<PAGE> 1
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 19, 1997
ROSS TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-27016 74-2507960
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
5316 Highway 290 West, First Floor, Austin, Texas 78735
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (512) 436-2000
<PAGE> 2
ITEM 5. OTHER EVENTS.
On September 19, 1997, Ross Technology, Inc. (the "Registrant") sent a
letter to its stockholders. A copy of the September 19, 1997 letter to
stockholders, including the Registrant's September 10, 1997 press release
included with the letter, is attached hereto as Exhibit 99.1 and incorporated
herein by reference.
On September 22, 1997, the Registrant issued a press release, a copy
of which is attached hereto as Exhibit 99.2 and incorporated herein by
reference.
ITEM 7. EXHIBITS.
99.1 Letter to stockholders dated September 19, 1997, including
copy of September 10, 1997 press release.
99.2 Press Release dated September 22, 1997.
-1-
<PAGE> 3
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.
ROSS TECHNOLOGY, INC.
Date: September 22, 1997 By: /s/ FRANCIS S. WEBSTER III
-----------------------------------
Francis S. (Kit) Webster III
Secretary
-2-
<PAGE> 4
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
99.1 Letter to stockholders dated September 19, 1997, including copy of
September 10, 1997 press release.
99.2 Press Release dated September 22, 1997.
<PAGE> 1
EXHIBIT 99.1
[ROSS TECHNOLOGY, INC. LETTERHEAD]
Fellow Stockholders:
I am pleased to announce that ROSS Technology has entered into a letter
of intent with Fujitsu Limited, its majority stockholder, pursuant to which
Fujitsu will acquire 500,000 shares of a new Series B Convertible Preferred
Stock of the Company in exchange for $50 million. The proceeds of this sale
will be used to retire $50 million of the Company's bank debt previously
guaranteed by Fujitsu. The closing of the transaction is expected to occur on
or before September 29, 1997, subject to agreement on definitive documentation
and the satisfaction of closing conditions to be agreed to by the parties.
Fujitsu also plans to continue to guarantee up to $20 million of bank debt for
the Company following the closing.
A copy of the Company's September 10, 1997 press release, which
includes the letter of intent and associated term sheet, is enclosed. I
encourage you to read all of these documents, which provide important
information about the terms of the Series B Convertible Preferred Stock and
this significant transaction.
The Company's Board of Directors has approved this transaction in the
strong belief that it should provide major benefits to the Company and its
stockholders, including the following:
o It will solidify the Company's balance sheet by significantly
reducing bank debt and providing a substantial increase in the
Company's capital.
o It allows the Company to be in compliance upon closing with the
Nasdaq's net tangible assets test and thus to avoid delisting
of the Company's Common Stock from the Nasdaq National Market.
o It eliminated some of the principal uncertainties regarding the
Company's ability to fund its three year turnaround plan and
thereby enhances our ability to attract and retain customers
and key employees.
o By retiring bank debt, it will significantly reduce the
Company's interest expense in future periods.
The letter of intent was approved by a Special Committee of the
Company's Board of Directors comprised of Fred T. May, the Company's Chairman
of the Board, who is not associated in any way with Fujitsu. In this
transaction, the Special Committee has had independent legal and financial
advice and has received an opinion from Robertson, Stephens & Company LLC,
investment bankers, to the effect that, as of September 9, 1997, the
recapitalization transaction described in the letter of intent is fair both to
the Company and its stockholders (other than Fujitsu) from a financial point of
view.
<PAGE> 2
I am also pleased to inform you that the Nasdaq Stock Market has agreed
to continue to list the Company's common stock on its National Market, provided
that the transaction with Fujitsu is completed on or before September 30, 1997
and the Company files a pro forma balance sheet with the Securities and
Exchange Commission by October 3, 1997 which shows compliance with the National
Market's net tangible assets requirement.
I would like to take this opportunity to thank you for your patience
and continued support of the Company. While there is still much work to be
done, I am excited about the Company's future prospects.
