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Previous: GE LIFE & ANNUITY ASSURANCE CO II, 497, 1999-05-28 |
Next: FRANKLIN MANAGED TRUST, NSAR-A, 1999-05-28 |
<PAGE>
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): May 17, 1999
DIGITAL ORIGIN, INC.
------------------------------------------------------------
(FORMERLY RADIUS INC.)
(Exact name of registrant as specified in its charter)
California
------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-18690 68-0101300
- ------------- ------------------
(Commission (IRS Employer
File Number) Identification No.)
460 E. Middlefield Road, Mountain View, CA 94043
------------------------------------------------------------
(Address of principal executive
offices, including zip code)
Registrant's telephone number, including area code: (650) 404-6000
--------------
<PAGE>
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS.
On May 17, 1999, the Company completed the sale (the "Disposition") of
its monitor and color publishing business (the "Display Business") to Korea Data
Systems America, Inc. ("KDS"). In connection with this transaction, the Company
received the sum of $1.0 million which represents the prepayment of the final
three installment payments on the promissory note related to the license
agreement. The Company expects to use such proceeds for working capital
purposes. As of May 17, 1999, the balance due on the note was $700,000 payable
through July 1999. Reference is made to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1998 and the Company's Quarterly Reports
on Form 10-Q for the quarters ended December 31, 1998 and March 31, 1999 for a
further description of the Display Business transaction.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION .
The following Unaudited Pro Forma Consolidated Balance Sheet as of
March 31, 1999, and the Unaudited Pro Forma Consolidated Statements of
Operations for the six month period ended March 31, 1999 and for the twelve
months ended September 30, 1998 give effect to the Disposition of the Company's
Display Business. The Disposition transaction was completed on May 17, 1999.
The adjustments related to the Pro Forma Consolidated Balance Sheet
assume the Disposition was consummated at March 31, 1999 and reflect the receipt
of $1.0 million which represents the prepayment of the final three installment
payments on the promissory note from KDS, and the elimination of the related
deferred income under the license agreement.
The adjustments to the Pro Forma Consolidated Statements of Operations
for the six months ended March 31, 1999 and the twelve months ended September
30, 1998 assume the Disposition was consummated at the beginning of the period
presented and reflect the elimination of net revenue, cost of sales, operating
expenses, and income from the license agreement related to the Display Business.
The pro forma financial information does not purport to be indicative
of the results of operations that would actually have been reported had the
transactions underlying the pro forma adjustments actually been consummated on
such dates or of the results of operations that may be reported by the Company
in the future.
(c) EXHIBITS
10.01 Amended and Restated License Agreement dated as of August 7,
1998 between Korea Data Systems America, Inc. and the
Registrant. *
10.02 Asset Purchase Agreement dated as of August 7, 1998 between
Korea Data Systems America, Inc. and the Registrant. *
10.03 Supplement to the License and Asset Purchase Agreement dated
December 4, 1998 between Korea Data Systems America, Inc. and
the Registrant. *
-----------
* Previously filed as exhibits to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1998.
