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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment 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)
May 8, 1997
GEMSTAR INTERNATIONAL GROUP LIMITED
(Exact name of registrant as specified in its charter)
British Virgin
Islands 0-26878 N/A
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
135 North Los Robles Avenue, Suite 800
Pasadena, California 91101
(Address of principal executive offices) (Zip Code)
(818) 792-5700
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
- ------ ------------------------------------
The merger (the "Merger") of StarSight Telecast, Inc. ("StarSight"), a
California corporation, with and into G/S Acquisition Subsidiary ("Sub"), a
California corporation and wholly owned subsidiary of Gemstar International
Group Limited (the "Company"), a British Virgin Islands corporation, with
StarSight continuing as the surviving corporation and a wholly owned subsidiary
of the Company, was consummated on May 8, 1997 pursuant to the Agreement and
Plan of Merger, dated as of December 23, 1996, by and among the Company,
StarSight and Sub (the "Merger Agreement").
Upon consummation of the Merger, (i) each share of StarSight's common
stock, no par value ("StarSight Common Stock"), issued and outstanding as of the
time the Merger became effective on May 8, 1997 (the "Effective Time") was
converted into 0.6062 shares (the "Exchange Ratio") of the Company's ordinary
shares, par value $.01 per share ("Ordinary Shares"); no fractional shares of
Gemstar Ordinary Shares were or will be issued in the Merger and in lieu
thereof, a cash payment was or will be made in accordance with the terms of the
Merger Agreement; (ii) each stock option to purchase shares of StarSight's
Common Stock (the "StarSight Stock Options") outstanding immediately prior to
the Effective Time under Starsight's 1989 Stock Incentive Program which had not
been exercised as of the Effective Time in accordance with its terms, was
assumed by the Company such that each StarSight Stock Option is deemed to
constitute an option to acquire, on substantially the same terms and conditions
as were applicable under such StarSight Stock Option, the number, rounded down
to the nearest whole integer, of full shares of Ordinary Shares the holder of
such StarSight Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such StarSight Stock Option in full, including
as to unvested shares, immediately prior to the Effective Time, at a price per
share equal to (y) the exercise price per share for the shares of StarSight
Common Stock otherwise purchasable pursuant to such StarSight Stock Option
divided by (z) the Exchange Ratio, with such exercise price per share rounded up
to the nearest whole cent; and (iii) each stock purchase warrant issued by
StarSight to purchase shares of StarSight Common Stock (collectively, the
"StarSight Warrants"), was in accordance with its terms, adjusted (an "Adjusted
Warrant") to become exercisable for, or exchangeable for a new warrant (on
substantially the same terms) that is exercisable for, the number of shares of
Gemstar Ordinary Shares equal to the Warrant Conversion Number (as defined
below). The exercise price of any Adjusted Warrant is an amount equal to the
exercise price of the Warrant related to such Adjusted Warrant as of the date of
the Merger Agreement divided by the Exchange Ratio. The "Warrant Conversion
Number" for any Adjusted Warrant is equal to the number of shares purchasable
pursuant to the StarSight Warrant related to such Adjusted Warrant as of the
date of the Merger Agreement multiplied by the Exchange Ratio.
The Exchange Ratio and other terms of the Merger Agreement were
arrived at through arm's length negotiations between the Company and its
advisers and StarSight and its advisers.
2
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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Item 7 of Form 8-K filed on May 22, 1997 is hereby amended in its
entirety to read as follows:
(a) Financial Statements of StarSight Telecast, Inc. (Business
Acquired).
StarSight's audited balance sheets as of December 31, 1996 and 1995
and the related audited statements of operations, shareholders' equity and cash
flows for the twelve months ended December 31, 1996 and 1995, the six months
ended December 31, 1994 and the twelve months ended June 30, 1994 (collectively,
the "Audited Financial Statements") are incorporated herein by reference to
"Item 8, Financial Statements and Supplementary Data" of Appendix P to the Final
Joint Proxy Statement/Prospectus filed by the Company pursuant to Rule 424(b) of
the Securities Act of 1933, as amended, on April 18, 1997. The unaudited interim
financial statements of StarSight required by this Item 7(a) are filed as
Exhibit 99.1
(b) Pro Forma Financial Information.
