<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
December 20, 1997
Date of Report
(Date of earliest event reported)
ADVANCED DEPOSITION TECHNOLOGIES, INC
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-12230 04-2865714
(Commission File Number) (IRS Employer Identification No.)
Myles Standish Industrial Park
580 Myles Standish Blvd.
Taunton, Massachusetts, 02780
(Address of principal executive offices) (Zip Code)
(508) 823-0707
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
On December 20, 1997, Advanced Deposition Technologies, Inc. ("ADT")
purchased (the "Acquisition") 65% of the capital stock of Alexander Boxall,
S.A., a corporation organized under the law of Spain ("ABSA"). ABSA manufactures
and distributes AC capacitor components for lighting and motors. The Acquisition
is being accounted for as a purchase whereby ADT will be deemed to have acquired
ABSA for financial reporting purposes. ADT intends to continue to use the assets
of ABSA to manufacture and distribute AC capacitor components.
ADT purchased 50% of the capital stock of ABSA from Pedro Nunez-Barranco
Guembe and the remaining 15% from Alexander Peter Boxall. The remaining 35% of
ABSA is owned by Mr. Boxall.
In conjunction with the Acquisition, ADT paid Mr. Nunez-Barranco Guembe
$2,800,000 and agreed to pay Mr. Nunez-Barranco Guembe $990,000, plus interest
accruing at 5.39% per annum, on December 19,1999, in exchange for his shares in
ABSA. In conjunction with the Acquisition, ADT issued to Mr. Boxall 280,000
shares of its common stock in exchange for 15% of the shares in ABSA. The
280,000 shares were issued from treasury stock and represent 6.6% of ADT's
outstanding stock after the Acquisition.
Effective upon the closing of the Acquisition, ADT expanded its Board of
Directors from six to seven members and appointed Mr. Boxall to fill the vacancy
created by such expansion. Mr. Boxall will be the Managing Director of ABSA.
Effective upon the closing of the Acquisition, three executive officers of ADT
were elected to ASBA's five-member Board of Directors. The remaining directors
are Mr. Boxall and his wife, Maria Franchesca Martinez Vegas.
ADT develops, manufactures, markets and sells standard and proprietary
metallized films for energy management applications, primarily within the
electronics and microwave food packaging industries. ADT sells film to ABSA for
use in ABSA's capacitor components. In ADT's 1995, 1996 and 1997 fiscal years,
ADT sales to ABSA amounted to approximately $2,620,000, $453,000 and $602,000,
respectively. There are no other material relationship between ADT (or any of
ADT's affiliates, officers or directors (or any associates thereof))and ABSA or
the sellers.
To consummate the Acquisition, ADT used $1,800,000 of its working capital,
plus a $1,000,000 term loan (the "Term Loan")from its primary lender, National
Bank of Canada. The Term Loan, plus accrued interest, are due and payable in
June 1998 and are secured by all of ADT's assets, including a pledge of the
shares of ABSA acquired in the Acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-----------------------------------------------------------------
(a) Financial Statements of Business Acquired.
-----------------------------------------
Audited financial statements of ABSA for the following periods:
(i) Balance Sheets as of December 18, 1997 and December 31, 1996
(ii) Statements of Income and Retained Earnings for the period from
January 1, 1997 to December 18, 1997 and the year ended
December 31, 1996
(iii) Statements of Cash Flows for the period from January 1, 1997 to
December 18, 1997 and the year ended December 31, 1996
(iv) Notes to Financial Statements
The foregoing financial statements, together with the Report of Independent
Certified Public Accountants, are included on pages F-1 through F-12.
(b) Pro Forma Financial Information.
-------------------------------
(i) Unaudited Pro Forma Consolidated Financial Information
Introductory Statement
(ii) Unaudited Pro Forma Consolidated Statement of Income for the Year
Ending December 31, 1997
(iii) Notes to Pro Forma Consolidated Financial Information
The foregoing Pro Forma financial information is included on pages P-1
through P-3.
(c) Exhibits.
