<PAGE>
================================================================================
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
================================================================================
FORM 8-K/A
[X] CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 14, 1999
_______________________________
SYMMETRICOM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
California 0-2287 No. 95-1906306
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
2300 Orchard Parkway,
San Jose, California 95131-1017
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (408) 943-9403
Not Applicable
(Former name or former address, if changed since last report)
_______________________________
<PAGE>
The undersigned Registrant, Symmetricom, Inc. ("Symmetricom"), hereby amends
item 7, financial statements and exhibits of its Current Report on Form 8-K,
originally filed with the Securities Exchange Commission on October 14, 1999,
reporting the acquisition by Registrant from Hewlett-Packard Company, it's
Communications Synchronization Business pursuant to the Master Asset Purchase
Agreement dated August 30, 1999.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements of Hewlett-Packard Company Communications
Synchronization Business required by this Item 7(a), are set forth below:
Report of Independent Accountants
Audited Statement of Tangible Assets Sold and Liabilities Assumed as
of September 30, 1999.
Audited Statements of Net Sales, Cost of Sales and Direct Operating
Expenses for the three fiscal years ended October 31, 1998, 1997 and
1996, and Unaudited Statements of Net Sales, Cost of Sales and Direct
Operating Expenses for the nine months ended July 31, 1999 and 1998.
Notes to the Statement of Tangible Assets Sold and Liabilities Assumed
and Statements of Net Sales, Cost of Sales and Direct Operating
Expenses.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the three-month period ended September 30, 1999.
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended June 30, 1999.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1999.
(c) Exhibits
23.1 Consent of Independent Accountants
99.4 Financial Statements of Hewlett-Packard Company Communications
Synchronization Business described in Item 7(a).
99.5 Pro Forma Financial Statements described in Item 7(b).
<PAGE>
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.
SYMMETRICOM, INC.
(Registrant)
DATE: December 14, 1999 By:
/s/ Maurice Austin
------------------
Maurice Austin
Chief Financial Officer
(for Registrant and as Principal
Financial and Accounting Officer)
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-38384, 33-3456, 33-11317, 2-70291, 33-56042, 33-
57163, 333-00333, 333-21815, 333-47369, 333-68969, and 333-82935) of
Symmetricom, Inc. of our report dated November 30, 1999 relating to the
statement of tangible assets sold and liabilities assumed as of September 30,
1999 and the related statements of net sales, cost of sales and direct operating
expenses for the years ended October 31, 1998, 1997 and 1996 of Hewlett-Packard
Company Communications Synchronization Business which appears in the Current
Report on Form 8-K/A of Symmetricom, Inc.'s Form 8-K originally
filed on October 14, 1999.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Jose, California
December 10, 1999
<PAGE>
EXHIBIT 99.4
Hewlett-Packard Company
Communications
Synchronization Business
Statements of Tangible Assets Sold and Liabilities
Assumed as of September 30, 1999, and of Net Sales,
Cost of Sales and Direct Operating Expenses for the
Years Ended October 31, 1998, 1997 and 1996
<PAGE>
Report of Independent Accountants
To the Board of Directors
Hewlett-Packard Company
We have audited the accompanying statement of tangible assets sold and
liabilities assumed of the Hewlett-Packard Company ("HP") Communications
Synchronization Business (the "Business") as of September 30, 1999, and the
related statements of net sales, cost of sales and direct operating expenses for
the years ended October 31, 1998, 1997 and 1996. These statements are the
responsibility of HP and the Business' management. Our responsibility is to
express an opinion on these statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in these statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the statements. We believe that
our audits provides a reasonable basis for our opinion.
The accompanying statements were prepared for inclusion in the Securities and
Exchange Commission Current Report on Form 8-K of Symmetricom, Inc. as described
in Note 2 and are not intended to be a complete presentation of the Business'
financial position and results of operation.
In our opinion the statements referred to above present fairly, in all material
respects, the tangible assets sold and liabilities assumed as described in Note
2 as of September 30, 1999, and the net sales, cost of sales and direct
operating expenses as described in Note 2 for the years ended October 31, 1998,
1997 and 1996, of the Business in conformity with generally accepted accounting
principles.
