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
March 30, 2000
(Date of earliest event reported)
EFTC CORPORATION
(Exact name of registrant as specified in its charter)
Commission file number: 0-23332
COLORADO 84-0854616
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
9351 GRANT STREET
DENVER, COLORADO 80229
(Address of principal executive offices)
(303) 451-8200
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
On March 30, 2000, the registrant issued the three press releases attached as
exhibits hereto. A more detailed estimate of 1999 financial results is attached
as a fourth exhibit.
Item 7. Financial Statements and Exhibits
c. Exhibits
Exhibit No. Description
99.1 Refinancing Release
99.2 Earnings Release
99.3 Officer Resignation Release
99.4 1999 Unaudited Financial Results
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: March 30, 2000
EFTC Corporation
By: /s/ James A. Doran
- ----------------------------
Vice President
For Immediate Release
EFTC REPORTS RECAPITALIZATION AND REFINANCING
DENVER, CO--March 30, 2000--EFTC Corporation (NASDAQ: EFTC), a leading provider
of high mix electronic manufacturing services, reported that it has entered into
an agreement for a public Recapitalization of EFTC by Thayer Equity Investors
IV, L. P. (Thayer) and BLUM Capital Partners, L. P. (BLUM). Under the
recapitalization, Thayer and BLUM will invest a total of $54 million in Senior
Subordinated Exchangeable Notes and warrants, and will subsequently undertake a
tender offer of up to 8,250,000 but not less than 500,000 shares of the
outstanding common stock of EFTC at a price of $4.00 per share. The Company has
also entered into a new revolving credit agreement with Bank of America, N.A
that provides for a $45 million revolving line of credit with a maturity date of
March 2003.
The Exchangeable Notes initially provide for a paid in kind (PIK) interest rate
of 15%. In addition, warrants to purchase approximately 3,100,000 shares of
EFTC's common stock will be issued at an exercise price of $.01 per share. The
Company's shareholders will be required to approve certain aspects of the
transactions, as required by the rules applicable to NASDAQ National Market
issuers. The warrants will not become exercisable and will expire, unless
shareholder approval is not received or the tender offer is not consummated.
Additionally, the Exchangeable Notes will be replaced with Senior Subordinated
Convertible Notes (Convertible Notes) upon receipt of shareholders approval and
consummation of the tender offer.
The Convertible Notes will provide for interest at 8.875% payable in additional
Convertible Notes. The Convertible Notes will be convertible into EFTC common
stock at $2.60 per share, which may be subject to adjustment, and conversion
will occur upon the election of the holders or if EFTC's common stock trades
above $7.50 per share for 45 consecutive trading days. Commencing on the third
anniversary of the closing date, the Convertible Notes will automatically
convert if EFTC's common stock trades above $4.25 for 45 consecutive trading
days.
<PAGE>
If shareholder approval does not occur or the tender offer is not consummated,
the Warrants will remain in place and the interest rate on PIK Exchangeable
Notes will be increased to 20% with a maturity date of June 2006.
Thayer and BLUM will be entitled to designate two directors upon closing of its
initial investment. Upon shareholder approval and consummation of the tender
offer, Thayer and BLUM will be entitled to a majority of directorships.
EFTC, a provider of high-mix electronic services, is headquartered in Denver,
Colorado and employs over 1,500 people nationwide. EFTC provides its services
primarily to OEM customers in the avionics, medical, instrumentation, and
communications industries.
Thayer Capital Partners is a private equity investment firm based in Washington,
DC. Thayer manages two private equity funds with more than $1.2 billion under
management. The firm focuses on buyouts and growth equity investments in four
primary industries: information technology and services, electronics and
outsourced manufacturing, travel and leisure services, and outsourced business
services.
