<PAGE>
Form 6-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 12a-16 or 15d-16 of
the Securities Exchange Act of 1934
May 18, 2000
Commission File No 0-26498
NUR MACROPRINTERS LTD.
(Exact Name of Registrant as specified in its Charter)
Not Applicable
(Translation of Registrant's Name into English)
6 David Navon Street
Moshav Magshimim
56910 Israel
(Address and principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-f or Form 40-f.
Form 20-F /X/ Form 40-F / /
Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-b(b) under the Securities Exchange Act of
1934.
Yes / / No /X/
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b).
<PAGE>
Financial Statements and Pro Forma Financial Information filed herewith.
(a) Financial Statements of Business Acquired.
Combined financial statements of Salsa Digital Group, as defined in Note 1
thereto, including the following, are included as a part of this Form 6-K/A:
o Report of Independent Auditors
o Combined Balance Sheets for the years ended December 31, 1998 and
December 31, 1999 and for the six months ended June 30, 2000
(unaudited)
o Combined Statements of Operations for the years ended
December 31, 1997, December 31, 1998 and December 31, 1999,
and for the six months ended June 30, 1999 (unaudited) and
June 30, 2000 (unaudited).
o Statements of Changes in Partners' Account, balance as of
January 1, 1997, December 31, 1997, December 31, 1998,
December 31, 1999 and June 30, 2000 (unaudited)
o Combined Statements of Cash Flows for the years ended
December 31, 1997, December 31, 1998 and December 31, 1999,
and for six months ended June 30, 1999 (unaudited) and
June 30, 2000 (unaudited)
o Notes to Combined Financial Statements
(b) Pro Forma Financial Information
Unaudited pro forma condensed financial statements of the Registrant giving
effect to the acquisition of Salsa Digital Group, including the following are
included as a part of this Form 6-K/A and are incorporated herein by this
reference:
o Unaudited Pro Forma Combined Condensed Balance Sheet at
June 30, 2000
o Unaudited Pro Forma Combined Condensed Statement of Operations
for the six months ended June 30, 2000 and for the year ended
December 31, 1999
o Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
<PAGE>
SALSA DIGITAL GROUP
COMBINED FINANCIAL STATEMENTS
AS OF JUNE 30, 2000
IN U. S. DOLLARS
INDEX
PAGE
-------------
REPORT OF INDEPENDENT AUDITORS F-2
COMBINED BALANCE SHEETS F-3 - F-4
COMBINED STATEMENTS OF OPERATIONS F-5
STATEMENTS OF CHANGES IN PARTNERS' ACCOUNT F-6
COMBINED STATEMENTS OF CASH FLOWS F-7
NOTES TO COMBINED FINANCIAL STATEMENTS F-8 - F- 16
- - - - - - - - - - - -
<PAGE>
ERNST & YOUNG [LOGO]
-- KOST FORER & GABBAY -- Phone: 972-3-6232525
3 Aminadav St. Fax: 972-3-5622555
Tel-Aviv 67899, Israel
REPORT OF INDEPENDENT AUDITORS
SALSA DIGITAL GROUP
We have audited the accompanying combined balance sheets of Salsa Digital
Group ("The Group" as listed in Note 1) as of December 31, 1998 and 1999 and the
related combined statements of operations, changes in partners' account and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Group's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 combined financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Group as of December 31, 1998 and 1999 and the combined results of its
operations and cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
Tel-Aviv, Israel KOST FORER & GABBAY
August 15, 2000 A Member of Ernst & Young International
F-2
<PAGE>
SALSA DIGITAL GROUP
COMBINED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- June 30,
1998 1999 2000
--------- --------- ---------
UNAUDITED
---------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 157 $ 256 $ 1,726
Trade receivables (net of allowance for
doubtful accounts: $ 781, $ 1,200, and
$ 985 as of December 31, 1998 and 1999
and June 30, 2000, respectively) 4,436 4,051 5,948
Other accounts receivable and prepaid
expenses (Note 3) 1,064 739 542
Inventories (Note 4) 7,305 5,744 3,844
--------- --------- ---------
TOTAL current assets 12,962 10,790 12,060
--------- --------- ---------
LONG-TERM INVESTMENTS:
Long-term trade receivable 198 - -
Long-term lease deposit 47 53 53
--------- --------- ---------
TOTAL long-term investments 245 53 53
--------- --------- ---------
PROPERTY AND EQUIPMENT, NET (Note 5) 1,815 2,536 2,216
--------- --------- ---------
TOTAL assets $ 15,022 $ 13,379 $ 14,329
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-3
<PAGE>
SALSA DIGITAL GROUP
COMBINED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------- June 30,
1998 1999 2000
--------- --------- ---------
UNAUDITED
---------
<S> <C> <C> <C>
LIABILITIES AND PARTNERS' ACCOUNT
CURRENT LIABILITIES:
Short-term bank credit $ 342 $ - $ -
Trade payables 1,981 2,413 2,090
Accrued expenses and other liabilities (Note 6) 2,603 2,397 2,146
Customer advances 754 808 1,037
--------- --------- ---------
TOTAL current liabilities 5,680 5,618 5,273
--------- --------- ---------
PARTNERS' ACCOUNT 9,342 7,761 9,056
--------- --------- ---------
TOTAL liabilities and partners' account $ 15,022 $ 13,379 $ 14,329
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-4