--------
The following exhibits are filed as part of this report pursuant to Item
601 of Regulation S-K:
Exhibit 2.1 Share Purchase Agreement, dated December 19, 1997,
between ADT and Pedro Nunez-Barranco Guembe (Previously filed)
Exhibit 2.2 Share Purchase Agreement, dated December 19, 1997,
between ADT and Alexander Peter Boxall (Previously filed)
Exhibit 23 Consent of BDO Audiberia (filed herwith)
-2-
<PAGE>
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.
Date: May 8, 1998 ADVANCED DEPOSITION TECHNOLGIES, INC.
/s/ Mark Thomas
------------------------------
Mark Thomas
Chief Financial Officer
-3-
<PAGE>
FINANCIAL STATEMENTS:
CONTENTS
================================================================================
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-2
Balance sheets F-3 - F-4
Statements of income and retained earnings F-5
Statements of cash flows F-6
Notes to financial statements F-7 - F-12
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Alexander Boxall, S.A.
We have audited the accompanying consolidated balance sheets of Alexander
Boxall, S.A. as of December 18, 1997 and December 31, 1996 and the related
statements of income and retained earnings and cash flows for the period from
January 1, 1997 to December 18, 1997 and the year ended December 31, 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
in Spain and the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free from 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 Alexander Boxall, S.A. at
December 18, 1997 and December 31, 1996, and the results of its operations and
its cash flows for the periods then ended, in conformity with generally accepted
accounting principles in Spain.
Generally accepted accounting principles in Spain, in so far as they relate to
Alexander Boxall, S.A., do not vary in significant respects from generally
accepted accounting principles in the United States of America (U.S. GAAP).
BDO Audiberia
/s/ Peter Houdelet
Peter Houdelet
Partner
Madrid, Spain
March 11, 1998
F-2
<PAGE>
Balance Sheets
<TABLE>
<CAPTION>
=======================================================================================
DECEMBER 18, December 31,
1997 1996
- ---------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents (Note 2(b)) $ 688 $ 164
Accounts receivable, net of allowances for doubtful
accounts of $246 in 1997 and $74 in 1996 (Note 7) 5,131 4,366
Inventories (Note 2(c)) 1,919 2,238
Prepaid expenses and other 507 726
- ---------------------------------------------------------------------------------------
Total current assets 8,245 7,494
- ---------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, at cost (Note 2(d)):
Machinery and equipment 3,120 3,620
Furniture and fixtures 479 437
Leasehold improvements 98 112
Vehicles 125 170
- ---------------------------------------------------------------------------------------
3,822 4,339
Less - accumulated depreciation and amortization 2,749 2,779
- ---------------------------------------------------------------------------------------
Net property and equipment 1,073 1,560
- ---------------------------------------------------------------------------------------
OTHER ASSETS, net of accumulated amortization (Note 2(e)) 581 457
- ---------------------------------------------------------------------------------------
Total assets $9,899 $9,511
=======================================================================================
</TABLE>
F-3
<PAGE>
Balance Sheets
<TABLE>
<CAPTION>
=======================================================================================
DECEMBER 18, December 31,
1997 1996
- ---------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Due to financial institutions (Note 3) $3,884 $3,959
Accounts payable 2,881 3,238
Accrued expenses 829 469
- ---------------------------------------------------------------------------------------
Total current liabilities 7,594 7,666
LONG-TERM OBLIGATIONS 13 137
- ---------------------------------------------------------------------------------------
Total liabilities 7,607 7,803
- ---------------------------------------------------------------------------------------
COMMITMENTS (Notes 3 and 4)
STOCKHOLDERS' EQUITY:
Common stock, no par value, 21,000 shares
authorized and issued 160 160
Retained earnings 2,374 1,548
Foreign currency translation adjustment (Note 2j) (242) -
- ---------------------------------------------------------------------------------------
Total stockholders' equity 2,292 1,708
- ---------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $9,899 $9,511
=======================================================================================
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
Statements of Income and Retained Earnings
<TABLE>
<CAPTION>
============================================================================================
JANUARY 1 TO Year Ended
DECEMBER 18, December 31,
1997 1996
- --------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
PRODUCT SALES (Note 2(g)) $15,336 $15,299
COST OF SALES 8,044 9,032
- --------------------------------------------------------------------------------------------
Gross profit 7,292 6,267
OPERATING EXPENSES 5,554 5,922
- --------------------------------------------------------------------------------------------
Operating income 1,738 345
- --------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 9 39
Interest expense (401) (591)
Other expense, net (76) 303
