UNITED STATES
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
July 28, 2000 (Jul 14, 2000)
Date of Report (Date of earliest event reported)
TRIMBLE NAVIGATION LIMITED
(Exact name of registrant as specified in its charter)
California 0-18645 94-2802192
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or organization) identification No.)
645 North Mary Avenue, Sunnyvale, California 94088
(Address of Principal Executive Offices) (Zip Code)
(408) 481-8000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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This report contains forward-looking statements 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. Actual results could differ materially from
those indicated in the forward-looking statements due to a number of factors
including, but not limited to, as a result of the risk factors set forth below
in this report as well as those set forth in the Company's Annual Report on Form
10-K, quarterly reports on Form 10-Q, and the other reports and documents that
the Company files from time to time with the Securities and Exchange Commission.
Item 2. Acquisition.
Acquisition Completion:
Effective as of July 14, 2000, Trimble Navigation Limited, a California
Corporation ("Trimble" or the "Company") completed the acquisition of the
Spectra Precision wholly owned businesses formerly owned by Thermo Electron
Corporation ("Thermo Electron"), collectively known as the "Spectra Precision
Group" for an aggregate purchase price of approximately $294 million, which is
subject to a final adjustment in the purchase price as provided for in the
acquisition agreements. The increase of $14 million from the previously
announced estimated purchase price is a result of adjustments to net working
capital and net debt from a reference balance sheet, made pursuant to the terms
of the original Agreement and Plan of Acquisition signed on May 11, 2000 by and
among Trimble, the Spectra Precision Group and Thermo Electron. The acquisition
includes 100% of the stock of Spectra Precision Inc., a Delaware corporation,
Spectra Precision SRL, an Italian corporation, Spectra Physics Holdings GmbH, a
German corporation, and Spectra Precision BV, a Netherlands corporation. The
acquisition also consists of certain assets and liabilities of Spectra Precision
AB, a Swedish corporation, including 100% of the shares of Spectra Precision SA,
a French corporation, Spectra Precision Scandinavia AB, a Swedish corporation,
Spectra Precision of Canada Ltd., a Canadian corporation, and Spectra Precision
Handelsges mbH, an Austrian corporation.
The acquisition will be treated as a purchase for accounting purposes;
accordingly, Trimble's consolidated results of operations will include the
operating results of the Spectra Precision Group subsequent to the effective
acquisition date. The acquisition was financed with $80 million in seller
subordinated debt, $140 million of cash provided through a syndicate of banks,
and $74 million of the Company's available cash on hand. (See further
discussions below under "Acquisition Financing".) The Company acquired
approximately $133 million of identifiable intangible assets as part of the
acquisition which the Company expects to amortize over various time periods
ranging from 5 to 10 years and expects to record approximately $81 million of
goodwill due to the acquisition which will be amortized over 20 years. The
Company also expects to incur $7 to $8 million of costs and expenses in
connection with the acquisition. The purchase price was arrived at through arm's
length negotiations by the parties and was determined to be fair and reasonable
by the Board of Directors of Trimble.
Acquisition Financing:
In order to finance the acquisition of the Spectra Precision Group, fund
the Company's on-going working capital requirements, and pay related fees and
expenses of the acquisition, Trimble (i) obtained a new senior secured credit
facility, (ii) issued an $80 million subordinated seller promissory note, (iii)
terminated its existing $50 million unsecured revolving credit facility and (iv)
prepaid its existing $30 million outstanding subordinated promissory notes, as
briefly summarized below.
0 New Credit Facilities: In July 2000, ABN AMRO Bank, N.V. led a syndicate
of banks which underwrote $200 million of new senior, secured credit
facilities for the Company (the "New Credit Facilities") to support the
acquisition of the Spectra Precision Group and to refinance certain
existing debt. The New Credit Facilities are comprised of a $50 million
3-year U.S. dollar only revolver; a $50 million 3-year multi-currency
revolver; and a $100 million 5-year term loan. Pricing for any borrowings
under the New Credit Facilities is fixed for the first 6 months at LIBOR
plus 275 basis points and is thereafter tied to a formula, based on the
Company's leverage ratio (which is defined as all outstanding debt
(excluding the seller subordinated note) over EBITDA). Trimble immediately
used approximately $170 million available under the New Credit Facilities
to fund the acquisition of the Spectra Precision Group. $30 million was
used to pay off the principal portion of Company's existing subordinated
notes to John Hancock (as described below) and $140 million was paid in
cash to the seller. The balance of the $294 million aggregate purchase
price was paid by the Company with $74 million of excess available cash on
hand and an $80 million subordinated seller note was issued to effect the
acquisition. The New Credit Facilities are secured by all material tangible
and intangible assets of the Company, subject to foreign tax
considerations. If Trimble is able to achieve and maintain a leverage ratio
(Debt/EBITDA) of 2.0x or less for four consecutive quarters, the security
for the New Credit Facilities will be released. Financial covenants of the
New Credit Facilities include leverage, fixed charge,
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and minimum net worth tests. In addition, Trimble is restricted from paying
dividends under the terms of the New Credit Facilities.
