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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
Date of Report (Date of earliest event reported) February 19, 1999
SEMX CORPORATION
(formerly known as SEMICONDUCTOR PACKAGING MATERIALS CO., INC.)
(Exact name of registrant as specified in its charter)
Commission file number 1-10938
Delaware 13-3584740
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1 LABRIOLA COURT, ARMONK, NY 10504
(Address of principal executive offices, including zip code)
(914) 273-5500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
ITEM 2. Acquisition or Disposition of Assets
On January 26, 1999, SEMX Corporation (the "Company") signed a
definitive purchase agreement to sell its connector business ("Retconn") to
Litton Systems, Inc ("Litton"). On February 19, 1999 (the "Closing Date") Litton
acquired the specified assets and assumed certain liabilities of Retconn, as
defined in the agreement, in consideration for a cash payment to the Company of
$23.9 million. The liabilities Litton assumed amount to approximately $3.5
million, including notes payable and capital lease obligations due to third
parties of $1.9 million, and $1.6 million of accounts payable and accrued
expenses.
The purchase agreement provides that the purchase price is subject to
adjustment for changes in Retconn's Closing Date book value, as defined, from a
reference balance sheet prepared as of October 31, 1998. Pending a review
period, purchase price adjustments are due and payable by wire transfer within
ten days of determination of the final closing balance sheet.
<PAGE>
On the Closing Date, the Company entered in various agreements with
Buyer pursuant to the Purchase Agreement including a confidentiality agreement
and a noncompetion agreement prohibiting the Company and its affiliates from
competing with the connector business for a period of three years. The Company
retained the right to acquire businesses partially engaged in the connector
business, provided the acquired companies revenues from its connector business
are less than $5.0 million per year and comprise less than 25% of its total
revenues.
On February 19, 1999 the Company entered into an agreement with its
bank concerning the distribution of the $23.9 million proceeds from the sale of
Retconn. Pursuant to the agreement, the Company repaid $15.1 million of term
indebtedness and $7.1 million of revolving credit borrowings. In addition the
Company paid approximately $1.7 million in transaction related fees and
severance payments. The agreement also provided for the bank's forbearance of
non-compliance with certain existing covenants and an extension of its revolving
credit and interim term loan facilities through June 30, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired. Not applicable.
(b) Pro Forma Financial Information.
The following unaudited pro forma consolidated financial statements are
filed with this report:
Pro Forma Consolidated Balance Sheet as of September 30, 1998 4
Pro Forma Consolidated Statements of Income:
Year ended December 31, 1997 5
Nine Months Ended September 30, 1998 6
Notes to Unaudited Pro Forma Consolidated Financial Statements 7
2
<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 thereunto duly authorized.
SEMX CORPORATION
Date: March 5, 1999 By: /s/ Gilbert D. Raker
-----------------------------------
Name: Gilbert D. Raker
Title: Chairman of the Board
and Chief Executive Officer
Date: March 5, 1999 By: /s/ Mark A. Koch
-----------------------------------
Name: Mark A. Koch
Title: Controller and Secretary
3
<PAGE>
PRO FORMA FINANCIAL INFORMATION
SEMX CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)
<TABLE>
<CAPTION>
Historical Proforma Adjustments Pro Forma
ASSETS September 30, Historical Debt September 30,
1998 Retconn Other Paydown 1998
------------ ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,529 $ 235 $ 22,191 (1) $ (22,191) (2) 1,294
Accounts receivable,net 8,751 2,346 6,405
Inventories 13,692 6,474 7,218
Prepaid expenses and other current assets 2,119 83 2,036
-------- -------- -------- -------- --------
Total current assets 26,091 9,138 22,191 (22,191) 16,953
Property, Plant and Equipment, net 43,953 1,244 42,709
Other Assets-net of accumulated amortization
