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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): August 30, 1996
RADIUS INC.
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
0-18690 68-0101300
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(Commission (IRS Employer
File Number) Identification No.)
215 Moffett Park Drive, Sunnyvale, CA 94089
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code:(408) 541-6100
This report on Form 8-K consists of __ pages.
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ITEM 5: OTHER EVENTS.
On August 30, 1996, the Company entered into agreements with respect to
a debt for equity exchange with its Creditors. IBM Credit Corporation ("IBM
Credit"), the Company's secured creditor, has agreed to receive Series A
Convertible Preferred Stock in satisfaction of $3.0 million of the Company's
approximately $23.0 million secured indebtedness to IBM Credit and to
restructure its loan with the Company, including extension by IBM Credit of
an additional advance of approximately $500,000 for making the discounted
payments to unsecured creditors described below. The Company and IBM Credit
have entered into an amended loan agreement, and the closing under such
amended loan agreement is anticipated to occur in early September.
The Company's unsecured creditors with aggregate claims of approximately
$45 million received either shares of Common Stock or, in the case of
creditors with claims of less than $50,000 ("Convenience Class Creditors), a
discounted cash payment (approximately $500,000 in the aggregate) in
satisfaction of such claims. While the issuance of the Series A Convertible
Preferred Stock and the Common Stock did not require the approval of the
Company's shareholders, an increase in the authorized number of shares of
Common Stock, which was necessary to implement this plan, required
shareholder approval, which approval was obtained at a special meeting of
shareholders on August 27, 1996.
Unsecured creditors have agreed to receive approximately 36,450,000
shares of Common Stock(which will represent 60% of the outstanding Common
Stock of the Company). The Company's secured creditor, IBM Credit, agreed to
receive 750,000 shares of Series A Convertible Preferred Stock which is
convertible into approximately 5,546,739 shares of Common Stock of the
Company (or approximately 6,100,313 shares in certain circumstances). The
unsecured creditors who agreed to receive shares of Common Stock in
satisfaction of their claims also agreed to receive Rights ("Rights") to
receive an aggregate of approximately 11,093,478 additional shares of the
Company's Common Stock in the event that the Series A Convertible Preferred
Stock is converted into Common Stock so that the number of shares of Common
Stock received by such unsecured creditors continues to represent 60% of the
Company's outstanding Common Stock. The Company also expects to amend its
stock option plans to reserve for issuance thereunder of approximately 10% of
the outstanding shares of the Company's Common Stock. Therefore,
shareholders holding shares of Common Stock immediately prior to the closing
of this debt-for-equity exchange ("Existing Shareholders") will represent
approximately 30% of outstanding shares of Common Stock immediately after the
closing. If and when the Series A Convertible Preferred Stock is converted
into Common Stock, Existing Shareholders will then represent 23% of the
outstanding shares of Common Stock assuming no other issuances of the
Company's securities and the exercise of all stock options.
The Company expects that the debt-for-equity exchange described above
will be consummated contemporaneously with the closing of the restructured
loan agreement with IBM Credit which is anticipated to occur in early
September.
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ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(b)PRO FORMA FINANCIAL INFORMATION.
Set forth below is the Company's Unaudited Pro Forma Consolidated Balance
Sheet as of June 30, 1996 reflecting the implementation of the
debt-for-equity exchange.
The Unaudited Pro Forma Balance Sheet as of June 30, 1996 reflects (i)
the settlement of approximately $47.3 million of accounts payable, accrued
liabilities and customer credit balances in exchange for $500,000 in cash and
approximately 36,450,000 million shares of common stock; (ii) the additional
advance of $500,000 from IBM Credit; (iii) the restructuring of the IBM
Credit loan and the issuance of 750,000 shares of Series A Convertible
Preferred Stock to IBM Credit.
The pro forma financial information does not purport to be indicative of
the financial position that would actually have been reported had the
transactions underlying the pro forma adjustments actually been consummated
on such date or of the results of operations that may be reported by the
Company in the future.
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RADIUS INC.
Unaudited Pro Forma Consolidated Balance Sheets
June 30, 1996
(in thousands)
<TABLE>
<CAPTION>
RADIUS INC. PRO FORMA TOTAL
CONSOLIDATED ADJUSTMENTS AS ADJUSTED
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<S> <C> <C> <C>
ASSETS:
Current Assets:
Cash $ 3,264 500 (B) $ 3,264
(500)(B)
Accounts receivable, net 22,234 4,300 (C) 26,534
Inventories 15,825 15,825
Prepaid expenses and other current assets 424 424
Income tax receivable 514 514
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Total current assets 42,261 4,300 46,581
Property and equipment, net 1,475 1,475
Deposits and other assets 142 142
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$ 43,878 4,300 $ 48,178
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LIABILITIES, CONVERTIBLE PREFERRED STOCK, COMMON
STOCK AND ACCUMULATED DEFICIT:
Current liabilities:
Accounts payable 37,952 (500)(B) $ 6,352
(1,500)(B)
(29,600)(C)
Accrued payroll and related expenses 2,196 2,196
Accrued warranty costs 687 687
Other accrued liabilities 8,866 8,866
Accrued income taxes 2,056 2,056
Accrued restructuring and other charges 15,474 (11,400)(C) 1,674
(2,400)(D)
Short-term borrowings 22,920 (18,000)(A) 5,420
500 (B)
Obligations under capital leases - current portion 1,293 1,293
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Total current liabilities 91,444 (62,900) 28,544
Obligation under capital leases - noncurrent portion 321 321
Long-term borrowings 15,000 (A) 15,000
Convertible preferrred stock 3,000 (A) 3,000
Common stock 126,243 45,300 (C) 171,543
Accumulated deficit (174,144) 1,500 (B) (170,244)
2,400 (D)
Accumulated translation adjustment 14 14
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$ 43,878 4,300 $ 48,178<PAGE>
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NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET $000
(A) Restructuring of the IBM Credit loan to reduce the current
portion to $4,920,000 and transfer the balance to reflect
long-term debt and the issuance pf preferred stock.
Short-term borrowings 4,920
Long-term borrowings 15,000
Preferred stock to be issued 3,000
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22,920
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(B) IBM Credit advance relating to the settlement for the
Convenience Class Creditors and the payment to such
creditors.
Cash settlement 500
Total Convenience Class Creditors claims 2,000
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Gain from the discounted cash payment 1,500
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(C) Common stock issued for the settlement of unsecured
creditors' claims and the settlement of customers with
credit balances. This adjustment assumes that carrying
value of the claims settled equals the value of the stock
issued. The difference, to be determined, between the two
values will not change the combined total of common stock
and accumulated deficit.
Customers with credit balances 4,300
Claims recorded in accounts payable 29,600
Claims recorded in the FY1995 restructuring 11,400
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Common stock issued 45,300
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(D) Reversal of excess 1995 restructuring reserves directly
related to the settlement of the related concellation
fees accrued.
2,400
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SIGNATURE
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.
Date: August __, 1996
RADIUS INC.
By: /s/ Charles W. Berger
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Charles W. Berger
Chairman, President, Chief Executive
Officer and Acting Chief Financial
Officer
