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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported) AUGUST 19, 1996
Commission File Number: 0-14618
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VECTRA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Washington 91-1160888
(State of incorporation) (I.R.S. Employer Identification No.)
5000 Executive Parkway, Suite 300
San Ramon, CA 94583
(Address of principal executive offices)
(510) 275-4500
(Registrant's telephone number)
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Item 2: Acquisition or Disposition of Assets
On August 19, 1996, the Shareholders of VECTRA Technologies, Inc., (the
"Company"), voted to approve, and the Company then consummated, the sale of the
Company's nuclear engineering services business, power services business, and
government services business (collectively, the "Engineering Businesses") to
Duke Engineering & Services, Inc. (the "Buyer"). The form of the transaction
was a sale of assets pursuant to an Asset Purchase Agreement among the Company,
the Company's wholly owned subsidiary, VECTRA Government Services, Inc. (the
"Subsidiary"), and the Buyer, dated May 23, 1996 (the "Agreement").
The purchase price for the sale of the Engineering Businesses was $27,500,000
(the "Base Purchase Price"), plus or minus certain balance sheet adjustments
(the "Purchase Price Adjustment"). The Purchase Price Adjustment is the amount
by which the book value of certain current assets (primarily accounts
receivable) and tangible property, plant and equipment used in the Engineering
Businesses (collectively, the "Valuation Assets") at the closing date of August
18, 1996 exceeds, or is less than, the sum of $10,000,000 and the value of the
liabilities to be assumed by the Buyer. The liabilities assumed by the Buyer
exclude payroll related liabilities, but generally include the assumption of the
leases for office space occupied by the Engineering Businesses.
Based on a July 28, 1996 unaudited pre-closing balance sheet, the Buyer paid a
preliminary amount of $30 million, of which $18.1 million was used to pay all of
the Company's bank debt and associated fees. An additional $3.5 million was
placed in escrow until an August 18, 1996 closing balance sheet is agreed upon
between the Company and the Buyer and the balance, $8.1 million was added to the
Company's working capital.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information
The following unaudited pro forma condensed consolidated balance sheets as of
June 30, 1996 give effect to the sale of the Engineering Businesses as if the
sale had been consummated on June 30, 1996. The following unaudited pro forma
consolidated statements of operations for the fiscal year ended December 31,
1995 and the six months ended June 30, 1996 give effect to the sales of the
Engineering Businesses and VECTRA UK as if the sales had been consummated at the
beginning of such periods. The unaudited pro forma financial statements are not
necessarily indicative of the results that actually would have occurred if the
sale had taken place during such periods or that may be attained in the future.
The unaudited pro forma financial statements should be read in conjunction with
the Company's consolidated financial statements and notes thereto.
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VECTRA TECHNOLOGIES, INC.
PRO FORMA CONDENSED BALANCE SHEETS (UNAUDITED)
AS OF JUNE 30, 1996
(in thousands)
<TABLE>
<CAPTION>
Duke
Historical Disposition
As Previously (See Notes 1 Pro Forma
Reported and 2) As Adjusted
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 2,575 $ 11,365 $ 13,940
Securities available for sale 1,033 - 1,033
Accounts receivable, net of allowance 16,658 (12,326) 4,332
Costs and estimated earnings in
excess of billings on
uncompleted contracts 2,366 (1,184) 1,182
Inventories 1,930 - 1,930
Prepaid expenses 896 (396) 500
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Total Current Assets 25,458 (2,541) 22,917
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Property, Plant and Equipment, at cost 21,364 (2,397) 18,967
Less accumulated depreciation (8,806) 1,602 (7,204)
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Net Property, Plant and Equipment 12,558 (795) 11,763
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Costs in excess of net assets of acquired
businesses, net of accumulated amortization 14,780 (14,780) -
Licenses, patents and other intangibles,
at cost, net of accumulated amortization 1,942 - 1,942
Investments and long-term prepaid costs 3,262 (2,840) 422
Other assets 80 - 80
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Total Assets $ 58,080 $ (20,956) $ 37,124
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</TABLE>
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VECTRA TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(CONTINUED)
AS OF JUNE 30, 1996
(in thousands)
<TABLE>
<CAPTION>
Duke
Historical Disposition
As Previously (See Notes 1 Pro Forma
Reported and 2) As Adjusted
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<S> <C> <C> <C>
LIABILITIES
