UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
FORM 8-K/A
Amendment 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 10, 1997
(March 10, 1997)
Uniphase Corporation
(Exact name of Registrant as Specified in its Charter)
Delaware 0-22874 94-2579683
(State of Other (Commission File (IRS Employer Identification
Jurisdiction No.) No.)
of Incorporation)
163 Baypointe Parkway, San Jose, California 95134
(Address of Principal Executive Offices) (Zip Code)
(408) 434-1800
(Registrant's Telephone Number, Including Area Code)
Page 1 of 19 Pages
Exhibit Index Located on Page 19
This amendment to Item 7. (b) of the 8K-A, filed on May 27, 1997,
is to clarify certain misstatements made on the Nine Months Ended
March 31, 1997, Pro Forma Condensed Combined Consolidated Statement
of Operation.
This form 8-K/A amends Item 7 of that certain Form 8-K filed with the
Securities and Exchange Commission on March 25, 1997 (the "Original Form 8-
K") by including the financial statements and pro forma financial
information referred to below.
Item 7. Financial Statements, Pro Forma Information and Exhibits
(a) Financial Statements of Business Acquired
(1) Report of Independent Auditors.
(2) Laser Enterprises, a division of International
Business Machines, balance sheets as of December
31, 1996 and 1995 and the related statements of
income and cash flows for each of the three years
in the period ended December 31, 1996.
(3) Notes to Financial Statements of Laser
Enterprises, a division of International
Business Machines.
REPORT OF INDEPENDENT AUDITORS
with
Financial Statements
Years ended December 31, 1996, 1995 and 1994
of
LASER ENTERPRISE, Rueschlikon ZH, Switzerland
a Division of International Business Machines Corporation, New York (IBM)
Report of Independent Auditors
To the Board of Directors of Uniphase Corporation, USA
We have audited the accompanying balance sheets of Laser Enterprise, a
Division of International Business Machines, New York, as of December 31,
1996 and December 31, 1995, and the related statements of income and cash
flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Division'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 Laser Enterprise, a
Division of International Business Machines as at December 31, 1996 and
1995 and the results of operations and its cash flows for each of the
three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
Zurich, Switzerland ATAG Ernst & Young AG
May 7, 1997
/s/ Robert G. Wightman /s/ Yves Vontobe
Robert G. Wightman Yves Vontobe
Chartered Accountant Certified Accountant
Laser Enterprise, A Division of International Business Machines
Balance Sheets
December 31
---------------------------
1996 1995
-------------- -----------
Assets
Current assets:
Accounts Receivable $ 5,328,755 $ 3,860,480
Inventories 3,336,370 776,315
------------- -----------
Total current assets 8,665,125 4,636,795
Property, plant and equipment, net 3,407,841 1,952,191
------------- -----------
Total assets $ 12,072,966 $ 6,588,986
============= ===========
Liabilities and Division Equity
Current liabilities:
Accounts payable $ 124,971 $ 42,514
Accrued liabilities 98,377 102,207
Accrued payroll costs 610,269 312,264
Provision for warranty costs 1,008,858 831,683
------------- -----------
Total current liabilities 1,842,475 1,288,668
Provision for hospitalization
contribution plan 420,000 375,000
Provision for employee pension costs 2,420,000 2,230,000
Division equity
Head Office current account 7,390,491 2,695,318
------------ -----------
Total liabiilities and division equity $12,072,966 $6,588,986
============ ===========
The accompanying notes form an integral part of these financial
statements
Laser Enterprise, A Division of International Business Machines
Statements of Income
Years ended December 31
-------------------------------------
1996 1995 1994
----------- ----------- -----------
Gross sales $21,895,655 $19,679,554 $13,844,335
Cost of sales (7,572,417) (9,587,004) (7,622,562)
----------- ----------- -----------
Gross profit 14,323,238 10,092,550 6,221,773
----------- ----------- -----------
Operating expenses:
Research and development
expenses 1,841,401 1,627,510 1,246,621
Selling, general and
administrative expenses 2,608,628 2,211,617 1,591,217
----------- ----------- -----------
Total operating expenses 4,450,029 3,839,127 2,837,838
Income before income taxes 9,873,209 6,253,423 3,383,935
Notional income tax expense 2,665,766 1,688,424 913,662
----------- ----------- -----------
Net income $ 7,207,443 $ 4,564,999 $ 2,470,273
=========== =========== ===========
The accompanying notes form an integral part of these financial
statements
Laser Enterprise, A Division of International Business Machines
Statements of Cash Flows
For the Years ended December 31