Technology rights and intellectual property 1,083 1,083
Goodwill 19,196 7,034 12,162
Other 1,694 70 1,624
-------- -------- -------- -------- --------
Total other assets 21,973 7,104 14,869
-------- -------- -------- -------- --------
Total Assets $ 92,017 $ 17,486 $ 22,191 $(22,191) $ 74,531
======== ======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Revolving credit facility $ 11,800 $ -- $ (7,141) (2) $ 4,659
Current portion of long-term debt 5,723 1,484 1,200 (1) (4,200) (2) 1,239
Accounts payable 5,276 1,152 4,124
Current portion of obligations under capital leases 2,535 52 2,483
Income taxes payable (831) 1,082 6,038 (1) 4,125
Accrued expenses 2,280 459 1,821
-------- -------- -------- -------- --------
Total current liabilities 26,783 4,229 7,238 (11,341) 18,451
-------- -------- -------- -------- --------
Deferred income taxes 2,012 (200)(1) 1,812
Long-term debt 18,946 4,405 3,100 (1) (10,850) (2) 6,791
Revolving credit facility -- -- --
Obligations under capital leases 6,812 357 6,455
-------- -------- -------- -------- --------
Total Liabilities 54,553 8,991 10,138 (22,191) 33,509
-------- -------- -------- -------- --------
Minority Interest in Subsidiary 1,152 1,152
-------- -------- -------- -------- --------
Shareholders' Equity:
Preferred stock-$.10 par value; authorized 1,000,000
shares, none issued -- -- --
Common stock-$.10 par value; authorized 20,000,000 0
shares, issued 6,375,616 shares 638 638
Additional paid-in-capital 28,199 5,895 5,895 (1) 28,199
Accumulated other comphrehensive income (97) (97)
Retained earnings 7,784 2,600 6,158 (1) 11,342
-------- -------- -------- -------- --------
36,524 8,495 12,053 40,082
Less: Treasury stock: 334,600 shares, at cost 212 0 212
-------- -------- -------- -------- --------
Shareholders' Equity 36,312 8,495 12,053 39,870
-------- -------- -------- -------- --------
Total Liabilities And Shareholders' Equity $ 92,017 $ 17,486 $ 22,191 $(22,191) $ 74,531
======== ======== ======== ======== ========
</TABLE>
See notes to unaudited proforma consolidated financial statements
4
<PAGE>
PRO FORMA FINANCIAL INFORMATION
SEMX CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Historical ProForma
Consolidated Historical Proforma Consolidated
SEMX Retconn Adjustments SEMX
12/31/97 12/31/97 12/31/97 12/31/97
---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 48,029 $ 16,445 $ 31,584
Service Revenue 23,047 23,047
---------- ---------- ---------- ----------
Total Revenue 71,076 16,445 54,631
Cost of Goods Sold 33,185 11,147 22,038
Cost of Services Performed 17,514 17,514
---------- ---------- ---------- ----------
Total 50,699 11,147 39,552
---------- ---------- ---------- ----------
Gross Profit 20,377 5,298 15,079
Selling, General and Administrative Expense 11,992 2,455 330 (1) 9,867
---------- ---------- ---------- ----------
Operating Income 8,385 2,843 (330) 5,212
Interest Expense (Net) 2,601 592 (1,248)(1)(2) 761
---------- ---------- ---------- ----------
Income Before Provision for Income
Taxes and Minority Interest in Loss of
Consolidated Subsidiary 5,784 2,251 918 4,451
Provision for Income Taxes 2,214 940 367 (3) 1,641
---------- ---------- ---------- ----------
Income Before Minority Interest in Loss
of Consolidated Subsidiary 3,570 1,311 551 2,810
Minority Interest in Loss of Consolidated Subsidiary 222 222
---------- ---------- ---------- ----------
Net Income $ 3,792 $ 1,311 $ 551 $ 3,032
========== ========== ========== ==========
Basic Income per Common Share $ .62 $ .50
Diluted Income per Common Share $ .61 $ .49
Weighted Average Number of Common
Shares Outstanding - Basic 6,069,954 6,069,954
Weighted Average Number of Common
Shares Outstanding - Diluted 6,232,490 6,232,490
</TABLE>
See notes to unaudited proforma consolidated financial statements
5
<PAGE>
PRO FORMA FINANCIAL INFORMATION
SEMX CORPORATION AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Historical ProForma
Consolidated Historical Proforma Consolidated
SEMX Retconn Adjustments SEMX
9/30/98 9/30/98 9/30/98 9/30/98
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net Sales $ 36,988 $ 14,117 $ 22,871
Service Revenue 13,917 13,917
---------- ---------- ---------- ----------
Total Revenue 50,905 14,117 36,788
Cost of Goods Sold 26,144 9,637 16,507
