<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT TO FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Amending Report Filed May 22, 1996
Date of Report (Date of earliest event reported): May 7, 1996
--------------
AUREAL SEMICONDUCTOR INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-20684 94-3117385
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
4245 TECHNOLOGY DRIVE
FREMONT, CA 94538
(Address of principal executive offices including zip code)
(510) 252-4245
Registrant's telephone number
================================================================================
This report, including exhibits, consists of 18 pages.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Aureal Semiconductor Inc. ("Company") initially reported on Form 8-K
dated May 7, 1996 (filed May 22, 1996) that the Company along with Aureal
Acquisition Corporation, a wholly-owned subsidiary of the Company ("Sub"), and
Crystal River Engineering, Inc., ("CRE") had entered into an Agreement and Plan
of Reorganization dated as of May 7, 1996 whereby Sub was to be merged with and
into CRE and CRE was to become a wholly-owned subsidiary of the Company (the
"Acquisition"). The Acquisition was completed on May 29, 1996.
In conjunction with the above noted transaction, the Company files
herein the required financial statements and pro forma financial information
pursuant to Article 11 of Regulation S-X.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements as of April 30, 1996 and 1995 together with Auditors'
Report
(b) Pro forma Combined Condensed Financial Statements
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.
AUREAL SEMICONDUCTOR INC.
July 19, 1996 By. /s/ David J. Domeier
---------------------
David J. Domeier
Vice President, Finance and
Chief Financial Officer
2
<PAGE> 3
CRYSTAL RIVER ENGINEERING, INC.
FINANCIAL STATEMENTS
AS OF APRIL 30, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE> 4
Report of Independent Public Accountants
To the Shareholders of Crystal River Engineering, Inc.:
We have audited the accompanying balance sheets of Crystal River Engineering,
Inc. (a California corporation) as of April 30, 1996 and 1995, and the related
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended April 30, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
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 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Crystal River Engineering, Inc.
as of April 30, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended April 30, 1996 in
conformity with generally accepted accounting principles.
San Jose, California
June 21, 1996
<PAGE> 5
CRYSTAL RIVER ENGINEERING, INC.
BALANCE SHEETS
APRIL 30, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash $118,758 $189,325
Accounts receivable 228,656 246,939
Unbilled receivables 133,800 -
Inventory 57,475 183,960
Prepaid expenses and other 7,447 7,447
Deferred tax asset 112,165 26,625
-------- --------
Total current assets 658,301 654,296
-------- --------
PROPERTY AND EQUIPMENT:
Equipment 202,082 120,456
Furniture and fixtures 7,844 7,844
-------- --------
Less- Accumulated depreciation (118,279) (93,160)
-------- --------
Net property and equipment 91,647 35,140
-------- --------
PATENTS AND OTHER ASSETS 68,428 54,074
-------- --------
Total assets $818,376 $743,510
======== ========
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 62,826 $ 49,007
Accrued warranty 40,000 40,000
Accrued bonuses 168,000 -
Other accrued liabilities 144,929 28,132
Income taxes payable 110,142 170,970
Deferred revenue - 9,500
-------- --------
Total liabilities 525,897 297,609
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 3)
SHAREHOLDERS' EQUITY:
Common stock, no par value--
Authorized: 5,000,000 shares
Outstanding: 166,510 shares and
166,000 shares, respectively 208,510 208,000
Deferred compensation (19,833) (33,833)
Retained earnings 103,802 271,734
-------- --------
Total shareholders' equity 292,479 445,901
-------- --------
Total liabilities and
shareholders' equity $818,376 $743,510
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE> 6
CRYSTAL RIVER ENGINEERING, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
REVENUES $1,880,729 $1,903,270 $1,315,571
COST OF REVENUES 453,682 351,403 355,661
---------- ---------- ----------
Gross margin 1,427,047 1,551,867 959,910
---------- ---------- ----------
OPERATING EXPENSES:
Research and development 139,313 147,457 59,185
Selling, general and administrative 1,556,718 1,260,563 637,091
---------- ---------- ----------
Total operating expenses 1,696,031 1,408,020 696,276
---------- ---------- ----------
Income (loss) from operations (268,984) 143,847 263,634
OTHER EXPENSE, net 8,866 7,825 5,545
---------- ---------- ----------
Income (loss) before provision
(benefit) for income taxes (277,850) 136,022 258,089
PROVISION (BENEFIT) FOR INCOME TAXES (109,918) 55,399 106,620
---------- ---------- ----------
Net income (loss) $ (167,932) $ 80,623 $ 151,469
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
CRYSTAL RIVER ENGINEERING, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Common Stock
----------------- Deferred Retained
Shares Amount Compensation Earnings Total
------ ------ ------------ -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE AT APRIL 30, 1993 166,000 $166,000 $ - $ 39,642 $205,642
