UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A 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) SEPTEMBER 30, 1998
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QUAD SYSTEMS CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-21504 23-2180139
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2405 MARYLAND ROAD, WILLOW GROVE, PENNSYLVANIA 19090
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 657-6202
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(Former name or former address, if changed since last report).
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QUAD SYSTEMS CORPORATION
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 30, 1998, Quad Systems Corporation (the "Company") sold
substantially all of the assets and liabilities of SMTech Limited, to Speedline
Technologies, Inc., a subsidiary of Cookson Group PLC, for $14.8 million in cash
paid at closing, subject to a holdback of $750,000. In connection with the sale,
the Company and Speedline's MPM division have entered into an agreement whereby
Speedline/MPM will supply the Company on an OEM basis with the former SMTech
stencil printer product line with any and all technological improvements and
advancements to be made on the products by Speedline.
ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(b) Pro forma consolidated financial information.
Pro forma Condensed Consolidated Financial Information
Pro forma Condensed Consolidated Balance Sheet as of September 30, 1998
Pro forma Condensed Consolidated Statement of Operations for the year ended
September 30, 1998
QUAD SYSTEMS CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following presents pro forma consolidated financial information of the
Company as adjusted to give effect to the sale of substantially all of the
assets and liabilities of SMTech Limited as of the beginning of the earliest
period presented for statement of operations purposes and as of the end of the
period presented for balance sheet purposes. The pro forma condensed
consolidated financial information assumes that the Company repaid its
outstanding line of credit balance with a portion of the sale proceeds. These
pro forma statements may not be indicative of the results that actually would
have occurred if the disposition of assets had taken place on the dates
indicated or which may be obtained in the future.
For ease of presentation, the Company has indicated its fiscal year as
ending on September 30; whereas, in fact, the Company reports on a 52-53 week
fiscal year ending on the last Sunday in September. Fiscal 1998 ended on
September 27, 1998.
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QUAD SYSTEMS CORPORATION
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEETS
SEPTEMBER 30,1998
(IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
QUAD NET ASSETS (a) PRO FORMA PRO FORMA
HISTORICAL SOLD ADJUSTMENTS CONSOLIDATED
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<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 2,116 $ (2) $ 5,255 (b) $ 7,369
Accounts receivable, net 15,003 (1,672) 714 (b) 14,045
Inventory 20,518 (2,245) 18,273
Deferred income taxes 3,886 (1,102)(c) 2,784
Other 1,255 (145) 1,110
Income taxes receivable 1,088 (1,088)(c) --
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Total current assets 43,866 (4,064) 3,779 43,581
Equipment and leasehold improvements, net 3,498 (516) (171)(d) 2,811
Deferred income taxes 653 653
Goodwill, net 2,594 (2,152)(d) 442
Other assets 365 365
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$ 50,976 $ (4,580) $ 1,456 $ 47,852
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LIABILITIES AND STOCKHOLDERS'EQUITY
Current liabilities:
Line of credit $ 8,795 $ (8,795)(b) $ --
Accounts payable 4,937 (1,007) 3,930
Accrued expenses 6,908 (772) 1,349 (e) 7,485
Customer deposits 509 509
Current portion of long-term debt 634 634
Deferred service revenue 1,220 1,220
Income taxes payable -- 1,042 (c) 1,042
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Total current liabilities 23,003 (1,779) (6,404) 14,820
Long-term debt, less current portion 1,761 1,761
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Total liabilities 24,764 (1,779) (6,404) 16,581
Stockholders' equity:
Preferred Stock -- --
Common Stock 132 132
Additional paid-in-capital 24,719 24,719
Retained earnings 1,395 5,125 (f) 6,520
Foreign currency translation 142 (66) 76
Less treasury stock (176) (176)
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Total stockholders' equity 26,212 (66) 5,125 31,271
