<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
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 28, 1999
-----------------
RADISYS CORPORATION
State of Oregon 0-26844 93-0945232
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
5445 NE Dawson Creek Drive, Hillsboro, OR 97124
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(503) 615-1100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The following financial statements of the business acquired are attached
hereto:
<TABLE>
<S> <C>
Report of Independent Accountants ................................................. F-1
Statement of Assets to be Acquired, December 28, 1999 ............................. F-2
Statement of Direct Revenues and Direct Operating Expenses for the
period from January 1, 1999 to December 28, 1999 .................................. F-3
Notes to Financial Statements ..................................................... F-4
(b) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma consolidated condensed financial
Statements are attached hereto:
Unaudited Pro Forma Consolidated Condensed Financial Data as of and
for the nine months ended September 30, 1999 ...................................... F-9
Unaudited Pro Forma Consolidated Condensed Balance Sheet Data
as of September 30, 1999 .......................................................... F-11
Unaudited Pro Forma Consolidated Condensed Statement of Operations
Data for the nine months ended September 30, 1999 ................................. F-12
Notes to Unaudited Pro Forma Consolidated Condensed Financial
Data .............................................................................. F-13
</TABLE>
(c) EXHIBITS.
2.1* Asset Purchase Agreement between RadiSys Corporation and
International Business Machines Corporation, dated as of December
17, 1999.
23.1 Consent of PricewaterhouseCoopers LLP.
* Previously filed.
2
<PAGE>
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 hereunto duly authorized.
Dated: March 10, 2000
RADISYS CORPORATION
By: /s/ Stephen F. Loughlin
-------------------------------------
Stephen F. Loughlin
Vice President of Finance &
Administration & Chief Financial Officer
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of RadiSys Corporation
We have audited the accompanying statement of assets to be acquired of the Open
Computing Platform (OCP) Business Unit of International Business Machines
Corporation as of December 28, 1999, and the related statement of direct
revenues and direct operating expenses for the period from January 1, 1999
through December 28, 1999. These statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As described in Note 1, the accompanying financial statements were prepared
solely to present the assets of OCP to be acquired by RadiSys Corporation
pursuant to the Asset Purchase Agreement between RadiSys Corporation and
International Business Machines Corporation dated December 17, 1999, and the
related direct revenues and direct operating expenses of OCP, and are not
intended to be a complete presentation of the assets and liabilities, the
results of operations or cash flows of the OCP Business Unit of International
Business Machines Corporation.
The OCP Business Unit of International Business Machines Corporation is a member
of a group of affiliated companies and, as disclosed in the financial
statements, has extensive transactions and relationships with members of the
group. Because of these relationships, it is possible that the terms of these
transactions are not the same as those that would result from transactions among
wholly unrelated parties.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets to be acquired of the OCP Business Unit of
International Business Machines Corporation at December 28, 1999, and the direct
revenues and direct operating expenses for the period from January 1, 1999 to
December 28, 1999, in conformity with accounting principles generally accepted
in the United States.
PricewaterhouseCoopers LLP
Portland, Oregon
March 3, 2000
F-1
<PAGE>
OCP BUSINESS UNIT OF INTERNATIONAL BUSINESS MACHINES CORPORATION
STATEMENT OF ASSETS TO BE ACQUIRED
December 28, 1999
(in thousands)
<TABLE>
<S> <C>
Inventories $ 721
Equipment, net 22
----------
Total assets acquired $ 743
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
OCP BUSINESS UNIT OF INTERNATIONAL BUSINESS MACHINES CORPORATION
STATEMENT OF DIRECT REVENUES AND DIRECT OPERATING EXPENSES
For the period from January 1, 1999 through December 28, 1999
(in thousands)
<TABLE>
<S> <C>
Direct revenues $ 48,463
-------------
Direct operating expenses:
Costs of revenues 33,043
Research and development 4,812
Selling, general and
administrative 1,146
-------------
Total direct operating
expenses 39,001
-------------
Direct revenues in excess of
direct operating expenses $ 9,462
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
OCP BUSINESS UNIT OF INTERNATIONAL BUSINESS MACHINES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(In thousands)
1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS:
International Business Machines Corporation ("IBM") and RadiSys Corporation (the
"Buyer" or "RadiSys") entered into a definitive agreement (the "Agreement") on
December 17, 1999 under which the Buyer acquired certain assets dedicated to
IBM's Open Computing Platform (OCP) operation (collectively referred to as the
"OCP Business Unit"). OCP develops and sells integrated computer-based solutions
based on Intel architecture, primarily to OEM's of telecommunications equipment.