Sincerely,
/s/ JACK W. SIMPSON
Jack W. Simpson, Sr.
President and Chief Executive Officer
<PAGE> 3
[ROSS TECHNOLOGY, INC. LETTERHEAD]
Company Contact: Company Information:
F.S. (Kit) Webster, III http://www.ross.com
Chief Financial Officer 800/ROSS-YES
(512) 436-2578 Int'l: 512/349-3108
FAX (512) 892-3402
E-Mail: [email protected]
ROSS Technology Recapitalization Letter of Intent Signed
AUSTIN, Texas, September 10, 1997 -- ROSS Technology, Inc. (Nasdaq: RTEC)
("ROSS" or the "Company") announced today that it has entered into a Letter of
Intent with its majority shareholder, Fujitsu Limited ("Fujitsu"), pursuant to
which Fujitsu has agreed to purchase $50 million of a new Series B Convertible
Preferred Stock to be issued by ROSS ("Preferred Stock"). The proceeds of the
sale of the Preferred Stock will be used to retire $50 million of principal
amount of ROSS' bank debt previously guaranteed by Fujitsu. Following the
closing of the transaction, ROSS' maximum aggregate bank debt guaranteed by
Fujitsu will be $20 million.
The text of the Letter of Intent and associated Term Sheet are attached to
this release.
The Letter of Intent contemplates that the closing of the sale of the
Preferred Stock and the retirement of the $50 million of existing ROSS debt
will occur on or before September 29, 1997.
(more)
<PAGE> 4
RTEC/Letter of Intent
Page 2
Closing is contingent upon several conditions, including:
1. Agreement between ROSS and Fujitsu on the terms and
conditions of definitive agreements for the transaction.
2. Approval of the transaction and the definitive agreements
by the ROSS Board of Directors and the Special Committee of the
ROSS Board of Directors, and receipt of any required governmental
or other approvals.
3. Receipt by the Special Committee of an opinion from a
reputable investment banking firm that the sale of the Preferred
Stock is fair to ROSS from a financial point of view.
4. Confirmation to the parties' reasonable satisfaction that
ROSS' Common Stock will continue to trade on the Nasdaq National
Market after the closing.
The principal terms of the Preferred Stock will include:
1. The Preferred Stock may be converted into Common Stock at
any time. The number of Common shares into which the Preferred
Stock may be converted, except when a Special Conversion Condition
applies, will be the liquidation preference per share ($100.00)
divided by the average of the closing prices of the Common Stock on
the five trading days immediately prior to the date of conversion
(the "Market Price"). The Common Stock issuable upon conversion is
eligible for registration at the Company's expense under an existing
Shareholders Agreement.
(more)
<PAGE> 5
RTEC/Letter of Intent
Page 3
2. There are two Special Conversion Conditions: (1) For two
years from the date of closing, the number of shares of Common Stock
into which the Preferred Stock may be converted will be the
liquidation preference per share ($100.00) divided by $2.50. (2) If
ROSS declares bankruptcy, or if ROSS requests future additional
funding or credit support from Fujitsu, subject to certain limited
exceptions set forth in the Term Sheet, the number of shares of
Common Stock into which the Preferred Stock may be converted will be
the liquidation preference per share ($100.00) divided by the lower
of the Market Price or $2.00 (but in no event less than
$1.00).
3. The Preferred Stock carries no stated dividend but will
participate pro rata in any dividends on the Common Stock on an "as
converted" basis. The Preferred Stock has no voting rights for
directors but may vote as a class on certain matters as set forth in
the Term Sheet.
4. No Nasdaq listing or trading market is planned for the
Preferred Stock.