Net income - - - 151,469 151,469
------- -------- -------- -------- --------
BALANCE AT APRIL 30, 1994 166,000 166,000 - 191,111 357,111
Deferred compensation
related to stock option
grants - 42,000 (33,833) - 8,167
Net income - - - 80,623 80,623
------- -------- -------- -------- --------
BALANCE AT APRIL 30, 1995 166,000 208,000 (33,833) 271,734 445,901
Exercise of stock options
for cash at $1.00 per
share 510 510 - - 510
Deferred compensation
related to stock option
grants - - 14,000 - 14,000
Net loss - - - (167,932) (167,932)
------- -------- -------- -------- --------
BALANCE AT APRIL 30, 1996 166,510 $208,510 $(19,833) $103,802 $292,479
======= ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 8
CRYSTAL RIVER ENGINEERING, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(167,932) $ 80,623 $151,469
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities-
Depreciation and amortization 25,119 30,012 27,187
Compensation on stock option grants 14,000 8,167 -
Changes in assets and liabilities-
Accounts receivable 18,283 (91,090) (4,418)
Unbilled receivables (133,800) - -
Inventory 126,485 (90,606) 20,012
Prepaids and other - (350) (5,797)
Deferred tax asset (85,540) (14,432) (12,193)
Accounts payable 13,819 (33,700) 40,519
Accrued warranty - 20,000 20,000
Accrued bonuses 168,000 - -
Other accrued liabilities 116,797 (15,443) (164)
Income taxes payable (60,828) 63,255 107,715
Deferred revenue (9,500) (157,000) 147,993
--------- -------- --------
Net cash provided by (used for)
operating activities 24,903 (200,564) (492,323)
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (81,626) (17,218) (35,141)
Patents and other assets (14,354) (41,574) -
---------- -------- --------
Net cash used for investing
activities (95,980) (58,792) (35,141)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 510 - -
--------- -------- --------
Net cash provided by financing
activities 510 - -
--------- -------- --------
NET INCREASE (DECREASE) IN CASH (70,567) (259,356) 457,182
CASH, BEGINNING OF YEAR 189,325 448,681 (8,501)
--------- -------- --------
CASH, END OF YEAR $ 118,758 $189,325 $448,681
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 19,022 $ 14,000 $ 7,424
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 9
CRYSTAL RIVER ENGINEERING, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996
1. ORGANIZATION OF THE COMPANY:
Crystal River Engineering, Inc. (the "Company"), was incorporated in California
in September 1989. Upon incorporation, the Company issued 66,000 shares of
common stock, with no par value, to the founder of the Company in exchange for
the rights to certain intellectual property. The Company develops, markets and
sells real-time 3-D audio tools, for research and use in the defense and
aerospace, commercial and interactive entertainment industries.
The Company is subject to the risks and challenges associated with other
companies in a comparable stage of development including: dependence on key
individuals, key suppliers and customers; competition from substitute products
and from larger companies; successful marketing of its products and acceptance
of its technology; successful development of product enhancements on a
continuing basis; and the need for adequate financing to support future growth.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition
Revenues consist principally of product sales and revenue earned under
development arrangements. The Company generally recognizes revenue from product
sales at the time of shipment. Where appropriate, provision is made at that time
for estimated warranty costs. Revenue under development arrangements is
generally recognized on the percentage-of-completion method of accounting,
depending upon the nature of the project.
Unbilled Receivables
Unbilled receivables represent revenues recognized under the
percentage-of-completion method of accounting which exceed the amounts that were
billable under the contract terms as of April 30, 1996. There were no unbilled
receivables at April 30, 1995.
<PAGE> 10
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or market.
Cost includes labor, material and manufacturing overhead. Inventory is composed
entirely of raw materials at April 30, 1996 and 1995.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using the
double-declining balance method over the estimated useful lives of the assets of
five to seven years.
Patents
Legal costs incurred in connection with filing the Company's patent claims are
recorded as patent costs. Upon receiving a determination that the Company's
claims have been approved or denied, these costs will either be amortized over
their estimated useful lives or expensed. As of April 30, 1996, the Company had
not yet received approval on any of its pending patent applications.
Software Development Costs
Under the criteria set forth in Statement of Financial Accounting Standards
(SFAS) No. 86 "Accounting for the Costs of Computer Software to be Sold, Leased
or Otherwise Marketed," capitalization of software development costs begins upon
the establishment of technological feasibility of the product which has been
defined as the point in time that a beta version of the related product exists.
