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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): December 31, 1998
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NORLAND MEDICAL SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-26206 06-1387931
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
106 Corporate Park Drive, Suite 106, White Plains, NY 10604
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(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code: (914) 694-2285
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ITEM 5. Other Events
An agreement has been reached to settle the class and derivative action entitled
Irwin I. Miller and David Hargreaves v. Reynald G. Bonmati et. al. (Civil Action
No. 15849) pending in the Count of Chancery of the State of Delaware, New Castle
County. The action arose out of the Registrant's acquisition of Norland
Corporation ("Norland Corp.") from Norland Medical System B.V. ("NMS BV") in
September of 1997 (the "Acquisition"). In connection with the settlement, the
purchase price paid by the Registrant for Norland Corp. has been reduced by more
than 50%, from $17,500,000 to $8,700,000. The $17,500,000 purchase price
consisted of $1,250,000 in cash paid at the closing of the Acquisition and the
Registrant's 7% note in the principal amount of $16,250,000. The revised
$8,700,000 purchase price consists of the $1,250,000 cash payment made at
closing, 7,000,000 shares of the Registrant's Common Stock issued to NMS BV upon
the conversion of a portion of the note at the current market price, as provided
in the Norland Corp. Purchase Agreement, and a note in the principal amount of
$5,560,000 bearing interest at the reduced rate of 6 1/2%. As a result of the
price reduction and conversion, the Registrant's indebtedness has been reduced
by $10,690,000.
In connection with the Delaware settlement, the defendants have agreed not to
oppose an application by plaintiffs' counsel for an award of attorneys' fees and
expenses not to exceed $1,000,000. Such fees and expenses are covered by
insurance carried by the Registrant. The settlement of the litigation is subject
to approval by the Court of Chancery. However, the purchase price reduction and
related reduction of indebtedness and stock issuance were effected on December
31, 1998. As a result of the issuance of the 7,000,000 shares referred to above,
the total number of issued and outstanding shares of the Registrant's Common
Stock is 14,164,031.
ITEM 7. Financial Statements and Exhibits
Exhibit 99.1 Press Release, dated January 4, 1999, of Norland
Medical Systems, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORLAND MEDICAL SYSTEMS, INC.
Date: January 5, 1999 By: /s/ Kurt W. Streams
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Kurt W. Streams
Vice President, Finance and Secretary
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Exhibit 99.1
Company Contact: Norland Medical Systems, Inc.
Kurt W. Streams
Vice President, Finance
914-694-2285
Investor Relations Contact: Lippert/Heilshorn & Associates
Bruce Voss 310-575-4848
Kim Golodetz 212-838-3777
NORLAND MEDICAL SYSTEMS, INC.
ANNOUNCES SETTLEMENT OF LITIGATION AND
RESTRUCTURING OF NORLAND CORPORATION ACQUISITION
WHITE PLAINS, NY, January 4, 1999--NORLAND MEDICAL SYSTEMS, INC. (OTCBB:NRLD)
announced today that on December 31, 1998 it reached an agreement to settle the
class and derivative action titled Irwin I. Miller and David Hargreaves v.
Reynald G. Bonmati et. al. (Civil Action No. 15849) pending in the Court of
Chancery of the State of Delaware, New Castle County. The action arose out of
the Company's acquisition of Norland Corporation ("Norland Corp.") from Norland
Medical System B.V. ("NMS BV") in September of 1997 (the "Acquisition"). In
connection with the settlement, the purchase price paid by the Company for
Norland Corp. has been reduced by more than 50%, from $17,500,000 to $8,700,000.
The $17,500,000 purchase price consisted of $1,250,000 in cash paid at the
closing of the Acquisition and the Company's 7% note in the principal amount of
$16,250,000. The revised $8,700,000 purchase price consists of the $1,250,000
cash payment made at closing, 7,000,000 shares of the Company's Common Stock
issued upon the conversion of a portion of the note at the current market price,
as provided in the Norland Corp. Purchase Agreement, and a note in the principal
amount of $5,560,000 bearing interest at the reduced rate of 6 1/2%.
As a result of the price reduction and conversion, $10,690,000 of debt has been
removed from the Company's books. The high level of indebtedness prior to the
restructuring of the Acquisition purchase price and the existence of unresolved
litigation have had a seriously negative impact on the Company's sales efforts.
The Company expects that it will report revenues for the fourth quarter of 1998
significantly lower than revenues for the third quarter. Reynald G. Bonmati,
Chairman and President of the Company stated, "We are pleased to have reached an
agreement to settle the litigation over the acquisition of Norland Corp. and to
have dramatically reduced the Company's debt load. We hope that these actions
will demonstrate to potential customers that Norland is committed to continuing
to be a key long-term player in the bone densitometer market."
The settlement of the litigation is subject to approval by the Court of
Chancery. However, the purchase price reduction and related reduction of
indebtedness and stock issuance were effected on December 31, 1998.
Norland Medical Systems, Inc. develops, manufactures, sells, and services a wide
range of bone densitometers used to assess bone mineral content and density, one
of several factors used by physicians in the diagnosis and monitoring of bone
disorders, particularly osteoporosis. Osteoporosis progresses as a symptomless
disease characterized by bone loss and deterioration of the skeleton, leading to
bone fragility and increased risk of fractures. According to the National
Osteoporosis Foundation, 28 million Americans, 80% of whom are women, are
affected by osteoporosis, and left unchecked, that number is predicted to
increase to 41 million by 2015. Driven by the availability of new treatments for
bone-related disorders, Norland is focusing on bringing affordable,
state-of-the-art diagnostic technology directly into the physician's office in
order to address a number of women's healthcare problems. The Company also has
rights to distribute medical diagnostic products developed by Stratec
Medizintechnik GmbH and IMRO Medical Systems.
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"Safe harbor" Statement under the Private Securities Litigation Reform Act of
1995: The statements which are not historical facts contained in this release,
including but not limited to any potential impact of the settlement and the
reduction in the purchase price for the Acquisition on future revenues, are
forward looking statements that involve risks and uncertainties, including, but
not limited to, the results of research and development efforts, the
development, approval and acceptance of new therapies for osteoporosis and other
bone disorders, changes in government and third party reimbursement programs,
the effect of regulation by the United States Food and Drug Administration (FDA)
and other agencies, the impact of competitive products, product development,
acceptance of new products, commercialization and technological changes and
difficulties, the results of financing efforts, the effect of the Company's
accounting policies, Court approval of the settlement and other risks detailed
in the Company's Form 10-K and other Securities and Exchange Commission filings.