Current Liabilities
Note payable to banks $ 10,820 $ (10,820) $ -
Accounts payable 8,027 (1,699) 6,328
Accrued payroll and related expenses 6,455 - 6,455
Other accrued liabilities (See Note 3) 6,885 (1,751) 5,134
Accrued selling expenses, Duke (See Note 4) - 1,925 1,925
Billings in excess of costs and estimated earnings
on uncompleted contracts 2,110 (859) 1,251
Long-term debt due within one year 5,827 (5,827) -
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Total Current Liabilities 40,124 (19,031) 21,093
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Long-term debt - - -
Deferred lease incentive 399 - 399
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Total Liabilities 40,523 (19,031) 21,492
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SHAREHOLDERS' EQUITY
Common Stock 44,960 - 44,960
Accumulated deficit (See Note 5) (27,403) (1,925) (29,328)
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Total Shareholders' Equity 17,557 (1,925) 15,632
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Total Liabilities and Shareholders' Equity $ 58,080 $ (20,956) $ 37,124
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</TABLE>
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VECTRA TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
as Accomplished Duke As
Previously Dispositions Disposition Adjusted
Reported (See Note 6) (See Note 7) (See Note 8)
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<S> <C> <C> <C> <C>
Revenues $ 47,406 $ (3,485) $ (33,223) $ 10,698
Operating costs 33,424 (2,312) (24,210) 6,902
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Gross profit 13,982 (1,173) (9,013) 3,796
Research and development expenses 315 (12) - 303
Selling, general and administrative expenses 12,042 (825) (7,581) 3,636
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Operating income (loss) 1,625 (336) (1,432) (143)
Gain on sale of subsidiary 550 (550) - -
Interest expense, net 1,937 - (1,937) -
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Income before income taxes 238 (886) 505 (143)
Provision for income taxes 54 (2) (52) -
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Net income (loss) $ 184 $ (884) $ 557 $ (143)
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Net income (loss) per share $ 0.02 $ (0.02)
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Number of shares used to calculate net income
(loss) per share 8,314,974 8,314,974
---------- ----------
---------- ----------
</TABLE>
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VECTRA TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma
as Accomplished Duke As
Previously Dispositions Disposition Adjusted
Reported (See Note 9) See Note 10) (See Note 11)
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues $ 123,501 $ (19,123) $ (78,094) $ 26,284
Operating costs 89,444 (10,237) (57,262) 21,945
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Gross profit 34,057 (8,886) (20,832) 4,339
Research and development expenses 3,257 (21) (1) 3,235
Selling, general and administrative expenses 38,210 (4,059) (20,388) 13,763
Write down of property, plant and equipment
and intangible assets 14,319 - (8,886) 5,433
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Operating income (loss) (21,729) (4,806) 8,443 (18,092)
Gain on sale of subsidiary 12,731 (12,731) - -
Interest expense, net 3,105 (46) (3,059) -
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Loss before income taxes (12,103) (17,491) (11,502) (18,092)
Provision for income taxes 110 (321) (211) -
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Net income (loss) $ (12,213) $ (17,170) $ (11,291) $ (18,092)
---------- ---------- ---------- ----------
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Net income (loss) per share $ (1.56) $ (2.31)
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Number of shares used to calculate
net income (loss) per share 7,840,038 7,840,038
---------- ----------
---------- ----------
</TABLE>
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VECTRA TECHNOLOGIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND THE FISCAL YEAR
ENDED DECEMBER 31, 1995
1. Pro forma adjustments related to the pro forma condensed consolidated
balance sheet are computed assuming the transactions were consummated on
June 30, 1996, and includes adjustments that give effect to events that are
directly attributable to the Duke transactions and factually supportable
regardless of whether they have a continuing impact or are nonrecurring.
2. The cash balance reflects the gross proceeds of $29.5 million based on
sales price of $27.5 million plus balance sheet adjustments (as applicable
to June 30, 1996) of $2.0 million less reduction of Bank Debt and Bank Fees
amounting to $18.1 million. The cash balance does not reflect the payment
of approximately $3.4 million (based on the June 30, 1996 balance sheet) of
engineering employee related liabilities (i.e., payroll, health and
vacation) retained by VECTRA from the Duke disposition and approximately
$1.9 million liability to be accrued for Duke related selling expenses.