----------------------------------
1996 1995 1994
---------- ---------- ----------
Operating activities
Net income $7,207,443 $4,564,999 $2,470,273
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation 732,812 895,958 920,859
Changes in operating assets and
liabilities:
Accounts receivable (1,468,275) 1,246,450 (2,176,630)
Inventories (2,560,055) 400,212 (1,076,527)
Accounts payable and other current
liabilities 553,807 599,205 239,463
Change in long-term liabilities 235,000 220,000 200,000
---------- ---------- ----------
Net cash provided by operating
activities 4,700,732 7,926,824 577,438
---------- ---------- ----------
Investing activities
Investments in property, plant and
equipment (2,188,462) (576,071) (802,244)
---------- ---------- ----------
Financing activities
Net cash provided by (to) International
Business Machines (2,512,270) (7,350,753) 224,806
---------- ---------- ----------
Cash at beginning and end of period $ 0 $ 0 $ 0
========== ========== ==========
The accompanying notes form an integral part of these financial
statements
LASER ENTERPRISE DIVISION OF IBM CORPORATION
Notes to Financial Statements
December 31, 1996, 1995 and 1994
Note 1 - Organization and basis of presentation
Laser Enterprise has operated as a business operation of International
Business Machines Corporation, New York (IBM). The accompanying financial
statements include the assets and liabilities and the related net sales and
expenses that are directly related to Laser Enterprise's operations on a
historical basis.
The Laser Enterprise business consists of research in the opto-electronic
field and the development and manufacture of gallium arsenide laser chips
in Rueschlikon, Zurich, Switzerland and their sale to unrelated parties
located principally in North America, Italy and Korea. Laser Enterprise
performs ongoing credit evaluations and does not require collateral.
Laser Enterprise had no separate legal status as it was an integral part of
the Zurich Research Laboratory, a component of the Research Division of
IBM. As a result, separate accounting records have not been maintained for
the Laser Enterprise operations acquired by Uniphase Corporation under the
Purchase Agreement of March 10, 1997 (the "Purchase Agreement") (see Note
9). The accompanying financial statements have been prepared from the
historical accounting records of IBM.
Since all financing, cash receipts and disbursements were undertaken by IBM
for Laser Enterprise, these financial statements do not show liquid asset
balances. All financing, cash receipts and disbursements since January 1,
1994 are recorded in the Head Office current account. At the end of each
year, the net income is credited to the Head Office current account.
The US Dollar is considered to be the functional currency of Laser
Enterprise. Accounts denominated in other currencies are translated into US
Dollars at the approximate rates of exchange in effect at the dates of the
underlying transactions. Exchange differences are considered to be
immaterial and are charged to income under operating expenses.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Note 2 - Significant accounting policies
Inventories
Inventory is stated at the lower of cost or market value. Cost is computed
on the basis of estimated costs allocated to Laser Enterprise and on
estimated average yields of salable product resulting from the production
process.
Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation is computed
for financial reporting purposes by the use of the straight line method
over the estimated useful lives (production and research machinery and
equipment 7 years, office machines and equipment 5 years).
Income taxes
Since Laser Enterprise has operated as a part of a non-trading division of
IBM, its results have not been subject to taxation on a basis comparable to
that applicable to an unaffiliated independent company. For financial
reporting purposes, a notional income tax charge is shown; this is computed
on the reported profit before income tax at the approximate average income
tax rate (maximum tax bracket: 27%) applicable to a company operating in
Rueschlikon, Zurich.
Revenue recognition
Sales, cost of sales, and a provision for estimated sales returns, warranty
costs and allowances are recorded at the time sales transactions are
considered complete, which is generally the date products are shipped to
customers.
Note 3 - Inventories
Inventories comprise the following:
December 31, 1996 1995 1994
Finished goods $ 704,281 $110,986 $ 677,330
Work in process (cells in lot validation) 2,632,089 665,329 499,197
--------- -------- ----------
$3,336,370 $776,315 $1,176,527
--------- -------- ----------
Management considers the value of the raw material inventories to be
insignificant.