- --------------------------------------------------------------------------------------------
Total other expense, net (468) (249)
- --------------------------------------------------------------------------------------------
Income before income taxes 1,270 96
INCOME TAXES (Notes 2(f) and 8) 444 17
- --------------------------------------------------------------------------------------------
NET INCOME 826 79
RETAINED EARNINGS, beginning of period 1,548 1,469
- --------------------------------------------------------------------------------------------
RETAINED EARNINGS, end of period $ 2,374 $ 1,548
============================================================================================
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
Statements of Cash Flows
<TABLE>
<CAPTION>
============================================================================================
JANUARY 1 TO Year Ended
DECEMBER 18, December 31,
1997 1996
- --------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 826 $ 79
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 341 253
Changes in assets and liabilities:
Accounts receivable (1,366) 603
Inventories 27 117
Prepaid expenses and other 127 (170)
Accounts payable 66 (558)
Accrued expenses 431 (82)
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities 452 242
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (50) (328)
(Increase) decrease in other assets (188) 109
- --------------------------------------------------------------------------------------------
Net cash used for investing activities (238) (219)
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) from financial institutions 452 (36)
Repayments of long-term obligations (108) (7)
- --------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities 344 (43)
- --------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
cash equivalents (34) -
- --------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 524 (20)
CASH AND CASH EQUIVALENTS, beginning of period 164 184
- --------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of period $ 688 $ 164
============================================================================================
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. OPERATIONS Alexander Boxall, S.A. (the "Company") is a manufacturer
of electronic capacitors used for lighting and motor
applications.
2. SIGNIFICANT The accompanying financial statements reflect the
ACCOUNTING application of certain significant accounting policies,
POLICIES including those described below.
(a) Estimates and Assumptions
The preparation of financial statements in accordance with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amount 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.
(b) Cash and Cash Equivalents
The Company considers all investments purchased with
original maturities of less than three months to be cash
equivalents.
(c) Inventories
Inventories are stated at the lower of cost (first-in,
first-out) or market and consist of the following (in
thousands):
December 31, 1997 1996
-------------------------------------------------------
Raw materials $ 1,288 $ 1,263
Work in process 91 177
Finished goods 615 798
-------------------------------------------------------
Less: Reserve for obsolescence 75 -
-------------------------------------------------------
Net $ 1,919 $ 2,238
=======================================================
F-7
<PAGE>
================================================================================
2. SIGNIFICANT (d) Property and Equipment
ACCOUNTING
POLICIES Property and equipment is stated at cost. The Company
(Continued) provides for depreciation and amortization by charges to
operations over the estimated useful lives of property and
equipment using the straight-line and units-of-production
methods as follows:
Estimated
Classification Useful Life
------------------------------------------------------------
Machinery and equipment 15 years
Furniture and fixtures 5 years
Leasehold improvements Terms of lease
Vehicles 4 years
(e) Other Assets
The Company capitalizes the costs of obtaining patents and
trademarks and is amortizing such costs over a five-year
period.
(f) Income Taxes
The Company provides for income taxes in accordance with
SFAS No. 109, "Accounting for Income Taxes". Under the
liability method specified by SFAS No. 109, a deferred tax
asset or liability is determined based on the difference
between the financial statement and tax basis of assets and
liabilities, as measured by the enacted rates assumed to be
in effect when these differences reverse.
(g) Revenue Recognition
The Company recognizes revenues on its product sales upon
shipment.
F-8
<PAGE>
================================================================================
2. SIGNIFICANT (h) Research and Development Expenses
ACCOUNTING
POLICIES The Company charges research and development expenses to
(Continued) operations as incurred.
(i) Financial Instruments
The estimated fair value of the Company's financial
instruments, which include accounts receivable and accounts
payable approximates their carrying value.
(j) Foreign Currency Translation
Assets and liabilities are translated into U.S. dollars at
the rates of exchange at the balance sheet date, and
related revenues and expenses are translated at average
exchange rates in effect during the period. Resulting
translation adjustments are recorded as a component of
stockholders' equity.
