SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K/A
AMENDMENT NO. 1
TO
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, 1995
TECH-SYM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 1-4371
(STATE OR OTHER JURISDICTION (COMMISSION FILE NO.)
OF INCORPORATION)
74-1509818
(IRS EMPLOYER IDENTIFICATION NO.)
10500 Westoffice Drive
Houston, Texas 77042
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(713) 785-7790
(REGISTRANT'S TELEPHONE NUMBER)
-1-
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective as of 00:00 a.m. on January 1, 1996, Continental
Electronics Corporation, a wholly-owned subsidiary of Tech-Sym Corporation
("CEC"), acquired all of the outstanding capital stock of TELEFUNKEN
Sendertechnik GmbH ("TFS") from Daimler-Benz Aerospace AG ("Dasa"). TFS, located
in Berlin, Germany, is in the business of designing and producing radio and
television broadcast transmitting equipment. TFS's customers include European
governments and commercial organizations, the Voice of America, Radio Free
Europe and other governments and organizations worldwide. CEC intends to
continue the existing business of TFS in conjunction with CEC's existing
business of designing and producing radio broadcast transmitter equipment.
The purchase price for the acquisition is 13,200,000 Deutsche
Marks, of which (i) 10,000,000 Deutsche Marks were paid by CEC to Dasa in
February 1996 and (ii) the remaining 3,200,000 Deutsche Marks are payable no
later than January 31, 1997, the unpaid balance of which bears interest at the
Frankfurt Interbank Offer Rate, as adjusted from time to time, plus one percent
(1%), payable quarterly within 15 days after the end of each calendar quarter.
As of December 31, 1995, the exchange rate between Deutsche Marks and U.S.
dollars was approximately 1.4315 Deutsche Marks to 1.0 U.S. dollar. The amount
of the consideration payable by CEC was determined by arms'-length negotiations
between CEC and Dasa. CEC financed the initial 10,000,000 Deutsche Mark payment
through bank borrowings from NationsBank of Texas, N.A. In connection with the
transaction, Dasa made a payment of 32.1 million Deutsche Marks to TFS
(approximately $22.2 million) which represented a contribution necessary to
maintain TFS's net equity at a specified amount as of December 31, 1995, as
required by an agreement between TFS and Dasa.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired. 1995 Annual
Report of Telefunken Sendertechnik GmbH, Berlin, Germany, including (i)
Statement of Income for the years ended December 31, 1995, 1994 and 1993,
(ii) Balance Sheet as of December 31, 1995 and 1994, (iii) Statement of
Cash Flows for the years ended December 31, 1995 and 1994, (iv) Notes to
Financial Statements and (v) Confirmation of KPMG Deutsche
Treuhand-Gesellschaft dated as of February 16, 1996.
(b) Pro forma financial information. Unaudited Pro Forma
Combined Financial Statements of Tech-Sym Corporation and Telefunken
Sendertechnik GmbH, including (i) Unaudited Pro Forma Combined Balance
Sheet as of December 31, 1995 and (ii) Unaudited Pro Forma Combined
Statement of Operations for the year ended December 31, 1995 and (iii)
Notes to Unaudited Pro Forma Combined Financial Statements.
(c) Exhibits.
*2.1 Stock Purchase Agreement, dated as of September 26,
1995, between Continental Electronics Corporation and
Daimler-Benz Aerospace AG
*2.2 Amendment Number 1 to Stock Purchase Agreement, dated
as of December 29, 1995, between Continental
Electronics Corporation and Daimler-Benz Aerospace AG
* Previously filed.
-2-
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.
TECH-SYM CORPORATION
By: /S/ WENDELL W. GAMEL
Name: Wendell W. Gamel
Title: Chairman and President
Date: March 15, 1996
-3-
<PAGE>
ITEM 7(A)
KPMG Deutsche Treuhand-Gesellschaft
1995 Annual Report
TELEFUNKEN Sendertechnik GmbH,
Berlin/Germany
<PAGE>
Contents
Statement of Income 1
Balance Sheet 2
Statement of Cash Flows 3
Notes to Financial Statements 4
Confirmation 12
<PAGE>
-1-
Statement of Income
(in thousands Deutschmarks)
For the Year Ended December 31,
----------------------------
1995 1994 1993
------ ------ -------
Sales 30,363 57,489 102,703
------ ------ -------
Costs and expenses:
Cost of Sales .............................. 39,179 57,366 87,304
Selling, general and administrative expenses 21,353 16,552 23,074
Company-sponsored product development ...... 8,634 5,404 5,074
Interest expense ........................... 336 213 160
Interest and other income - net ............ (5,861) (8,122) (8,541)
------ ------ -------
63,641 71,413 107,071
------ ------ -------
Net income before loss compensation (33,278) (13,924) (4,368)
------ ------ -------
Loss compensation ................. 32,112 13,033 5,178
------ ------ -------
Net income ........................ (1,166) (891) 810
------ ------ -------
The accompanying notes are an integral pit of these financial statements.