BLUM Capital Partners is a San Francisco based private equity and strategic
block investment firm, which manages in excess of $3 billion in capital both
domestically and internationally. BLUM has invested in a wide variety of
businesses and has been successful initiating value-enhancing strategies,
including going-private transactions, equity infusions to either restructure a
balance sheet or provide growth capital, share repurchases, acquisition
programs, and business unit divestitures.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES OF THE COMPANY. AT THE TIME THE OFFER IS COMMENCED, THAYER AND
BLUM WILL FILE A TENDER OFFER STATEMENT WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION AND EFTC WILL FILE A SOLICITATION/RECOMMENDATION STATEMENT WITH
RESPECT TO THE OFFER. THE TENDER OFFER STATEMENT (INCLUDING AN OFFER TO
PURCHASE, A RELATED LETTER OF TRANSMITTAL, AND OTHER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT INFORMATION WHICH
SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER OFFER
DOCUMENTS, AS WELL AS THE SOLICITATION/RECOMMENDATION STATEMENT, WILL BE MADE
AVAILABLE TO ALL STOCK HOLDERS OF EFTC AT NO EXPENSE TO THEM. THE TENDER OFFER
STATEMENT (INCLUDING THE OFFER TO PURCHASE, THE RELATED LETTER TO THE
TRANSMITTAL, AND THE OTHER OFFER DOCUMENTS FILED WITH THE COMMISSION) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL ALSO BE AVAILABLE AT NOT CHARGE AT
THE COMMISSION'S WEBSITE AT www.sec.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995. Certain of the statements contained in this press release, are
forward-looking statements that involve a number of risks and uncertainties.
Such forward-looking statements include any assumptions that shareholders will
approve the transaction and that the tender offer will be consummated.
Factors that could cause actual results to differ materially include the
following: business conditions and growth in the Company's industry and in the
general economy; competitive factors; risks that orders may be subject to
cancellation; risks due to shifts in market demand; risks inherent with
predicting revenue and earnings outcomes; uncertainties involved in implementing
improvements in the manufacturing process; uncertainties regarding potential tax
refunds, uncertainties regarding application of accounting principles; the
ability of the Company to complete acquisitions; and the risk factors listed
from time to time in the Company's reports filed with the Securities and
Exchange Commission as well as assumptions regarding the foregoing.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise. Readers are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties and that actual results may differ materially from those indicated
in the forward-looking statements as a result of various factors. Readers are
cautioned not to place undue reliance on these forward-looking statements.
For Immediate Release
EFTC REPORTS FOURTH QUARTER AND YEAR-END RESULTS
DENVER, CO--March 30, 2000--EFTC Corporation (NASDAQ: EFTC), a leading provider
of high-mix electronic manufacturing services, reported sales and earnings
results for the fourth quarter and year ended December 31, 1999.
<TABLE>
<CAPTION>
Summary of Financial Results
(Including restructuring and one-time charges)
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue * $62,414 $ 58,447 $221,864 $226,780
Operating loss (13,702) (11,844) (37,926) (2,793)
Net loss (20,106) (7,857) (67,557) (4,178)
Net loss per share (basic and diluted) $ (1.29) $ (.51) $ (4.35) $ (.31)
</TABLE>
* Includes revenue of $9,588 from the Services division in Q4 of 1998,
and $22,436 and $40,726 for the years ended December 31, 1999 and 1998,
respectively. The Services Division was sold in September 1999.
<TABLE>
<CAPTION>
Balance Sheet Summary
(in Thousands)
December 31,
1999 1998
---- ----
<S> <C> <C>
Trade receivables, net $ 26,094 $ 34,123
Inventories, net 69,227 60,759
Other current assets 5,617 8,248
Property, plant and equipment, net 23,577 38,619
Goodwill and other assets 12,555 48,917
-------------- --------------
Total assets $ 137,070 $ 190,666
============== ==============
Bank debt and notes payable $ 42,994 $ 54,983
Accounts payable and other liabilities 66,652 40,703
Shareholders' equity 27,424 94,980
-------------- --------------
Total liabilities and shareholders' equity $ 137,070 $ 190,666
============== ==============
</TABLE>
EFTC's revenue of $62 million for the fourth quarter of 1999 compares with $58
million reported in the fourth quarter of 1998, a 7% increase. After excluding
the Services division (which was sold in September 1999) from Q4 1998 results,
fourth quarter 1999 revenue increased 28% from $49 million in the fourth quarter
of 1998. Sequentially, fourth quarter revenue increased 34% from the $46 million
reported in the third quarter of 1999 (after adjusting for the sale of the
Services division). Annual revenue for 1999 decreased 2% from $227 million
reported in 1998 to $222 million this year. Excluding the Service's division
revenue for both 1998 and 1999, annual revenue increased 7% from $186 million to
$199 million.