Costs qualifying for capitalization have not been significant to date and,
accordingly, no software development costs have been capitalized.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of trade receivables. Concentrations of credit
risk with respect to trade receivables are limited as the majority of the
Company's customers are well-established companies, government agencies or
contractors of government agencies. Additionally, the Company establishes an
allowance for doubtful accounts, if necessary, based upon factors surrounding
the credit risk of specific customers, historical trends and other available
information.
New Accounting Standards
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which will be effective for the
Company's 1997 fiscal year. SFAS No. 123 allows companies which have stock-based
compensation arrangements with employees to adopt a new fair-value basis of
accounting for stock options and other equity instruments, or to continue to
apply the existing accounting rules under Accounting Practice Bulletin ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees" but with additional
financial statement disclosure. The Company plans to continue to account for
stock-based compensation arrangements to employees under APB Opinion No. 25 and,
therefore, does not anticipate that SFAS No. 123 will have a material impact on
its financial position, results of operations or cash flows.
<PAGE> 11
3. COMMITMENTS AND CONTINGENCIES:
The Company leases its two facilities under month-to-month operating leases with
no minimum future commitment. Rent expense for the years ended April 30, 1996,
1995 and 1994 was approximately $77,200 $77,400 and $39,700, respectively.
4. COMMON STOCK:
In 1994, the Company adopted the 1994 Stock Option Plan (the "Plan"). The
Company currently has authorized a total of 1,000,000 shares for issuance under
the Plan. The Plan provides for the grant of both incentive and non-qualified
stock options to employees, consultants and directors at an exercise price of
not less than 100% of the fair market value of the common stock, as determined
by the Board of Directors, on the date of grant, except that non-qualified
options may be granted at 85% of such fair value. The maximum term of a stock
option under the Plan is ten years from the date of grant, or such shorter term
as may be provided in the option agreement, however, if the optionee at the time
of grant has voting power over more than 10% of the Company's outstanding common
stock, the maximum term is five years. Options generally vest ratably over three
years.
Stock option activity under the Plan from its inception through April 30, 1996
is summarized below:
<TABLE>
<CAPTION>
Options
Available Options Price
For Grant Outstanding Per Option
--------- ----------- -------------
<S> <C> <C> <C>
Balance at April 30, 1993 - - -
Authorized 1,000,000 - -
Granted (8,952) 8,952 $1.00
--------- ------- -------------
Balance at April 30, 1994 991,048 8,952 1.00
Granted (367,869) 367,869 1.00
Canceled 80,458 (80,458) 1.00
--------- ------- -------------
Balance at April 30, 1995 703,637 296,363 1.00
Granted (236,527) 236,527 1.00 - 3.30
Exercised - (510) 1.00
--------- ------- -------------
Balance at April 30, 1996 467,110 532,380 $1.00 - $3.30
========= ======= =============
</TABLE>
As of April 30, 1996, 288,661 options issued under the Plan were exercisable at
$1.00 - $3.30 per share.
Included in the options granted during fiscal 1996 are options granted in July
1995 to purchase 21,000 shares of common stock at $1.00 per share under the
Plan. The Company recorded deferred compensation of $42,000 for the difference
between the option price of these options and $3.00 (fair market value of the
common stock at the date of grant for financial reporting purposes). The Company
is
<PAGE> 12
expensing the deferred compensation ratably over the three-year vesting period
of the option.
5. INCOME TAXES:
The components of the provision (benefit) for income taxes for the years ended
April 30, 1996, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ (18,730) $53,651 $ 90,950
State (5,648) 16,180 26,757
--------- ------- --------
Total current (24,378) 69,831 117,707
--------- ------- --------
Deferred:
Federal (65,720) (11,088) (8,518)
State (19,820) (3,344) (2,569)
--------- ------- -------
Total deferred (85,540) (14,432) (11,087)
--------- ------- --------
Total provision (benefit)
for income taxes $(109,918) $55,399 $106,620
========= ======= ========
</TABLE>
The provision for income taxes differs from the amounts which would result by
applying the applicable statutory Federal income tax rate to income (loss)
before income taxes for the years ended April 30, 1996, 1995 and 1994 as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Provision computed at Federal
statutory rate $ (94,469) $46,247 $ 87,750
State income taxes, net of
Federal benefit (3,728) 10,679 17,660
Non-deductible expenses 1,360 680 680
Other (13,081) (2,207) 530
--------- ------- --------
Total provision (benefit)
for income taxes $(109,918) $55,399 $106,620
========= ======= ========
</TABLE>
<PAGE> 13
Components of the net deferred income tax asset as of April 30, 1996 and 1995
are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cumulative temporary differences:
Deferred revenue $ - $ 4,114
Accrued bonus 72,744 -
Accrued warranty 17,320 17,320
Accrued vacation 11,452 7,289
Other temporary differences 10,649 (2,098)
-------- -------
Total deferred income
tax asset $112,165 $26,625
======== =======
</TABLE>
The Company has recorded a deferred income tax asset of $112,165 and $26,625 at
April 30, 1996 and 1995, respectively. Although realization is not assured,
management believes it is more likely than not that the deferred tax asset will
be realized. The amount of the deferred tax asset considered realizable,
however, could be reduced in the near term if estimates of future taxable income
are reduced.