Some OCP products are shipped with the IBM logo through several distributors of
mid-range computer products. RadiSys has the right to continue to ship product
with the IBM logo for one year. The OCP Business Unit has been operating as a
division of IBM since 1985. The accompanying financial statements present the
assets to be acquired and the direct revenues and direct operating expenses of
the OCP Business Unit based upon the structure of the transaction as described
in the Agreement; this transaction is herein referred to as the "Acquisition."
The financial statements have been prepared to substantially comply with the
rules and regulations of the Securities and Exchange Commission for business
combinations accounted for as a purchase, and are not intended to be a complete
presentation of the financial position, results of operations and cash flows as
if the OCP Business Unit had operated as a stand-alone company. The OCP Business
Unit was not operated as a stand-alone business within IBM.
Because the OCP Business Unit was not operated as a stand-alone business, the
presentation does not include certain indirect expenses of the OCP Business Unit
which were incurred by other divisions of IBM. Therefore, the accompanying
financial statements are not representative of the complete financial position,
results of operations or cash flows of the OCP Business Unit for the period
presented.
The OCP Business Unit subcontracts all manufacturing and system integration
services to third parties. These subcontractors own all production inventory
until the OCP Business Unit takes title at shipment to the customer. Inventory
balances owned by the OCP Business Unit relate only to end-of-life components
necessary to continue offering current versions of existing products.
F-4
<PAGE>
IBM provided various services to the OCP Business Unit including, but not
limited to, general management, facilities management, human resources, data
processing, security, payroll and employee benefits administration, financial,
legal, tax, insurance administration, duplicating, telecommunications and other
miscellaneous services. Expenses related to employee benefits, facilities
management, data processing, security, duplicating and telecommunications have
been allocated to the OCP Business Unit and are presented in the accompanying
statement of direct revenues and direct operating expenses. These allocations
have been made first on the basis of direct usage when identifiable, with the
remainder allocated on the basis of revenues, headcount, or other statistical
basis. Where the allocations are based on headcount, the number of employees
associated with the OCP Business Unit has been identified or estimated by
management of IBM based on its understanding of the Agreement, in order for such
allocations to be made. These methods of allocating indirect costs are
considered reasonable; however, they do not necessarily reflect the costs that
the OCP Business Unit would have incurred on a stand-alone basis. The financial
information included herein may not necessarily reflect the financial position,
results of operations and cash flows of the OCP Business Unit on a stand-alone
basis in the future. Expenses related to general management, human resources,
payroll and employee benefits administration, financial, legal, tax, insurance
administration, and other miscellaneous services have not been allocated by IBM
to the OCP Business Unit and are not included in the accompanying financial
statements.
In the accompanying statement of direct revenues and direct operating expenses,
direct revenues presented are derived primarily from billings to third parties,
while direct operating expenses presented are actual expenses incurred by the
OCP Business Unit plus expense allocations from IBM. Direct revenues include
hardware and related sales.
2. SUMMARY OF ACCOUNTING POLICIES
INVENTORIES
Inventories consist primarily of end of life component parts and are valued at
the lower of cost or market, cost being determined on the basis of weighted
average cost.
EQUIPMENT
Equipment is recorded at cost and depreciated for financial reporting purposes
on the straight-line basis over estimated useful lives of three to five years.
Ordinary maintenance and repair expenditures are charged to expense as incurred.
Equipment, which consists primarily of office furniture and equipment and
manufacturing test equipment, was $132 at gross cost less accumulated
depreciation of $110 at December
F-5
<PAGE>
28, 1999. Depreciation expense was not material for the period ended December
28, 1999.
REVENUE RECOGNITION
The OCP Business Unit recognizes revenue on product sales upon shipment from
third party manufacturing subcontractors, based on free on board shipping terms.
RESEARCH AND DEVELOPMENT
Expenditures for research and development are expensed as incurred.
INCOME TAXES
Income taxes have not been provided in the financial statements as the OCP
Business Unit is part of the consolidated IBM company and income taxes were not
allocated to the divisional level.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets to be acquired at the date of the financial
statements, and the reported amounts of direct revenues and direct operating
expenses during the reporting period. Actual results could differ from those
estimates.
