<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
NOVEMBER 16, 1994
_________________
RAYCHEM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 2-15299 94-1369731
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
300 CONSTITUTION DRIVE, MENLO PARK, CA 94025-1164
(Address of principal executive offices) (Zip code)
(415) 361-4180
(Registrant's telephone number, including area code)
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RAYCHEM CORPORATION
INDEX TO FORM 8-K AMENDMENT
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
ITEM 7(b) PRO FORMA FINANCIAL INFORMATION
Pro Forma Consolidated Condensed Statement of
Operations - Three Months Ended September 30, 1994 2
Pro Forma Consolidated Condensed Statement of
Operations - Fiscal Year Ended June 30, 1994 3
Notes to Pro Forma Consolidated Condensed
Statements of Operations 4-5
Pro Forma Consolidated Condensed Balance Sheet -
September 30, 1994 6
Notes to Pro Forma Consolidated Condensed
Balance Sheet 7
SIGNATURES 8
</TABLE>
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RAYCHEM CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
THE FOLLOWING UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS HAS BEEN DERIVED FROM THE CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS OF THE COMPANY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1994,
AND ADJUSTS SUCH INFORMATION TO GIVE EFFECT TO THE FORMATION OF THE
ERICSSON RAYNET JOINT VENTURE AS IF THE JOINT VENTURE WAS FORMED ON JULY
1, 1994. THE JOINT VENTURE HAS TAKEN OVER AND IS CONTINUING THE
OPERATIONS OF THE COMPANY'S RAYNET SUBSIDIARY. RAYNET HOLDS THE
COMPANY'S 49% INTEREST IN THE JOINT VENTURE. ALTHOUGH THE JOINT VENTURE
AGREEMENT SPECIFIES VARYING PROFIT AND LOSS ALLOCATIONS TO ITS PARTNERS
IN THE EARLY YEARS OF OPERATION, FOR PURPOSES OF THIS PRO FORMA
PRESENTATION 49% OF THE LOSS HAS BEEN ALLOCATED TO THE COMPANY. THE PRO
FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS IS PRESENTED FOR
INFORMATIONAL PURPOSES ONLY AND DOES NOT PURPORT TO BE INDICATIVE OF THE
RESULTS OF OPERATIONS THAT ACTUALLY WOULD HAVE RESULTED IF THE ERICSSON
RAYNET JOINT VENTURE HAD BEEN CONSUMMATED ON JULY 1, 1994, NOR WHICH MAY
RESULT FROM FUTURE OPERATIONS. THE PRO FORMA CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE NOTES
THERETO AND THE COMPANY'S CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND
RELATED NOTES THERETO CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM
10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1994.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1994
---------------------------------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------------------ ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 390,701 $ (22,556)(1) $ 368,145
Cost of goods sold 209,496 (26,637)(1) 182,859
Research and development expense 40,421 (13,192)(1) 27,229
Selling, distribution, and administrative expense 126,145 (10,952)(1) 114,943
(250)(4)
Provision for restructuring and divestitures 23,900 0 23,900
Loss on formation of Ericsson Raynet joint venture 28,130 (28,130)(3) 0
Interest expense, net 4,701 (107)(1) 4,993
399 (6)
Equity in net loss of Ericsson Raynet joint venture 0 12,091 (2) 12,091
Other expense, net 3,546 63 (1) 3,609
----------------- ---------------- ----------------
Loss before income taxes, extraordinary
item, and change in accounting principle (45,638) 44,159 (1,479)
Provision for income taxes 2,690 0 2,690
----------------- ---------------- ----------------
Loss before extraordinary item
and change in accounting principle $ (48,328) $ 44,159 $ (4,169)
================= ================ ================
Average number of common shares and
equivalents outstanding 43,241,149
================
Loss before extraordinary item
and change in accounting principle
per common share $ (0.10)
================
</TABLE>
See accompanying notes to pro forma consolidated condensed statements of
operations.