The pro forma financial information which is based in part upon the
Audited Financial Statements is incorporated herein by reference to the section
entitled "Unaudited Pro Forma Condensed Combined Financial Statements" in the
Final Joint Proxy Statement/Prospectus filed by the Company pursuant to Rule
424(b) of the Securities Act of 1933, as amended, on April 18, 1997. The interim
pro forma financial information required by this Item 7(b) are filed as Exhibit
99.2.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of December 23, 1996, by
and among the Company, StarSight and Sub (incorporated by
reference to Appendix A to the Final Joint Proxy
Statement/Prospectus filed by the Company pursuant to Rule 424(b)
on April 18, 1997).
99.1 Unaudited Interim Financial Statements
99.2 Interim Pro Forma Financial Information
3
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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.
GEMSTAR INTERNATIONAL GROUP LIMITED
Date: July 22, 1997 By: /s/ LARRY GOLDBERG
-------------------------------
Larry Goldberg
Secretary and Corporate Counsel
4
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EXHIBIT INDEX
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Exhibit No.
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2.1 Agreement and Plan of Merger, dated as of December 23, 1996, by
and among the Company, StarSight and Sub (incorporated by
reference to Appendix A to the Final Joint Proxy
Statement/Prospectus filed by the Company pursuant to Rule
424(b) on April 18, 1997).
99.1 Unaudited Interim Financial Statements
99.2 Interim Pro Forma Financial Information
5
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EXHIBIT 99.1
STARSIGHT TELECAST, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, 1997
(Unaudited) Dec. 31, 1996
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,855 $ 25,708
Short-term investments 19,805 1,989
Accounts receivable 1,759 3,047
Other 399 352
-------------- -------------
Total current assets 31,818 31,096
FURNITURE, FIXTURES AND EQUIPMENT, net of
accumulated depreciation of $4,881 and $4,651 978 1,074
PATENTS AND LICENSES, net of accumulated
amortization of $917 and $853 2,927 2,861
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TOTAL ASSETS $ 35,723 $ 35,031
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 9,965 $ 4,323
Deferred revenue 13,426 11,170
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Total current liabilities 23,391 15,493
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LONG-TERM DEFERRED REVENUE 9,700 9,700
SHAREHOLDERS' EQUITY:
Common stock, no par value. Authorized 50,000,000 shares;
issued and outstanding 25,614,686 and 25,556,304 at
March 31, 1997 and December 31, 1996, respectively 126,134 125,972
Unearned compensation (388) (399)
Accumulated deficit (123,114) (115,735)
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Total shareholders' equity 2,632 9,838
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 35,723 $ 35,031
============== =============
</TABLE>
See notes to condensed financial statements.
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STARSIGHT TELECAST, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
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<S> <C> <C>
REVENUES $4,828 $1,246
OPERATING COSTS AND EXPENSES:
Selling and marketing 4,965 2,749
Research and development 1,271 888
General and administrative 6,468 4,498
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Total operating costs and expenses 12,704 8,135
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OPERATING LOSS (7,876) (6,889)
OTHER INCOME, NET 497 126
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NET LOSS ($7,379) ($6,763)
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LOSS PER COMMON SHARE ($0.29) ($0.30)
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 25,590 22,792
======= =======
</TABLE>
See notes to condensed financial statements.
<PAGE>
STARSIGHT TELECAST, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($7,379) ($6,763)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization of unearned compensation 11 245
Depreciation and amortization 294 384
Changes in assets and liabilities 9,139 730
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Net cash provided by (used in) operating activities 2,065 (5,404)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (19,816) 0
Maturities of short-term investments 2,000 0
Acquisitions of furniture, fixtures and equipment (134) (109)
Additions to patents and licenses (130) (16)
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Net cash used in investing activities (18,080) (125)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock, net 0 24,625
Proceeds from the exercise of options for common stock 162 148
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Net cash provided by financing activities 162 24,773
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (15,853) 19,244
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,708 8,787
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CASH AND CASH EQUIVALENTS, END OF PERIOD $9,855 $28,031
======= =======
</TABLE>
See notes to condensed financial statements.