-2-
<PAGE>
DIGITAL ORIGIN, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999
(in thousands)
<TABLE>
<CAPTION>
DIGITAL ORIGIN, PRO FORMA TOTAL
INC. ADJUSTMENTS AS
ADJUSTED
----------------- ---------------- ------------
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash $ 1,814 1,000 (A) $ 2,814
Accounts receivable, net 871 871
Note receivable from Korea Data Systems America, Inc. 2,400 (1,000) (A) 1,400
Inventories 408 408
Prepaid expenses and other current assets 65 65
----------------- ---------------- ------------
Total current assets 5,558 - 5,558
Property and equipment, net 64 64
Purchased technology 150 150
----------------- ---------------- ------------
$ 5,772 - $ 5,772
================= ================ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (net capital deficiency):
Current liabilities:
Accounts payable $ 1,728 $ 1,728
Accrued payroll and related expenses 446 446
Other accrued liabilities 1,169 1,169
Deferred income 2,461 (1,000) (A) 1,461
Accrued income taxes 1,101 1,101
----------------- ---------------- ------------
Total current liabilities 6,905 (1,000) 5,905
Shareholders' equity (net capital deficiency):
Common stock 169,177 169,177
Accumulated deficit (170,310) 1,000 (A) (169,310)
----------------- ---------------- ------------
Total shareholders' equity (net capital deficiency) (1,133) 1,000 (133)
----------------- ---------------- ------------
$ 5,772 - $ 5,772
================= ================ ============
</TABLE>
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<PAGE>
DIGITAL ORIGIN, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
DIGITAL PRO FORMA TOTAL
ORIGIN, INC ADJUSTMENTS AS ADJUSTED
---------------- --------------- -------------
<S> <C> <C> <C>
Net sales $ 5,417 $ 5,417
Commissions and royalties 50 50
---------------- -------------
Total net sales 5,467 5,467
Cost of sales 2,110 2,110
---------------- -------------
Gross profit 3,357 3,357
---------------- -------------
Operating expenses:
Research and development 1,289 1,289
Selling, general and administrative 3,392 3,392
---------------- -------------
Total operating expenses 4,681 4,681
Loss from operations (1,324) (1,324)
Other income, net 5,254 (2,085) (B) 3,169
Interest expense (55) 55 (C) -
---------------- --------------- -------------
Income before income taxes 3,875 (2,030) 1,845
Provision for income taxes - -
---------------- --------------- -------------
Net income $ 3,875 $ (2,030) $ 1,845
================ =============== =============
Net income per share:
Basic net income per share $ 0.70 $ 0.33
================ =============
Diluted net income per share $ 0.69 $ 0.33
================ =============
Shares used in per share computations:
Shares used in computing basic net income per share 5,525 5,525
================ =============
Shares used in computing diluted net income per share 5,643 5,643
================ =============
</TABLE>
-4-
<PAGE>
DIGITAL ORIGIN, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
TWELVE MONTHS ENDED SEPTEMBER 30, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
DIGITAL LESS: LESS: TOTAL
ORIGIN, INC DISPLAY INTEREST AS ADJUSTED
BUSINESS
--------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Net sales $ 14,564 $ 8,447 $ 6,117
Commissions and royalties 1,104 414 690
--------------- ------------- -------------
Total net sales 15,668 8,861 6,807
Cost of sales 9,921 6,612 3,309
--------------- ------------- -------------
Gross profit 5,747 2,249 3,498
--------------- ------------- -------------
Operating expenses:
Research and development 2,801 688 2,113
Selling, general and administrative 7,107 3,613 3,494
--------------- ------------- -------------
Total operating expenses 9,908 4,301 5,607
Loss from operations (4,161) (2,052) (2,109)
Other income, net 12,353 1,615 10,738
Interest expense (459) 459 (C) -
--------------- ------------- ----------- -------------
Income (loss) before income taxes 7,733 (437) 459 8,629
Benefit from income taxes (1,000) (1,000)
--------------- ------------- ----------- -------------
Net income (loss) $ 8,733 $ (437) $ 459 $ 9,629
=============== ============= =========== =============
Net income per share:
Basic net income per share $ 1.58 $ 1.74
=============== =============
Diluted net income per share $ 1.57 $ 1.73
=============== =============
Shares used in per share computations:
Shares used in computing basic net income per share 5,522 5,522
=============== =============
Shares used in computing diluted net income per share 5,557 5,557
=============== =============
</TABLE>
-5-
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
(A) Cash received as a prepayment of the final three installment payments on
the promissory note from KDS and the elimination of the related deferred
income under the license agreement.
(B) Reduction of other income related to the license agreement recorded for the
six months ended March 31, 1999.
(C) Reduction of $55,000 and $459,000 in interest expense recorded by the
Company during the six months ended March 31, 1999 and the twelve months
ended September 30, 1998, respectively, to reflect the use of the proceeds
to repay outstanding obligation under the Company's line of credit
agreements.
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: May 28, 1999
DIGITAL ORIGIN, INC.
By: /s/ Mary F. Bobel
-------------------------------
Mary F. Bobel
Chief Financial Officer
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