2
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RAYCHEM CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
THE FOLLOWING UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS HAS BEEN DERIVED FROM THE CONSOLIDATED STATEMENT OF OPERATIONS
OF THE COMPANY FOR THE FISCAL YEAR ENDED JUNE 30, 1994, AND ADJUSTS SUCH
INFORMATION TO GIVE EFFECT TO THE FORMATION OF THE ERICSSON RAYNET JOINT
VENTURE AS IF THE JOINT VENTURE WAS FORMED ON JULY 1, 1993. THE JOINT
VENTURE HAS TAKEN OVER AND IS CONTINUING THE OPERATIONS OF THE COMPANY'S
RAYNET SUBSIDIARY. RAYNET HOLDS THE COMPANY'S 49% INTEREST IN THE JOINT
VENTURE. ALTHOUGH THE JOINT VENTURE AGREEMENT SPECIFIES VARYING PROFIT
AND LOSS ALLOCATIONS TO ITS PARTNERS IN THE EARLY YEARS OF OPERATION, FOR
PURPOSES OF THIS PRO FORMA PRESENTATION 49% OF THE LOSS HAS BEEN
ALLOCATED TO THE COMPANY. THE PRO FORMA CONSOLIDATED CONDENSED STATEMENT
OF OPERATIONS IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT
PURPORT TO BE INDICATIVE OF THE RESULTS OF OPERATIONS THAT ACTUALLY WOULD
HAVE RESULTED IF THE ERICSSON RAYNET JOINT VENTURE HAD BEEN CONSUMMATED
ON JULY 1, 1993, NOR WHICH MAY RESULT FROM FUTURE OPERATIONS. THE PRO
FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS SHOULD BE READ IN
CONJUNCTION WITH THE NOTES THERETO AND THE COMPANY'S CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES THERETO CONTAINED IN THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1994.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1994
---------------------------------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
--------------------- --------------- -----------------
<S> <C> <C> <C>
Revenues $ 1,461,532 $ (57,784)(1) $ 1,403,748
Cost of goods sold 779,820 (77,946)(1) 701,874
Research and development expense 136,619 (41,278)(1) 95,341
Selling, distribution, and administrative expense 491,563 (38,976)(1) 451,587
(1,000)(4)
Interest expense, net 12,762 (2,966)(1) 14,439
3,049 (5)
1,594 (6)
Equity in net loss of Ericsson Raynet joint venture 0 46,716 (2) 46,716
Other expense, net 7,023 713 (1) 7,736
--------------------- ----------- -----------------
Income before income taxes 33,745 52,310 86,055
Provision for income taxes 32,066 (324)(1) 31,742
--------------------- ----------- -----------------
Net income $ 1,679 $ 52,634 $ 54,313
===================== =========== =================
Average number of common shares and
equivalents outstanding 43,290,797
=================
Net income per common share $ 1.25
=================
</TABLE>
See accompanying notes to pro forma consolidated condensed statements of
operations.
3
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RAYCHEM CORPORATION
NOTES TO PRO FORMA CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(1) Adjustment to deconsolidate Raynet, eliminating its results of operations
from the company's consolidated results of operations.
(2) Adjustment to record the company's 49% equity in losses of the Ericsson
Raynet joint venture. Assumes the joint venture's losses are equal to
Raynet's results of operations, after the following adjustments for
non-joint venture activity:
<TABLE>
<CAPTION>
Three Months Fiscal Year
Ended Ended
September 30, 1994 June 30, 1994
------------------ -------------
(in thousands)
<S> <C> <C>
Raynet net loss $ (28,269) $ (102,993)
Adjustments:
Eliminate BSE royalties 621 3,418
Eliminate dividend on RNI preferred stock - 3,049
Eliminate nonrecurring charges for employee
incentive programs 2,972 1,187
---------- ----------
Adjusted Ericsson Raynet net loss $ (24,676) $ (95,339)
========== ==========
49% equity in Ericsson Raynet net loss $ (12,091) $ (46,716)
========== ==========
</TABLE>
BellSouth Enterprises Inc. (BSE) had financed a portion of the software
development work at Raynet and held a royalty interest in the software
related revenues of Raynet. With the creation of the joint venture, this
royalty payment was reconfigured. Raychem has agreed to pay BSE a total of
$30 million in three equal payments beginning at the closing of the joint
venture transaction and continuing with two subsequent annual payments (see
footnote 6 below). In addition, Raychem has agreed to make other royalty
payments to BSE contingent upon the future revenues and earnings
performance of the joint venture. Raynet's royalties arising from the
prior arrangement with BSE are eliminated for pro forma purposes.
