<PAGE>
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
Date of Report (Date of earliest event reported): September 23, 1998
IXYS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-26124 770140882-5
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) (Identification No.)
3540 Bassett Street
Santa Clara, CA 95054
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (408) 982-0700
PARADIGM TECHNOLOGY, INC.
694 Tasman Drive
Milpitas, CA 95035
(Former name or former address, if changed since last report)
<PAGE>
ITEM 1. CHANGE IN CONTROL OF REGISTRANT
This Current Report on Form 8-K (the "Report") is filed by IXYS Corporation, a
Delaware corporation formerly named Paradigm Technology, Inc. (the
"Registrant").
This Report contains forward looking statements that involve risks and
uncertainties, including risks that the integration of the operations,
technologies, products and employees of IXYS USA, Inc., a Delaware corporation
formerly named IXYS Corporation ("IXYS USA"), and the Registrant might not occur
as anticipated; that the synergies expected to result from the merger described
below might not occur as anticipated; that management's attention might be
diverted from day-to-day business activities; and that greater than normal
employee turnover might occur. In addition, there are normal risks and
uncertainties associated with the Registrant's business, including risks
relating to the timing and magnitude of product sales, timely development,
acceptance and pricing of new products and technological advances and the impact
of competitive conditions. Actual results and developments may differ materially
from those described in this Report. For more information about the Registrant
and risks relating to investing in the Registrant, refer to the Registrant's
most recent reports on Form 10-K and Form 10-Q, and to Amendment No. 2 to the
Form S-4 Registration Statement relating to the merger described below, as filed
by the Registrant with the United States Securities and Exchange Commission (the
"Commission").
On September 23, 1998, Paradigm Enterprises, Inc. ("Merger Sub"), which was a
wholly-owned subsidiary of the Registrant, was merged with and into IXYS USA
(the "Merger"), pursuant to an Agreement and Plan of Merger and Reorganization
(the "Agreement") dated as of March 9, 1998, as amended, among IXYS USA, Merger
Sub and the Registrant.
In connection with the Merger, Michael Gullett and George Collins resigned as
directors of the Registrant, and Nathan Zommer, Arnold Agbayani and Rolf Karg
became directors of the Registrant. James Kochman was the only individual to
remain a director of the Registrant before and after the Merger. Dr. Karg is
affiliated with Asea Brown Boveri AG ("ABB"). Upon the Merger, Dr. Zommer
became the President and Chief Executive Officer of the Registrant and Mr.
Agbayani became the Vice President of Finance and Administration, Chief
Financial Officer and Secretary of the Registrant.
Pursuant to the Merger, Dr. Zommer acquired beneficial ownership of
approximately 3,356,188 shares of Common Stock of the Registrant, representing
approximately 27.9% of the outstanding Common Stock of the Registrant, and ABB
and entities affiliated with ABB acquired approximately 5,452,419 shares of
Common Stock of the Registrant, representing approximately 45.5% of the
outstanding Common Stock of the Registrant. (The foregoing percentages were
calculated in accordance with Rule 13d-3 promulgated under the Securities
Exchange Act.)
Dr. Zommer acquired shares of Common Stock of a California corporation
predecessor to IXYS USA in exchange for a promissory note due and payable
December 31, 1999, bearing interest at the rate of 5.79% per annum and in the
original amount of $707,238.83 and such shares were pledged to the predecessor
California corporation as security for such note. Such shares have successively
been converted into shares of Common Stock of IXYS USA and
2.
<PAGE>
into shares of Common Stock of the Registrant. IXYS USA holds such promissory
note and is the pledgee under the related pledge agreement.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The Merger became effective at the time of the filing of a Certificate of Merger
with the Delaware Secretary of State on September 23, 1998 (the "Effective
Time"). At the Effective Time: (i) Merger Sub ceased to exist; (ii) IXYS USA,
as the surviving corporation in the Merger, became a wholly-owned subsidiary of
the Registrant; and (iii) subject to the provisions of the Agreement relating to
the payment of cash in lieu of fractional shares, each share of IXYS USA Common
Stock, par value $0.001 per share ("IXYS Common Stock"), and each share of IXYS
Preferred Stock, par value $0.001 per share, outstanding immediately prior to
the Effective Time (except for any such shares held by the Registrant as
treasury stock and any such shares held by IXYS USA or any subsidiary of IXYS
USA or the Registrant, which shares, if any, were canceled) was converted into
the right to receive .057842 of a share of Common Stock, $0.01 par value per
share, of the Registrant ("Registrant Common Stock"). Following the Merger, the
Registrant changed its name to IXYS Corporation.