3. FACILITIES
Occupancy and facilities expense, which primarily consists of rent, utilities
and insurance expense, allocated to the OCP Business Unit for the period ended
December 28, 1999 was $342. Pursuant to the Agreement, RadiSys may sublease the
IBM facilities for a period of no greater than twelve months from the date of
closing. RadiSys will obtain its own office space for the OCP operation.
F-6
<PAGE>
4. PENSION AND HEALTH CARE PLANS
The employees of the OCP Business Unit participated in IBM pension and retiree
health care benefit plans. Pursuant to the Agreement, liabilities pertaining to
participation by such employees of the OCP Business Unit in IBM pension and
retiree health care benefit plans are not assumed by the Buyer. Accordingly,
such liabilities are excluded from the accompanying statement of assets to be
acquired.
5. TRADEMARK AND PATENT AGREEMENTS
As described in Note 1, OCP develops and sells integrated computer-based
solutions primarily to OEM's of telecommunications equipment. Most of the
business involves customized solutions for specific OEM applications with the
OEM's logo on the product. Some OCP products are shipped with the IBM logo
through several distributors of mid-range computer products. RadiSys has the
right to continue to ship product with the IBM logo for one year. RadiSys
purchased the nonexclusive right to use certain IBM patents and intellectual
property associated with the OCP operations for a term of five years.
6. RISK CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES
SALES TO SIGNIFICANT CUSTOMERS
During the period ended December 28, 1999 OCP had revenue from two individual
customers comprising 52% and 14% of total revenue, respectively.
EXPORT SALES
Export sales from the U.S. for the period ended December 28, 1999 were
approximately 5% of total sales.
F-7
<PAGE>
COMMITMENTS
The initial purchase price for the assets to be acquired was $13,931 paid in
cash at time of closing, subject to specified post-closing adjustments. Pursuant
to the terms of the Agreement, RadiSys may be required to make additional future
payments in March of 2001, 2002, and 2003 based upon a formula tied to future
OCP revenues. These potential future payments will be accounted for as
additional purchase price. The total consideration for the Acquisition will not
exceed $30 million.
Pursuant to the Agreement, RadiSys acquired the rights and obligations of IBM in
connection with certain open purchase orders relating to the OCP Business Unit
which were outstanding at the closing of the Acquisition. These purchase orders
relate primarily to open customer contracts for products currently in
production. In addition, RadiSys acquired certain product development open
purchase orders.
7. TRANSITION SERVICES AGREEMENTS
Concurrent with the closing of the Acquisition, IBM and RadiSys entered into
transition services agreements (the "Transition Agreements") whereby IBM agreed
to provide, and RadiSys agreed to purchase, certain manufacturing and
fulfillment support services; network, data and information processing services;
facilities management and accounting services (collectively, the "IBM Services")
for a period of six months. Generally, the cost to RadiSys for the IBM Services
will be the cost to IBM including labor, out of pocket costs to third parties
and an allocation for overhead costs.
F-8
<PAGE>
RADISYS CORPORATION
Unaudited Pro Forma Consolidated
Condensed Financial Data
As of and for the nine months ended September 30, 1999
International Business Machines Corporation ("IBM") and RadiSys Corporation (the
"Buyer" or "RadiSys") entered into a definitive agreement (the "Agreement") on
December 17, 1999 under which the Buyer acquired certain assets dedicated to the
IBM's Open Computing Platform (OCP) operation (collectively referred to as the
"OCP Business Unit"). OCP develops and sells integrated computer-based solutions
based on Intel architecture, primarily to OEM's of telecommunications equipment.
Some OCP products are shipped with the IBM logo through several distributors of
mid-range computer products. RadiSys has the right to continue to ship product
with the IBM logo for one year. This transaction is herein referred to as the
"Acquisition".
The following unaudited pro forma consolidated condensed financial data has been
derived from the respective companies' historical financial statements. The
historical financial statements of the OCP Business Unit present the assets to
be acquired and the direct revenues and direct operating expenses of the OCP
Business Unit based upon the structure of the transaction at and for the
nine-month period ended September 30, 1999. The OCP Business Unit was not
operated as a stand-alone business within IBM. Assets used in the OCP Business
Unit were an integral part of the IBM operations to provide integrated
computer-based solutions based on Intel architecture, primarily to OEM's of
telecommunications equipment. Because the OCP Business Unit was not operated as
a stand-alone business, the presentation does not include certain indirect
expenses of the OCP Business Unit. Therefore, the financial statements are not
representative of the complete financial position, results of operations or cash
flows of the OCP Business Unit for the period presented.