<PAGE>
SALSA DIGITAL GROUP
COMBINED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------ -------------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
UNAUDITED
-------------------
<S> <C> <C> <C> <C> <C>
Sales $ 13,049 $ 24,906 $ 33,070 $ 15,598 $ 17,498
Cost of sales 5,844 14,250 19,556 8,980 10,462
-------- -------- -------- -------- --------
Gross profit 7,205 10,656 13,514 6,618 7,036
-------- -------- -------- -------- --------
Operating expenses:
Research and development 243 690 1,844 922 591
Selling and marketing 3,071 4,015 5,053 2,686 3,679
General and administrative 949 2,870 6,402 2,566 1,762
Impairment of property and equipment -- -- -- -- 288
-------- -------- -------- -------- --------
TOTAL operating expenses 4,263 7,575 13,299 6,174 6,320
-------- -------- -------- -------- --------
Operating income 2,942 3,081 215 444 716
Financial expenses (income), net 184 263 202 151 (45)
-------- -------- -------- -------- --------
2,758 2,818 13 293 761
Taxes on income -- 47 45 2 34
-------- -------- -------- -------- --------
Net income (loss) $ 2,758 $ 2,771 $ (32) $ 291 $ 727
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-5
<PAGE>
SALSA DIGITAL GROUP
STATEMENTS OF CHANGES IN PARTNERS' ACCOUNT
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
PARTNERS'
ACCOUNT
--------
Balance as of January 1, 1997 $ 4,848
Accrued interest on partners` account (184)
Contribution from partners 446
Net income 2,758
--------
Balance as of December 31, 1997 7,868
Accrued interest on partners` account (270)
Distribution to partners (1,027)
Net income 2,771
--------
Balance as of December 31, 1998 9,342
Accrued interest on partners` account (207)
Distribution to partners (1,342)
Net loss (32)
--------
Balance as of December 31, 1999 7,761
Contribution from partners (unaudited) 568
Net income (unaudited) 727
--------
Balance as of June 30, 2000 (unaudited) $ 9,056
========
The accompanying notes are an integral part of the combined financial
statements.
F-6
<PAGE>
SALSA DIGITAL GROUP
COMBINED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------- ---------------------
1997 1998 1999 1999 2000
--------- --------- ---------- ---------- ----------
UNAUDITED
---------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,758 $ 2,771 $ (32) $ 291 $ 727
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation 652 548 624 283 243
Impairment of property and equipment - - - - 288
Decrease (increase) in trade
receivables and long-term
trade receivables, net (2,732) 318 583 (189) (1,897)
Decrease (increase) in other accounts
receivable and prepaid expenses 91 (1,025) 325 502 197
Decrease (increase) in inventories (1,075) (3,506) 1,561 (240) 1,900
Increase (decrease) in trade payables (22) 983 432 706 (323)
Increase (decrease) in accrued expenses
and other liabilities 844 1,160 (206) (644) (251)
Increase in customer advances - 754 54 8 229
Accrued interest on partners' account (184) (270) (207) (147) -
--------- --------- ---------- ---------- ----------
Net cash provided by operating activities 332 1,733 3,134 570 1,113
--------- --------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (778) (844) (1,345) (180) (211)
Investment in long-term lease deposit - (47) (6) (6) -
--------- --------- ---------- ---------- ----------
Net cash used in investing activities (778) (891) (1,351) (186) (211)
--------- --------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contribution from (distribution to)
partners 446 (1,027) (1,342) 47 568
Short-term bank credit, net - 342 (342) (342) -
--------- --------- ---------- ---------- ----------
Net cash provided by (used in)
financing activities 446 (685) (1,684) (295) 568
--------- --------- ---------- ---------- ----------
Increase in cash and cash equivalents - 157 99 89 1,470
Cash and cash equivalents at the
beginning of the period - - 157 157 256
--------- --------- ---------- ---------- ----------
Cash and cash equivalents at
the end of the period $ - $ 157 $ 256 $ 246 $ 1,726
========= ========= ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-7
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
NOTE 1:- GENERAL
Salsa Digital Group ("the Group" or "Salsa") is engaged in the
development, manufacturing and selling of digital printing systems for
on-demand, short-run, wide format and super wide format printing, and
also in selling of related consumable products.
The Group operates in the U.S. in a form of a partnership ("The
Partnership"), in Japan through a subsidiary of the Partnership, and
in Brazil through a company held by the partners (the combined
company). The Group's operations in Belgium are conducted in a form of
a branch of the Partnership, while the operations in China and Dubai
are conducted in a form of representative offices. The accompanying
financial statements refer to the combined Group.
In 1978, Sign-Tech, the predecessor of the Group, was founded by the
Gandy family in Toronto, and was engaged in the manufacturing of
extrusions used for black-lit acrylic signs. Later it expanded its
operations also to the manufacturing of ink, substrates and ink-jet
printers.
