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FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
September 30, 1996
Commission File No.: 0-14685
GENICOM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 51 - 0271821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14800 CONFERENCE CENTER DRIVE
SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (703) 802-9200
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GENICOM CORPORATION AND SUBSIDIARIES
FORM 8-K/A INDEX
Item 7. Financial Statements and Exhibits
<TABLE>
<S> <C> <C>
(a) Financial statements of operation acquired: 3-11
Statements of Assets Acquired and Liabilities Assumed as of December 31,
1994, December 31, 1995, and September 30, 1996 (unaudited); Statements of
Revenues and Direct Operating Expenses for the Years ended December 31,
1993, 1994, and 1995 and for the Nine Months ended September 30, 1995 and
1996 (unaudited) and Report of Independent Auditors.
(b) Pro forma financial information: 12-17
Transaction Description
Pro Forma Consolidated Balance Sheet as of September 29, 1996 (unaudited)
Notes to Pro Forma Consolidated Balance Sheet (unaudited)
Pro Forma Consolidated Statements of Operations for the Year Ended December
31, 1995 and for the Nine Months Ended September 29, 1996 (unaudited)
Notes to Pro Forma Consolidated Statements of Operations (unaudited)
Signatures 18
</TABLE>
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Item 7 (a) - Financial Statements of Operation Acquired:
Statements of Assets Acquired and Liabilities Assumed as of December 31, 1994,
December 31, 1995, and September 30, 1996 (unaudited); Statements of Revenues
and Direct Operating Expenses for the Years ended December 31, 1993, 1994, and
1995 and for the Nine Months ended September 30, 1995 (unaudited) and 1996
(unaudited) and Report of Independent Auditors.
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Printer Business
of Texas Instruments Incorporated
Nine Months ended September 30, 1996 and 1995 (Unaudited)
and Years ended December 31, 1995, 1994, and 1993
with Report of Independent Auditors
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Report of Independent Auditors
The Board of Directors
Texas Instruments Incorporated
We have audited the accompanying statements of assets acquired and liabilities
assumed of the Printer Business of Texas Instruments Incorporated (the
Business) at December 31, 1995 and 1994, and the related statements of revenues
and direct operating expenses for each year in the three year period ended
December 31, 1995. These statements are the responsibility of the management
of Texas Instruments Incorporated. Our responsibility is to express an opinion
on these statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements. An audit also
includes assessing the accounting principles used and significant estimates
made by the management, as well as evaluating the overall statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As described in Note 1, the accompanying statements of revenues and direct
operating expenses were prepared solely to present the revenues and direct
operating expenses of the Business and are not intended to be a complete
presentation of the results of operations of the Business.
In our opinion, the statements referred to above present fairly, in all
material respects, the assets acquired and liabilities assumed of the Business
at December 31, 1995 and 1994, and the related revenues and direct operating
expenses for each year in the three year period ended December 31, 1995, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
November 26, 1996
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Printer Business
of Texas Instruments Incorporated
Statements of Assets Acquired and Liabilities Assumed
(In Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31
1996 1995 1994
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(Unaudited)
<S> <C> <C> <C>
ASSETS
Receivables, less allowance for doubtful $ 9,018 $10,083 $13,394
accounts of $241 in 1996, $350 in 1995,
and $663 in 1994 (Note 7)
Inventory (Note 3) 13,319 18,897 14,910
Equipment, net (Note 4) 243 583 915
Other assets 165 300 480
----------------------------------------------
Total assets acquired $22,745 $29,699 $29,863
==============================================
LIABILITIES
Accrued warranty $ 1,392 $ 2,020 $ 2,683
Other accrued liabilities 403 1,019 760
----------------------------------------------
Total liabilities assumed $ 1,795 $ 3,039 $ 3,443
==============================================
Assets acquired net of liabilities assumed $20,950 $26,824 $26,256
==============================================
</TABLE>
See accompanying notes.
