<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
Date of Report
(Date of earliest event reported)
November 3, 1998
ORTEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-22598 95-3494360
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2015 West Chestnut Street, Alhambra, California 91803-1542
(Address of principal executive offices) (Zip Code)
(626) 281-3636
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name or former address, if changed since last report)
Total Number of Pages: 8
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Exhibit Index Located at Page 8
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
On November 3, 1998, Ortel Corporation announced its intention to discontinue
its development and production of 980nm pump laser for telecommunications
applications. Costs associated with the discontinuance of that business were
included in the results as reported on Form 10-Q for the second quarter ended
October 31, 1998. The program for developing the 980nm pump laser began during
the first quarter ended July 31, 1997. Since that time, sales of the 980nm
product totaled $1.4 million. The Company elected to terminate this business
largely due to expected price reductions for this product going forward. The
necessary research and development costs, which would further differentiate
Ortel's product, were not merited under these market conditions.
Item 7. Pro forma Financial Statements
Pro forma consolidated financial statements of Ortel Corporation have been
prepared which segregate the discontinued 980nm pump laser program for the six-
month interim period ended October 31, 1998 and for the prior fiscal year ended
April 30, 1998. Pro forma Balance Sheets have been prepared as of October 31,
1998 and April 30, 1998.
For the six-month period ended October 31, 1998, total revenues for the
discontinued business were $ .8 million which resulted in operating losses
of $1.4 million after income taxes. As a result of the announcement to
discontinue this business, a charge of $1.6 million after taxes was recognized
in writing down the value of inventory, accounts receivable, equipment, and
leasehold improvements used in the development and production of the 980nm pump
laser. An additional charge of $2.3 million after taxes was recognized for
estimated future expenditures primarily for product warranty, severance
associated with a reduction in force and purchase order cancellation charges.
During the prior fiscal year ended April 30, 1998, $ .9 million in revenues for
the discontinued business resulted in a net loss of $1.4 million after taxes. At
year end, inventory and accounts receivable identified to this business totaled
$ .9 million. Fixed and other long-term assets identified to this business
totaled $1 million.
2
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Item 7 Pro forma Financial Statements (continued)
ORTEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
October 31, 1998
Discontinued Pro forma as
Historical Operations Adjusted
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $12,925 $12,925
Short-term investments 16,071 16,071
Accounts receivable (net) 15,986 $ 426 15,560
Other receivables 1,848 1,848
Inventories 11,930 1,024 10,906
Income tax receivables 150 150
Deferred tax assets 3,012 3,012
Prepaid and other current assets 905 6 899
Current assets, discontinued operations - - -
------- ------- -------
Total current assets 62,827 1,456 61,371
Property, equipment and improvements (net) 19,781 589 19,192
Intangible assets 2,352 2,352
Other assets 8,248 8,248
Long-term assets, discontinued operations - - -
------- ------- -------
Total assets $93,208 $ 2,045 $91,163
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Accounts payable $ 6,171 $ 6,171
Accrued payroll and related costs 2,060 2,060
Other accrued liabilities 2,681 2,681
Income taxes payable 183 183
Accrued liabilities, discontinued operations - $(2,854) 2,854
------- ------- -------
Total current liabilities 11,095 (2,854) 13,949
Deferred income 397 397
Deferred income taxes 980 980 -
Minority interest 324 324
Stockholders' equity:
Preferred stock - -
Common stock 12 12
Additional paid-in capital 54,781 54,781
Retained earnings 26,946 3,919 23,027
Loans receivable (988) (988)
Accumulated other comprehensive (loss) (339) - (339)
------- ------- -------
Net stockholders' equity 80,412 3,919 76,493
------- ------- -------
Total liabilities and stockholders' equity $93,208 $ 2,045 $91,163
======= ======= =======
</TABLE>
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Item 7 Pro forma Financial Statements (continued)
ORTEL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended October 31, 1998
--------------------------------------------------
Discontinued Pro forma as
Historical Operations Adjusted
<S> <C> <C> <C>
Revenues...................................................... $39,004 $ 795 $38,209
Cost of revenues.............................................. 23,589 1,248 22,341
------- ------- -------
Gross profit................................................ 15,415 (453) 15,868
Operating expenses:
Research and development...................................... 7,037 917 6,120
Sales and marketing........................................... 6,537 428 6,109
General and administrative.................................... 3,313 - 3,313
------- ------- -------
Total operating expenses.................................... 16,887 1,345 15,542
------- ------- -------
Operating income (loss)....................................... (1,472) (1,798) 326
Interest income (net)......................................... 689 - 689
Other non-operating income.................................... 163 - 163
------- ------- -------
Income (loss) before income taxes............................. (620) (1,798) 1,178
Provision for income taxes.................................... (117) (360) 243
------- ------- -------
Income (loss) from continuing operations...................... (503) 935
Loss from discontinued operations, net of tax................. - (1,438) (1,438)
Loss from disposal of discontinued operations, net of tax..... $(3,919) $(3,919) $(3,919)
------- ------- -------
Net income (loss)............................................. $(4,422) $(5,357) $(4,422)
======= ======= =======
Net Income (loss) per share:
Basic
Net income (loss).......................................... $(.37) $(.45) $(.37)
======= ======= =======
Diluted