In 1986, Sign-Tech was listed on the Toronto Stock Exchange, until its
bankruptcy in 1992.
In 1993, the Gandy family repurchased the operations from the trustee,
and started operating in the form of a partnership, with worldwide
branches and companies under the partnership and the partners'
control.
On February 29, 2000, the family, in two separate transactions, sold
the extrusion and substrates operations and the Sign-Tech name, and
continued the ink and ink-jet printers operations in a new
partnership, Salsa Digital Group.
On May 17, 2000 the Partnership and its related entities entered into
an acquisition agreement with Nur Macroprinters Ltd. ("Nur") and its
subsidiaries. According to the agreement, Nur and its subsidiaries
acquired as of July 3, 2000, all the assets and assumed liabilities of
the Group, in a total of $ 30 million, $ 20 million in cash and the
rest in 666,667 ordinary shares of Nur.
The acquired assets included: cash and cash equivalents, trade
receivables, inventories, machinery and equipment, shares of a
subsidiary in Japan, intellectual property, rights and interest in
existing contracts, leases, permits and other instruments, prepaid
expenses and the license rights to manufacture and market existing
products. The liabilities assumed included: accounts payable, accrued
expenses, deferred revenues, and other related liabilities.
Since, as discussed above, Sign-Tech went through many changes, as
well as legal changes, during the periods presented, management is of
the opinion that it is more meaningful to present only the financial
statements of the Salsa's operations acquired by Nur. Therefore, these
financial statements refer to the carved-out, acquired ink and ink-jet
printer operations, purchased by Nur and its subsidiaries.
F-8
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The Group's combined financial statements have been prepared in
accordance with generally accepted accounting principles in the United
States.
a. Basis of presentation:
These financial statements include the acquired ink and ink-jet
printers operations of the Group, as well as the related assets
and liabilities.
Certain items in the statements of operations have been recorded
on a direct cost basis. Such items include: revenues from sales
of ink and ink-jet printers, cost of revenues, selling,
advertising and sales promotion costs, and certain general and
administrative expenses (mainly bad debts).
Certain selling and general expenses have been allocated to the
Group proportion to the Group's sales. Management believes that
such allocation method is reasonable in the circumstances. The
financial information included in the financial statements does
not necessarily reflect the financial position and results of
operations of the Group if it had been a separate, stand-alone
company during the reported periods.
b. Use of estimates:
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.
c. Financial statements in U.S. dollars:
The accompanying combined financial statements have been
prepared in U.S. dollars. Since the U.S. dollar is the
primary currency in the economic environment in which the
Group operates, the U.S. dollar is its functional and
reporting currency.
The Group's transactions and balances denominated in U.S. dollars
are presented at their original amounts. Non-dollar transactions
and balances have been remeasured into U.S. dollars in accordance
with Statement 52 of the Financial Accounting Standards Board
("FASB") "Foreign Currency Translation". All transaction gains
and losses from remeasurement of monetary balance sheet items
denominated in non-dollar currencies are reflected in the
statement of operations as financial income or expenses, as
appropriate.
F-9
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
d. Principles of combination:
The combined financial statements include the accounts of the
Partnership (including the representative offices in China and
Dubai), its subsidiary in Japan, its branch in Belgium, and the
company in Brazil, owned by the partners but operated under the
control of the Group. All Group transactions and balances,
including profits from Group sales not yet realized outside the
Group, have been eliminated in combination.
e. Cash equivalents:
The Group considers all highly liquid investments originally
purchased with maturities of three months or less to be cash
equivalents.
f. Inventories:
Inventories are stated at the lower of cost or market value. The
Group annually reviews the inventory for obsolescence, based on
the sales activity of its products, and provides a reserve where
appropriate. Cost is determined as follows:
Raw materials - using the "first in, first out" method.
Work-in-progress and finished products - includes materials,
labor and manufacturing overhead costs.
g. Property and equipment:
These assets are stated at cost, net of accumulated depreciation.
Depreciation is calculated using the straight-line method over
the estimated useful lives of the assets.
The annual depreciation rates are as follows:
%
-------------------------
Machinery and industrial equipment 10 - 33
Office furniture and equipment 10
Leasehold improvements Over the term of the lease
period
Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Dispossed Of" requires
impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets
is less than the asset's carrying amount.
The Group periodically assesses the recoverability of the
carrying amount of property and equipment and provides for any
impairment loss based upon the difference between the carrying
amount and fair value of such assets. In the period ended June
30, 2000 the Group has recognized an impairment loss on machinery
and industrial equipment in the amount of $ 288.
F-10
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
h. Retirement Savings Plan
The Group maintained a retirement savings plan (401(k) Plan)
covering all nonunion full-time employees with six months of
service. Contributions to the 401(k) Plan are at the discretion
of the employee subject to the terms of the 401(k) Plan with a
portion of the contribution matched at the discretion of the
Group. There was approximately $ 10, $ 65 and $ 74 in expenses
under the 401(k) Plan for the years ended December 31, 1997, 1998
and 1999, respectively.
i. Income taxes:
Since the Group was formed as a limited partnership, and not as a
stand-alone taxable entity, the income and deductions of the
Group for tax purposes are included in tax returns of the
individual partners. Therefore, no provision for income tax is
included in the accompanying combined financial statements with
respect to the U.S. Partnership, except for the companies in
Japan and Brazil and the branch in Belgium, which were
immaterial.
j. Revenue recognition
Revenues from sales of products are recognized upon shipment
provided that no significant vendor obligations remain and
collection is deemed probable.
