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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
SCHEDULE 14D-9/A
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
SMARTFLEX SYSTEMS, INC.
(NAME OF SUBJECT COMPANY)
SMARTFLEX SYSTEMS, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, $.0025 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
83169K108
((CUSIP) NUMBER OF CLASS OF SECURITIES)
WILLIAM L. HEALEY
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD
14312 FRANKLIN AVENUE
TUSTIN, CALIFORNIA 92781
(714) 838-8737
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
COPIES TO:
NICK E. YOCCA, ESQ.
STRADLING, YOCCA, CARLSON & RAUTH
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660
(949) 725-4000
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This Amendment No. 1 amends Items 8 and 9 of the
Solicitation/Recommendation Statement on Schedule 14D-9 (as amended, the
"Schedule 14D-9") of SMARTFLEX SYSTEMS, INC., a Delaware corporation (the
"Company"), filed with the Securities and Exchange Commission on July 14, 1999,
relating to a tender offer by SSI Acquisition Corp., a Delaware corporation (the
"Purchaser"), a wholly-owned subsidiary of Saturn Electronics & Engineering,
Inc., a Michigan corporation ("Saturn"), for all of the outstanding shares of
Common Stock, $.0025 par value, of the Company. Unless otherwise stated herein,
the capitalized terms used but not defined herein shall have the same meaning as
set forth in the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) On July 20, 1999, the Company announced its earnings for the quarter
ended June 30, 1999. The Press Release dated July 20, 1999, is incorporated by
reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
19 Press Release issued by the Company on July 20, 1999.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
SMARTFLEX SYSTEMS, INC.
/s/ WILLIAM L. HEALEY
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Name: William L. Healey
Title: Chairman of the Board,
President
and Chief Executive Officer
Date: July 21, 1999
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
19 Press Release issued by the Company on July 20, 1999
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EXHIBIT 19
FOR IMMEDIATE RELEASE
CONTACTS:
JOHN HOHENER JULIE MYERS
SMARTFLEX SYSTEMS STAPLETON COMMUNICATIONS
VICE PRESIDENT, FINANCE (650) 470-4231
CHIEF FINANCIAL OFFICER
(714) 838-8737
SMARTFLEX REPORTS SECOND QUARTER RESULTS
Tustin, Calif. - July 20, 1999 -- Smartflex Systems, Inc. ("Smartflex")
(Nasdaq: SFLX) today announced net revenues of $30.3 million for the second
quarter ended June 30, 1999, an increase of 12 percent from the $27.0 million
reported in last year's comparable quarter. The net loss for the second quarter
of fiscal 1999, was $546,000 or $0.08 per share, compared to net income of
$387,000 or $0.06 per share for the comparable period in the prior year. Net
revenues for the first half of 1999 were $53.5 million compared to $64.0 million
in the first half of 1998. Net loss for the six months ended June 30, 1999 was
$5.4 million, or $0.84 per share compared to net income of $1.2 million, or
$0.19 for the same period in 1998. The 1999 first half results include a $3.8
million pre-tax charge related to a restructuring completed in the first quarter
of 1999.
The increase in revenues, as compared to the same period in the prior
year, was primarily due to incremental business generated from the recent
acquisitions of the company. Gross margin as a percent of revenues was 10.7
percent, compared to 11.0 percent in the same period in the prior year and 9.0
percent in the prior quarter. During the fourth quarter of 1998 and the first
quarter of 1999 the company made certain acquisitions which changed the
consolidated product mix and related margins. All of the company's business
entities contributed to results for the entire quarter.
On July 7,1999 Smartflex announced that it had entered into a definitive
agreement pursuant to which Saturn Electronics and Engineering, Inc would
acquire all of the outstanding shares of common stock of Smartflex. The
agreement, approved unanimously by Smartflex's Board of Directors, is a cash
tender offer of $10.50 per share. The directors and executive officers of
Smartflex have agreed to tender their shares. The tender offer commenced July
14, 1999 and is conditioned on a majority of the outstanding shares of Smartflex
being tendered as well as other customary conditions.