Cost of Services Performed 11,380 11,380
---------- ---------- ---------- ----------
Total 37,524 9,637 27,887
---------- ---------- ---------- ----------
Gross Profit 13,381 4,480 8,901
Selling, General and Administrative Expense 10,983 2,667 408 (1) 8,724
Restructuring Charge 1,950 1,950
---------- ---------- ---------- ----------
Operating Income 448 1,813 (408) (1,773)
Interest Expense (Net) 2,697 558 (868)(1)(2) 1,271
---------- ---------- ---------- ----------
Income (Loss) Before Provision for Income
Taxes and Minority Interest in Loss of
Consolidated Subsidiary (2,249) 1,255 460 (3,044)
Provision (Credit) for Income Taxes (751) 545 184 (3) (1,112)
---------- ---------- ---------- ----------
Income (Loss) Before Minority Interest in Loss
of Consolidated Subsidiary (1,498) 710 276 (1,932)
Minority Interest in Loss of Consolidated Subsidiary 255 255
---------- ---------- ---------- ----------
Net Income (Loss) $ (1,243) $ 710 $ 276 $ (1,677)
========== ========== ========== ==========
Basic Income (Loss) per Common Share $ (.21) $ (.28)
Diluted Income (Loss) per Common Share $ (.21) $ (.28)
Weighted Average Number of Common
Shares Outstanding - Basic 6,057,710 6,057,710
Weighted Average Number of Common
Shares Outstanding - Diluted 6,057,710 6,057,710
</TABLE>
See notes to unaudited proforma consolidated financial statements
6
<PAGE>
SEMX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The Pro Forma Consolidated Balance Sheet reflects the financial position of the
Company after giving effect to the disposition of the assets and liabilities of
Retconn discussed in Item 2 as if the disposition took place on September 30,
1998. The Pro Forma Consolidated Statements of Income for the fiscal year ended
December 31, 1997 and the nine months ended September 30, 1998 assume that the
disposition occurred on January 1, 1997 and 1998, respectively and are based on
the operations of the Company for the periods then ended. Such pro forma
financial statements also reflect the paydown of $15,050 of term debt and $7,141
in revolving credit borrowings with the proceeds from the Retconn sale and the
resulting reduction in interest expense.
The unaudited pro forma consolidated financial statements have been prepared by
the Company based on adjustments necessary to reflect the disposition. The
unaudited pro forma consolidated financial statements presented herein are shown
for illustrative purposes only and are not necessarily indicative of the future
financial position or future results of operations of the Company or the results
of operations that would have actually occurred had the transaction been
effective as of the periods presented.
CONSOLIDATED PROFORMA BALANCE SHEET
1) To record $23,871 selling price, less legal and transaction fees of $1,680
versus the net assets of Retconn amounting to $8,495, adjusted for
liabilities not assumed by Litton including $4,300 of allocated debt and
$1,082 of allocated income taxes payable. Transaction results in a pretax
gain of $8,314, less net taxes of $4,756 for a gain of $3,558 posted to
retained earnings.
2) To record paydown of $15,050 bank term debt and $7,141 revolving credit
debt with proceeds from Retconn Sale.
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1997
1) Adjustment to record allocated corporate charges of $330 and allocated
interest expense of $527 included in Retconn's historical results that
remain at the SEMX level.
2) Adjustment to record $1,775 reduction of consolidated interest expense due
to repayment of $15,050 of 8% bank term debt and $7,141 of revolving credit
debt with proceeds from sale of Retconn.
3) To record tax effect of above transactions at an estimated effective rate
of 40%
7
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1998.
1) Adjustment to record allocated corporate charges of $408 and allocated
interest expense of $463 included in Retconn's historical results that
remain at the SEMX level.
2) Adjustment to record $1,331 reduction of consolidated interest expense due
to repayment of $15,050 of 8% bank term debt and $7,141 of revolving credit
debt with proceeds from sale of Retconn.
3) To record tax effect of the above transactions at an estimated effective
rate of 40%,
8
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