Deferred revenues include unearned amounts billed to customers
but not recognized as revenues.
k. Warranty costs:
The Group provides a warranty for up to six months, at no extra
charge. A provision which to date has been insignificant is
recorded for probable costs, in connection with warranties, based
on the Group experience (in respect of most of these costs the
Group has warranties from its suppliers).
l. Research and development costs:
Research and development costs are charged to expenses as
incurred.
m. Advertising costs:
The Group expenses advertising costs, as incurred. Advertising
expenses for the years ended December 31, 1997, 1998 and 1999,
were $ 2,003, $ 1,197 and $ 1,255 respectively.
F-11
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
n. Concentrations of credit risk:
SFAS No. 105, "Disclosure of Information About Financial
Instruments with Off-Balance-Sheet Risk and Financial Instruments
with Concentrations of Credit Risk", requires disclosure of any
significant off-balance-sheet and credit risk concentrations. The
Group has no significant off-balance-sheet concentration of
credit risk such as foreign exchange contracts, option contracts
or other foreign hedging arrangements.
Financial instruments that potentially subject the Group to
concentrations of credit risk consist principally of cash and
cash equivalents, long-term trade receivables and trade
receivables. Cash and cash equivalents are deposited with major
banks mainly in the U.S. Management believes that the financial
institutions that hold the Group's cash and cash equivalents are
financially sound, and, accordingly, minimal credit risk exists
with respect to these financial instruments. The Group's trade
receivables are mainly derived from sales to customers in the
United States, Asia and Europe. The Group has adopted credit
policies and standards intended to accommodate industry growth
and inherent risk. Management believes that credit risks are
moderated by the diversity of its end customers. The Group
performs ongoing credit evaluations of its customers' financial
condition and requires collateral as deemed necessary. In
management's estimation, the allowance for doubtful accounts
adequately covers anticipated losses in respect of its trade
receivables credit risks. The allowance for doubtful accounts is
determined with respect to specific debts that are doubtful of
collection.
o. Fair value of financial instruments:
SFAS No. 107, "Disclosure About Fair Value of Financial
Instruments" requires disclosures about the fair value of
financial instruments. The estimated fair value of financial
instruments has been determined by the Group, using available
market information and valuation methodologies. However,
considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates
presented herein may not be indicative of the amounts that the
Group could realize in a current market exchange. The use of
different market assumptions or valuation methodologies may have
a material effect on the estimated fair value amounts.
The carrying values of cash and cash equivalents, trade
receivables, short-term bank credit and trade payables
approximate fair values due to the short-term maturities of these
instruments. The carrying amount of the Group's long-term trade
receivables approximates its fair value. The fair value was
estimated using discounted cash flow analysis, based on the
Group's incremental rates for similar types of investment
arrangements.
F-12
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
p. Impact of recently issued accounting standards:
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133 ("SFAS 133"), "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133") and its amendments
Statements 137 and 138 in June 1999 and June 2000, respectively.
These statements establish accounting and reporting standards
requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded
in the balance sheet as either an asset or liability measured at
its fair value. These statements also require that changes in the
derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and
losses to offset related results on the hedged item in the income
statement, and requires that a business must formally document,
designate, and assess the effectiveness of transactions that
receive hedge accounting. The FASB has issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133". The
Statement defers for one year the effective date of SFAS No. 133.
The rule will apply to all fiscal quarters of all fiscal years
commencing after June 15, 2000. The Group does not expect the
impact of this new statement on the Group's combined balance
sheets or results of operations, to be material.
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in
Financial Statements", as amended, which provides guidance
related to revenue recognition based on interpretations and
practices followed by the SEC. SAB 101 was effective the fourth
fiscal quarter of 2000 and requires companies to report any
changes in revenue recognition as cumulative change in accounting
principle at the time of implementation in accordance with APB
20, "Accounting Changes". The Group has considered the effect of
adoption of SAB101. Such adoption of SAB 101 will not have a
material effect on the combined financial position or results of
operations of the Group.
q. Interim financial information:
The financial statements include the unaudited combined balance
sheet as of June 30, 2000, the statement of changes in partners'
account for the six months ended June 30, 2000 and the combined
statements of operations and cash flows for the six months ended
June 30, 1999 and 2000. In the opinion of management, such
financial information has been prepared on the same basis as the
annual financial statements and includes all adjustments
(consisting only of normal recurring adjustments), which the
Group considers necessary for a fair presentation of the
financial position at such date, and the operating results and
cash flows for the respective periods. Results for the interim
period are not necessarily indicative of the results to be
expected for the entire year.