/s/ Pricewaterhouse Coopers LLP
PricewaterhouseCoopers LLP
San Jose, California
November 30, 1999
<PAGE>
Hewlett-Packard Company Communications
Synchronization Business
Statement of Tangible Assets Sold and Liabilities Assumed (in thousands)
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30,
1999
<S> <C>
Tangible assets sold:
Raw material inventory $ 269
Finished goods inventory 465
----------
734
----------
Machinery and equipment 1,980
Less: Accumulated depreciation (1,775)
----------
205
----------
Total tangible assets sold $ 939
----------
Liabilities assumed:
Accrued warranties $ 132
Other accrued liabilities 93
----------
Total liabilities assumed $ 225
==========
</TABLE>
See accompanying Notes to the Statements of Tangible Assets Sold
and Liabilities Assumed and of Net Sales, Cost of Sales and Direct Operating
Expense.
2
<PAGE>
Hewlett-Packard Company Communications
Synchronization Business
Statement of Net Sales, Cost of Sales and Direct Operating Expenses
(in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine
Months Ended For the Year Ended
July 31, October 31,
---------------------- -------------------------------
1999 1998 1998 1997 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
Net sales $ 33,223 $ 43,327 $ 58,992 $ 69,384 $ 17,132
Cost of sales 29,258 36,180 53,611 41,155 10,680
-------- -------- -------- -------- --------
3,965 7,147 5,381 28,229 6,452
Direct operating expenses:
Research and development 8,556 11,998 15,707 20,842 14,667
Selling, general and administrative 12,499 13,828 18,390 13,496 5,264
--------- --------- --------- -------- ---------
21,055 25,826 34,097 34,338 19,931
--------- --------- --------- -------- ---------
Net deficiency $ (17,090) $ (18,679) $ (28,716) $ (6,109) $ (13,479)
========= ========= ========= ======== =========
</TABLE>
<PAGE>
Hewlett-Packard Company Communications
Synchronization Business
Notes to Statement of Tangible Assets Sold and Liabilities Assumed and
Statements of Net Sales, Cost of Sales and Direct Operating Expenses
(in thousands)
- -------------------------------------------------------------------------------
1. Description of Business
The Communications Synchronization Business (the "Business"), of the Hewlett-
Packard Company ("HP"), is engaged in the design, manufacture and marketing
of synchronization products for communication networks.
2. Basis of Presentation
On August 30, 1999, HP sold to Symmetricom, Inc. ("Symmetricom" or the
"Company") for cash certain tangible assets and Symmetricom assumed certain
liabilities of the Business in accordance with the Master Asset Purchase
Agreement between HP and Symmetricom dated August 30, 1999 (the "Purchase
Agreement").
The accompanying statements of tangible assets sold and liabilities assumed
as of September 30, 1999 and of net sales, cost of sales and direct operating
expenses for the nine months ended July 31, 1999 (unaudited) and 1998
(unaudited) and the years ended October 31, 1998, 1997, and 1996, have been
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Current Report on
Form 8-K of Symmetricom.
The statement of tangible assets sold and liabilities assumed includes the
amounts of certain tangible assets and liabilities of the Business at
September 30, 1999. Tangible assets sold include raw materials and finished
goods inventories and property, plant and equipment as specifically
identified in the Purchase Agreement. The machinery and equipment include
equipment for research and development, manufacturing and testing of
communication synchronization products. The assets purchased by Symmectricom
include miscellaneous equipment with an original cost of $507 which was
expensed upon purchase by HP and which is included in the statement of
tangible assets sold and liabilities assumed. Liabilities assumed include an
estimate of the Business' warranty obligations and certain accrued benefits
earned by former HP employees who transferred to Symmetricom in connection
with the Purchase Agreement.
The statements of net sales, cost of sales and direct operating expenses
includes direct expenses of the Business for research and design,
manufacturing, marketing, distribution, and administration as well as
allocations of costs incurred by HP primarily for selling, administration and
management services that are directly attributed to the operations of the
Business. Corporate overhead, interest expense and income tax incurred by HP
have been excluded from the statements of net sales, cost of sales and direct
operating expenses. These statements do not purport to represent all the
costs and expenses associated with a stand-alone separate company, or the
costs which may be incurred by an unaffiliated company to achieve similar
results. Complete financial statements, including historical balance sheets,
were not prepared as HP did not maintain the Business as a separate business
unit and has not segregated indirect operating cost information or certain
assets and liabilities in the Business' accounting records.