(more)
<PAGE> 6
RTEC/Letter of Intent
Page 4
Jack W. Simpson, Sr., ROSS' President and Chief Executive Officer stated
that, "We are very pleased that a plan has been developed to achieve a sound
balance sheet, and we continue to recognize the strong support that Fujitsu has
shown to ROSS. Management has felt that a strong balance sheet and continued
listing of the Company's stock on the Nasdaq National Market are two of the
requirements for a successful turnaround of the Company. We will attend a
hearing at Nasdaq on the listing question on September 11 and are hopeful that
the outcome will be positive. We will then intensify our focus on the other
activities that have previously been identified for a successful turnaround of
ROSS."
F.S. (Kit) Webster III, Chief Financial Officer of the Company, stated
that avoidance of the second Special Conversion Condition was critically
dependent on the Company's ability to achieve positive cash flow equal to or in
excess of that set forth in its internal business plans. He further stated
that the achievement of such cash flows is not assured, and that the Company's
internal business plans were predicated upon several conditions, primarily: 1)
Fujitsu's continued provision of its portion of the funding related to the
Company's 64-bit Viper microprocessor development project pursuant to the
existing Joint Development Agreement between the Company and Fujitsu. 2) An
increase in revenue focused on upgrade sales. 3) The improvement of gross
profit margins primarily through control of costs and the successful
introduction of the Company's 250 MHz "Colorado 5" microprocessor. Mr. Webster
noted that the Company and Fujitsu are currently discussing the final
specifications for the product to be developed under the Joint Development
Agreement. Fujitsu's funding obligations and rights to the intellectual
property under the Agreement could be affected if the parties ultimately fail
to agree on final specifications.
(more)
<PAGE> 7
RTEC/Letter of Intent
Page 5
Text of Letter of Intent:
[ROSS TECHNOLOGY, INC. LETTERHEAD]
September 10, 1997
Mr. Takesi Maruyama
Executive Vice President
FUJITSU LIMITED
6-1 Marunouchi 1-chome
Chiyoda-ku
Tokyo 100, Japan
Dear Mr. Maruyama:
This letter is to confirm our mutual understandings regarding a
recapitalization (the "Recapitalization") of ROSS Technology, Inc., a Delaware
corporation ("ROSS"), consisting of the purchase by Fujitsu of $50 million
stated value (500,000 shares) of a new series of preferred stock of ROSS, to be
called "Series B Convertible Preferred Stock" (the "Series B Preferred Stock"),
in consideration of the repayment by Fujitsu of $50 million of ROSS' debt to The
Dai-Ichi Kangyo Bank, Limited ("DKB"), which repayment would be accompanied by
a simultaneous reduction of the aggregate Fujitsu loan guarantee to $20
million. Subject to the foregoing, our understanding is as follows:
1. Terms of Series B Preferred Stock: The principal terms of the Series B
Preferred Stock shall be as set forth on Exhibit A hereto.
(more)
<PAGE> 8
RTEC/Letter of Intent
Page 6
2. Definitive Documents. This letter is intended to set forth the
principal terms and conditions of the proposed transactions, but is not
intended to be legally binding on the parties. The parties' legal obligations
shall be set forth in a definitive Stock Purchase Agreement and a Certificate
of Designation containing the terms of Series B Preferred Stock. Execution of
such definitive documentation by the parties shall be subject (a) to the
approval of this transaction on behalf of ROSS by its Board of Directors upon
recommendation by a committee of the Board of Directors consisting solely of
persons not affiliated with Fujitsu (the "Special Committee") and (b) to the
receipt by the Special Committee of an opinion from a reputable investment
banking firm that the transactions described hereby are fair to ROSS from a
financial point of view.
3. Closing. Subject to the receipt of any required governmental or other
approvals and the satisfaction or waiver of other closing conditions in the
Stock Purchase Agreement, the closing of Fujitsu's purchase of the Series B
Preferred Stock shall occur on or before September 29, 1997.
4. Documents and Expenses. Fujitsu shall prepare the Stock Purchase
Agreement, the Certificate of Designation and any other required documentation,
subject to review by the Special Committee and its counsel. Each party shall
use good faith efforts to finalize the documentation and close the transaction
as soon as practicable. Each party shall be responsible for its own legal and
other expenses in connection with the negotiations and all documentation and
filings required with respect to this transaction.