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Smartflex Systems, Inc., headquartered in Tustin, California, is a
leader in providing automated electronics manufacturing services. Smartflex
services optimize and accelerate product realization - the process from product
concept through volume manufacturing.
Smartflex's specialty manufacturing skills allow the company to help its
telecommunications, computer, and medical electronics customers meet their goals
of smaller packaging, reduced cost, and faster delivery to the marketplace.
Smartflex serves customers worldwide from its factories and technology centers
in Cebu, Philippines; Monterrey and Guadalajara, Mexico; Singapore; West Long
Branch, New Jersey; Methuen, Massachusetts; and Santa Clara, Fremont and Tustin,
California. For more information contact the company's website at
http://www.smartflex.com.
This release contains forward-looking statements, including each statement of
management's opinions, expectations, plans, and objectives for future operations
that involve risks and uncertainties. Actual results could differ materially
from these expectations as a result of various factors, and therefore we caution
investors against ascribing undue weight thereto. The factors include, but are
not limited to, the ability to effectively identify, investigate, conclude,
integrate and manage acquisitions or large-scale projects, to manage the
transition of manufacturing operations, qualification of manufacturing
processes, efficient utilization of manufacturing facilities and financial
resources, the ability to retain and attract qualified personnel, international
currency fluctuations, and future financial, economic, competitive and market
conditions and their potential direct or indirect effect, including
cancellations of orders included in backlog. These and other factors are also
discussed in Smartflex Systems' 10-K, 10-Q and other filings made previously or
from time to time with the Securities and Exchange Commission.
(Condensed Statements of Operations and Balance Sheets to follow)
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SMARTFLEX SYSTEMS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30 (unaudited) June 30 (unaudited)
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(Dollar amounts in thousands, except share data) 1999 1998 % Change 1999 1998 % Change
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<S> <C> <C> <C> <C> <C> <C>
Net revenues $30,339 $27,037 12 $53,491 $64,042 (17)
Cost of revenues 27,082 24,054 13 48,143 56,914 (15)
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Gross margin 3,257 2,983 9 5,348 7,128 (25)
Costs and Expenses:
Marketing and sales expense 687 886 (23) 1,844 1,816 2
General and administrative expense 3,178 1,886 69 6,032 3,967 52
Restructuring expense -- -- 3,847 --
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Operating (loss) income (608) 211 (6,375) 1,345
Interest income 174 221 (21) 489 484
Interest expense (342) (25) (652) (87)
Other expense (51) 171 210 98
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(Loss) income before income taxes (827) 578 (6,748) 1,840
Income tax (benefit) provision (281) 191 (1,348) 625
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Net (loss) income $ (546) $ 387 $(5,400) $1,215
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Net (loss) income per share: basic $ (0.08) $ 0.06 $ (0.84) $ 0.19
diluted $ (0.08) $ 0.06 $ (0.83) $ 0.19
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Shares used in computing net (loss)
income per share: basic 6,481 6,422 6,467 6,397
diluted 6,508 6,476 6,500 6,469
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</TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1999 December 31,
(Dollar amounts in thousands) (unaudited) 1998
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<S> <C> <C>
ASSETS
Cash and short-term investments $21,713 $27,356
Accounts receivable, net 14,969 11,209
Inventories 10,467 3,927
Other current assets 8,170 5,973
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Total current assets 55,319 48,465
Property and equipment, net 20,801 18,475
Goodwill, net 14,327 4,089
Other assets 1,167 1,262
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Total assets $91,614 $72,291
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $14,885 $ 7,050
Accrued liabilities 7,044 7,546
Current portion of other notes payable 4,523 --
Current portion of notes payable to bank 1,150 1,150
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Total current liabilities 27,602 15,746
Long-term portion of notes payable to bank 18,066 4,463
Other long-term liabilities 324 1,063
Total stockholders' equity 45,622 51,019
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Total liabilities $91,614 $72,291
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