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Printer Business
of Texas Instruments Incorporated
Statements of Revenues and Direct Operating Expenses
(In Thousands)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30 YEAR ENDED DECEMBER 31
1996 1995 1995 1994 1993
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(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues $92,432 $131,734 $172,234 $195,392 $184,962
Direct operating expenses:
Cost of revenues 75,584 105,529 138,127 151,049 144,697
Marketing, general, and administrative 9,673 19,592 25,783 29,461 34,534
Research and development 97 2,979 3,604 8,351 7,120
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Total direct operating expenses 85,354 128,100 167,514 188,861 186,351
---------------------------------------------------------------------------
Revenues less direct operating expenses $ 7,078 $ 3,634 $ 4,720 $ 6,531 $ (1,389)
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</TABLE>
See accompanying notes.
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Custom Manufacturing Services
Business of Texas Instruments Incorporated
Notes to Financial Statements
December 31, 1995
1. BASIS OF PRESENTATION
The Printer Business of Texas Instruments Incorporated (the Business) engages
in the design, development, marketing, and sale of travel ticket, laser/LED,
and serial impact printers and provides supplies and replaceable components for
such printers to customers in the United States, Europe, and Asia.
The Business has operated as a business activity of Texas Instruments
Incorporated (TI). On September 30, 1996, Genicom Corporation (the Buyer)
acquired certain assets and assumed certain liabilities of the Business. The
acquisition was made pursuant to an Asset Purchase Agreement (the Agreement)
dated July 22, 1996, and amended September 30, 1996. The assets acquired
included accounts receivable (U.S. trade customers only), inventory, equipment,
and other assets primarily related to the Business's operations in Texas and
Europe. Cash, real property, accounts payable, and certain laser product
inventories were excluded from the assets acquired and liabilities assumed. In
addition, product liability claims, environmental claims, and product warranty
claims (related to "epidemic failure" as defined in the Agreement) arising from
the operation of the Business prior to September 30, 1996 were not assumed by
the Buyer and any liability associated with such claims is excluded from these
statements.
Historically, the Business has had no separate legal status as it was an
integral part of TI's overall operations. As a result, separate financial
statements have not been maintained for the worldwide Business. The
accompanying statements have been prepared from the historical accounting
records of TI and present the assets acquired and the liabilities assumed as of
December 31, 1995 and 1994, and the revenues and direct operating expenses of
the Business for each year in the three year period ended December 31, 1995,
including allocations of certain common expenses based upon selected criteria,
as defined (Note 2). Since only certain assets of the Business have been
acquired and only certain liabilities assumed, statements of financial position
and cash flows are not applicable. In addition, no liability for income taxes
is recorded, and the statements of revenues and direct operating expenses do
not include tax expense. The accompanying statements of revenues and direct
operating expenses were prepared to present the net revenues and direct
operating costs of the Business. Accordingly, they are not intended to be a
complete presentation of the results of operations of the Business, and they do
not purport to reflect the revenues and direct operating costs that would have
resulted if the Business had operated as an unaffiliated independent entity.
The preparation of the statements requires the use of management's estimates,
which may vary from actual results.
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Printer Business
of Texas Instruments Incorporated
Notes to Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
ALLOCATION OF EXPENSES
TI provides various administrative services to the Business including
marketing, data processing and personnel services. TI charged these expenses
and all other central operating costs, first on the basis of direct usage when
identifiable, with the remainder allocated among TI's division entities on the
basis of their respective revenues, headcount, or level of effort. An occupancy
charge (consisting of depreciation, rent, and taxes) for TI facilities occupied
by the Business was allocated based on square footage used. In the opinion of
management of TI, these methods of allocation are reasonable. The charges
allocated by TI to the Business are included in the statements of revenues and
direct operating expenses for all periods presented.
EQUIPMENT
Equipment is recorded at cost and depreciated using the 150% declining balance
method with an estimated useful life of five years. Amounts related to fully
depreciated assets are removed from the financial records. Depreciation
included in the statements of revenues and direct operating expenses reflects
total direct charges recorded by the Business rather than such depreciation
related only to the equipment acquired by the Buyer (see Note 4). Maintenance
and repairs are charged to expense as incurred.