The operating loss of $13.7 million for the fourth quarter of 1999 compares to
an operating loss of $11.8 million for the same period last year. During the
fourth quarter of 1999, EFTC recognized a charge of $4.2 million for a valuation
allowance related to deferred tax assets, and a charge of $1.0 million related
to the amortization of debt issuance costs due to a fourth quarter amendment to
its credit agreement. During the fourth quarter of 1999, EFTC also incurred
other charges totaling $11.8 million primarily for inventory and receivable
reserves and other charges related to the resolution of issues with Honeywell
International, Inc., including issues related to the closure of the Ft.
Lauderdale division and the sale of the Tucson division. During the fourth
quarter of 1998, EFTC recognized a $13.8 million charge associated with closing
the Company's Rocky Mountain facility in Greeley, Colorado.
Since the fourth quarter of 1998, EFTC has taken several significant actions
intended to improve its future profitability including plant consolidations,
asset sales, significant new business with Honeywell, and the implementation of
its Oracle ERP system at all manufacturing locations. "While 1999 was a
difficult year; our organization is committed to realizing our vision as the
undisputed leader in high mix electronics manufacturing services," said Jack
Calderon, EFTC's chief executive officer. "We continue to create a platform that
will be a best in class solution for OEMs with high mix needs. As our processes,
tools, and systems mature, we expect EFTC will improve performance and gain a
competitive advantage in our targeted market," he added.
EFTC, a provider of high-mix electronic services, is headquartered in Denver,
Colorado and employs over 1,500 people nationwide. EFTC provides its services
primarily to OEM customers in the avionics, medical, instrumentation, and
communications industries.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995. Certain of the statements contained in this press release, are
forward-looking statements that involve a number of risks and uncertainties.
Such forward-looking statements include any assumptions that several significant
actions taken will improve EFTC's future profitability, including plant
consolidations, asset sales, significant new business, and completing the
implementation of its Oracle ERP system to all manufacturing locations. Such
forward-looking statements also include expectations that the platform being
created will be the best in class solution for OEMs with high mix needs and that
our processes, tools, and systems, once mature, will gain EFTC a competitive
advantage and improve our financial results.
Factors that could cause actual results to differ materially include the
following: business conditions and growth in the Company's industry and in the
general economy; competitive factors; risks that orders may be subject to
cancellation; risks due to shifts in market demand; risks inherent with
predicting revenue and earnings outcomes; uncertainties involved in implementing
improvements in the manufacturing process; uncertainties regarding potential tax
refunds, uncertainties regarding application of accounting principles; and the
risk factors listed from time to time in the Company's reports filed with the
Securities and Exchange Commission as well as assumptions regarding the
foregoing.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise. Readers are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those
indicated in the forward-looking statements as a result of various factors.
Readers are cautioned not to place undue reliance on these forward-looking
statements.
For Immediate Release -
EFTC Announces Resignation of Chief Financial Officer
DENVER, CO--March 30, 2000--EFTC Corporation (NASDAQ: EFTC), a leading provider
of high-mix electronic manufacturing services, announced the resignation of
Stuart Fuhlendorf, the company's Chief Financial Officer. In addition, Mr.
Fuhlendorf has resigned from EFTC's Board of Directors. Mr. Fuhlendorf has
accepted the position of Senior Vice President and Chief Financial Officer of
Metawave Communications Corporation, headquartered in Redmond, WA. EFTC will be
conducting a search for a new chief financial officer.
"Stu has been a valuable asset to the EFTC management team," said Jack Calderon,
EFTC's Chairman and Chief Executive Officer. "During his 8 year tenure at EFTC,
Stu played a critical role in the Company's growth and evolution. We wish him
every success in his new endeavor and will sincerely miss him."
EFTC, a provider of high mix electronic manufacturing services, is headquartered
in Denver, Colorado and employs approximately 1,500 people nationwide. EFTC
provides its services to OEM customers in the aerospace/avionics, medical,
instrumentation, and communications industries.