3. The Duke related adjustment for other accrued liabilities includes $289,000
of liabilities transferred to Duke and $1,450,000 million in Bank Fees,
payment of which was deferred until the close of the Duke transaction.
4. Accrued Duke selling expense liabilities are approximated as follows: ($ in
thousands):
Employee related expenses (including termination costs) $1,091
Lease termination costs 144
Legal fees 200
Audit fees 50
Purchase price adjustments 250
Other expenses 190
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Total Duke selling expenses $1,925
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5. The loss on the sale to DE&S is calculated as follows:
Total
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ESTIMATED PROCEEDS: $29,524
LESS: NET ASSETS OF DIVISIONS SOLD
Cash 50
Accounts Receivable 12,326
Costs and estimated earnings in excess of billings 1,184
Prepaid expenses 396
Property and equipment, net 795
Intangibles 17,620
Accounts payable (1,699)
Other accrued liabilities (289)
Billings in excess of costs (859)
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Net assets of divisions sold 29,524
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Accrued selling expenses 1,925
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Income (loss) on sale before income taxes (1,925)
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Income tax expense (benefit) --
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Income (loss) on sale $ (1,925)
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The loss of the sale of the Engineering Businesses is not reflected in the pro
forma condensed consolidated statements of operations for the six months ended
June 30, 1996 or the fiscal year ended December 31, 1995, but will be reflected
in the third quarter of 1996 in which the sale was consummated.
6. Reflects the April 1996 disposition of VECTRA UK as if it had occurred
at the beginning of 1996.
7. Pro forma adjustments for the six months ended June 30, 1996 related
to the Duke transaction are computed assuming the transaction was consummated
at the beginning of the fiscal period presented and include adjustments that
give effect to events that are (i) directly attributable to the transaction,
(ii) expected to have a continuing impact on the registrant, and (iii)
factually supportable. Revenue and cost of sales were determined on an
individual invoice by invoice basis as related to the Engineering Businesses.
Research and development and selling, general and administrative expenses
were determined on an employee and item basis for the Engineering Businesses.
All actual interest incurred is allocated to the Duke adjustment, since the
proceeds from the transaction have been used to repay all debt to which such
interest relates.
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8. Pro forma historical earnings are not indicative of possible future
performance. No assurances can be given, express or implied, that the two
remaining operating businesses, Fuels Services and Waste Services, can be
restructured to be sufficiently profitable to create shareholder value.
9. Reflects the June 1995 disposition of Plant Services and the April 1996
disposition of VECTRA UK as if they had occurred at the beginning of 1995; the
disposition of the net sale proceeds to reduce Bank Debt and increase working
capital; and the related effects upon retained earnings.
10. Pro forma adjustments for the year ended December 31, 1995 related
to Duke transaction are computed assuming the transaction was consummated at
the beginning of the fiscal year presented and includes adjustments that give
effect to events that are (I) directly attributable to the transaction, (ii)
expected to have a continuing impact on the registrant, and (iii) factually
supportable. Revenue and cost of sales were determined on an individual
invoice by invoice basis as related to the Engineering Businesses. Research
and development and selling, general and administrative expenses were
determined on an individual invoice by invoice basis for the Engineering
Businesses. The $8,886,000 write down of intangible assets related to the
1995 adjustment of the carrying value of costs in excess of net assets of the
acquired engineering businesses as a reflection of the Duke transaction. All
actual interest incurred is allocated to the Duke adjustment, since the
proceeds from the transaction have been used to repay all debt, to which such
interest relates interest.
11. Pro forma historical earnings are not indicative of possible future
performance. No assurances can be given, express or implied, that the two
remaining operating businesses, Fuels Services and Waste Services, can be
restructured to be sufficiently profitable to create shareholder value. The
$3.2 million research and development expense; the $5.4 million write down of
property, plant and equipment and intangible assets; a $1.2 million
establishment of an allowance for decommissioning; and higher levels of
corporate overhead expenses before streamlining contributed significantly to the
pro forma net loss in 1995.
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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.
VECTRA TECHNOLOGIES, INC.
August 29, 1996 By /s/ Ray A. Fortney
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Ray A. Fortney
President, Chief Executive Officer
August 29, 1996 By /s/ Thomas B. Pfeil
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Thomas B. Pfeil
Chief Financial Officer
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