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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) October 16, 2000
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Isco, INC.
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(Exact name of registrant as specified in its charter)
Nebraska 0-14429 47-0461807
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4700 Superior Street, Lincoln, NE 68504
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(Address of principal executive offices) (Zip Code)
(402) 464-0231
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Registrant's telephone number, including area code
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Item 2. Acquisition or Disposition of Assets
On October 16, 2000 Isco, Inc. completed the sale of the net assets of
Geomation, Inc., a wholly owned subsidiary of Isco Inc., to an investment group
led by the current management of Geomation. The sales price for this transaction
was based on the book values of the assets and liabilities as of August 31,
2000. Isco recorded a pre-tax loss on this sale of approximately $700,000. The
loss was reflected in Isco's fiscal year 2000 results of operations. Assets
carried at approximately $929,000 were sold and the purchaser assumed
liabilities of approximately $166,000. This agreement also transferred the
operations to the new entity as of August 31, 2000. Isco's fiscal year 2001
results will include sales of approximately $113,000 and a pre-tax loss of
$47,000 related to the Geomation operations through August 31, 2000.
Isco, Inc., via its subsidiary Geomation, Inc., retained all intangibles and
deferred tax assets. The intangibles, carried at approximately $1,355,000, were
considered impaired as a result of this sale and the remaining book values for
these intangibles were written-off during the year ended July 28, 2000 and
reported as operating expenses in Isco's fiscal year 2000 statement of
operations.
The operations of Geomation are housed in a leased facility. The lease term is
five years and expires August 31, 2004. Isco, via Geomation, Inc., remains the
lessee on this lease agreement. On October 16, 2000 Isco entered into a
sub-lease agreement with the investment group that transfers all of the lease
commitments to the new entity. The sub-lease agreement contains a 90-day
cancellation provision for both parties.
Isco, Inc. originally acquired a minority ownership position in Geomation, Inc.
in fiscal year 1993 and then acquired the remaining equity of Geomation during
fiscal year 1998. Geomation designs, manufactures, and markets measurement, data
logging, and control systems for the geotechnical and environmental markets.
More than 70 percent of its sales are in dam monitoring applications.
Geomation's core technology and expertise is in field collection, logging, and
transmission of data. Geomation was acquired for technology and market
synergies. Unfortunately, these synergies were not realized. In addition,
Geomation's operating performance in fiscal year 2000 significantly deteriorated
as sales declined, operating losses widened, and net cash flow turned negative.
The decision to divest Geomation resulted from a review of the corporation's
overall strategy and financial options; it was concluded that Isco's optimal
action was to divest Geomation.
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Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information:
ISCO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 28, 2000
(In thousands except for per share data)
<TABLE>
<CAPTION>
Historical Pro Forma
Isco, Inc. Adjustments Pro Forma
July 28 for July 28
2000 Geomation (1) 2000
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<S> <C> <C> <C>
Net sales $ 55,183 $ 1,435 $ 53,748
Cost of sales 25,776 559 25,217
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29,407 876 28,531
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Expenses:
Selling, general, and administrative 20,960 1,158 19,802
Research and engineering 5,532 551 4,981
Loss on impairments and sale of Geomation 2,056 2,056 --
Write-off of ERP operating system 2,448 -- 2,448
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Total operating expenses 30,996 3,765 27,231
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Operating income (loss) (1,589) (2,889) 1,300
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Non-operating income:
Investment income 490 28 462
Interest expense (400) -- (400)
Other 424 -- 424
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514 28 486
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Earnings (loss) before income taxes (1,075) (2,861) 1,786
Income tax expense (benefit) (123) (552) 429
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Net earnings (loss) $ (952) $ (2,309) $ 1,357
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Basic earnings (loss) per share $ (.17) $ (.41) $ .24
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Weighted average number of shares outstanding 5,644 5,644 5,644
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</TABLE>
(1) See Note A to the Pro Forma Consolidated Statement of Operations.
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ISCO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(Columnar amounts in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
Isco, Inc. Adjustments Pro Forma
July 28 for July 28
2000 Geomation (2) 2000
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Assets
Current assets:
<S> <C> <C> <C>
Cash and Cash equivalents $ 1,589 $ 50 $ 1,639
Short-term investments 1,981 -- 1,981
Accounts receivable 9,934 -- 9,934
Inventory 9,059 -- 9,059
Refundable income taxes 498 -- 498
Deferred income taxes 1,569 -- 1,569
Other current assets 538 50 488
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Total current assets 25,168 -- 25,168
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Property, plant, and equipment, net 16,389 -- 16,389
Long-term investments 3,728 -- 3,728
Deferred income taxes 317 -- 317
Other assets 4,840 -- 4,840
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Total assets $50,442 $ -- $50,442
======= ======= =======
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 782 $ -- $ 782
Accrued expenses 3,167 -- 3,167
Short-term borrowing 1,815 -- 1,815
Current portion of long-term debt 993 -- 993
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Total current liabilities 6,757 -- 6,757
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Long-term debt 3,164 -- 3,164
Commitments and contingencies
Shareholder's equity
Preferred stock, $.10 par value, authorized 5,000,000
Shares; issued none
Common stock, $.10 par value, authorized 15,000,000
Shares; issued and outstanding 5,643,992 shares 564 -- 564
Additional paid-in capital 37,697 -- 7,697
Retained earnings 2,200 -- 2,200
Accumulated other comprehensive income 60 -- 60
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Total shareholders' equity 40,521 -- 40,521
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Total liabilities and shareholders' equity $50,442 $ -- $50,442
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</TABLE>
(2) See Note B to the Pro Forma Consolidated Statement of Operations
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ISCO, INC. AND SUBISIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated financial statements are based on the
historical audited financial statements of the Company and the unaudited
stand alone financial statements of Geomation, Inc. Certain pro forma
adjustments have been made to the accompanying unaudited pro forma
consolidated financial statements, based upon the sale of the net assets of
Geomation, Inc. on October 16, 2000. The unaudited pro forma balance sheet as
of July 28, 2000 gives effect to the disposition as if it had occurred on
July 28, 2000. The unaudited pro forma consolidated statement of operations
for the year ended July 28, 2000 gives effect to the disposition as if it had
occurred on July 31, 1999.
The following adjustments have been reflected in the unaudited pro forma
consolidated financial statements.
A. Pro forma adjustments - Statement of Operations
These adjustments reflect the removal of Geomation's revenues and
expenses for the fiscal year ended July 28, 2000.
B. Pro forma adjustments - Balance Sheet
These adjustments reflect the receipt of cash and removal of net assets
from the sale, net of selling costs. The net assets of Geomation , Inc.
were reflected as other current assets as of July 28, 2000 since these
assets were being held for sale at that time.
(c) Exhibits: Not Applicable
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 hereto duly authorized.
ISCO, INC.,
By: /s/Vicki L. Benne
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Vicki L. Benne
Chief Financial Officer and Treasurer
Dated: October 25, 2000
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