Net income (loss).......................................... $(.35) $(.42) $(.35)
======= ======= =======
Shares used in per share computations:
Basic...................................................... 11,897 11,897 11,897
======= ======= =======
Diluted.................................................... 12,720 12,720 12,720
======= ======= =======
</TABLE>
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Item 7 Pro forma Financial Statements
ORTEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
<TABLE>
<CAPTION>
April 30,
1998
-------------
ASSETS (audited &
- ------ reclassified)
<S> <C>
Current assets:
Cash and cash equivalents........................................................ $12,656
Short-term investments........................................................... 16,012
Accounts receivable (net)........................................................ 12,819
Other receivables................................................................ 1,415
Inventories...................................................................... 10,492
Income tax receivables........................................................... 71
Deferred tax assets.............................................................. 2,775
Prepaid and other current assets................................................. 1,281
Current assets, discontinued operations.......................................... 936
-------
Total current assets.......................................................... 58,457
Property, equipment and improvements (net).......................................... 19,492
Intangible assets................................................................... 2,581
Other assets........................................................................ 8,802
Long-term assets, discontinued operations........................................... 1,009
-------
Total assets.................................................................. $90,341
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable................................................................. 3,685
Accrued payroll and related costs................................................ 2,899
Other accrued liabilities........................................................ 2,538
Income taxes payable............................................................. 172
Accrued liabilities, discontinued operations..................................... -
-------
Total current liabilities..................................................... 9,294
Deferred income..................................................................... 400
Deferred income taxes............................................................... 1,598
Minority interest................................................................... 265
Stockholders' equity:
Preferred stock.................................................................. -
Common stock..................................................................... 12
Additional paid-in capital....................................................... 53,101
Retained earnings................................................................ 27,449
Loans receivable................................................................. (1,460)
Accumulated other comprehensive income (loss).................................... (318)
-------
Net stockholders' equity...................................................... 78,784
-------
Total liabilities and stockholders' equity.................................... $90,341
=======
</TABLE>
Note: Certain amounts related to discontinued operations have been reclassified
to conform to current year presentation. See accompanying notes to condensed
consolidated financial statements.
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Item 7 Pro forma Financial Statements (continued)
ORTEL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal year ended April 30, 1998
-------------------------------------------------
Discontinued Pro forma as
Historical Operations Adjusted
<S> <C> <C> <C>
Revenues...................................................... $76,870 $ 943 $ 75,927
Cost of revenues.............................................. 45,011 946 44,065
------- -------- --------
Gross profit................................................ 31,859 (3) 31,862
Operating expenses
Research and development...................................... 13,567 1,904 11,663
Sales and marketing........................................... 10,537 286 10,251
General and administrative:................................... 6,157 - 6,157
------- -------- --------
Total operating expenses:............................... 30,261 2,190 28,071
------- -------- --------
Operating income (loss)....................................... 1,598 (2,193) 3,791
Interest income (net)......................................... 1,278 - 1,278
Other non-operating income (expense).......................... 584 - 584
------- -------- --------
Income (loss) before income taxes........................ 3,460 (2,193) 5,653
Provision for income taxes.................................... 723 (794) 1,517
------- -------- --------
Net income (loss) from continuing operations.................. $ 2,737 4,136
Net income (loss) from discontinued operations, net of tax.... - ( 1,399) ( 1,399)
------- -------- --------
Net income (loss)............................................. $ 2,737 $ (1,399) $ 2,737
======= ======== ========
Net Income (loss) per share:
Basic
Net income (loss).......................................... $.24 $(.12) $.24
======= ======== ========
Diluted
Net income (loss).......................................... $.22 $(.11) $.22
======= ======== ========
Shares used in per share computations:
Basic...................................................... 11,634 11,634 11,634
======= ======== ========
Diluted.................................................... 12,637 12,637 12,637
======= ======== ========
</TABLE>
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SIGNATURE
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.
ORTEL CORPORATION
Date: January 25, 1999 By: /s/ Stephen K. Workman
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Stephen K. Workman
Vice President, Finance and Chief Financial Officer
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EXHIBIT INDEX TO FORM 8-K
Exhibit Sequentially
Number Description Numbered Page
2.1 Press Release, dated November 3, 1998 Submitted with
8-K filed Nov
25, 1998
8