4
<PAGE>
Hewlett-Packard Company Communications
Synchronization Business
Notes to Statement of Tangible Assets Sold and Liabilities Assumed and
Statements of Net Sales, Cost of Sales and Direct Operating Expenses
(in thousands) (Continued)
- -------------------------------------------------------------------------------
The statements of net sales, cost of sales and direct operating expenses for
the nine months ended July 31, 1999 and 1998 are unaudited; however, in the
opinion of HP and the Business' management, these statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of these statements.
3. Summary of Significant Policies
Use of estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the Business' financial statements and
accompanying notes. Actual results could differ from those estimates.
Revenue recognition
Revenue from product sales is recognized at the time the product is shipped
or upon installation and customer acceptance, if the acceptance criteria are
substantive. Provisions are established for estimated costs that may be
incurred for product warranties and post sales support.
The Business sells communication synchronization products to domestic and
international customers. The following table is a summary of sales by major
geographic region (percentage of total sales):
<TABLE>
<CAPTION>
For the Nine Months Ended
July 31, For the Year Ended October 31,
------------------------- ---------------------------------
1999 1998 1998 1997 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
United States 24% 46% 44% 20% 24%
Korea 22% 13% 11% 55% 28%
Other international 54% 41% 45% 25% 48%
--------- ---------- --------- --------- ---------
Total 100% 100% 100% 100% 100%
--------- ---------- --------- --------- ---------
</TABLE>
The following table is a summary of significant customers each comprising
greater than 10% of sales:
5
<PAGE>
Hewlett-Packard Company Communications
Sychronization Business
Notes to Statement of Tangible Assets Sold And Liabilities Assumed and
Statements Net Sales, Costs of Sales and Direct Operating Expenses
(in thousands) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended
July 31, For the Year Ended October 31,
------------------------- ------------------------------
1999 1998 1998 1997 1996
------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Company A 22% 13% 11% 56% 28%
Company B - 22% 19% 13% -
Company C - 13% 13% - -
Company D - - - - 15%
Company E - - - - 14%
Company F 14% - - - -
</TABLE>
Inventories
Inventories are valued at standard cost which approximates actual cost
computed on a first-in, first-out basis, not in excess of market values.
Property, plant and equipment
Property, plant and equipment are stated at cost. Additions, improvements
and major renewals are capitalized. Maintenance, repairs and minor renewals
are expensed as incurred. Depreciation is provided using accelerated
methods, principally over 3 to 10 years for machinery and equipment.
Depreciation expense amounted to $471 (unaudited), $635 (unaudited) $819,
$655 and $299 during the nine months ended July 31, 1999 and 1998 and the
years ended October 31, 1998, 1997 and 1996, respectively.
Research and development
Research and development costs are expensed as incurred.
Company Allocations
Allocated costs directly related to the operations of the Business primarily
include international cash discounts, field selling costs and certain
management and administrative costs. Such costs are allocated on a basis
considered reasonable by management as discussed below.
International cash discounts
International cash discounts of $102 (unaudited), $231 (unaudited), $280,
$416 and $103 were allocated to the Business during the nine months ended
July 31, 1999 and 1998 and the years ended October 31, 1998, 1997 and 1996,
respectively. These represent international cash discounts that offset
direct revenues earned by the Business and are allocated based on the value
of gross shipments.
Field selling costs
Field selling costs of $5,127 (unaudited), $5,878 (unaudited), $7,604, $6,134
and $2,692 were allocated to the Business during the nine months ended July
31, 1999 and 1998 and the years ended October 31, 1998, 1997 and 1996,
respectively. These costs include salaries and benefits, travel, facilities
and other expenses associated with HP's sales force. These field selling
costs are allocated based on a channel model applicable to a geographic
region.
6
<PAGE>
Hewlett-Packard Company Communications
Sychronization Business
Notes to Statement of Tangible Assets Sold And Liabilities Assumed and
Statements Net Sales, Costs of Sales and Direct Operating Expenses
(in thousands) (Continued)
- --------------------------------------------------------------------------------
Administrative and management costs
Administrative and management costs of $1,556 (unaudited), $2,245
(unaudited), $3,014, $1,918 and $704 were allocated to the Business during
the nine months ended July 31, 1999 and 1998 and the years ended October 31,
1998, 1997 and 1996, respectively. These costs include certain marketing,
management and administrative services and other international trading
expenses and are allocated based on revenues or, as in personnel related
costs, on headcount.