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$ 50,976 $ (1,845) $ (1,279) $ 47,852
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</TABLE>
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QUAD SYSTEMS CORPORATION
CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUAD SMTech PRO FORMA QUAD
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C> <C>
Net sales $ 74,859 $ 14,693 $8,073 (g) $ 68,239
Cost of products sold 52,128 10,606 8,073 (g) 49,595
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Gross profit 22,731 4,087 -- 18,644
Operating expenses:
Engineering, research and
development 7,515 952 6,563
Selling and marketing 14,542 1,400 13,142
Administrative and general 6,955 2,283 4,672
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29,012 4,635 -- 24,377
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Loss from operations (6,281) (548) -- (5,733)
Interest expense, net 684 55 (476)(h) 153
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Loss before income taxes (6,965) (603) 476 (5,886)
Income tax expense (benefit) (1,915) (90) 131 (h) (1,694)
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Net income (loss) $ (5,050) $ (513) $ 345 $ (4,192)
======== ======== ====== ========
Net loss per share:
Basic $ (1.16) $ (0.96)
Diluted $ (1.16) $ (0.96)
Weighted average number of shares outstanding:
Basic 4,359,464 4,359,464
Diluted 4,359,464 4,359,464
</TABLE>
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QUAD SYSTEMS CORPORATION
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(a) Reflects the sale of substantially all of the net assets of SMTech Limited
("SMTech"), a wholly owned subsidiary of the Company. Certain account
balances relating to income and other taxes and leasehold improvements were
excluded from the sale.
(b) Reflects the receipt of $14,050 in cash, the recording of $714 receivable
from Speedline Technologies, Inc. for the remainder of the sale proceeds
and the payment of the outstanding line of credit balance of $8,795.
(c) Reflects the reclassification of deferred income taxes and income taxes
receivable to income taxes payable. Income taxes payable reflects the taxes
due on sale of the net assets of SMTech of approximately $3,232.
(d) Reflects the write off of leasehold improvements associated with the sale
of the SMTech screen printer business. Also reflects write off of the
goodwill associated with the initial purchase of SMTech in January 1995.
(e) Reflects accrued expenses relating to the costs incurred in connection with
the sale of $751 and accrued expenses of $598 for the cost associated with
terminating the SMTech lease agreement.
(f) Reflects the net gain on sale of the net assets of SMTech.
(g) Represents the intercompany sales between SMTech and the Company previously
eliminated.
(h) Reflects the adjustment to decrease interest expense for the repayment of
the outstanding line of credit balance assumed to be repaid at the
beginning of the year and the related tax effect of the reduction in
interest expense.
(c) Exhibits.
2.1 Agreement relating to the sale and purchase of the business and
assets of SMTech Limited, dated September 30, 1998, between the
Registrant, SMTech Limited and Speedline Technologies, Inc. -
Incorporated by reference to Exhibit 2.1 filed under Current Report
on Form 8-K filed with the Securities and Exchange Commission on
October 14, 1998.
2.2 Agreement relating to the goodwill and intellectual property
assignment of SMTech Limited, dated September 30, 1998, between the
Registrant, SMTech Limited and Speedline Technologies, Inc. -
Incorporated by reference to Exhibit 2.2 filed under Current Report
on Form 8-K filed with the Securities and Exchange Commission on
October 14, 1998.
2.3 Supply agreement dated September 30, 1998 between the Registrant
and Speedline Technologies, Inc. for the resale of SMTech stencil
printers (portions redacted pursuant to SEC order granting
confidential treatment to certain provisions). - Incorporated by
reference to Exhibit 2.3 filed under Current Report on Form 8-K
filed with the Securities and Exchange Commission on October 14,
1998.
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QUAD SYSTEMS CORPORATION
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.
QUAD SYSTEMS CORPORATION
Dated: December 10, 1998 By: /s/ ANTHONY R. DRURY
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Anthony R. Drury
Senior Vice President, Finance
and Chief Financial Officer
(Principal Accounting Officer
and duly authorized officer)