In addition, pursuant to the Agreement, at the Effective Time, all rights with
respect to IXYS Common Stock under IXYS USA stock options then outstanding, were
converted into and became rights with respect to Registrant Common Stock, and
the Registrant assumed each such outstanding IXYS USA stock option in accordance
with the terms of the stock option plan under which it was issued and the stock
option agreement by which it is evidenced. By virtue of the assumption by the
Registrant of such IXYS USA stock options, from and after the Effective Time:
(i) each IXYS USA stock option assumed by the Registrant may be exercised solely
for Registrant Common Stock; (ii) the number of shares of Registrant Common
Stock subject to each such IXYS USA stock option is equal to the number of
shares of IXYS Common Stock subject to such IXYS USA stock option immediately
prior to the Effective Time multiplied by .057842 (the exchange ratio in the
Merger), rounded down to the nearest whole share (with cash, less the applicable
exercise price, being payable for any fraction of a share); and (iii) the per
share exercise price under each such Registrant stock option was adjusted by
dividing the per share exercise price under such Registrant stock option by
.057842 and rounding up to the nearest cent.
The former stockholders of IXYS USA are receiving approximately 11,513,821
shares of Registrant Common Stock pursuant to the Merger. In addition,
approximately 274,914 shares of Registrant Common Stock may be issued in
connection with the exercise of the IXYS USA stock options assumed by the
Registrant.
The Merger is intended to be a tax-free reorganization under the Internal
Revenue Code of 1986, as amended, and is expected to be accounted for as a
purchase.
Prior to the Merger, all outstanding shares of Preferred Stock of the Registrant
were converted into Common Stock of the Registrant, and a reverse stock split of
the Common Stock of the Registrant, pursuant to which each 15 shares were
combined into one share, occurred. Following such conversion and reverse stock
split, and after giving effect to the Merger, as of September
3.
<PAGE>
30, 1998, there were approximately 11,955,670 shares of Common Stock of
Registrant outstanding, options to acquire approximately 281,773 shares of
Common Stock of Registrant outstanding and warrants to acquire approximately
198,515 shares of Common Stock of Registrant outstanding. On such date, the
weighted average exercise price per share of such options was approximately
$5.94, the weighted average exercise price per share of the 195,881 warrants
assumed under the Merger was approximately $1.42, and the weighted average
exercise price per share of the 2,634 warrants which the Registrant had
outstanding prior to the Merger was approximately $372.00.
IXYS USA designs, develops and markets a broad spectrum of power semiconductors
used primarily in controlling energy in motor drives, power conversion
(including uninterruptible power supplies and switch mode power supplies) and
medical devices. IXYS USA's power semiconductors convert electricity at
relatively high voltage and current levels to create efficient power as required
by a specific application. IXYS USA's target market includes segments of the
power semiconductor market that require medium to high power semiconductors,
with a particular emphasis on "higher power" semiconductors, which are
semiconductors capable of processing greater than 500 watts of power. The
Registrant intends to continue to use the assets of IXYS USA for the purposes
for which such assets were used prior to the Merger.
See Item 1 for additional information.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of the Business Acquired
The audited consolidated financial statements of IXYS Corporation as of
March 31, 1997 and 1998 and for the three years in the period ended
March 31, 1998 were included as part of the Registration Statement on
Form S-4 (No. 33-57003) filed by the registrant with the Commission on
June 6, 1998, and incorporated by reference herein. The unaudited
condensed consolidated financial statements of IXYS Corporation as of
June 30, 1998 and for the three month periods ended June 30, 1997 and
1998 are included as Exhibit 99.1.
(b) Pro Forma Financial Information
The required pro forma financial information with respect to the
acquired business referred to in Item 2 of this Report are included as
Exhibit 99.1.