6. SUBSEQUENT EVENT:
In May 1996, the Company entered into an agreement to sell all of the
outstanding shares of common stock of the Company to Aureal Semiconductor Inc.
("Aureal"). Prior to the acquisition, holders of options to purchase 180,474
shares of common stock exercised their options. As such, at the time of the
acquisition, there were a total of 346,984 shares of common stock outstanding.
The shareholders received cash of $8.30 for each share of outstanding common
stock for a total purchase price of approximately $2,880,000. In addition,
Aureal assumed the remaining outstanding options to purchase the Company's
common stock and exchanged them for options to purchase Aureal's common stock.
The options were exchanged at a ratio of 8.3 shares of Aureal common stock for
each share of the Company's common stock.
<PAGE> 14
AUREAL SEMICONDUCTOR INC.
AND CRYSTAL RIVER ENGINEERING, INC.
PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
On May 7, 1996, Aureal Semiconductor Inc. (the "Company") entered into an
agreement to acquire Crystal River Engineering, Inc. ("CRE"). On May 29, 1996,
the acquisition was completed through a combination of approximately $2.9
million in cash for all outstanding shares of common stock of CRE and the
assumption of existing CRE stock option obligations, valued at approximately
$2.8 million. The transaction will be accounted for as a purchase.
The accompanying pro forma combined condensed financial statements assume that
the acquisition took place as of the beginning of fiscal 1995. The pro forma
combined condensed balance sheet as of March 31, 1996, combines the Company's
balance sheet as of March 31, 1996, with CRE's balance sheet as of April 30,
1996. The pro forma combined condensed statement of operations for the year
ended December 31, 1995, combines the Company's statement of operations for the
year ended December 31, 1995 with CRE's statement of operations for the year
ended April 30, 1996. The pro forma combined condensed statement of operations
for the three months ended March 31, 1996, combines the Company's statement of
operations for the three months ended March 31, 1996, with CRE's statement of
operations for the three months ended April 30, 1996. The pro forma combined
condensed statements of operations do not include the effect of any nonrecurring
charges directly attributable to the acquisition.
The accompanying pro forma combined condensed financial statements should be
read in conjunction with the historical financial statements and related notes
thereto for both the Company and CRE.
<PAGE> 15
AUREAL SEMICONDUCTOR INC. AND
CRYSTAL RIVER ENGINEERING, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
-------------------------------------------------------
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
AUREAL CRE ADJUSTMENTS COMBINED
--------------------------------------- ---------
<S> <C> <C> <C> <C>
Net sales $ 2,532 $ 479 $ (89)(b) $ 2,922
Cost of sales 119 161 280
--------------------- --------
Gross profit 2,413 318 2,642
--------------------- --------
Operating expenses:
Research and development 1,617 35 (75)(b) 1,577
Selling, general and administrative 523 413 25 (e) 961
Amortization of reorganization asset 625 - 625
--------------------- --------
Total operating expenses 2,765 448 3,163
--------------------- --------
Operating loss (352) (130) (521)
Interest income 65 - 65
Interest expense 785 - 111(c) 896
Other expense - 2 2
--------------------- --------
Loss from operations before income taxes (1,072) (132) (1,354)
Benefit for income taxes - (52) (52)
--------------------- --------
Net loss $ (1,072) $ (80) $ (1,302)
===================== ========
Net loss per share $ (0.05) $ (0.06)
======== ========
Shares used in calculating per share amounts 23,242 23,242
======== ========
</TABLE>
See accompanying notes.