The unaudited pro forma consolidated condensed balance sheet gives effect to the
Acquisition on a purchase basis as if it had been consummated on September 30,
1999. The unaudited pro forma consolidated condensed statement of operations
data gives effect to the Acquisition on a purchase basis as if it had been
consummated on January 1, 1999.
In the opinion of management of RadiSys, all adjustments necessary to present
fairly such unaudited pro forma consolidated condensed financial data have been
made based on the terms and structure of the Acquisition. This unaudited pro
forma consolidated condensed financial data are not necessarily indicative of
what actual results would have been if the Acquisition had occurred at the
beginning of the respective period nor do they purport to indicate the results
of future operations of RadiSys. These unaudited pro forma consolidated
condensed financial data should be read in
F-9
<PAGE>
conjunction with the accompanying notes to the pro forma consolidated condensed
financial data and the historical financial statements of RadiSys and the OCP
Business Unit.
Prior to the Acquisition, the OCP Business Unit was operated as a part of IBM.
Management of IBM allocated certain costs in preparation of the historical
financial statements of the OCP Business Unit. These cost allocations do not
necessarily reflect the actual costs that would have been incurred by the OCP
Business Unit if it had been operated as a stand-alone business.
RadiSys and the OCP Business Unit estimate that following the Acquisition
additional one-time charges to operations will be incurred associated with
integrating the two businesses. These non-recurring charges have been excluded
from the pro forma presentation.
The adjustments to the unaudited pro forma consolidated condensed financial data
are preliminary and are subject to adjustment based on the Agreement and the
actual amounts of assets acquired assumed as of the closing date, December 28,
1999.
F-10
<PAGE>
RADISYS CORPORATION
Pro Forma Consolidated Condensed Balance Sheet Data
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
As of September 30, 1999
------------------------------------------------------------------------------------
RadiSys OCP Pro forma Pro forma
Historical Historical Adjustments References Consolidated
---------- ---------- ----------- ---------- ------------
<S> <C> <C> (1) <C> <C> <C>
ASSETS
Cash and cash equivalents $ 24,242 $ 24,242
Accounts receivable 50,403 50,403
Inventories 44,757 1,400 A 46,157
Other current assets 2,072 2,072
Deferred income taxes 3,455 3,455
Property and equipment, net 19,251 28 19,279
Goodwill and intangibles 21,882 13,073 B 34,955
Other non-current assets 9,577 9,577
------------- ------------ ------------------
Total assets $ 175,639 $ 1,428 $ 190,140
============== ============= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 34,400 $ 34,400
Short term borrowings 14,501 C 14,501
Accrued expenses 17,725 17,725
Total shareholders' equity 123,514 123,514
-------------- ------------------
Total liabilities
and shareholders' equity $ 175,639 $ 190,140
=========== ================
</TABLE>
(1) OCP Business Unit historical September 30, 1999 amounts represent only the
assets to be acquired.
See accompanying notes to pro forma consolidated condensed financial data.
F-11
<PAGE>
RADISYS CORPORATION
Pro Forma Consolidated Condensed Statement of Operations Data
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine months ended September 30, 1999
--------------------------------------------------------------------------------
RadiSys OCP Pro forma Pro forma
Historical Historical Adjustments References Consolidated
---------- ---------- ----------- ---------- ------------
(2)
<S> <C> <C> <C> <C> <C>
Total revenues $ 178,145 35,931 $ 214,076
Operating expenses:
Costs of goods sold 113,023 24,985 138,008
Research and development 21,973 3,642 25,615
Selling, general &
administrative 26,991 766 27,757
Goodwill & intangibles
amortization 1,733 2,861 D 4,594
Combination costs 5,971 5,971
------------- ------------- -----------
Total operating expenses 169,691 29,393 201,945
------------- ------------- -----------
Income from operations 8,454 6,538 12,131
Interest and other income, net 2,943 (924) E 2,019
------------- ------------- -----------
Income before income taxes 11,397 6,538 14,150
Income tax provision (benefit) (1,807) 1,074 F (733)
------------- ------------ ------------
Net income $ 13,204 6,538 $ 14,883
============= ============= ===========
Per share data:
Net income
Basic $ 1.23 N/A $ 1.39
Diluted $ 1.18 N/A $ 1.33
Weighted average shares:
Basic 10,722 N/A 10,722
Diluted 11,171 N/A 11,171
</TABLE>
(2) OCP Business Unit historical 1999 amounts represent only direct revenues
and direct operating expenses.