INVENTORY
Inventory is stated at the lower of standard cost (which approximates actuals)
or market. Cost is determined using a first-in, first-out method.
REVENUES
Revenues represent sales to unaffiliated customers and certain other TI
operating units. Revenues are recognized when shipments are made. Sales to
unaffiliated non-U.S. customers approximated $74.5 million, $74.1 million, and
$68.6 million in 1995, 1994, and 1993, respectively. See Note 5 for further
discussion of sales to affiliated customers.
DIRECT OPERATING EXPENSES
Direct operating expenses include the costs of manufacturing the related
product shipments included in revenues of the Business. Cost of revenues
include direct labor and direct material, and allocations of costs associated
with engineering, production planning, manufacturing plant administration,
purchasing, and other costs incurred at the manufacturing plants. Research and
development expenses are expensed as incurred. Total direct operating expenses
are not necessarily indicative of the costs that would have been incurred had
the Business operated as a stand-alone business.
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Printer Business
of Texas Instruments Incorporated
Notes to Statements (continued)
3. INVENTORY
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31
1996 1995 1994
---------------------------------------------
(Unaudited)
(In Thousands)
<S> <C> <C> <C>
Raw materials and purchased parts $ 4,502 $ 6,478 $ 6,382
Work in process 735 1,216 1,108
Finished goods 11,326 14,884 9,877
---------------------------------------------
16,563 22,578 17,367
Less: Reserves for salability and obsolescence 3,244 3,681 2,457
---------------------------------------------
$ 13,319 $18,897 $14,910
=============================================
</TABLE>
4. EQUIPMENT
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31
1996 1995 1994
---------------------------------------------
(Unaudited)
(In Thousands)
<S> <C> <C> <C>
Equipment, at cost $ 1,712 $ 4,386 $ 4,697
Less: Accumulated depreciation (1,469) (3,803) (3,782)
---------------------------------------------
Equipment, net $ 243 $ 583 $ 915
=============================================
</TABLE>
Total equipment depreciation expense included in the statement of revenues and
direct operating expenses was approximately $888,000, $857,000, and $998,000 in
1995, 1994, and 1993, respectively. See Note 2 for discussion of depreciation.
5. RELATED PARTY TRANSACTIONS
Sales to other business units of TI approximated $8.4 million, $3.7 million,
and $3.2 million for the years ended December 31, 1995, 1994, and 1993,
respectively. These revenues are recorded at cost plus a negotiated gross
margin and are not necessarily indicative of revenues that would be recognized
on third-party sales.
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Printer Business
of Texas Instruments Incorporated
Notes to Statements (continued)
6. LEASES
The Business leased a materials warehouse in Temple, Texas under an operating
lease. The term for this lease ended in 1996. Rental expense associated with
this lease was approximately $151 thousand, $146 thousand, and $133 thousand in
1995, 1994, and 1993, respectively.
7. RISK CONCENTRATION
Concentrations of credit risk for the Business primarily relate to accounts
receivable. Such concentrations for the Business are limited due to its large
number of customers, which are dispersed across different geographic areas.
The Business maintains an allowance for losses based upon the expected
collectibility of accounts receivable.
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Item 7 (b) - Pro Forma Financial Information:
On September 30, 1996, the Registrant acquired certain assets of Texas
Instruments worldwide printer and related supplies business for the purchase
price of approximately $27.9 million, subject to adjustment as provided for in
the Asset Purchase Agreement. Based on currently available information, the
Registrant does not expect the adjustment to exceed $2.1 million in favor of
Texas Instruments. The payment of the preliminary purchase price was financed
primarily through the Registrant's credit facility with NationsBank for $19.4
million and a note of $9.0 million to Texas Instruments payable over two years.
The Registrant expects to pay any additional purchase price from cash provided
by operations.
The assets acquired include primarily accounts receivable and inventory. The
acquisition is being accounted for as a purchase and the allocation of the
purchase price and related acquisition costs is subject to adjustment based
upon refinements in the application of purchase method accounting and the final
determination of the purchase price.
The pro forma financial statements have been prepared by the Registrant's
management based upon the financial statements of the Texas Instruments
worldwide printer and related supplies business included in this Form 8-K/A.