Note 4 - Property, plant and equipment
Property, plant and equipment comprises the following:
December 31, 1996 1995 1994
Production and research machinery and
equipment $ 9,150,997 $7,298,902 $6,778,196
Office machines and equipment 1,225,397 889,030 831,665
---------- --------- ----------
Total cost 10,376,394 8,187,932 7,609,861
Accumulated depreciation 6,968,553 6,235,741 5,339,783
---------- --------- ----------
Net book value $ 3,407,841 $1,952,191 $2,270,078
---------- --------- ----------
Note 5 - Provision for hospitalization cost plan
Laser Enterprise makes contributions of up to CHF 25,000 each to the
hospitalization costs of the employees, their spouses and non-adult
children. After a disbursement has been made, the remaining credit balance
of the person concerned is topped-up to CHF 25,000 by annual installments
of CHF 2,500 during the period of employment. After retirement, the persons
concerned remain entitled to contributions up to the amount of their credit
balance; this balance is no longer topped-up after retirement. Entitlement
to contributions ceases on the termination of employment other than through
retirement.
For financial reporting purposes, provision is made for the cost of these
hospitalization contributions at the rate of USD 1,000 per employee per
year (the approximate average historical cost per employee for the IBM
Zurich Research Laboratory) up to an amount of USD 20,000 per employee.
This amount of USD 20,000 then represents a provision for the post-
retirement cost of the hospital-ization contribution plan. The actual
disbursements of hospitalization contributions for Laser Enterprise
personnel were minimal in the years 1996, 1995 and 1994.
Note 6 - Provision for employee pension costs
The personnel of Laser Enterprise were members of the defined benefit and
defined contribution pension plans of IBM. For the financial reporting
purposes of Laser Enterprise, these plans have the characteristics of
multiemployer plans. The pension plans are funded by defined contributions
from the employees plus defined (defined contribution plan) or non-defined
contributions (defined benefit plan) from the employers. The defined
contribution plan and the vested benefits under the defined benefit plan
are considered to be fully funded through current contributions.
Provisions for the unfunded obligations of the defined benefit plan have
been made in these financial statements based on the supplementary funding
amounts in respect of projected benefit obligations under the defined
benefit plan which were included in the Purchase Agreement.
Pension plan expense was one of the components of the total employee
benefits costs allocated to Laser Enterprise primarily on the basis of
headcount. The total pension plan expense charged to the income statements
amounted to approximately $ 1,204,000 in 1996, $ 513,000 in 1995 and
$413,000 in 1994.
Note 7 - Gross sales
Gross sales per the accompanying financial statements represent shipments
by Laser Enterprise for the products acquired by Uniphase Corporation.
Two significant third-party customers in the North America accounted for
46% respectively 43% of gross sales in 1996, 55% respectively 34% in 1995
and 79% respectively 7% in 1994.
Note 8 - Transactions with Head Office
The Head Office current account balance included in the balance sheet
represents a net balance as a result of the various transactions between
Laser Enterprise and its Head Office. There are no terms of settlement or
interest charges associated with the account balance. The balance is
primarily the result of Laser Enterprise,s participation in the Head
Office,s central cash management program, wherein all Laser Enterprise,s
cash receipts are remitted to the Head Office and all cash disbursements
are funded by the Head Office.
An analysis of transactions in the Head Office current account for each of
the three years in the period ended December 31, 1996 follows:
1996 1995 1994
Balance at beginning of year $ 2,695,318 $ 5,481,072 $2,985,993
Customer payments directly to
Head Office (18,039,038) (17,883,604) (7,784,405)
Investment in property, plant and
equipment 2,188,463 578,071 802,244
Miscellaneous expenses, net of items not
requiring disbursement of cash 10,672,539 8,266,356 6,093,305
Notional income tax expense 2,665,766 1,688,424 913,662
Net income 7,207,443 4,564,999 2,470,273
------------- ----------- ----------
Balance at end of year $ 7,390,491 $ 2,695,318 $5,481,072
------------- ----------- ----------
Average balance during year $ 5,042,904 $ 4,088,195 $4,233,532
------------- ----------- ----------
The Zurich Research Laboratory of IBM provides various services to Laser
Enterprise for which charges are made based on allocations of the total
costs of the Zurich Research Laboratory. Such allocations of the costs of
corporate services, production, clean room and other facilities,
information services, etc. to Laser Enterprise were made based on the
estimated usage, determined primarily on the basis of actual headcount. In
the opinion of management this method of allocation is reasonable. No
charges have been made for the use of existing IBM patents and know-how.