7
<PAGE>
Exhibit 99.5
Symmetricom, Inc. and Hewlett-Packard Company
Communications Synchronization Business
Pro Form Financial Data
On September 30, 1999, subsequent to the first fiscal quarter, Symmetricom, Inc.
("Symmetricom" or the "Company") acquired Hewlett-Packard Company's
Communications Synchronization Business ("Product Line Business") for $19.4
million in cash. The acquisition has been accounted for under the purchase
method of accounting. The estimated net purchase price of $19.8 million, which
includes cash paid of $19.0 million, transaction costs of $.4 million, assumed
liabilities of $.4 million was allocated to tangible assets acquired of $1.4
million, capitalized developed technology of $8.0 million, other intangible
assets of $6.9 million and in-process research and development of $3.5 million.
Additionally, an estimated $11.0 million will be paid to Hewlett-Packard Company
over the next 12 to 15 months as additional assets, primarily inventory, are
transferred to the Company. The purchase price allocation is subject to further
adjustment over the next quarter.
The following condensed consolidated pro forma financial data is based upon the
historical financial statements of Symmetricom for the three months ended
September 30, 1999 (unaudited) and the year ended June 30, 1999 and the
historical financial statements of the Product Line Business for the three
months ended July 31, 1999 (unaudited) and the year ended July 31, 1999. The
unaudited condensed consolidated pro forma financial data has been prepared to
present, on a pro forma basis, the combined results of the operations of the
Company and the Product Line Business.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet at September 30,
1999 combines the historical balance sheet of the Company and the Statement of
Tangible Assets Sold and Liabilities Assumed of the Product Line Business as if
the acquisition had occurred on September 30, 1999, after giving effect to
certain adjustments described in the accompanying Notes to Unaudited Pro Forma
Condensed Consolidated Balance Sheet.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the
year ended June 30, 1999 and for the three months ended September 30, 1999
present the combined results of operations of the Company and the Statement of
Net Sales, Cost of Sales and Direct Operating Expenses of the Product Line
Business as if the acquisition had occurred on September 30, 1999, after giving
effect to certain adjustments described in the accompanying Notes to Unaudited
Pro Forma Condensed Consolidated Statement of Operations. The following
Unaudited Pro Forma Condensed Consolidated Financial Information is presented
for illustrative purposes only. The Gross Margin of the Product Line Business
was significantly impacted by expenses for inventory writeoff, warranty retrofit
programs, the redeployment of resources and ramp up costs of offshore
manufacturing facilities for the year and quarter ended July 31, 1999. We do not
believe that this is indicative of the consolidated financial position or
results of operations for future periods or the results that actually would have
been realized had the Company and the Product Line Business been a consolidated
company during the specified periods.
The Unaudited Pro Forma Condensed Consolidated Financial Information, including
the notes thereto, is qualified in its entirety by reference to, and should be
read in conjunction with the historical consolidated financial statements and
the notes thereto, which were previously reported in the Company's Annual Report
on Form 10-K for the year ended June 30, 1999 and the Quarterly Report on Form
10-Q for the quarter ended September 30, 1999.
This report on Form 8-K contains forward-looking information within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and is subject to the safe harbor
created by those Sections. These forward-looking statements include statements
concerning additional payments as assets are transferred to
<PAGE>
Symmetricom, purchase price allocation, and future operating results.
Symmetricom's actual results could differ materially from those projected or
suggested in these forward-looking statements. Factors that could cause future
actual results to differ materially from the results projected in or suggested
by such forward-looking statements include: transfer of the assets by
Hewlett-Packard Company; difficulties in integrating the Communications
Synchronization business, products and employees with those of Symmetricom;
reduced rates of growth of telecommunication services and high-bandwidth
applications; timing, cancellation or delay of customer orders; delays in new
product development, introduction and production startup; increased competition;
customer acceptance of new products, including new and existing Communications
Synchronization products; customer delays in qualification of key new products,
including new and existing Communications Synchronization products; and the risk
factors listed from time to time in Symmetricom's reports filed with the
Securities and Exchange Commission.