F-13
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
NOTE 3:- OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
DECEMBER 31,
---------------------
1998 1999
--------- -------
Government authorities $ 50 $ 21
Advances to suppliers 463 463
Prepaid expenses 330 84
Other 221 171
--------- -------
$ 1,064 $ 739
========= =======
NOTE 4:- INVENTORIES
DECEMBER 31,
------------------------ JUNE 30,
1998 1999 2000
----------- ------- ----------
UNAUDITED
----------
Raw materials $ 2,941 $ 1,945 $ 2,059
Work-in-progress 1,598 221 181
Finished products 2,766 3,578 1,605
----------- ------- --------
$ 7,305 $ 5,744 $ 3,844
=========== ======= ========
NOTE 5:- PROPERTY AND EQUIPMENT
DECEMBER 31,
-------------------
1998 1999
-------- --------
Cost:
Machinery and industrial equipment $ 2,884 $ 4,218
Office furniture and equipment 27 37
Leasehold improvements 10 11
-------- --------
2,921 4,266
-------- --------
Accumulated depreciation:
Machinery and industrial equipment 1,093 1,707
Office furniture and equipment 10 18
Leasehold improvements 3 5
-------- -------
1,106 1,730
-------- -------
Depreciated cost $ 1,815 $ 2,536
======== =======
F-14
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
NOTE 6:- ACCRUED EXPENSES AND OTHER LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
-------- --------
<S> <C> <C>
Employees and payroll accruals $ 136 $ 259
Government authorities 247 267
Deferred revenues 463 116
Warranty and installation 311 400
Provision for legal settlement (1) 850 850
Accrued expenses 596 505
-------- --------
$ 2,603 $ 2,397
======== ========
</TABLE>
(1) This was a result of a legal settlement, which awarded a third
party in the amount of $850 thousands, which are included in General
and Administrative expenses in the year ended December 31, 1998.
NOTE 7:- CONTINGENT LIABILITIES
From time to time, the Group may have certain contingent liabilities
that arise in the ordinary course of its business activities. The
Group accounts for contingent liabilities when it is probable that
future expenditures will be made and such expenditures can be
reasonably estimated. In the opinion of management, based on
consultations with its legal advisors, there are no pending claims of
which the outcome is expected to result in a material adverse effect
on the financial position or the results of operations or cash flows
of the Group.
NOTE 8:- RELATED PARTY TRANSACTIONS
The Group incurred management fees charged by its general partner,
which consist of executive salaries and income tax liability
reimbursements made to the unit holders who are also executives.
Management fees in the amounts of approximately $ 352, $ 398 and
$ 642, are included in general and administrative expenses for the
years ended December 31, 1997, 1998 and 1999, respectively.
On March 1, 2000, upon the sale of the non-inkjet division to a third
party, the Group entered into an agreement with the partners for the
lease of the office and manufacturing space of the Group in the U.S.
Lease expenses for the four months ended June 30, 2000 which are
included in general and administrative expenses are in the amount of
$ 122. Prior to that, the Group used the facility at no charge.
Financial expenses presented in the combined statements of operations
consist of interest to partners in respect of partners' account,
calculated at an annual rate of 6%. Amounts of long-term liabilities
attributed to the carved out partnership were retained by the parents
and thus included in the partners' account.
F-15
<PAGE>
SALSA DIGITAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
NOTE 9:- REPORTABLE SEGMENTS DATA
Summary information about geographic areas:
The Group consists of one reportable segment (See note 1 for a brief
description of the Group's operations).
This data is presented in accordance with SFAS 131 "Disclosures About
Segments of an Enterprise and Related Information", which the Group
has retroactively adopted for all periods presented.
The following presents total revenues for the years ended December 31,
1997, 1998 and 1999 and for the six months ended June 30, 2000, and
long-lived assets as of December 31, 1997, 1998 and 1999 and as of
June 30, 2000, based on the country of domicile:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------ JUNE 30,
1997 1998 1999 2000
----------------- ----------------- ----------------- -------------------
UNAUDITED
-------------------
LONG- LONG- LONG- LONG-
TOTAL LIVED TOTAL LIVED TOTAL LIVED TOTAL LIVED
REVENUES ASSETS REVENUES ASSETS REVENUES ASSETS REVENUES ASSETS
-------- -------- -------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Asia $ - $ - $ 2,690 $ 68 $ 3,367 $ 69 $ 2,311 $ 65
America 12,932 1,507 21,354 1,783 27,753 2,505 12,935 2,189
Europe 117 12 862 11 1,950 15 2,252 15
-------- -------- -------- ------- ------- -------- -------- --------
$13,049 $ 1,519 $24,906 $ 1,862 $33,070 $ 2,589 $ 17,498 $ 2,269
======== ======== ======== ======= ======= ======== ======== ========
</TABLE>
------------
F-16
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Condensed Balance Sheet at June
30, 2000 gives effect to the acquisition of Salsa Digital Group ("The Group" or
"Salsa") by Nur Macroprinters Ltd. and its subsidiaries ("Nur" or "the Company")
on July 3, 2000, as if it had occurred at that date. The following Unaudited Pro
Forma Combined Condensed Statements of Operations for the year ended December
31, 1999 and for the six months period ended June 30, 2000 give effect to the
acquisition as if it had occurred on January 1, 1999. The pro forma financial
statements give effect to the acquisition using the "purchase" method of
accounting after giving effect to the Pro Forma adjustments described in the
accompanying notes; the purchase price, including transaction costs has been
allocated to the acquired assets and liabilities of the Group (including in
process Research and Development) based on their estimated fair values at the
date of acquisition. The excess of the consideration paid by Nur in the
acquisition over the fair value of the Group's identifiable assets and
liabilities has been recorded as goodwill.