Note 9 - Subsequent event
On March 10, 1997, Laser Enterprise was acquired by Uniphase Corporation
and its name was changed to Uniphase Laser Enterprise AG.
_____________________
Pro Forma Financial Information
Item 7. Financial Statements, Pro Forma Information and Exhibits
(Continued)
(b) Pro Forma Financial Information
On March 10, 1997, Uniphase Corporation (the
"Company") acquired the certain assets, including
accounts receivable, fixed assets, inventory, non-
exclusive technology and a patent license agreement and
assumed certain accrued liabilities of Laser
Enterprise, a division of International Business
Machines ("IBM"), located at IBM's Zurich Research
Laboratory in Switzerland for the purchase price of
$45.9 million consisted of $45 million cash and
acquisition expenses of approximately $900,000. The
Unaudited Pro Forma Condensed Combined Statement of
Operations for the nine months ended March 31, 1997 and
the fiscal year ended June 30 1996, should be read in
conjunction with the consolidated financial statements
of the Company, as previously filed and the Financial
Statements of Laser Enterprise, a division of IBM
("Laser Enterprise") included herein. Those financial
statements are based on the historical financial
statements of the Company and Laser Enterprise after
giving effect to the acquisition under the purchase
method of accounting and the assumptions and
adjustments described in the accompanying Notes to the
Unaudited Pro Forma Condensed Combined Statements of
Operation. The pro forma information does not purport
to be indicative of the results which would have been
reported if the above transaction had been in effect
for the periods presented or which may result in the
future.
The Unaudited Pro Forma Condensed Combined
Statements of Operations are presented as if the
operations of the Company and Laser Enterprise had been
combined as of July 1, 1995. The Unaudited Pro Forma
Condensed Combined Statement of Operations for the year
ended June 30, 1996 combines the year ended June 30,
1996 for the Company and the twelve month period ended
June 30, 1996 for Laser Enterprise. The Unaudited Pro
Forma Condensed Combined Statement of Operations for
the nine months ended March 31, 1997 combines the nine
months ended March 31, 1996 for the Company and for
Laser Enterprise.
Pro Forma Condensed Combined Consolidated
Statement of Operations (Unaudited)
March 31, 1997
(in thousands, except per share data)
Nine Months Ended March 31, 1997
--------------------------------------
Laser Pro Pro Forma
Uniphase Enterprise Forma Uniphase
Adjustments Combined
Net sales $73,073 $16,847 $ -- $89,920
Cost of sales 39,167 8,205 87 (B) 47,459
--------- --------- -------- ---------
Gross profit 33,906 8,642 (87) 42,461
Operating expenses:
Research and development 6,307 1,519 52 (B) 7,878
Royalty and license 1,209 -- -- 1,209
Selling, general and
administrative 17,635 1,907 1,033 (A) 20,805
230 (B)
Acquired in-process research
development 33,314 -- (33,314)(A) --
--------- --------- -------- ---------
Total operating expenses 58,465 3,426 (31,999) 29,892
--------- --------- -------- ---------
Income (loss) from
operations (24,559) 5,216 31,912 12,569
Interest and other
income, net 2,805 -- -- 2,805
--------- --------- -------- ---------
Income (loss) before
income taxes (21,754) 5,216 31,912 15,374
Income tax expense (benefit) 6,056 1,366 (148)(C) 7,274
--------- --------- -------- ---------
Net income (loss) $(27,810) $3,850 $32,060 $ 8,100
========= ========= ======== =========
Net income (loss) per share $ (1.69) $ 0.49
========= =========
Number of weighted average
shares used in per share
amounts 16,489 16,489
========= =========
See accompanying notes to unaudited pro forma condensed combined
financial statements
Pro Forma Condensed Combined Consolidated
Statement of Operations (Unaudited)
June 30, 1996
(in thousands, except per share data)
Twelve Month Period Ended June 30, 1996
---------------------------------------------
Pro Forma
Laser Pro Forma Uniphase