<TABLE>
EFTC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
(Dollars in Thousands, Except Per Share Amounts)
ASSETS
------
1999 1998
---- ----
Current Assets:
<S> <C> <C>
Cash and equivalents $ 716 $ 623
Trade receivables, net of allowance for doubtful
accounts of $3,689 and $1,322, respectively 26,094 34,123
Inventories, net 66,108 60,759
Income taxes receivable 2,106 125
Deferred income taxes - 5,259
Prepaid expenses and other 2,795 2,241
------ -------
Total Current Assets 97,819 103,130
------ -------
Property, Plant and Equipment, at cost:
Leasehold improvements 2,797 1,589
Buildings and improvements 1,172 17,143
Manufacturing machinery and equipment 16,496 17,435
Furniture, computer equipment and software 12,726 9,411
------ -------
Total 33,191 45,578
Less accumulated depreciation and amortization (9,614) (6,959)
------ -------
Net Property, Plant and Equipment 23,577 38,619
------ -------
Intangible and Other Assets:
Goodwill, net of accumulated amortization
of $758 and $2,111, repectively 7,264 44,848
Intellectual property, net of accumulated amortization
of $699 and $233, repectively 4,289 2,861
Debt issuance costs, net of accumulated amortization
of $97 and $241, respectively 460 986
Deposits and other 3,661 222
------ -------
Total Intangible and Other Assets 15,674 48,917
------ -------
$ 137,070 $ 190,666
=============== =================
<PAGE>
EFTC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, Continued
December 31, 1999 and 1998
(Dollars in Thousands, Except Per Share Amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
1999 1998
----- ----
Current Liabilities:
Current maturities of long-term debt:
Related parties $ 5,018 $ 225
Banks - 3,890
Accounts payable 46,985 27,272
Accrued compensation and benefits 4,993 2,980
Deposit on inventory finance arrangement - 5,600
Other accrued liabilities 8,536 4,127
------ -------
Total Current Liabilities 65,532 44,094
Long-term Liabilities:
Long-term debt, net of current maturities:
Related parties 4,792 15,098
Banks 33,184 35,770
Deferred income taxes - 725
Other 6,138 -
------ -------
Total Liabilities 109,646 95,687
------- -------
Commitments and Contingencies (Notes 8, 9 and 11)
Shareholders' Equity:
Preferred stock, $.01 par value. Authorized
5,000,000 shares; none issued or outstanding - -
Common stock, $.01 par value. Authorized 45,000,000 shares;
issued and outstanding 15,543,000 shares 155 155
Additional paid-in capital 91,992 91,990
Retained earnings (deficit) (64,723) 2,834
------ -------
Total Shareholders' Equity 27,424 94,979
------ -------
$ 137,070 $ 190,666
=============== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EFTC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1999, 1998 and 1997
(Dollars In Thousands, Except Per Share Amounts)
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net Sales $ 221,864 $ 226,780 $ 122,079
--------- --------- ---------
Cost of Goods Sold 223,951 200,581 102,166
Gross profit (loss) (2,087) 26,199 19,913
Operating Costs and Expenses:
Selling, general and administrative expenses 31,884 23,038 12,711
Impairment of property, plant and equipment 2,822 3,342 -
Goodwill amortization 1,133 1,564 547
Merger costs - 1,048 -
--------- --------- ---------
Total operating costs and expenses 35,839 28,992 13,258
--------- --------- ---------
Operating income (loss) (37,926) (2,793) 6,655
Other Income (Expense):
Interest expense (6,516) (4,312) (2,411)
Loss on sale of division (20,565) - -
Gain (loss) on sale of property, plant and equipment (315) 400 1,156
Other, net (55) (104) 139
--------- --------- ---------
Income (loss) before income taxes (65,377) (6,809) 5,539
Income Tax Benefit (Expense) (2,180) 2,631 (2,118)
--------- --------- ---------
Net income (loss) $ (67,557) $ (4,178) $ 3,421
================= ================= =================
Pro Forma Information (Unaudited):
Historical Net Income (Loss) $ (67,557) $ (4,178) $ 3,421
Pro Forma Adjustment to Income Taxes - (317) (41)
--------- --------- ---------
Pro Forma Net Income (Loss) $ (67,557) $ (4,495) $ 3,380
================= ================= =================
Pro Forma Income (Loss) Per Share:
Basic $ (4.35) $ (0.31) $ 0.40
================= ================= =================
Diluted $ (4.35) $ (0.31) $ 0.38
================= ================= =================
Weighted Average Shares Outstanding:
Basic 15,543,000 14,730,000 8,502,000
================= ================= =================
Diluted 15,543,000 14,730,000 8,955,000
================= ================= =================
</TABLE>