These pro forma financial statements may not be indicative of the results that
actually would have occurred if the combination had been in effect on the dates
indicated or which may be obtained in the future. The pro forma financial
statements should be read in conjunction with the audited financial statements
and footnotes included in the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 and the Texas Instruments audited Statements of
Assets Acquired and Liabilities Assumed as of December 31, 1994 and 1995 and
Statements of Revenues and Direct Operating Expenses for the years ended
December 31, 1993, 1994 and 1995 and footnotes contained in this Form 8-K/A.
The pro forma consolidated balance sheet (unaudited) as of September 29, 1996
presents the financial position of the Registrant as if the assets and
liabilities of Texas Instruments printer business has been acquired as that
date.
The pro forma consolidated statements of operations (unaudited) for the year
ended December 31, 1995 present the results of operations as if the Texas
Instruments printer business had been acquired as of January 2, 1995, taking
into consideration only those transactions known to be occurring, and having
continuing impact to operations as a result of the acquisition.
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GENICOM CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 29, 1996
(UNAUDITED)
(In thousands, except share data)
<TABLE>
<CAPTION>
TEXAS PRO FORMA
GENICOM INSTRUMENTS ADJUSTMENTS PRO FORMA
============= ============== =============== ==============
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,969 $ $ $ 13,969
Accounts receivable, less allowance for
doubtful accounts of $2,575 53,422 9,018 62,440
Inventories 30,474 13,319 43,793
Prepaid expenses and other assets 5,401 165 5,566
------------ ------------ ------------- -------------
TOTAL CURRENT ASSETS 103,266 22,502 0 125,768
Property, plant and equipment, net 26,602 243 26,845
Intangibles and other assets 27,744 9,555 (1) 37,299
------------ ------------ ------------- -------------
$ 157,612 $ 22,745 $ 9,555 $ 189,912
============ ============ ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Debt maturing within one year $ 3,923 $ $ $ 3,923
Accounts payable and accrued expenses 47,706 1,795 2,100 (4) 51,601
Deferred income 12,325 12,325
------------ ------------ ------------- -------------
TOTAL CURRENT LIABILITIES 63,954 1,795 2,100 67,849
Long-term debt, less current portion 47,013 28,405 (2) 75,418
Other non-current liabilities 12,498 12,498
------------ ------------ ------------- -------------
TOTAL LIABILITIES 123,465 1,795 30,505 155,765
STOCKHOLDERS' EQUITY:
Common stock 110 110
Additional paid-in capital 26,173 26,173
Retained earnings 9,965 9,965
Foreign currency translation adjustment (1,331) (1,331)
Pension liability adjustment (770) (770)
Assets acquired, net 20,950 (20,950)(3) 0
------------ ------------ ------------- -------------
TOTAL STOCKHOLDERS' EQUITY 34,147 20,950 (20,950) 34,147
------------ ------------ ------------- -------------
$ 157,612 $ 22,745 $ 9,555 $ 189,912
============ ============ ============= =============
</TABLE>
See notes to pro forma consolidated financial statements.
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GENICOM CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
1. This pro forma adjustment reflects the goodwill recognized upon the
acquisition of certain assets and liabilities of the Texas Instruments
worldwide printer business.
2. This pro forma adjustment reflects the assumed borrowings under the
Registrant's credit facilities and the note payable to Texas Instruments.
The Registrant has classified the debt as long-term.
3. Eliminate the net assets of the Texas Instruments printer business.
4. Possible additional purchase price payment due to Texas Instruments,
subject to review by both parties pursuant to the Asset Purchase Agreement.
