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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OR THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December
1, 1999
INTERSYSTEMS, INC.
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Exact Name of Registrant as specified in charter
Delaware
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(State or Other Jurisdiction of Incorporation)
1-9547 13-3256265
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Commission file No. I.R.S. Employer Identification No.
537 Steamboat Road, Greenwich, CT 06830
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(Address of Principal Executive Offices) Zip Code
(203) 629-1400
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(Registrant's Telephone Number, Including Area Code)
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Item 2. Acquisition or Disposition of Assets
On December 1, 1999, InterSystems, Inc. (the "Company") (AMEX: II and
II.WS) reported that its Nebraska subsidiary, also known as
InterSystems, Inc. (hereinafter "InterSystems Nebraska"), completed the
previously announced sale of substantially all of its assets to, and
the assumption of certain liabilities by, Enduro Systems, Inc.
("Enduro"), a privately held manufacturing company based in Houston,
Texas. The purchase price, $11,010,948, was based upon a multiple of
earnings. The purchase price was subject to adjustment for the decrease
in working capital (as defined) from June 1, 1999 through October 3,
1999 and other miscellaneous adjustments. After repayment by
InterSystems Nebraska of long term debt, capital leases and related
expenses, the transaction yielded approximately $5,600,000 in cash to
the subsidiary, plus a $500,000 subordinated promissory note due in 42
months.
In connection with this sale, Mr. Fred S. Zeidman, President of the
Company and a Director, resigned his position as President and joined
Enduro. Mr. Zeidman retained his position as a Director of the
Company. In the interim, Mr. Herbert M. Pearlman, Chairman of the
Company, assumed the title of Acting President of the Company.
InterSystems Nebraska, which is based in Omaha, designs, manufactures
and markets specialized equipment used in handling, weighing and
sampling of granular materials, including agricultural products,
chemicals, cement, minerals and plastic pellets.
The Company's remaining operations consist of Chemtrusion, Inc., based
in Houston and Jeffersonville, Indiana. Chemtrusion provides various
out-sourcing services to the petro-chemical industry including
research, manufacturing and facilities operations for major multi-
national companies. Chemtrusion is a leader in specialty plastics
compound processing that combines thermoplastic resins with various
additives to enhance and customize plastic materials for specific end
uses. Chemtrusion's Indiana Division is a dedicated facility providing
design, construction and operating services for Mytex Polymers, a joint
venture of Exxon Chemical and Mitsubishi Chemicals America.
Enduro, based in Houston, Texas, through its divisions, manufactures
engineered or technically oriented products. Its Material Handling
Division, with plants in Freeport, Texas and Santa Rosa, California,
markets its products under the Velcon and FlexWeigh names. This
division designs and manufactures automatic and semi-automatic drum
filling and conveying systems as well as high precision weight
indicators and motion weighing systems. Enduro's Composite Products
Division, with plants in Houston, Fort Worth and Freeport, manufactures
a broad range of products designed for use in highly corrosive,
structurally demanding applications in industries such as chemical,
pulp and paper, water and waste water treatment and off-shore oil and
gas.
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Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
INTERSYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet
as of September 30, 1999 and pro forma condensed consolidated
statements of operations for the nine months ended September 30, 1999
and for the year ended December 31, 1998, reflect the pro forma
condensed consolidated balance sheet and pro forma condensed
consolidated statements of operations of the Company excluding the
assets and liabilities of InterSystems Nebraska as though the sale of
the assets and assumption of certain liabilities of InterSystems
Nebraska and the repayment of long term debt and other liabilities had
occurred at September 30, 1999 for the condensed consolidated balance
sheet and at January 1, 1998 for the condensed consolidated statements
of operations. The pro forma condensed consolidated financial
statements should be read in connection with the notes hereto and with
historical consolidated financial statements of the Company together
with the notes thereto included in the Company's Form 10-KSB for the
year ended December 31, 1998 and Form 10-Q for the nine months ended
September 30, 1999.