<PAGE>
EXHIBIT 00.5 - Part 2
SYMMETRICOM, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
September 30, 1999
(In thousands)
<TABLE>
<CAPTION>
Symmetricom, Hewlett-Packard
Inc. Product Line Adjustments Pro Forma
------------ --------------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 50,062 $ - $ (19,041) (1) $ 31,021
Short-term investments 12,256 12,256
Accounts receivable, net 10,640 - - 10,640
Inventories 11,087 734 (10) (2) 11,811
Other current assets 3,544 - - 3,544
------------ ------------- ---------- ----------
Total current assets 87,589 734 (19,051) 69,272
Property, plant and equipment, net 20,307 205 506 (4) 21,018
Other assets 1,236 15,804 (3) (5) 17,040
------------ ------------- ----------- ----------
Total assets $ 109,132 $ 939 $ (2,741) $ 107,330
============ ============= =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,431 $ - $ - $ 3,431
Accrued liabilities 14,047 225 4,171 (6) (7) 18,443
Current maturities of long-term obligations 618 618
------------ ------------- ----------- ----------
Total current liabilities 18,096 225 4,171 22,492
Long-term obligations 7,978 - 7,978
Deferred income taxes 624 - - 624
------------ ------------- ----------- ----------
Total liabilities 26,698 225 4,171 31,094
------------ ------------- ----------- ----------
Shareholders' equity:
Preferred stock
Common stock 20,019 - - 20,019
Unrealized gain on securities 2,260 - - 2,260
Excess of tangible assets sold and
liabilities assumed - 714 (714) (9) -
Retained earnings 60,155 - (6,198) (3) (6) (8) 53,957
------------ ------------- ----------- ----------
Total shareholders' equity 82,434 714 (6,912) 76,236
------------ ------------- ----------- ----------
------------ ------------- ----------- ----------
Total liabilities and shareholders' equity $ 109,132 $ 939 $ (2,741) $ 107,330
============ ============= =========== ==========
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(1) Adjustment to reflect the financing of the acquisition. Total cash paid was
$19.0 million plus $.4 million of accrued transaction costs.
(2) Adjustment of inventories to reflect inventories not acquired.
(3) Adjustment to record deferred taxes due to timing differences resulting
from the amortization of in-process research and development for book
and tax purposes.
(4) Adjustment to record property, plant and equipment at its fair market
value.
(5) Adjustment to reflect the purchase price allocation to intangible assets
including developed technology of $8.0 million, workforce of $1.4 million,
customer list of $1.3 million, trademarks of $.9 million and goodwill of
$3.3 million.
(6) Adjustment to record the fair market value of liabilities assumed by the
Company, including $3.6 million for employee retention bonuses and an
additional $.2 million for warranty claims.
(7) Adjustment to record transaction costs of $.4 million.
(8) Adjustment to record the effect of the write-off of in-process
research and development of $4.3 million, net of income tax benefit of
$.9 million.
(9) Adjustment to eliminate the excess of tangible assets sold and liabilities
assumed.
<PAGE>
SYMMETRICOM, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended June 30, 1999
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Symmetricom, Hewlett-Packard
Inc. Product Line Adjustments Pro Forma
------------ --------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 76,915 $ 48,888 $ - $ 125,803
Cost of sales 40,169 46,689 80 (2) 86,938
------------ --------------- ----------- ---------
Gross profit 36,746 2,199 (80) 38,865
Operating expenses:
Research and development 13,671 12,265 62 (2) 25,998
Selling, general and administrative 20,753 17,061 1,960 (1) 39,774
------------ --------------- ----------- ---------
Operating income (loss) 2,322 (27,127) (2,102) (26,907)
Interest income 1,917 - (1,000) (5) 917
Interest expense (715) - - (715)
------------ --------------- ----------- ---------
Earnings (loss) before income taxes 3,524 (27,127) (3,102) (26,705)
Income tax provision (benefit) 740 - (6,348) (4) (5,608)
------------ --------------- ----------- ---------
Earnings (loss) from continuing operations 2,784 (27,127) 3,246 (21,097)
Discontinued operations, net of tax:
Earnings (loss) from operations (73) - - (73)
Estimated loss on sale (3,906) - - (3,906)
------------ --------------- ----------- ---------
Earnings (loss) from discontinued operations (3,979) - - (3,979)
------------ --------------- ----------- ---------
Net earnings (loss) $ (1,195) $ (27,127) $ 3,246 $ (25,076)
------------ --------------- ----------- ---------
Earnings (loss) per share---basic:
Earnings from continuing operations $ 0.18 $ (1.77) $ 0.21 $ (1.38)
Earnings (loss) from discontinued operations (0.26) (0.26)
------------ --------------- ----------- ---------
Net earnings (loss) $ (0.08) $ (1.77) $ 0.21 $ (1.64)
============ =============== =========== =========
Weighted average shares outstanding---basic 15,301 15,301 15,301 15,301
============ =============== =========== =========
Earnings (loss) per share---diluted:
Earnings from continuing operations $ 0.18 $ (1.77) $ 0.21 $ (1.38)
Earnings (loss) from discontinued operations (0.26) (0.26)
------------ --------------- ----------- ---------
Net earnings (loss) $ (0.08) $ (1.77) $ 0.21 $ (1.64)
============ =============== =========== =========
Weighted average shares outstanding-diluted 15,395 15,301 15,301 15,301
============ =============== =========== =========
</TABLE>
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
(1) Adjustment to reflect $2.0 million of amortization of goodwill and other
intangibles on a straight line basis over five to ten years.