This pro forma information should be read in conjunction with the
respective audited consolidated historical financial statements (including notes
thereto) of Nur and the Group, for the year ended December 31, 1999 and for the
six months period ended June 30, 2000, appearing elsewhere herein.
The following information is not necessarily indicative of the future
financial position or operating results of the combined company or the financial
position or operating results of the combined company had the acquisition
occurred at the dates indicated. The pro forma adjustments are based on
available financial information and certain estimates and assumptions that the
Company believes are reasonable and that are set forth in the notes to the
unaudited pro forma combined financial information.
We have undertaken an independent study to identify and determine the fair value
of the Group's intangible assets (as for the allocation of the purchase price
see Note c).
<PAGE>
NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
JUNE 30, 2000
--------------------------------------------------------
PRO FORMA PRO FORMA
NUR SALSA ADJUSTMENTS NOTE COMBINED
---------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,295 $ 1,726 $ (962) 2a $ 9,059
Trade receivables 22,437 5,948 -- 28,385
Other accounts receivable and
prepaid expenses 5,640 542 -- 6,182
Inventories 12,106 3,844 -- 15,950
---------- ---------- ---------- --------
Total current assets 48,478 12,060 (962) 59,576
---------- ---------- ---------- --------
LONG-TERM INVESTMENTS:
Investments and other non-current assets 1,162 53 -- 1,215
Severance pay fund 614 -- -- 614
---------- ---------- ---------- --------
Total long-term investments 1,776 53 -- 1,829
---------- ---------- ---------- --------
PROPERTY AND EQUIPMENT, NET 2,695 2,216 -- 4,911
---------- ---------- ---------- --------
GOODWILL AND OTHER INTANGIBLE
ASSETS, NET 21 -- 17,439 2e 17,460
---------- ---------- ---------- --------
Total assets $52,970 $14,329 $16,477 $83,776
========== ========== ========== ========
</TABLE>
2
<PAGE>
NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
JUNE 30, 2000
-----------------------------------------------------------
PRO FORMA PRO FORMA
NUR SALSA ADJUSTMENTS NOTE COMBINED
---------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term bank credit $ 4,675 $ -- $ -- $ 4,675
Current maturities of long-term loans 762 -- 5,000 2a 5,762
Trade payables 8,951 2,090 -- 11,041
Accrued expenses and other liabilities 10,160 2,146 395 2c 12,701
Advances from customers 605 1,037 -- 1,642
-------- ------- ------- -------
Total current liabilities 25,153 5,273 5,395 35,821
-------- ------- ------- -------
LONG TERM LIABILITIES:
Long-term loans 1,237 -- 15,000 2a 16,237
Long-term liabilities 147 -- -- 147
Accrued severance pay 853 -- -- 853
-------- ------- ------- -------
Total long-term liabilities 2,237 -- 15,000 17,237
-------- ------- ------- -------
SHAREHOLDERS' EQUITY:
Share capital 3,138 -- 164 2d 3,302
Additional paid-in capital 19,919 -- 9,274 2d 29,193
Accumulated other comprehensive loss (458) -- -- (458)
Retained earnings (accumulated deficit) 2,981 -- (4,300) 2d (1,319)
Partner's account -- 9,056 (9,056) 2d --
-------- ------- ------- -------
Total shareholders' equity 25,580 9,056 (3,918) 30,718
-------- ------- ------- -------
Total liabilities and shareholders' equity $52,970 $14,329 $16,477 $83,776
======== ======= ======= =======
</TABLE>
3
<PAGE>
NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
SIX MONTH ENDED JUNE 30, 2000
---------------------------------------------------------------------
PRO FORMA PRO FORMA
NUR SALSA ADJUSTMENTS NOTE COMBINED
---------- ------- ----------- ---- ----------
<S> <C> <C> <C> <C> <C>
Sales $ 45,627 $17,498 $ -- $ 63,125
Cost of sales 23,580 10,462 -- 34,042
---------- ------- ------- ----------
Gross profit 22,047 7,036 -- 29,083
---------- ------- ------- ----------
Operating expenses:
Research and development expenses, net 3,847 591 -- 4,438
Selling and marketing expenses, net 7,338 3,679 -- 11,017
General and administrative expenses 4,184 1,762 61 2g 6,007
Impairment of property and equipment -- 288 -- 288
Amortization of goodwill and other
intangible assets -- -- 1,453 2e 1,453
---------- ------- ------- ----------
Total operating expenses 15,369 6,320 1,514 23,203
---------- ------- ------- ----------
Operating income (loss) 6,678 716 (1,514) 5,880
Financial income (expenses), net (375) 45 -- (330)
Other income, net 8 -- -- 8
---------- ------- ------- ----------
Income before taxes on income 6,311 761 (1,514) 5,558
Taxes on income (tax benefit) 525 34 (37) 2h 522
---------- ------- ------- ----------
Income after taxes on income 5,786 727 (1,477) 5,036
Equity in losses of affiliates, net (140) -- -- (140)
---------- ------- ------- ----------
Net income (loss) for the period $ 5,646 $ 727 $(1,477) $ 4,896
========== ======= ======= ==========
EARNINGS PER SHARE:
Basic earnings per share 0.46 -- (0.08) 0.38