0 New Seller Promissory Note: The $80 million promissory note issued by the
Company to the seller is subordinated to the New Credit Facilities and
carries a 10% coupon, payable in cash or additional seller paper at the
Company's option. The subordinated seller note has a stated two year
maturity, but carries an automatic maturity deferral provision which
effectively extends the maturity date to that date on which Trimble is
allowed to repay the note without triggering a default under the New Credit
Facilities. The New Credit Facilities allow Trimble to repay the seller
note at any time (in part or in whole), provided that (a) Trimble's
leverage ratio (Debt (excluding the seller note)/EBITDA) prior to such
repayment is less than 1.0x and (b) after giving effect to such repayment
Trimble would have (i) a leverage ratio (Debt (excluding any remaining
portion of the seller note)/EBITDA) of less than 2.0x and (ii) cash and
unused availability under the revolvers of the New Credit Facilities of at
least $35 million. Although the subordinated seller note will carry certain
limited covenants and defaults, the seller will be barred in the event of
default from pursuing such rights and remedies for the stated maturity of
the New Credit Facilities (i.e., a five-year standstill). The New Credit
Facilities also prohibit cash payments of interest or principal on the
subordinated seller note during a period of default. .
O Prepayment of Existing $30 million Subordinated Notes: In June 1994,
Trimble issued $30 million of subordinated promissory notes to John
Hancock bearing interest at an annual rate of 10%, with principal and
interest due on June 15, 2001. Interest payments under such notes were due
monthly in arrears. The notes were subordinated to the Company's senior
debt, which was defined as all pre-existing indebtedness for borrowed money
and certain future indebtedness for borrowed money (including, subject to
certain restrictions, secured bank borrowings and borrowed money for the
acquisition of property and capital equipment) and trade debt incurred in
the ordinary course of business. In order to effect the acquisition of the
Spectra Precision Group and as part of obtaining the New Credit Facilities,
Trimble prepaid all such outstanding long-term note obligations to John
Hancock for a total of $31,069,108, which consisted of $30 million in
principal, $183,333 in accrued interest and $885,775 as a prepayment
penalty. Pursuant to the terms of such original notes, any prepayment of
any portion of the outstanding principal required Trimble to pay additional
amounts if U.S. Treasury obligations of a similar maturity exceed a
specified yield.
O Termination of Existing $50 million Unsecured Revolving Credit Facility:
In August 1997, Trimble entered into a three-year, $50,000,000 unsecured
revolving credit facility with four banks (the "Credit Agreement"). The
existing Credit Agreement enabled Trimble to borrow up to $50,000,000,
provided that certain financial and other covenants were met. In October
1999, Trimble and the lenders agreed to change and amend certain covenants
for the life of the loan, which was set to expire in August of 2000. The
Credit Agreement was also subsequently modified to include Trimble's prior
separate $5,000,000 line of credit and to simplify the entire arrangement.
The modified Credit Agreement required the payment of a commitment fee of
0.25% of the available amount and any borrowings under such Credit
Agreement bore interest at the following rates: 1% over LIBOR if the total
funded debt to EBITDA were less than or equal to 1.0x, or 0.3%, 1.25% over
LIBOR if such ratio were greater than 1.0x and less than or equal to 2.0x,
or 0.4%, and 1.75% over LIBOR if such ratio were greater than 2.0x. In
addition to borrowing at the specified LIBOR rate, Trimble also had the
additional right to borrow under the Credit Agreement with interest at the
higher of (i) one of the bank's annual prime rate and (ii) the federal
funds rate plus 0.5%. Trimble never made any borrowings under such
$50,000,00 unsecured revolving portion of the Credit Agreement, but had
issued certain letters of credit amounting to approximately $1.2 million.
In order to effect the acquisition of the Spectra Precision Group, in July
2000 Trimble completely terminated this Credit Agreement in favor of
obtaining the New Credit Facilities described above.
Integration Plans:
The Company expects that the acquisition of the Spectra Precision Group
will strengthen Trimble's position as a leading provider of positioning
solutions worldwide. The acquisition also gives Trimble one of the most
comprehensive product portfolios in the industry, strengthens its distribution
network, and serves as a platform for future growth. The complementary product
lines and technologies of Trimble and Spectra Precision Group, will make the
combined Company a leader in the Architecture/Engineering/Construction (A/E/C),
Agriculture, and Asset Management market segments of the positioning solution
industry. There is very little overlap between each of the Companies product
offerings. In addition, the Spectra Precision Group's well-established and
extensive distribution network should extend Trimble's reach into new segments
of its target market segments both domestically and internationally.