(more)
<PAGE> 9
RTEC/Letter of Intent
Page 7
If the foregoing is in accordance with your understanding, please return a
signed copy of this letter to the undersigned.
Very truly yours,
ROSS TECHNOLOGY, INC.
By: /s/ Fred T. May
---------------------------
Fred T. May
Chairman of the Board and
Chairman of the Special Committee
ACCEPTED AND AGREED TO:
FUJITSU LIMITED
By: /s/ T. Maruyama
------------------------
Name: Takesi Maruyama
------------------------
Title: Executive Vice President
------------------------
(more)
<PAGE> 10
RTEC/Letter of Intent
Page 8
EXHIBIT A
Term Sheet for Series B
Convertible Preferred Stock
of
ROSS Technology, Inc.
<TABLE>
<S> <C>
Shares to be Issued: $50 million stated value (500,000 shares) of a new series of
preferred stock, to be called "Series B Convertible Preferred
Stock" (the "Series B Preferred Stock").
Purchase Price: $100 per share ($50 million in the aggregate), payable by
retirement of existing ROSS debt to DKB.
Closing Date: On or before September 29, 1997 (the "Closing Date"), subject
to the receipt of any required approvals and the satisfaction or
waiver of other closing conditions.
Liquidation Preference: $100 per share.
Dividends: The Series B Preferred Stock will participate pari passu on an
"as converted" basis in any dividends declared and paid on the
ROSS Common Stock (the "Common Stock").
Use of Proceeds: Proceeds of Series B Preferred Stock to retire $50 million
principal amount of existing ROSS debt to DKB.
</TABLE>
(more)
<PAGE> 11
RTEC/Letter of Intent
Page 9
<TABLE>
<S> <C>
Conversion: The Series B Preferred Stock shall be convertible
into Common Stock at any time. Except when a Special
Conversion Condition applies, the number of shares of
Common Stock into which each share of Series B
Preferred Stock may be converted shall be determined
by dividing the liquidation preference per share by
the average of the closing prices of a share of
Common Stock for the five trading days immediately
prior to the date of conversion (the "Market Price").
Special Conversion 1. Until the second anniversary of the Closing Date, the
Conditions: number of shares of Common Stock into which each share
of Series B Preferred Stock may be converted shall be
determined by dividing the liquidation preference per
share by $2.50.
2. Notwithstanding Special Conversion Condition Number
1, in the event (i) of ROSS's bankruptcy, or (ii) for
a period of ninety (90) days after ROSS requests
additional funding or credit support from Fujitsu
(including any increase in Fujitsu's guarantee of ROSS
debt or other obligations but excluding payments in
the ordinary course of business or otherwise mutually
agreed), which request is (a) made with respect to
ROSS' fiscal year 1998 and is in excess of the funding
requirements set forth in ROSS' financial plan for the
fiscal year 1998 as previously provided to Fujitsu or
(b) made for any reason with respect to any fiscal
period after ROSS' fiscal year 1998 (a "Capital
Deficit"), the number of shares of Common Stock into
which each share of Series B Preferred Stock may be
converted shall be determined by dividing the
liquidation preference per share by the lower of the
Market Price or $2.00 (but in no event less than
$1.00).
</TABLE>
(more)
<PAGE> 12
RTEC/Letter of Intent
Page 10
<TABLE>
<S> <C>
Voting Rights: No voting in elections for directors. Separate class
vote upon (i) creation of parity and senior stock,
(ii) amendments to the Certificate of Incorporation
which adversely affect the rights, preferences or
privileges of the Series B Preferred Stock, (iii)
mergers, sales of substantially all assets and the
like, and (iv) other customary preferred stock
protective voting provisions to be negotiated.
Registration Rights: Shares of Common Stock into which shares of the Series B
Preferred Stock are converted shall have the benefits
of the registration rights provided for in the
existing Shareholders Agreement among ROSS, Fujitsu,
Sun Microsystems, Inc. and Mr. Roger Ross. No
registration rights shall apply to the Series B
Preferred Stock.
