will it take to complete the sale of Solium?
The Company will make every effort to select, negotiate and
complete the transition of the Solium business to a new owner in
a timely manner, but does not wish to speculate on the time
required to complete a transaction.
12. What will Pacific Scientific be selling?
The principal assets are intellectual property - pending and
issued patents, designs, in-process engineering and manufacturing
know-how. The physical assets will include inventory;
engineering, testing, and manufacturing equipment; and
facilities.
Page 4 of 4
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