Revenues for the Spectra Precision Group for the last six months ended June
30, 2000, were approximately $117 million. Revenues of Spectra Precision after
integration will be combined with current Trimble revenues. The Spectra
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Precision Group currently has manufacturing and development centers in Ohio,
Sweden, and Germany, and has approximately 1,300 employees.
The Spectra Precision Group develops instruments and systems that provide
positioning solutions for four major customer applications:
1. Surveying -- Spectra Precision AB is a leading supplier of surveying and
positioning systems based on both optical measurement and GPS technology.
Products are used in highway construction, site development and other
infrastructure development projects.
2. Construction Site Positioning -- The Spectra Precision Group is a leading
supplier of laser-based positioning instruments which permit the accurate
alignment of foundations, sewers, walls, floors and ceilings.
3. Construction and Agricultural Machine Control -- The Spectra Precision
Group is a leading supplier of laser systems which correctly position and
control heavy construction equipment in construction site preparation,
highway construction and agricultural land leveling.
4. Software -- Spectra Precision Software Inc., a subsidiary of Spectra
Precision, Inc., is a leading developer of three-dimensional land
modeling software for the civil engineering, surveying, construction, GIS
and photogrammetry industries.
Trimble's current strategy is to focus on leveraging existing technologies,
distribution, and marketing resources and identifying and taking advantage of
synergies between the companies. The Company's initial priorities for the
combined entities are centered around the alignment of distribution channels,
definition of basic corporate organization, reporting and structure, branding
and imaging of the company and products. At the present time, there are no
immediate plans to integrate the manufacturing of Trimble with those of the
Spectra Precision Group.
As part of the acquisition, Trimble has identified approximately $15 to $20
million of potential cost reductions which could be achieved over the next two
to three years; however, the Company is still in the early stages of combining
Trimble and Spectra Precision Group and this involves certain inherent risks,
including: the potential inability to successfully integrate acquired operations
and businesses or to realize anticipated synergies, economies of scale or other
value; diversion of management's attention; difficulties in coordinating the
management of operations at new sites; and the possible loss of key employees of
acquired operations. The Company's profitability may suffer if we are unable to
successfully integrate and manage this acquisition, or if we do not generate
sufficient revenue to offset the increased expenses associated with this
acquisition.
Prior to the execution of the Agreement and Plan of Acquisition, Ulf J.
Johansson, a current member of Trimble's board of directors, served as the
president and chief executive officer of Spectra-Physics from January 1990 to
September 1996 and Steven W. Berglund, Trimble's current President, Chief
Executive Officer and member of the board of directors served as the president
of Spectra Precision, Inc. from June 1995 to March 1999. In addition, Mr.
Berglund served as senior vice president of Spectra Physics AB from April 1991
through June 1995 and from 1985 through 1991 he held various positions with the
Spectra Physics AB Company. Spectra Precision was then a subsidiary of
Spectra-Physics AB.
The descriptions provided in this Report on Form 8-K of the terms and
conditions of the Agreement and Plan of Acquisition and the transactions
contemplated thereby as part of Trimble's acquisition of the Spectra Precision
Group are summaries only and the full text of the such acquisition agreements
are filed hereto as listed below.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired:
The financial statements required by this Item will be filed
by amendment no later than 60 days from the date of the
earliest event reported by this report.
(b) Pro Forma Financial Information:
The pro forma financial statements required by this Item will
be filed by amendment no later than 60 days from the date of
the earliest event reported by this report.
(c) EXHIBITS
10.72 Stock and Asset Purchase Agreement, dated as of May 11, 2000,
between Trimble Acquisition Corp., and Spectra Physics
Holdings USA, Inc., Spectra Precision AB, and Spectra
Precision Europe Holdings, BV.
10.73 Asset Purchase Agreement, dated May 11, 2000, between Trimble
Acquisition Corp. and Spectra Precision AB.
10.74 $200.0 million Credit Agreement, dated July 14, 2000,
between Trimble Navigation Limited and ABN AMRO Bank N.V.,
Fleet National Bank, and The Bank of Nova Scotia.
10.75 Subordinated Seller Note, dated July 14, 2000, for the
principal amount of $80,000,000 issued by Trimble Navigation
Limited to Spectra Precision Holdings, Inc.
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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.
TRIMBLE NAVIGATION LIMITED
(Registrant)
By: /s/ Mary Ellen Genovese
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Mary Ellen Genovese
(Vice President Finance, Chief Financial Officer, and
Corporate Controller)
Dated: July 28, 2000
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