Registration of Series B The offering of Series B Preferred Stock to Fujitsu is
Offering: anticipated to be exempt from registration and qualification
requirements under federal and state securities laws and
accordingly no registration or qualification is expected.
</TABLE>
(more)
<PAGE> 13
RTEC/Letter of Intent
Page 11
<TABLE>
<S> <C>
Transferability: The shares of Series B Preferred Stock will be freely
transferable, subject to applicable limitations under federal
and state securities laws. No Nasdaq listing or trading market
is planned for the Series B Preferred Stock.
Closing Conditions: In addition to the conditions described in the foregoing letter,
the Stock Purchase Agreement will contain, among other
things, customary representations and warranties of Fujitsu
and ROSS as shall be negotiated and customary conditions to
closing as well as the condition that the parties are able to
confirm to their reasonable satisfaction that the Common
Stock of ROSS will continue to trade on the Nasdaq National
Market after the closing.
</TABLE>
# # # # #
<PAGE> 1
EXHIBIT 99.2
[ROSS TECHNOLOGY, INC. LETTERHEAD]
ROSS TECHNOLOGY CONDITIONALLY APPROVED
FOR CONTINUED LISTING ON NASDAQ
AUSTIN, TEXAS, SEPTEMBER 22, 1997 -- ROSS Technology, Inc. (Nasdaq:
RTEC) ("ROSS" or the "Company") announced today that, following a hearing held
between the Company and representatives of the Nasdaq Stock Market ("Nasdaq"),
the Company has received notification that its Common Stock will remain listed
on the Nasdaq National Market, subject to the satisfaction of certain
conditions, including the following:
1. The proposed recapitalization transaction with Fujitsu Limited
("Fujitsu"), the Company's majority stockholder, announced on
September 10, 1997 (the Recapitalization"), be completed on or
prior to September 30, 1997.
2. The Company make a public filing with the Securities and Exchange
Commission and Nasdaq on or before October 3, 1997, reporting the
closing of the Recapitalization and including a pro forma August
31, 1997 balance sheet showing that after the Recapitalization the
Company is in compliance with Nasdaq's net tangible assets
requirement for National Market companies.
Jack Simpson, the Company's President and Chief Executive Officer,
stated that, "The recapitalization of ROSS and its continued listing on Nasdaq
will set the stage for the Company to continue its turnaround plan."
--more--
<PAGE> 2
RTEC/Nasdaq
Page 2
F.S. (Kit) Webster III, the Company's Chief Financial Officer, noted
that ROSS and Fujitsu are in the process of finalizing definitive agreements
with respect to the Recapitalization and that, based on the current positions
of the parties, these agreements would condition the closing of the
Recapitalization, among other things, on the resolution of issues between ROSS
and Fujitsu regarding materials previously supplied by Fujitsu, and on
agreement between ROSS and Fujitsu on the essential terms of a wafer supply
agreement covering ROSS' purchase of silicon wafers and die from Fujitsu. At
the present time, the Company does not know whether it will be able to satisfy
all of the currently contemplated conditions to closing and complete the
Recapitalization by September 30, 1997.
ROSS OVERVIEW
ROSS Technology, founded in 1988, is a majority-owned subsidiary of
Fujitsu Limited. A minority position in ROSS is held by Sun Microsystems, Inc.
As of June 30, 1997, the Company's outstanding Common Stock was held 60 percent
by Fujitsu, 5 percent by Sun, and 35 percent by employees and the public. The
Company's objective is to produce extremely high SPARC performance in a very
compact space, leading the industry in delivering the most SPARC computing
power per cubic inch. ROSS is one of the industry's most prominent suppliers of
SPARC microprocessors and SPARC system products to both the OEM and end-user
markets.
# # #
NOTE TO EDITORS
ROSS and the ROSS logo are registered trademarks of ROSS Technology, Inc.
