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 Exchange Act of 1934
Date of Report (Date of earliest event reported): February 29, 1996
Farmstead Telephone Group, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-15938
Delaware 06-1205743
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
81 Church Street,
East Hartford, CT 06108-3728
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 282-0010
Item 5. Other Events
Effective February 29, 1996, the Company purchased from AT&T
Systems Leasing Corporation, a subsidiary of AT&T Capital
Corporation, certain assets of its discontinued Asset Recovery
Center ("ARC"). Prior to its closing in January 1996, the ARC
primarily operated to service AT&T affiliates in the orderly
disposition, by way of consignment sales arrangements, of
excess, overstocked and end-of-life telecommunications, computer
and data transmission equipment. The ARC also provided
inventory storage and record keeping services on a monthly fee
basis. The assets acquired consisted primarily of warehouse
equipment, vehicles, computer and office equipment, and
inventory.
The Company concurrently formed a subsidiary corporation,
Farmstead Asset Management Services, LLC, to start up a similar
operation in Piscataway, New Jersey. The Company intends to
attempt to re-establish certain of the relationships that the
ARC enjoyed. No assurance can be given that these attempts will
be successful as, prior to its closing, the ARC notified in
writing all of its affiliates that the ARC was no longer
operational and advised them that a similar AT&T service center
based in Illinois was available. Nonetheless, given the
Company's long-standing relationship with AT&T and the internal
structural changes occurring in AT&T as it splits its operations
into three separate and distinct corporations, the Company is
hopeful that it will successfully be able to restart a similar
operation. The Company believes that if it is successful, it
will be able to develop new sources of equipment for resale to
its existing customers. In making the decision to enter into
this transaction, the Company had discussions with former ARC
employees as to its business operating results and their
perception of continuing business opportunities. The Company
also utilized its knowledge of the secondary market industry.
In conducting its pre-purchase due diligence procedures, the
Company had limited knowledge of the ARC's historical, unaudited
operating results. Its access to more detailed information was
limited by AT&T to that which directly applied to the specific
assets being considered for purchase. Moreover, the limited
financial information of the ARC that was made available to the
Company was not considered a reliable indicator of the prospects
of the Company's new operation since, due to its position as an
internal service facility of AT&T, the ARC was significantly
supported, financially and administratively, by other AT&T cost
centers. Therefore, the Company was unable to determine the
ARC's actual operating results had it been run as an
unaffiliated independent operation, as is the Company's intent.
The Company is unable at this time to predict the impact the
new subsidiary will have on the Company's financial condition,
equity, capital resources or operating results. However, as the
Company's revenues have risen significantly over the past few
years from $6.3 million in 1993 to more than $15 million in
1995, the Company sees this transaction as a potential major
expansion of its core business and an important opportunity to
become a significant strategic partner of AT&T during the period
of AT&T's reorganization. For these reasons and the reasons
stated above, the Company believes that the operations of the
new subsidiary will prove beneficial.
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, hereunto duly authorized.
FARMSTEAD TELEPHONE GROUP, INC.
Dated: March 15, 1996 By: /s/ Robert G. LaVigne
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Robert G. LaVigne
Vice President - Finance & Administration
(Principal Financial and Accounting Officer)