INTERSYSTEMS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
September 30, 1999
<TABLE>
<S> <C> <C> <C>
Historical Adjustments Pro Forma
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CURRENT ASSETS:
Cash $ 249 $ 5,602 $ 5,851
Marketable equity securities 78 78
Trade receivables 3,601 ( 2,154) 1,447
Inventories 2,689 ( 2,622) 67
Prepaid expenses and other 425 ( 120) 305
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7,042 706 7,748
Equipment and leasehold
improvements (net) 26,112 (2,037) 24,075
Other assets 351 ( 19) 332
Escrow account 250 250
Note receivable - sale of
Nebraska 500 500
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Total assets $ 33,505 $ ( 600) $ 32,905
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</TABLE>
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<TABLE>
<S> <C> <C> <C>
CURRENT LIABILITIES
Line of credit and short-
term notes payable $ 775 $ ( 475) $ 300
Current portion of
long-term debt 1,155 ( 129) 1,026
Accounts payable and
accrued expenses 4,355 ( 1,860) 2,495
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6,285 ( 2,464) 3,821
Convertible subordinated
debentures 645 645
Line of credit 670 670
Long-term debt-net of
current portion 22,065 ( 1,363) 20,702
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Total liabilities 29,665 ( 3,827) 25,838
Shareholders' equity 3,840 3,227 7,067
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Total liabilities and
shareholders' equity $ 33,505 $ ( 600) $ 32,905
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</TABLE>
Adjustments include consideration received for sale of assets subject
to certain liabilities of Nebraska consisting of cash of $5,602 (after
repayment of $2,529 in outstanding debt) escrow of $250 and $500
convertible subordinated note and the elimination of assets and
liabilities of Nebraska. The gain on the sale approximates $3,227.
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INTERSYSTEMS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
September 30, 1999
<TABLE>
<S> <C> <C> <C>
Historical Adjustments Pro forma
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Net sales $ 24,033 $ (13,433) $ 10,600
Cost of sales 16,795 ( 9,625) 7,170
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Gross profit 7,238 ( 3,808) 3,430
Selling, general and
administrative expenses 5,586 ( 2,883) 2,703
Interest expense - net 1,541 ( 233) 1,308
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Income from continuing
operations $ 111 $ ( 692) $ ( 581)
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Per share - basic and
Assuming dilution $ .01 $ ( .07)
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Average number of common
Shares outstanding 7,830 7,830
========== =========
</TABLE>
Adjustments for the nine months ended September 30, 1999 reflect the
elimination of sales and costs of the Nebraska operations including
interest on outstanding obligations repaid at closing and the
elimination of $217 in parent company overhead costs as a result of the
sale.
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INTERSYSTEMS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
December 31, 1998
<TABLE>
<S> <C> <C> <C>
Historical Adjustments Pro forma
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Net sales $ 33,322 $ (21,817) $ 11,505
Cost of sales 23,834 (16,276) 7,558
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Gross profit 9,488 ( 5,541) 3,947
Selling, general and
administrative expenses 7,415 ( 4,073) 3,342
Interest expense - net 1,630 ( 329) 1,301
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Income from continuing
operations $ 443 $ ( 1,139) $ ( 696)
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Per share - basic $ .06 $ ( .09)
assuming dilution .05 ( .09)
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Average number of common
Shares outstanding
Basic 7,798 7,798
========= =========
assuming dilution 8,156 7,798
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</TABLE>
Adjustments for the year ended December 31, 1998 reflect the
elimination of sales and costs of the Nebraska operations including
interest on outstanding obligations repaid at closing and the
elimination of $308 in parent company overhead costs as a result of the
sale.
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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 hereunto duly authorized.
INTERSYSTEMS, INC.
By: /s/ Herbert M. Pearlman
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Herbert M. Pearlman, Chairman and
Acting President
Date: December 16, 1999
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