Raychem held convertible preferred stock in Raynet International Inc.
(RNI), a subsidiary of Raynet Corporation, which stock was converted to
common stock prior to the closing of the transaction. As a result,
dividends accrued on the preferred stock are eliminated for pro forma
purposes.
Certain employee incentive programs, designed to retain employees during
the period the company was seeking a strategic partner for Raynet, resulted
in charges which are considered nonrecurring and directly attributable to
the transaction. These charges have been eliminated for pro forma
purposes.
4
<PAGE> 6
Due to the company's U.S. tax position, no additional provision for income
taxes has been recorded for pro forma purposes with respect to the reduced
losses arising from the joint venture allocation. Because the joint
venture is a U.S. partnership, the future results of the joint venture will
be reported under the equity method, on a pre-tax basis, and the tax impact
of the joint venture will be included in the company's consolidated
provision for income taxes.
The joint venture agreement provides that Ericsson's share of the joint
venture's losses will be capped at $25 million, plus 51% of restructuring
charges, if any, for the fiscal year ending June 30, 1995. In addition,
during the fiscal year ending June 30, 1996, up to $19.6 million of losses
will be allocated to Ericsson and Raynet in a 51/49 ratio; additional
losses, if any, of up to $10 million will be allocated 100% to Raynet; and
thereafter additional losses, if any, will again be allocated to Ericsson
and Raynet in a 51/49 ratio. Restructuring charges, if any, during the
fiscal year ending June 30, 1996, will be allocated to Ericsson and Raynet
in a 51/49 ratio. If these allocations were applied to the pro forma
periods (i.e. fiscal 1995 Ericsson cap to fiscal year ended June 30, 1994,
and the fiscal 1996 allocations to the three-month period ended September
30, 1994), then the company's equity in the joint venture's net loss would
be as follows:
<TABLE>
<CAPTION>
Three Months Fiscal Year
Ended Ended
September 30, 1994 June 30, 1994
------------------ -------------
(in thousands)
<S> <C> <C>
Equity in Ericsson Raynet net loss $ (14,680) $ (69,319)
=========== ===========
</TABLE>
(3) Adjustment to reverse the loss on formation of the Ericsson Raynet joint
venture which is considered to be a nonrecurring charge directly
attributable to the transaction. Reversing the loss on formation from the
company's results of operations will not have any tax impact due to the
company's U.S. tax position.
(4) Adjustment to reverse the company's amortization of goodwill arising from
the repurchase of all of the convertible preferred stock in RNI previously
held by BSE. The goodwill has been considered in Raychem's basis for
purposes of computing its loss on formation of the Ericsson Raynet joint
venture. Reversing the goodwill amortization from the company's results of
operations will not have any tax impact due to the company's U.S. tax
position.
(5) Adjustment to reverse dividend received by the company on RNI preferred
stock.
(6) Adjustment to record imputed interest at 7.97% annual rate on payments of
$10 million each due to BSE on November 16, 1995 and 1996, in accordance
with the reconfigured BSE royalty agreement (see footnote 2 above).