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STARSIGHT TELECAST, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
1. Basis of Presentation
The interim condensed financial statements reflect all adjustments, consisting
of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair presentation of the results for the interim periods. These
interim condensed financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Form 10-K for
the year ended December 31, 1996. The interim results of operations are not
necessarily indicative of the results for the entire year ending December 31,
1997.
The amounts appearing in the December 31, 1996 condensed balance sheet are
derived from the audited balance sheet included in the financial statements in
the Company's Form 10-K for the year ended December 31, 1996.
2. Loss Per Share
Loss per share is based on the weighted average number of shares of common stock
and dilutive common stock equivalents outstanding for the periods.
3. Subsequent Events
On May 8, 1997, the Company and Gemstar International Group Limited merged.
In April 1997, the Company entered into a license agreement with
Scientific-Atlanta, Inc. (S/A), whereby S/A would pay the Company royalties for
products shipped incorporating the Company's technology.
<PAGE>
EXHIBIT 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 1997
(in thousands)
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA GEMSTAR
GEMSTAR STARSIGHT ADJUSTMENTS STARSIGHT
------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................. $50,054 $ 9,855 $ 59,909
Short-term investments.................... 29,141 19,805 48,946
Prepaid expenses and other current assets. 5,489 2,158 7,647
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Total current assets.................... 84,684 31,818 116,502
Property and equipment, net................. 4,148 978 5,126
Intangible assets, net...................... 3,928 2,927 6,855
Investments................................. 1,535 - 1,535
Other assets................................ 2,463 - 2,463
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$96,758 $ 35,723 $ 132,481
======= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and accrued expenses..... $33,176 $ 9,965 $ 43,141
Current portion of deferred revenue....... 4,754 13,426 18,180
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Total current liabilities............... 37,930 23,391 61,321
Deferred revenue, less current portion...... 1,377 9,700 11,077
Other liabilities........................... 5,161 - 5,161
Shareholders' equity:
Ordinary shares........................... 313 126,134 (126,134)(a) 468
155 (a)
Additional paid-in capital................ 60,536 - 126,134 (a) 186,515
(155)(a)
Accumulated deficit....................... (8,469) (123,114) (131,583)
Unearned compensation..................... - (388) (388)
Cumulative translation adjustments........ (90) - (90)
------- --------- ---------
Net shareholders' equity................ 52,290 2,632 54,922
$96,758 $ 35,723 $ 132,481
======= ========= =========
</TABLE>
See notes to Unaudited Pro Forma Condensed Combined Financial Statements
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Year Ended March 31, 1997
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Pro
Historical Forma
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Gemstar StarSight
Year ended Year ended Gemstar
March 31, 1997 March 31, 1997 StarSight
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<S> <C> <C> <C>
Revenues......................................................... $71,121 $ 12,280 $83,401
Operating costs and expenses..................................... 48,740 39,028 87,768
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Earnings (loss) from operations.................................. 22,361 (26,748) (4,367)
Other income..................................................... 4,073 1,083 5,156
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Earnings (loss) from operations before income taxes.............. 26,454 (25,665) 789
Income taxes..................................................... 8,369 -- 8,369
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Net Earnings (loss).............................................. $18,085 (25,665) $(7,580)
======= ======== =======
Earnings (loss) per share........................................ $ 0.54 ($1.01) ($0.16)
======= ======== =======
Shares used in per share calculation............................. 33,378 25,483 48,826
======= ======== =======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) Reflects conversion of 25,614,686 shares of StarSight common stock into
approximately 15,527,622 Gemstar Ordinary shares
(b) Gemstar and StarSight will incur direct transaction costs of approximately
$6,000,000 associated with the Merger, consisting of transaction fees for
attorneys, accountants, financial printing and other related charges.
Gemstar and StarSight will also incur additional costs related to severance
and other integration costs. All of these non-recurring costs will be
charged to operations as incurred. Accordingly, these costs are not
reflected in the unaudited pro forma condensed financial statements.