See accompanying notes to pro forma consolidated condensed financial data.
F-12
<PAGE>
RADISYS CORPORATION
Notes to Pro Forma Consolidated
Condensed Financial Data
(Unaudited)
(In thousands)
(A) Amount recorded is at net realizable value, hence there is no adjustment
necessary to state inventory acquired at fair value pursuant to APB16,
"Business Combinations."
(B) Amount represents goodwill and intangibles related to the excess of the
purchase price over the fair value of the tangible assets acquired which
will be amortized ratably over five years.
(C) RadiSys paid $13,931 (subject to post-closing adjustments) in cash
consideration for the Acquisition obtained from short term borrowing under
its existing credit line. For pro forma purposes, the cash consideration
is $14,501 which takes into account the inventory value at September 30,
1999 rather than at the purchase date of December 28, 1999. In addition,
$101 of direct and incremental costs were incurred related to the
Acquisition and are included in the purchase price.
(D) Amount represents goodwill amortization for the nine months ended
September 30, 1999, giving effect to estimated additional net contingent
consideration to be paid of $6,175.
(E) Amount represents an increase in interest expense assuming the cash
consideration and resulting short term borrowing was transacted on January
1, 1999. The interest rate used is the pro rata interest rate charged to
Radisys in 1999 of 8.5%.
(F) Amount represents the income tax effect of OCP Business Unit income from
operations, after pro forma adjustments for amortization and interest
income, at the statutory income tax rate of 39%.
F-13
<PAGE>
Exhibit Description
- ------- -----------
2.1* Asset Purchase Agreement between RadiSys Corporation and
International Business Machines Corporation, dated as of
December 17, 1999.
The following exhibits and schedules to the Asset Purchase
Agreement have been omitted and will be provided to the
Securities and Exchange Commission upon request:
Exhibit A Assumption Agreement
Exhibit B Bill of Sale
Exhibit C Schedule of Disclosure and Exceptions
Exhibit D OCP Products
Exhibit E OEM Customer Applications Which Currently
Use OCP Products
Schedule 1.1 Transferred Assets
Schedule 1.1(a) Production Equipment
Schedule 1.1(b) Furniture and Equipment
Schedule 1.1(c) Inventory and Work-in-Process
Schedule 1.1(d) Customer and Other Contracts to be
Transferred to Buyer as Transferred Assets
Schedule 1.2 Excluded Assets
Schedule 1.4 Assumed Liabilities
Schedule 1.4(a) Contracts to be Transferred to Buyer as
Assumed Liabilities
Schedule 1.4(b) Contracts with Seller or Seller's
Affiliates to be Transferred to Buyer as
Assumed Liabilities
Schedule 2.2 Closing Statement
Schedule 3.1 Estimated Allocation of Purchase Price
Schedule 4.2(a) Listing of Regular and Supplemental
Employees
Schedule 4.2(b)(1) Summary of Buyer's Planned Employment
Terms and Benefit Plans
Schedule 4.2(b)(2) Buyer's Severance Pay Practice for
Transferred Employees
Schedule 8.3 Governmental Actions
Schedule 8.8 OEM Agreement Consents
23.1 Consent of PricewaterhouseCoopers LLP
* Previously filed.
F-14
<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. 33-80577, 333-00514, 333-46473, 333-80087,
333-80089 and 333-85093) of RadiSys Corporation of our report dated March 3,
2000 relating to the statement of assets to be acquired as of December 28, 1999
and the related statement of direct revenues and direct operating expenses for
the period from January 1, 1999 to December 28, 1999 of the OCP Business Unit of
International Business Machines Corporation, which appears in this Amendment
No.1 to Current Report on Form 8-K/A of RadiSys Corporation.
PricewaterhouseCoopers LLP
Portland, Oregon
March 10, 2000