(2) Adjustment to reflect $.1 million increase in depreciation on property,
plant and equipment at fair market value.
(3) Nonrecurring costs include $3.6 million of employee retention bonuses and
$3.5 million, net, of in-process research and development. These costs
will be charged to operations in the second fiscal quarter of 2000, the
quarter in
<PAGE>
which the deal was consummated. The effects of these costs have not been
reflected in the unaudited pro forma condensed consolidated statements of
operations as they are nonrecurring in nature.
(4) No tax benefit has been recorded by Hewlett-Packard Company for the
Communications Synchronization business. Adjustment to record a tax
benefit at the estimated Symmetricom rate of 21%.
(5) Adjustment to reflect a $1.0 million decrease in interest income related
to the decrease in cash due to the acquisition.
<PAGE>
SYMMETRICOM, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Quarter Ended September 30, 1999
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Symmetricom, Hewlett-Packard
Inc. Product Line Adjustments Pro Forma
------------ --------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 19,617 $ 6,399 $ - $ 26,016
Cost of of sales 10,578 8,689 20 (2) 19,287
------------ --------------- ----------- ---------
Gross profit 9,039 (2,290) (20) 6,729
Operating expenses:
Research and development 3,303 2,571 16 (2) 5,890
Selling, general and administrative 5,057 2,498 490 (1) 8,045
------------ --------------- ----------- ---------
Operating income (loss) 679 (7,359) (526) (7,206)
Interest income 677 - (250) (5) 427
Interest expense (176) - - (176)
------------ --------------- ----------- ---------
Earnings (loss) before income taxes 1,180 (7,359) (776) (6,955)
Income tax provision (benefit) 295 - (2,034) (4) (1,739)
============ =============== =========== =========
Net earnings (loss) $ 885 $ (7,359) $ 1,258 $ (5,216)
============ =============== =========== =========
Earnings (loss) per share---basic: $ 0.06 $ (0.49) $ 0.08 $ (0.35)
============ =============== =========== =========
Weighted average shares outstanding---basic 15,005 15,005 15,005 15,005
============ =============== =========== =========
Earnings (loss) per share---diluted: $ 0.06 $ (0.49) $ 0.08 $ (0.35)
============ =============== =========== =========
Weighted average shares outstanding---diluted 15,412 15,005 15,005 15,005
============ =============== =========== =========
</TABLE>
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
(1) Adjustment to reflect $0.5 million of amortization of goodwill and other
intangibles on a straight line basis over five to ten years.
(2) Adjustment to reflect $36 thousand increase in depreciation on property,
plant and equipment at fair market value.
(3) Nonrecurring costs include $3.6 million of employee retention bonuses and
$3.5 million, net, of in-process research and development. These costs
will be charged to operations in the second fiscal quarter of 2000, the
quarter in which the deal was consummated. The effects of these costs have
not been reflected in the unaudited pro forma condensed consolidated
statements of operations as they are nonrecurring in nature.
(4) No tax benefit has been recorded by Hewlett-Packard Company for the
Communications Synchronization business. Adjustment to record a tax
benefit at the estimated Symmetricom rate of 25%.
(5) Adjustment to reflect a $250 thousand decrease in interest income related
to the decrease in cash due to the acquisition.