5
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RAYCHEM CORPORATION
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
THE FOLLOWING UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
HAS BEEN DERIVED FROM THE CONSOLIDATED CONDENSED BALANCE SHEET OF THE
COMPANY AT SEPTEMBER 30, 1994, AND ADJUSTS SUCH INFORMATION TO GIVE
EFFECT TO THE FORMATION OF THE ERICSSON RAYNET JOINT VENTURE AS IF THE
JOINT VENTURE WAS FORMED ON SEPTEMBER 30, 1994. IN FORMING THE JOINT
VENTURE, RAYCHEM SOLD CERTAIN SPECIFIED ASSETS OF ITS RAYNET
SUBSIDIARY TO ERICSSON IN EXCHANGE FOR $40 MILLION, ERICSSON
CONTRIBUTED THE PURCHASED ASSETS TO THE JOINT VENTURE, AND RAYNET
CONTRIBUTED SUBSTANTIALLY ALL OF ITS REMAINING ASSETS AND LIABILITIES
TO THE JOINT VENTURE. RAYNET HOLDS THE COMPANY'S 49% INTEREST IN THE
JOINT VENTURE AND RAYNET REPRESENTATIVES CONSTITUTE A MINORITY OF THE
BOARD OF MANAGERS OF THE JOINT VENTURE. THE PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY
AND DOES NOR PURPORT TO BE INDICATIVE OF THE FINANCIAL CONDITION THAT
ACTUALLY WOULD HAVE RESULTED IF THE ERICSSON RAYNET JOINT VENTURE HAD
BEEN CONSUMMATED ON SEPTEMBER 30, 1994. THE PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET SHOULD BE READ IN CONJUNCTION WITH THE NOTES
THERETO AND THE COMPANY'S CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
AND RELATED NOTES THERETO CONTAINED IN THE COMPANY'S QUARTERLY REPORT
ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1994.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
--------------------------------------------------------
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
--------------- -------------- ----------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 68,746 $ (2,564)(2) $ 93,012
26,830 (3)
Accounts receivable, net 318,248 (29,142)(2) 289,106
Inventories 241,408 (21,689)(2) 219,719
Other current assets 100,177 22,708 (2) 122,885
--------------- ------------ ----------------
Total current assets 728,579 (3,857) 724,722
--------------- ------------ ----------------
Net property, plant, and equipment 530,205 (25,695)(2) 504,510
Investment in unconsolidated affiliates 0 35,622 (2) 5,682
(29,940)(3)
Other assets 133,361 (11,443)(2) 118,168
(3,750)(3)
--------------- ------------ ----------------
TOTAL ASSETS $ 1,392,145 $ (39,063) $ 1,353,082
=============== ============ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 31,196 $ (2,318)(2) $ 28,878
Accounts payable 75,094 (17,247)(2) 57,847
Other current liabilities 246,603 (28,130)(1) 207,898
(12,505)(2)
1,930 (3)
--------------- ------------ ----------------
Total current liabilities 352,893 (58,270) 294,623
--------------- ------------ ----------------
Long-term debt 244,675 0 244,675
Other long-term liabilities 99,051 (133)(2) 118,258
19,340 (3)
Minority interest 4,117 0 4,117
Stockholders' equity:
Common stock 43,378 0 43,378
Additional contributed capital 364,850 0 364,850
Retained earnings 259,561 28,130 (1) 259,561
(28,130)(3)
Currency translation 24,410 0 24,410
Notes receivable from sale of stock (790) 0 (790)
--------------- ------------ ----------------
Total stockholders' equity 691,409 0 691,409
--------------- ------------ ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,392,145 $ (39,063) $ 1,353,082
=============== ============ ================
</TABLE>
See accompanying notes to pro forma consolidated condensed balance sheet.
6
<PAGE> 8
RAYCHEM CORPORATION
NOTES TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(1) Adjustment to reverse the accrued loss on formation of the Ericsson Raynet
joint venture before recording the pro forma entries arising at the closing
of the transaction (see footnotes 2 and 3 below).
(2) Adjustments to deconsolidate Raynet subsidiary and reflect the company's
investment in the joint venture, to record retained net assets of selected
Raynet foreign subsidiaries ($3.8 million), to reflect amounts receivable
by the company from the joint venture, comprised of trade receivables
($16.6 million) and a loan receivable ($8 million), and to record
liabilities retained by Raynet ($2.1 million).
(3) Adjustments to record the joint venture transaction. Adjustment to cash is
comprised of receipt of $40 million in sales proceeds, reduced by the $10
million payment to BellSouth Enterprises Inc. (BSE) and approximately $3.2
million of expenses associated with the sale, consisting primarily of
broker, legal, and accounting fees. Other adjustments include recording of
liabilities for pension plan obligations resulting from the transfer of
Raynet employees participating in the Raychem defined benefit plan to plans
which will be established by the joint venture ($3.4 million), the
write-off of goodwill arising from the repurchase by the company of Raynet
International Inc. preferred stock previously held by BSE ($3.8 million),
and the recording of additional amounts due to BSE at their present value
using a 7.97% discount rate ($17.8 million).
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
RAYCHEM CORPORATION
(Registrant)
Date: January 6, 1995 /s/ RAYMOND J. SIMS
--------------- -------------------------------
Raymond J. Sims
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ DEIDRA D. BARSOTTI
-------------------------------
Deidra D. Barsotti
Vice President and
Corporate Controller
(Principal Accounting Officer)
8