========== ======= ======= ==========
Diluted earnings per share 0.40 -- (0.07) 0.33
========== ======= ======= ==========
Weighted average number of shares used
in computing basic EPS 12,145,662 -- 666,667 12,812,329
========== ======= ======= ==========
Weighted average number of shares used
in computing diluted EPS 14,164,349 -- 666,667 14,831,016
========== ======= ======= ==========
</TABLE>
4
<PAGE>
NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------
PRO FORMA PRO FORMA
NUR SALSA ADJUSTMENTS NOTE COMBINED
--- ----- ----------- ---- --------
<S> <C> <C> <C> <C> <C>
Sales $ 60,719 $33,070 $ -- $ 93,789
Cost of sales 31,784 19,556 -- 51,340
---------- ---------- ---------- ----------
Gross profit 28,935 13,514 -- 42,449
---------- ---------- ---------- ----------
Operating expenses:
Research and development expenses, net 4,809 1,844 -- 6,653
Selling and marketing expenses, net 9,485 5,053 -- 14,538
General and administrative expenses 6,275 6,402 366 2g 13,043
Amortization of goodwill and other
intangible assets -- -- 2,906 2e 2,906
---------- ---------- ---------- ----------
Total operating expenses 20,569 13,299 3,272 37,140
---------- ---------- ---------- ----------
Operating income 8,366 215 (3,272) 5,309
Financial expenses, net (683) (202) -- (885)
Gain on marketable securities 67 -- -- 67
Other income, net 176 -- -- 176
---------- ---------- ---------- ----------
Income before taxes on income 7,926 13 (3,272) 4,667
Taxes on income (tax benefit) 798 45 (56) 2h 787
---------- ---------- ---------- ----------
Income (loss) after taxes on income 7,128 (32) (3,216) 3,880
Equity in earnings of affiliates, net 75 -- -- 75
Minority interest in earnings of subsidiary (28) -- -- (28)
---------- ---------- ---------- ----------
Net income (loss) for the year $ 7,175 $ (32) $ (3,216) $ 3,927
========== ========== ========== ==========
EARNINGS PER SHARE:
Basic earnings per share 0.64 -- (0.31) 0.33
========== ========== ========== ==========
Diluted earnings per share 0.56 -- (0.27) 0.29
========== ========== ========== ==========
Weighted average number of shares used
in computing basic EPS 11,181,137 -- 666,667 11,847,804
========== ========== ========== ==========
Weighted average number of shares used
in computing diluted EPS 12,722,600 -- 666,667 13,389,267
========== ========== ========== ==========
</TABLE>
5
<PAGE>
NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
NOTE 1: BASIS OF PRESENTATION
The pro forma statements are presented for informational purposes only
and do not give effect to any potential cost savings or other
synergies that could result from the acquisition of the Group. Plans
are in development to integrate the operations of the combined
companies. These plans may involve certain costs. Nur management
believes that these costs, if any, will be immaterial to the Company's
financial position and/or result of operations.
NOTE 2: PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
One. Nur has financed the cash portion of the acquisition through
commercial bank loans.
The pro forma adjustments to the balance sheet reflect the cash
received and consideration paid at the time of closing as well as
other actual and estimated acquisition costs as follows:
Loans received from banks $ 20,000
Cash paid in consideration of the acquisition (20,000)
Actual and estimated acquisition expenses (400)
Actual and estimated issuance expenses (562)
-----------
$ (962)
===========
b. Acquisition of In-Process Research and Development
Pursuant to the sale agreement between Salsa and Nur, Nur
acquired all assets and assumed certain liabilities of Salsa
Digital Group. For accounting purposes, the transaction will be
accounted for under the purchase method.
Salsa is engaged in the development, manufacturing and selling of
digital printing systems for on-demand, short-run, wide format
and super wide format printing, and also in selling of related
consumable products. Salsa devotes substantial resources to
research and development ("R&D") activity in the normal course of
its business.
An independent third party appraisal company conducted a
valuation of Salsa's intangible assets. These intangibles include
current technology, in-process research and development
("IPR&D"), the customer list and the workforce in-place. The
valuation of intangibles included $9,672 for existing technology,
$4,300 for IPR&D, $3,094 for the customer list and $1,478 for the
workforce. The excess of the purchase price over the fair value
of identifiable
6
<PAGE>
NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
tangible and intangible assets of $3,195 will be allocated to
goodwill. Intangible assets will be amortized over periods of
5, 7 and 10 years (see Note e). The fair value of the IPR&D,
which relates to Salsa II 2400/5000 and Bit Fire Down printer
research projects, will be recorded as an R&D expense in the
third quarter of 2000, in which the acquisition was completed.