3. DUE TO FINANCIAL The Company receives cash in advance at a discount on
INSTITUTIONS specific accounts receivable balances. The customers have
agreements with the bank to make payments directly to the
bank. The Company is indebted to the bank until the
agreements are paid in full.
F-9
<PAGE>
================================================================================
4. COMMITMENTS
Operating Leases The Company leases its facilities, vehicles and other
equipment under operating leases that expire through
December 25, 1999. The Company's manufacturing operations
are maintained in a leased facility which is owned by the
shareholders of the Company under a lease expiring on
December 31, 2006. Future minimum lease payments as of
December 18, 1997 are as follows (in thousands):
Fiscal Year Amount
---------------------------------------------
1998 $ 172
1999 173
2000 168
2001 168
2002 168
Thereafter 672
---------------------------------------------
Total $1,521
=============================================
Rent expense included in the accompanying consolidated
statements of operations is approximately $167,000 and
$319,000 for 1997 and 1996, respectively.
F-10
<PAGE>
================================================================================
5. CONCENTRATION OF Statement of Financial Accounting Standards No.
CREDIT RISK 105, "Disclosure of Information About Financial
Instruments with Off-Balance-Sheet Risk and
Financial Instruments with Concentrations of Credit
Risk," requires disclosure of any significant off-
balance-sheet and credit risk concentrations.
Although collateral is not required, the Company
periodically reviews its accounts and provides
estimated reserves for potential credit losses.
(a) Significant Customers
Product sales to significant customers for the
periods ended December 18, 1997 and December 31,
1996 in excess of 10% of sales were as follows:
Percentage of Product Sales
---------------------------
Customer 1997 1996
A 10.0% 8.7%
(b) Export Sales
Export sales as a percentage of revenues were made
to the following geographic regions in 1997 and
1996, respectively:
Region 1997 1996
---------------------------------------------------
Europe 85.9% 79.3%
South America 9.1 10.0
Far East 4.7 4.7
North America 0.3 0.4
Africa - 5.6
F-11
<PAGE>
================================================================================
6. SUPPLEMENTAL DISCLOSURE Cash paid during the year for (in thousands):
OF CASH FLOW INFORMATION
1997 1996
---------------------------------------------------
Interest $392 $514
Income taxes $171 $ 16
7. RELATED PARTY The Company sells its products to companies in
TRANSACTION which a stockholder of the Company owns an equity
interest. Sales to these companies were $3,102,990
in 1997 and $1,023,256 in 1996. Receivables from
these related parties were $515,455 and $80,990 at
December 18, 1997 and December 31, 1996,
respectively.
8. INCOME TAXES Income taxes are provided at the statutory rate of
35% and are currently payable.
F-12
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Statement of Income for the
twelve months ended December 31, 1997 give effect to the acquisition of
Alexander Boxall, S.A. ("ABSA") under the purchase method of accounting as if
the acquisition had been consummated on January 1, 1997. The historical
financial information for the twelve months ended December 31, 1997 for ABSA has
been obtained from the financial statements of ABSA which were audited by BDO
Audiberia. The historical financial information for the twelve months ended
December 31, 1997 for Advanced Deposition Technologies, Inc. (the "Company") has
been obtained from the Statement of Operations as presented in the Company's
Form 10-KSB for the twelve months ended December 31, 1997.
The Unaudited Pro Forma Consolidated Statement of Income is based on the
individual financial statements of ABSA and the Company under the adjustments
set forth in the accompanying Notes to the Pro Forma Consolidated Financial
Information. No Pro Forma Balance Sheet as of December 31, 1997 is presented as
the ABSA acquisition is reflected in the December 31, 1997 Balance Sheet
contained in the Company's Form 10-KSB for the twelve months ended December 31,
1997.
The Unaudited Pro Forma Consolidated Statement of Income may not be
indicative of the results that would actually have occurred if the ABSA
acquisition had been in effect on the date indicated or which may be expected in
the future. The Unaudited Pro Forma Consolidated Statement of Income should be
read in conjunction with the historical financial statements and accompanying
notes of the Company and ABSA.