(c) Exhibits
EXHIBIT
No. DESCRIPTION
- ------- -----------
2.1 Agreement and Plan of Merger and Reorganization dated as of
March 9, 1998, as amended, among IXYS, Merger Sub and
Paradigm./(1)/
4.
<PAGE>
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
99.1 Financial Statements.
____________________________
/(1)/ Filed as an Annex to the Joint Proxy Statement/Prospectus forming part of
the Registration Statement on Form S-4 (No. 333-57003) filed by the
Registrant with the Commission on June 6, 1998, and incorporated by
reference herein.
Item 8. Change in Fiscal Year.
In connection with the Merger on September 23, 1998, the Registrant's fiscal
year end will become March 31 of each calendar year. Because the transaction
constituted a reverse acquisition under generally accepted accounting
principles, no transition report will be filed with the Commission.
5.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
IXYS CORPORATION
Dated: October 8, 1998 By: /s/ Arnold P. Agbayani
---------------------------------
Arnold P. Agbayani
Vice President of Finance and
Administration and Chief
Financial Officer
6.
<PAGE>
Exhibit Index
EXHIBIT
NO. DESCRIPTION
------- -----------
2.1 Agreement and Plan of Merger and Reorganization dated as of
March 9, 1998, as amended, among IXYS, Merger Sub and
Paradigm./(1)/
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants.
99.1 Financial Statements.
____________________________
/(1)/ Filed as an Annex to the Joint Proxy Statement/Prospectus forming part of
the Registration Statement on Form S-4 (No. 333-57003) filed by Paradigm
Technology, Inc. with the Commission on June 6, 1998, and incorporated by
reference herein.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this report on Form 8-K of our
report dated May 1, 1998, on our audit of the consolidated financial statements
of IXYS Corporation as of March 31, 1997 and 1998, and for the three years in
the period ended March 31, 1998, appearing in the registration statement on Form
S-4 (SEC File No. 333-57003) of Paradigm Technology, Inc. filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended.
/s/ PricewaterhouseCoopers LLP
San Jose, California
May 1, 1998
<PAGE>
EXHIBIT 99.1
IXYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
March 31, June 30,
ASSETS 1998 1998
------------- ------------
<S> <C> <C>
Current assets: (unaudited)
Cash and cash equivalents $ 10,594 $ 9,289
Accounts receivable, less allowance for doubtful accounts of $588
in 1998 and $944 in 1999 10,009 10,642
Inventories, net 17,103 19,100
Deferred income taxes 1,617 1,615
------------- ------------
Total current assets 39,323 40,646
Plant and equipment, net of accumulated depreciation and amortization 10,602 11,097
Other assets 1,143 1,172
Deferred income taxes 3,272 3,272
------------- ------------
Total assets $ 54,340 $ 56,187
============= ============
LIABILITIES
Current liabilities:
Current portion of capitalized lease obligations $ 428 $ 584
Current portion of notes payable to bank 4,168 4,628
Current portion of mandatorily redeemable convertible preferred stock 9,300 9,300
Accounts payable 4,474 3,940
Accrued expenses and other liabilities 7,119 6,006
------------- ------------
Total current liabilities 25,489 24,458
Notes payable to bank, net of current portion 6,624 7,040
Capitalized lease obligations, net of current portion 814 1,305
Pension liabilities 5,113 5,288
------------- ------------
Total liabilities 38,040 38,091
------------- ------------
Series A and B mandatorily redeemable convertible preferred stock, $.001 par value:
Authorized: 116,000,000 shares in 1998 and 1999;
Issued and outstanding: 111,409,671 shares in 1998 and 1999 28,256 28,256
(Aggregate liquidation value of $37,589 in 1998 and 1999)
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value:
Authorized: 250,000,000 shares in 1998 and 1999
Issued and outstanding: 72,211,873 shares in 1998 and 1999 72 72
Additional paid-in capital 1,001 1,001
Notes receivable from stockholders (936) (936)
Accumulated deficit (11,359) (10,232)
Cumulative translation adjustment (734) (65)
------------- ------------
Total stockholders' deficit (11,956) (10,160)
------------- ------------
Total liabilities, mandatorily redeemable convertible
preferred stock and stockholders' deficit $ 54,340 $ 56,187
============= ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
<PAGE>
IXYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------------------
1997 1998
--------------- --------------
(unaudited)
<S> <C> <C>
Net revenues $ 13,247 $ 16,269
Cost of goods sold 8,328 11,448
--------------- --------------
Gross profit 4,919 4,821
--------------- --------------
Operating expenses:
Research, development and engineering 731 730
Selling, general and administrative 2,188 2,300
--------------- --------------
Total operating expenses 2,919 3,030
--------------- --------------
Income from operations 2,000 1,791
Other income (expense), net (82) 16
--------------- --------------
Income before provision for income taxes 1,918 1,807
Provision for income taxes (868) (680)
--------------- --------------
Net income $ 1,050 $ 1,127
=============== ==============
Net income per share - basic $ 0.02 $ 0.02
=============== ==============
Number of shares used in per share calculation - basic 65,501 72,212
=============== ==============
Net income per share - diluted $ 0.01 $ 0.01
=============== ==============
Number of shares used in per share calculation - diluted 201,866 205,343
=============== ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
IXYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------
1997 1998
------- -------
(unaudited)
<S> <C> <C>
Net income $ 1,050 $ 1,127
Other comprehensive income, net of tax:
Foreign currency translation adjustments (251) 669
------- -------
Comprehensive income $ 799 $ 1,796
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
IXYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------------
1997 1998
------------ ------------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,050 $ 1,127
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 391 513
Provision for bad debts 368 334
Provision for excess and obsolete inventory (142) 670
(Gains) losses on foreign currency translation 187 542
Changes in operating assets and liabilities:
Accounts receivable (488) (401)
Inventories (262) (2,500)
Prepaid expenses and other current assets (499) (422)
Other assets (30) (24)
Accounts payable 89 (571)
Accrued expenses and other liabilities 848 (217)
Pension liabilities 106 77
------------ ------------
Net cash provided by (used in) operating activities 1,618 (872)
------------ ------------
Cash flows from investing activities:
Purchases of plant and equipment (507) (879)
------------ ------------
Cash flows from financing activities:
Proceeds from capital lease obligations 389 627
Principal payments on capital lease obligations (450) (319)
------------ ------------
Net cash provided by (used in) financing activities (61) 308
------------ ------------
Effect of foreign exchange rate fluctuations on cash and cash
equivalents (347) 138
------------ ------------
Net increase (decrease) in cash and cash equivalents 703 (1,305)
Cash and cash equivalents at beginning of year 8,231 10,594
------------ ------------
Cash and cash equivalents at end of year $ 8,934 $ 9,289
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
IXYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of June 30, 1998 and the quarters ended
June 30, 1997 and 1998 and thereafter is unaudited)
1. Interim Financial Data (Unaudited):
----------------------------------
The unaudited financial statements for the quarters ended June 30, 1997 and
1998 have been prepared on the same basis as the audited financial
statements and, in the opinion of management, include all material
adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of financial position and results of operations in
accordance with generally accepted accounting principles. Although certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to the rules and regulations of the
Securities and Exchange Commission (S.E.C.), the Company believes the
disclosures made are adequate to make the information presented not
misleading. It is suggested that the accompanying financial statements be
read in conjunction with the Company's annual financial statements for the
year ended March 31, 1998 which have been included in Paradigm
Technologies, Inc. Form S-4 filed with the S.E.C. (see Note 7).
The Company's balance sheet as of March 31, 1998 was derived from the
Company's audited financial statements, but does not include all
disclosures necessary for the presentation to be in accordance with
generally accepted accounting principles.
2. Foreign Currency Translation:
----------------------------
The local currency is considered to be the functional currency of the
operations of IXYS GmbH. Accordingly, assets and liabilities are translated
at the exchange rate in effect at year-end and revenues and expenses are
translated at average rates during the year. Adjustments resulting from the
translation of the accounts of IXYS GmbH into U.S. dollars are included in
cumulative translation adjustment, a separate component of stockholders'
deficit. Foreign currency transaction gains and losses are included as a
component of other income and expense.