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GENICOM CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
TEXAS PRO FORMA
GENICOM INSTRUMENTS ADJUSTMENTS PRO FORMA
============ ============ ============= =============
<S> <C> <C> <C> <C>
REVENUES, NET: $ 294,052 $ 172,234 $ (47,508) (1) $ 418,778
OPERATING COSTS AND EXPENSES:
Cost of revenues 217,613 138,127 (38,406) (2) 317,334
Operating expenses 61,261 29,387 (13,635) (3) 77,013
------------ ------------ ------------- -------------
278,874 167,514 (52,041) 394,347
------------ ------------ ------------- -------------
OPERATING INCOME 15,178 4,720 4,533 24,431
Interest expense, net 7,741 2,976 (4) 10,717
------------ ------------ ------------- -------------
INCOME BEFORE INCOME TAXES 7,437 4,720 1,557 13,714
Income tax expense 1,285 2,134 (5) 3,419
------------ ------------ ------------- -------------
NET INCOME (LOSS) $ 6,152 4,720 (577) $ 10,295
============ ============ ============= =============
EARNINGS PER COMMON SHARE AND COMMON
SHARE EQUIVALENT (PRIMARY AND FULLY DILUTED) $ 0.51 $ 0.85
============ =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING
Primary 12,038 12,038
============ =============
Fully diluted 12,056 12,056
============ =============
</TABLE>
See notes to pro forma consolidated financial statements.
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GENICOM CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 29, 1996
(UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
TEXAS PRO FORMA
GENICOM INSTRUMENTS ADJUSTMENTS PRO FORMA
============ ============ ============= =============
<S> <C> <C> <C> <C>
REVENUES, NET: $ 211,503 92,432 (15,014) (1) $ 288,921
OPERATING COSTS AND EXPENSES:
Cost of revenues 162,516 75,584 (13,650) (2) 224,450
Operating expenses 49,836 9,770 (1,671) (3) 57,935
------------ ------------ ------------- -------------
212,352 85,354 (15,321) 282,385
------------ ------------ ------------- -------------
OPERATING (LOSS) INCOME (849) 7,078 307 6,536
Interest expense, net 3,299 1,945 (4) 5,244
Other income 153 153
------------ ------------ ------------- -------------
(LOSS) INCOME BEFORE INCOME TAXES (3,995) 7,078 (1,638) 1,445
Income tax (benefit) expense (3,876) 1,850 (5) (2,026)
------------ ------------ ------------- -------------
NET (LOSS) INCOME $ (119) 7,078 (3,488) $ 3,471
------------ ------------ ------------- -------------
EARNINGS PER COMMON SHARE AND COMMON
SHARE EQUIVALENT (PRIMARY AND FULLY DILUTED) $ (0.01) (6) $ 0.29
------------ ------------ ------------- -------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING
Primary 10,918 12,142
------------ ------------ ------------- -------------
Fully diluted 10,918 12,164
------------ ------------ ------------- -------------
</TABLE>
See notes to pro forma consolidated financial statements.
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GENICOM CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
1. Eliminates the revenue associated with the laser printers the Registrant
did not acquire.
2. Eliminates the cost of goods associated with the laser printers the
Registrant did not acquire.
3. Eliminates operating expenses associated with the laser printers the
Registrant did not acquire. Includes $1.4 million and $1.0 million for
1995 and 1996, respectively, for amortization of the goodwill associated
with the acquisition.
4. Incremental interest expense on acquisition related borrowings at an
effective interest rate of approximately 8.5%.
5. To recognize a consolidated pro forma income tax provision at a rate of
34%.
6. Recalculated using common stock equivalents due to the pro forma statements
resulted in net income.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENICOM Corporation
--------------------------------------
Registrant
Date: December 13, 1996
\s\James C. Gale
--------------------------------------
Signature
James C. Gale
Senior Vice President Finance and
Chief Financial Officer
(Mr. Gale is the Chief Financial
Officer and has been duly
authorized to sign on behalf of
the Registrant)
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GENICOM CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS TO FORM 8-K/A
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------------ ------------------------------------------------------------------ -----------------
<S> <C> <C>
23 Consent of Independent Auditor E-2
</TABLE>
E - 1
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Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use of our report dated November 26, 1996, with respect to
the statements of assets acquired and liabilities assumed and the statements of
revenues and direct operating expenses of the Printer Business of Texas
Instruments Incorporated included in the Current Report on Form 8-K/A of
GENICOM Corporation filed on December 13, 1996 with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Dallas, Texas
December 12, 1996