<PAGE> 16
AUREAL SEMICONDUCTOR INC. AND
CRYSTAL RIVER ENGINEERING, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
Year Ended December 31, 1995
---------------------------------------------------
Historical Historical Pro Forma Pro Forma
Aureal CRE Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $ 47,747 $1,881 $(243)(b) $ 49,385
Cost of sales 53,802 454 54,256
-------------------------- ---------
Gross profit (6,055) 1,427 (4,871)
-------------------------- ---------
Operating expenses:
Research and development 6,730 139 (154)(b) 6,715
Selling, general and administrative 17,790 1,557 100 (e) 19,447
Amortization of reorganization asset 8,596 -- 8,596
Restructuring charges 61,626 -- 61,626
-------------------------- ---------
Total operating expenses 94,742 1,696 96,384
-------------------------- ---------
Operating loss (100,797) (269) (101,255)
Interest income 141 -- 141
Interest expense 3,177 -- 409 (c) 3,586
Other expense -- 9 9
-------------------------- ---------
Loss from operations before income taxes (103,833) (278) (104,709)
Benefit for income taxes -- (110) (110)
-------------------------- ---------
Net loss $(103,833) $ (168) $(104,599)
========================== =========
Net loss per share $ (5.19) $ (5.23)
========= =========
Shares used in calculating per share amounts 20,000 20,000
========= =========
</TABLE>
See accompanying notes.
<PAGE> 17
AUREAL SEMICONDUCTOR INC. AND
CRYSTAL RIVER ENGINEERING, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
As of March 31, 1996
--------------------------------------------------------------
Historical Historical Pro Forma Pro Forma
Aureal CRE Adjustments Combined
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,507 $119 $ 7,626
Restricted cash 217 -- 217
Accounts receivable 49 229 (75)(h) 203
Unbilled receivables -- 134 (14)(b) 120
Inventories 77 57 134
Refundable income taxes 11 -- 11
Prepaid expenses and other current assets 1,221 7 1,228
Deferred tax asset -- 112 112
--------- ---- ---------
Total current assets 9,082 658 9,651
Property and equipment, net 934 92 1,026
Reorganization asset, net 4,375 -- 4,375
Patents and other assets 94 68 150(a) 312
--------- ---- ---------
$ 14,485 $818 $ 15,364
========= ==== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 380 $ 63 (75)(b) $ 368
Accrued compensation and benefits 254 168 422
Accrued warranty -- 40 40
Other accrued liabilities 2,151 145 2,296
Restructuring obligations 1,332 -- 1,332
Current portion of pre-petition claims 949 -- 949
Income taxes payable -- 110 110
--------- ---- ---------
Total current liabilities 5,066 526 5,517
TCW credit facility 19,550 -- 2,900 (a) 22,450
Long-term portion of pre-petition claims
and deferred obligations 4,781 -- 4,781
--------- ---- ---------
Total liabilities 29,397 526 32,748
--------- ---- ---------
Stockholders' equity (deficit):
Common stock 30 208 (208)(a) 30
Additional paid-in capital 89,963 -- 2,838 (d) 92,801
Deferred compensation -- (20) 20 (a) --
Retained earnings (deficit) (104,905) 104 (5,414)(a,b,d) (110,215)
--------- ---- ---------
Total stockholders' equity (deficit) (14,912) 292 (17,384)
--------- ---- ---------
$ 14,485 $818 $ 15,364
========= ==== =========
</TABLE>
See accompanying notes.
<PAGE> 18
AUREAL SEMICONDUCTOR INC.
AND CRYSTAL RIVER ENGINEERING, INC.
NOTES TO PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
1. PRO FORMA ADJUSTMENTS
Certain pro forma adjustments have been made to the accompanying pro forma
combined condensed balance sheet and statement of operations as described below:
(a) Reflects the acquisition of CRE for approximately $2.9 million
and the allocation of $150,000 of the purchase price to
intangible assets.
(b) Eliminates sales by CRE to the Company, as well as the related
receivables and payable.
(c) Reflects an increase in interest expense of the Company as a
result of increased bank borrowings of approximately $2.9
million for the purchase of CRE at the beginning of 1995.
(d) Reflects the compensation element for CRE stock options
assumed by the Company in connection with the acquisition.
(e) Reflects the amortization of acquired intangible assets of
$150,000 which will be amortized on a straight-line basis over
an estimated useful life of eighteen months.
2. RESEARCH AND DEVELOPMENT IN PROCESS
In connection with the purchase price allocation, the Company allocated $5.3
million of the purchase price to research and development in process. In the
opinion of management, the acquired research and development in process had not
reached technological feasibility and had no alternative future use and,
accordingly, this amount will be charged to expense at the time the acquisition
is consummated. This charge has not been considered in the pro forma condensed
statements of operations.