3. Computation of Net Income Per Share:
-----------------------------------
The Company has adopted Statement of Financial Accounting Standards No. 128
(SFAS 128), "Earnings per Share," which is effective for all periods ending
after December 15, 1997. SFAS 128 requires dual presentation of basic and
diluted earnings per share (EPS) for complex capital structures on the face
of the Statement of Income. Basic EPS is computed by dividing net income by
the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution from the exercise or conversion
of other securities into common stock.
5
<PAGE>
IXYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of June 30, 1998 and the quarters ended
June 30, 1997 and 1998 and thereafter is unaudited)
4. Recent Accounting Pronouncements:
--------------------------------
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about
Segments of an Enterprise and Related Information". This Statement
establishes standards for disclosure about operating segments in annual
financial statements and selected information in interim financial reports.
It also establishes standards for related disclosures about products and
services, geographic areas and major customers. This Statement supersedes
Statement of Financial Accounting Standards No. 14, "Financial Reporting
for Segments of a Business Enterprise." The new standard becomes effective
for the Company's fiscal year 1999 and requires that comparative
information from earlier years be restated to conform to the requirements
of this standard. The Company is evaluating the requirements of SFAS 131
and the effects, if any, on the Company's current reporting and
disclosures.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133), which establishes
accounting and reporting standards for derivative instruments and hedging
activities. SFAS 133 requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheets and measure those
instruments at fair value. This Statement becomes effective for the Company
for fiscal years beginning after December 15, 1999. The Company is
evaluating the requirements of SFAS 133 and the effects, if any, on the
Company's current reporting and disclosures.
5. Comprehensive Income:
--------------------
Effective in the first quarter of 1998, the Company has adopted Statement
of Financial Accounting Standard No. 130, "Reporting Comprehensive Income"
(SFAS 130). Comprehensive income generally represents all changes in
stockholders' equity except those resulting from investments or
contributions by stockholders. The Company has reclassified earlier
financial statements for comparative purposes. The only component of
comprehensive income for the three months ended June 30, 1997 and 1998 was
the change in the cumulative translation adjustment.
6
<PAGE>
IXYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of June 30, 1998 and the quarters ended
June 30, 1997 and 1998 and thereafter is unaudited)
6. Inventories:
-----------
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1998 1998
------- -------
<S> <C> <C>
Raw materials $ 3,789 $ 3,371
Work in progress 12,059 11,755
Finished goods 5,765 9,155
------- -------
less inventory reserve 21,613 24,281
(4,510) (5,181)
------- -------
$17,103 $19,100
======= =======
</TABLE>
7. Acquisition and Merger:
----------------------
Effective September 23, 1998, the Company acquired and merged into Paradigm
Technology, Inc. ("Paradigm"), a company that designs and markets fast SRAM
products. The acquisition was structured as a reverse merger whereby
Paradigm issued approximately 11,513,821 shares of its common stock in
exchange for all outstanding shares of IXYS stock. At the conclusion of the
merger, IXYS stockholders hold approximately 96% of the combined company.
For financial accounting purposes, IXYS will be the surviving company and
the historic financial information will be that of IXYS.
7
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements give
effect to the merger of Paradigm Technology, Inc. ("Paradigm") and IXYS
Corporation ("IXYS") using the purchase method of accounting in accordance with
generally accepted accounting principles. IXYS is considered the accounting
acquiror. The unaudited pro forma condensed combined financial statements are
based on the respective historical financial statements which are included in
this Form 8-K or have previously been filed with the Securities and Exchange
Commission (the "Commission") and are incorporated herein by reference. The
unaudited pro forma condensed combined balance sheet assumes that the Merger
took place on June 30, 1998 and combines Paradigm's June 30, 1998 historical
balance sheet with IXYS' June 30, 1998 historical consolidated balance sheet.