This expense has not been included in the pro-forma combined
condensed statement of operations as it does not represent a
continuing expense.
The valuation of the current technology and the IPR&D was
determined using the income approach. The income approach
reflects the present value of the operating cash flows generated
by the products after taking into account the cost to realize the
revenue, the relative risk of offering the product, and an
appropriate discount rate to reflect the time value of invested
capital. Revenue and expense projections as well as technology
assumptions were prepared through 2005 based on information
provided by Salsa's management. The projected cash flows were
discounted using 25% and 27% discount rates. In determining the
discount rate for Salsa, we calculated the weighted average cost
of capital for a company similar to Nur which was determined to
be approximately 15%. To account for the additional risks
associated with Salsa's IPR&D, we used discount rates of 25%
and 27%.The valuation of the IPR&D was performed separately using
the income approach. Each project was analyzed to determine the
technological innovations included; the utilization of core
technology; the complexity, cost and time to complete
development. The percentage of completion ratio was estimated
based on the complexity factors for each in-process development
project to achieve technological feasibility.
The value assigned to IPR&D relates mainly to two research
projects: Salsa II 2400/5000 and the Bit Fire Down printer.
These technologies have not yet reached technological
feasibility nor have any alternative future use. Salsa II
2400/5000 are both intended to be entry-level wide format
digital printers. They are targeting the market that requires
a higher quality image with lower numbers of prints. The major
development efforts include completion of design verification
for a new material handling system and integration. The
project is approximately 90% complete with an initial release
date expected to occur during the forth quarter of 2000. The
risks in development included the product's potential failure
to meet costs requirements and failure to achieve adequate
print quality. The Bit Fire Down printer will incorporate
significantly new functions. This project is estimated to be
50% complete and is expected to reach technological
feasibility in the third quarter of 2001. The risks in
developments include potential failure to meet costs
requirements, failure to develop a workable head orientation
and failure to achieve adequate print quality.
7
<PAGE>
NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
c. Allocation of purchase price
The following represents the allocation of the purchase price to
the acquired assets and liabilities of the Group at June 30,
2000.
Assets acquired:
Current assets $ 12,060
Long-lived assets 2,269
Goodwill and other intangible assets (see e follows) 17,439
IPR&D (see b above) 4,300
Current liabilities assumed (5,273)
Other liabilities not purchased in Brazil (395)
---------
Purchase price $ 30,400
=========
d. The adjustments reflect the additions to Nur's shareholders'
equity and IPR&D:
Issuance of 666,667 shares of Nur $ 164
=========
Additional paid-in capital $ 9,836
Actual and estimated issuance expenses (562)
---------
Additional paid-in capital, net $ 9,274
=========
Elimination of partners' account $ (9,056)
=========
Write off of IPR&D (included in retained earnings) $ (4,300)
=========
e. Amortization of goodwill and other intangible assets
The purchase price for the Salsa's acquisition amounted to
$30,400 (out of which $20,000 was paid in cash and $10,000 was
paid in 666,667 ordinary shares of Nur), of which $21,739 is
allocated to intangible assets including goodwill.
Nur plans to amortize the intangible assets and goodwill
associated with the acquisition of the Group over periods of 5, 7
and 10 years.
The pro forma adjustments to the Statements of Operations reflect
amortization of the intangible assets and goodwill as if the
transaction had occurred on January 1, 1999.
8
<PAGE>
NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
AMORTIZATION AMORTIZATION
INTANGIBLE AMORTIZATION EXPENSE PER EXPENSE PER
ASSETS AMOUNT PERIOD ANNUM SIX MONTH
--------------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Current product/
technology $ 9,672 5 $1,934 $ 967
Work force 1,478 7 211 106
Customer list 3,094 7 442 221
Goodwill 3,195 10 319 159
------- ------ ------
$17,439 $2,906 $1,453
======= ====== ======
</TABLE>
f. Calculation of purchase price:
Cash $ 20,000
Issuance of 666,667 shares of Nur (1) 10,000
Estimated professional fees and other direct
transaction costs 400
-----------
$ 30,400
===========
(1) Average market price of each Nur share $ 15.
g. Lease expenses:
Since March 2000 the Group started paying lease expenses to
the former owners of Salsa in the amount of $30.5 thousands
per month. Previously, the Group used the property with no
extra charge. The adjustments reflects the lease expenses of
the Group as if it was leased since January 1999.
h. Taxes on income:
Since the acquired Group was formed as a limited partnership
and not as a stand-alone taxable entity, the income deductions of
the Group for tax purposes are included in the tax returns of the
individual partners.
The adjustments reflect the tax expenses of the acquired
Group on a stand alone basis as if it was purchased in January 1,
1999.
9
<PAGE>
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, thereunto duly authorized.
NUR MACROPRINTERS LTD.
Date: October 12, 2000 By: /s/ Erez Shachar
---------------------------
Name: Erez Shachar
Title: Chief Executive Officer