Uniphase Enterprise Adjustments Combined
________ ________ ___________ _______
Net Sales $69,073 $19,191 $88,264
Cost of sales 36,300 7,890 116 (B) 44,306
--------- -------- --------- --------
Gross profit 32,773 11,301 (116) 43,958
Operating expenses
Research and development 5,828 1,528 70 (B) 7,426
Royalty and license 1,377 -- -- 1,337
Selling, general, and
administrative 12,699 2,349 1,377 (A) 16,732
307 (B)
Acquired in-process research
and development 4,480 -- -- 4,480
Compensation expense 3,000 -- -- 3,000
--------- -------- --------- --------
Total operating expenses 27,344 3,877 1,754 32,975
--------- -------- --------- --------
Income (loss) from
operations 5,429 7,424 (1,870) 10,983
Interest and other income,
net 1,399 -- -- 1,399
--------- -------- --------- --------
Income (loss) before
income taxes 6,828 7,424 (1,870) 12,382
Income tax expense
(benefit) 4,036 2,004 (197) (C) 5,843
--------- -------- --------- --------
Net income (loss) $ 2,792 $ 5,420 $ (1,673) $ 6,539
========= ======== ========= ========
Net income (loss) per share $ 0.21 $ 0.48
========= ========
Number of weighted avg.
shares used in per
share amounts 13,577 13,577
========= ========
See accompanying notes to unaudited pro forma condensed combined financial
statements
Notes to Unaudited Pro Forma
Condensed Combined Financial Statements
(A) In March 1997, the Company acquired ULE. The total purchase price of
$45.9 million included consideration of $45 million in cash and
estimated direct costs of $900,000.
Of the total purchase price, $33.3 million has been allocated to in-
process research and development and charged to expense. Since such
amount is a non-recurring charge, it has been included as a pro forma
adjustment to exclude the effects from the Unaudited Pro Forma Condensed
Combined Statement of Income for the nine-month period ended March 31,
1997.
The remaining $11.7 million of the total purchase price has been
allocated to specifically identifiable assets acquired. The intangible
assets acquired of $6.9 million will be amortized over an average
estimated useful life of five years. The related amortization is
reflected as a pro forma adjustment to the Unaudited Pro Forma Condensed
Combined Statements of Income.
The purchase price allocation is preliminary subject to change based on
the Company's final analysis.
(B) Upon the closing, the Company granted stock options to certain
employees at a grant price of less than market value. The Company will
incur compensation expenses totaling $2.0 million which will be amortized
over the vesting period of four years and the related proportional amounts
have been included as a pro forma adjustment to the Unaudited Pro Forma
Condensed Combined Statements of Income.
(C) The pro forma combined provisions for income taxes do not represent the
amounts that would have resulted had Uniphase and Laser Enterprise filed
consolidated income tax returns during the periods presented. The pro
forma adjustments have been tax effected at the Company's incremental
tax rate of approximately 40%.
Item 7. Financial Statements, Pro Forma Information and Exhibits (continued)
(c) Exhibits
The Exhibit Index appearing on page 19 is incorporated by
reference.
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.
UNIPHASE CORPORATION
/s/ Dan E. Pettit
Dan E. Pettit
Vice President of Finance and CFO
Date: June 10, 1997
EXHIBIT INDEX
Sequentially
Exhibit Description Numbered Page
2.1 Purchase Agreement among
Uniphase Corporation, International
Business Machines Corporation, and
Uniphase Laser Enterprise AG
(incorporated by reference to exhibits
of Registrant's Form 8-K filed on March
25, 1997).
2.2 Technology Lciense Agreement
(incorporated by reference to
exhibits of Registrant's Form 8-K filed on
March 25, 1997).
2.3 Patent License Agreement
(incorporated by reference to exhibits of
Registrant's Form 8-K filed on March 25,
1997).
2.4 The Agreement for Exchange of Confidential
Information (incorporated by reference
to exhibits of Registrant's Form 8-K filed
on March 25, 1997).