The unaudited pro forma condensed combined statement of operations assumes that
the Merger took place as of April 1, 1997 for the twelve months ended March 31,
1998 and combines Paradigm's condensed statement of operations for the nine
months ended December 31, 1997 (unaudited) and three months ended March 31, 1998
(unaudited) with IXYS' historical results of operations for the twelve months
ended March 31, 1998. The unaudited pro forma condensed combined statement of
operations for the three months ended June 30, 1998 combines Paradigm's
condensed statement of operations (unaudited) for the three months ended June
30, 1998 with IXYS' condensed consolidated statement of operations for the same
period (unaudited).
The unaudited pro forma condensed combined financial statements are based on the
estimates and assumptions set forth in the notes to such statements. The pro
forma adjustments are based on a preliminary valuation of Paradigm that has yet
to be finalized, made in connection with the development of the pro forma
information for illustrative purposes to comply with the disclosure requirements
of the Commission. The pro forma adjustments included in the unaudited pro
forma condensed combined financial information may be revised upon the
finalization of the valuation of the net assets acquired by IXYS. The unaudited
pro forma condensed combined financial statements do not purport to be
indicative of the results of operations for future periods or the combined
financial position or results that would have been realized had the companies
been a single entity during these periods. These unaudited pro forma condensed
combined financial statements should be read in conjunction with the historical
consolidated financial statements and the related notes thereto of Paradigm and
IXYS, which are included elsewhere herein or have previously been filed with the
Commission.
8
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
for the three months ended June 30, 1998
<TABLE>
<CAPTION>
Paradigm
Technology, IXYS Pro Forma Pro Forma
Inc. Corporation Adjustments Combined
--------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
Sales $ 1,036 $ 16,269 $ 17,305
Cost of sales 1,365 11,448 12,813
--------------- --------------- -------------
Gross profit (329) 4,821 4,492
--------------- --------------- -------------
Research and development 289 730 1,019
Selling, general and administrative 753 2,300 3,053
Amortization of intangibles $ 653 (1) 653
--------------- --------------- ----------------- -------------
Total operating expenses 1,042 3,030 653 4,725
--------------- --------------- ----------------- -------------
Operating income (loss) (1,371) 1,791 (653) (233)
Other (income) expense, net 86 (16) 70
--------------- --------------- ----------------- -------------
Income (loss) before taxes (1,457) 1,807 (653) (303)
Provision for income taxes (680) (680)
--------------- --------------- ----------------- -------------
Net income (loss) $ (1,457) $ 1,127 $ (653) $ (983)
=============== =============== ================= =============
Income (loss) per share - basic $ 0.02 $ (0.08)
=============== =============
Shares used in per share calculation - basic 72,212 11,956 (2)
=============== =============
Income (loss) per share - diluted $ 0.01 $ (0.08)
=============== =============
Shares used in per share calculation - diluted 205,343 11,956 (2)
=============== =============
</TABLE>
See accompanying notes to unaudited pro forma condensed combined statement of
operations.
9
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS:
(1) Adjustment reflects the amortization of the amount of the purchase price
allocated to identified intangible assets over three months ended June 30,
1998. Intangibles are being amortized over 2 years.
(2) Shares used in the per share calculation reflect 11.5 million shares issued
to IXYS stockholders as if they were outstanding from April 1, 1998 and
Paradigm shares following the reverse stock split and assuming that all
preferred stock had converted to common stock as of April 1, 1998.
Shares used in proforma income (loss) per share calculations for the three
months ended June 30, 1998 are as follows (in thousands):
IXYS shares based on actual exchange ratio 11,514
Paradigm shares following one-for-fifteen reverse
split and conversion of all preferred stock 442
------
Shares used in per share calculation - basic
and diluted 11,956
======
10
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
for the year ended March 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Paradigm
Technology, IXYS Pro Forma Pro Forma
Inc. (3) Corporation Adjustments Combined
-------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
Sales $ 10,791 56,856 $ 67,647
Cost of sales 10,402 38,048 48,450
-------------- ------------ -----------
Gross profit 389 18,808 19,197
-------------- ------------ -----------
Research and development 2,527 3,329 5,856
Selling, general and administrative 4,040 8,384 12,424
Amortization of intangibles $ 2,611 (1) 2,611
-------------- ------------ ------------- -----------
Total operating expenses 6,567 11,713 2,611 20,891
-------------- ------------ ------------- -----------
Operating income (loss) (6,178) 7,095 (2,611) (1,694)
Other (income) expense, net 1,049 (3,218) (2,169)
-------------- ------------ ------------- -----------
Income (loss) before taxes (7,227) 10,313 (2,611) 475
Provision for income taxes (4,229) (4,229)
-------------- ------------ ------------- -----------
Net income (loss) $ (7,227) $ 6,084 $ (2,611) (3,754)
============== ============ ============= ===========
Income (loss) per share - basic $ 0.09 $ (0.31)
============ ===========
Shares used in per share calculation - basic 65,501 11,956 (2)
============ ===========
Income (loss) per share - diluted $ 0.03 $ (0.31)
============ ===========
Shares used in per share calculation - diluted 201,866 11,956 (2)
============ ===========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined statement of
operations.