P-1
<PAGE>
ADVANCED DEPOSITION TECHNOLOGIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR ENDING DECEMBER 31, 1997
(in thousands, except shares and share data)
<TABLE>
<CAPTION>
Historical
--------------------------------------
Advanced
Deposition
Technologies, Alexander Pro Forma Pro Forma
Inc. Boxall, S.A. Total Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
REVENUES
Product sales $11,750 $15,723 $27,473 $ (376) (A) $ 25,422
(1,675) (B)
Royalties, licenses and
Other 500 -- 500 -- 500
------- ------- ------- ------- -----------
Total revenues 12,250 15,723 27,973 (2,051) 25,922
COST OF REVENUES 10,102 8,251 18,353 (201) (A) 16,977
(1,175) (B)
------- ------- ------- ------- -----------
Gross profit 2,148 7,472 9,620 (675) 8,945
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 1,782 5,701 7,483 (143) (A) 6,840
(500) (B)
RESEARCH AND
DEVELOPMENT EXPENSES 324 -- 324 -- 324
AMORTIZATION EXPENSE 154 -- 154 130 (C) 284
------- ------- ------- ------- -----------
Operating income (loss) (112) 1,771 1,659 (162) 1,497
------- ------- ------- ------- -----------
OTHER INCOME (EXPENSE):
Interest income 91 10 101 -- 101
Interest Expense (274) (417) (691) 18 (A) (827)
(154) (D)
Other expense, net (63) (81) (144) 2 (A) (142)
------- ------- ------- ------- -----------
Total other expense, net (246) (488) (734) (134) (868)
------- ------- ------- ------- -----------
Income (Loss) before income
taxes and minority
interest (358) 1,283 925 (296) 629
INCOME TAXES 4 448 452 (4) (A) 448
------- ------- ------- ------- -----------
NET INCOME (LOSS) $ (362) $ 835 $ 473 $ (292) $ 181
Before Minority Interest
in Net Income of Subsidiary
======= ======= ======= ======= ===========
NET INCOME (LOSS)
APPLICABLE TO:
Majority interest $ (368) $ 543 $ 175 $ (286) $ (111)
Minority interest 3 292 295 (3) 292
------- ------- ------- ------- -----------
NET INCOME $ (365) $ 835 $ 470 $ (289) $ 181
======= ======= ======= ======= ===========
INCOME PER SHARE
Basic $0.04
Diluted 0.04
===========
Weighted average common shares
outstanding 4,242,,017
===========
</TABLE>
P-2
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Note 1 - Pro Forma Adjustments (in thousands)
(A) To eliminate the effects on the Company's historical statement of
operations of the consolidation of Alexander Boxall, S.A.'s operating
activity since the date of acquisition.
(B) To eliminate intercompany transactions.
(C) To recognize the amortization of the excess of purchase price over the
fair value of net assets of subsidary (goodwill) for the Company's
65% investment in Alexander Boxall, S.A.
Effect on net income for the full-year amortization of
goodwill $138
Less: Amount recognized in financial statements 8
----
Pro forma adjustment $130
====
(D) To recognize interest expense connected to the financing of the
acquisition on a $1,000,000 bank loan and a $990,000 note payable to
the former shareholder.
Effect on net income for the full-year interest expense $160
Less: Amount recognized in financial statements 6
----
Pro forma adjustment $154
====
P-3
<PAGE>
EXHIBIT INDEX
------- -----
Exhibit 2.1 Share Purchase Agreement, dated December 19, 1997,
between ADT and Pedro Nunez-Barranco Guembe (Previously filed)
Exhibit 2.2 Share Purchase Agreement, dated December 19, 1997,
between ADT and Alexander Peter Boxall (Previously filed)
Exhibit 23 Consent of BDO Audiberia (filed herewith)
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the registration
statements of Advanced Deposition Technologies, Inc. on Form S-8, dated December
11, 1996 (SEC file No. 333-17653), on Form S-8, dated April 24, 1997 (SEC file
No. 333-25801), and on Form S-3, dated May 9, 1996 (SEC file No. 033-98400), of
our report dated March 11, 1998 relating to the financial statements of
Alexander Boxall, S.A. as of December 18, 1997 and December 31, 1996 and for the
periods ended, included in the 8K/A of Advanced Deposition Technologies, Inc.
filed in connection with the acquisition of Alexander Boxall, S.A.
BDO Audiberia
/s/ Peter Houdelet
Peter Houdelet
Madrid, Spain
May 4, 1998