11
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS:
(1) Adjustment reflects the amortization of the amount of the purchase price
allocated to identified intangible assets and goodwill over twelve months
ending March 31, 1998. Intangible assets are being amortized over 2 years.
(2) Shares used in the per share calculation reflect 11.5 million shares issued
to IXYS stockholders as if they were outstanding from April 1, 1997 and
Paradigm shares following the reverse stock split and assuming that all
preferred stock had converted to common stock as of April 1, 1997.
Shares used in proforma income (loss) per share calculations for the twelve
months ended March 31, 1998 are as follows (in thousands):
IXYS shares based on actual exchange ratio 11,514
Paradigm shares following one-for-fifteen reverse
split and conversion of all preferred stock 442
------
Shares used in per share calculation - basic
and diluted 11,956
======
(3) The twelve months ended March 31, 1998 for Paradigm is unaudited and
consists of the last three quarters of Paradigm's fiscal year ended
December 31, 1997 and the first quarter of its fiscal year ending December
31, 1998.
12
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Paradigm
Technology, IXYS Pro Forma Pro Forma
Inc. Corporation Adjustments Combined
---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 254 $ 9,289 $ 9,543
Accounts receivable 891 10,215 11,106
Inventories 2,230 19,100 21,330
Other current assets 158 2,042 2,200
Intangible assets $ 5,221 (1) 5,221
Property and equipment, net 2,305 11,097 13,402
Other 113 4,444 4,557
---------------- -------------- -------------- --------------
Total $ 5,951 $ 56,187 $ 5,221 $ 67,359
================ ============== ============== ==============
Current liabilities $ 5,017 $ 24,458 $ (9,300)(2) $ 20,175
Long-term liabilities 316 13,633 13,949
Mandatorily redeemable preferred stock, net 28,256 (28,256)(2)
Stockholders' equity (deficit) 618 (10,160) 37,556 35,301
5,221 (1)
5,707 (3)
(5,707)(3)
---------------- -------------- -------------- --------------
$ 5,951 $ 56,187 $ 5,221 $ 67,359
================ ============== ============== ==============
</TABLE>
See accompanying notes to unaudited pro forma condensed combined balance sheet.
13
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET:
(1) Reflects allocation of a portion of the estimated purchase price of $5.6
million and assumption of liabilities in the amount of $6.7 million to
goodwill and identified intangible assets and the related deferred tax
liability. The total purchase price of $5.6 million was calculated based on
the market price of Paradigm common stock at the date of the transaction
($0.71875 per share on September 23, 1998) multiplied by Paradigm's total
stock outstanding (6,627,735 shares of common stock which includes the
common stock issued upon conversion of all Paradigm preferred stock) and
includes approximately $800,000 of transaction related costs born by IXYS.
The excess of the purchase price over the net assets of Paradigm has been
allocated to current products ($761), workforce and other identified
intangibles ($597), goodwill ($3,863), and in-process research and
development ($5,707). IXYS' management estimates that the net book value of
Paradigm's fixed assets approximate their fair value at the purchase date.
(2) Reflects the conversion of IXYS mandatorily redeemable convertible
preferred stock into IXYS common stock at the date of the transaction.
(3) Reflects the impact on stockholders' equity of the anticipated write-off of
in-process research and development in the amount of $5,707, net of income
tax effects. Amount is initially recorded in paid-in-capital and then is
expensed into accumulated deficit.
14