<PAGE>
-2-
Balance Sheet
(in thousands Deutschmarks)
December 31,
------------------
1995 1994
------- -------
Assets Current assets
Cash and cash equivalents .................... 21,220 29
Receivables - net ............................ 37,630 58,983
Inventories .................................. 14,624 6,359
------- -------
Total current assets ................ 73,474 65,371
------- -------
Plant and equipment - net .................... 1,547 2,518
Other assets, including intangibles........... 1,545 154
------- -------
Total assets ........................ 76,566 68,043
------- -------
Liabilities Current liabilities
Current maturities of
long-term debt .............................. 260 260
Accounts payable ............................ 1,352 2,987
Other accrued liabilities ................... 22,498 14,943
Other liabilities ........................... 7,479 4,183
------- -------
Total current liabilities 31,589 22,373
Long-term debt .............................. 780 1,040
Accrued liabilities (long-term) ............. 24,634 23,448
Other liabilities (long-term) ............... 810 1,263
------- -------
Total liabilities .................. 26,224 25,751
------- -------
Commitments and Contingencies
Capital Nominal capital .............................. 10,000 10,000
Additional paid-in capital ................... 1,205 1,205
Accumulated earnings ......................... 8,795 8,795
Accumulated loss through
adaptation to US-AGAPE ...................... (1,247) (81)
------- -------
Total capital ......................... 18,753 19,919
------- -------
Total liabilities and Total
Capital ............................... 76,566 68,043
The accompanying notes are an integral part of these financial statements.
<PAGE>
-3-
Statement of Cash Flows
(in thousands Deutschmarks
For the Year ended December 31,
-------------------------------
1995 1994
-------- ---------
Cash flows from operating activities:
Net income .................................... (33,278) (13,924)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization ........ 1,365 2,240
Change in operating assets and liabilities:
Receivables .......................... 21,353 659
Inventories .......................... (8,265) 7,844
Accounts payable ..................... (1,635) (381)
Other accrued liabilities ............ 7,555 (7,952)
Other ................................ 3,331 (1,926)
-------- ---------
Net cash used for operating activities ........ (9,574) (13,440)
-------- ---------
Cash flows from investing activities:
Capital expenditures ......................... (1,820) (338)
-------- ---------
Net cash used for investing activities ....... (1,820) (338)
-------- ---------
Cash flows from financing activities:
Loss compensation ........................... 32,112 13,033
Payments on long-term debt .................. (260) 0
Change in Accrued liabilities (long-term .... 1,186 1,279
Change in other liabilities (long-term) ..... (453) (520)
------ ------
Net cash provided by financing activity ...... 32,585 13,792
------ ------
Net increase in cash and equivalents ............... 21,191 14
Cash and equivalents at beginning of year .... 29 15
------ ------
Cash and equivalents at end of year .......... 21,220 29
------ ------
The accompanying notes are an integral part of these financial statements.
<PAGE>
-4-
Notes to Financial Statements
Note 1-Description of Business and Significant Accounting Policies
TELEFUNKEN Sendertechnik GmbH is a German limited liability company located at
10502 Berlin having a commercial registration number MRB 31290. The company
manufactures and sells terrestrial broadcasting products that utilize analog and
digital transmission techniques and related products. TELEFUNKEN, furthermore,
provides services related to products of the mentioned kind.
Effective as of 12:00 p.m. / 00:00 a.m. (Berlin time) on December 31,
1995/January 1, 1996 the shares of capital-stock of TELEFUNKEN have been
completely purchased by CONTINENTAL ELECTRONICS CORPORATION, Dallas, Texas,
being a subsidiary of TECH SYM CORPORATION, Houston, Texas.
Revenue Recognition: The Company recognizes revenue in accordance with the terms
of the related contracts, usually after accomplished delivery and satisfactory
product examination by purchases TELEFUNKEN does not utilize the percentage of
completion method. Therefore, there is no unbilled revenue among the Company's
assets.
Estimated losses on contracts and binding offers are provided for in hill when
they become apparent.
Inventories: Inventories are valued at the lower of cost or market. Cost is
determinated on the average cost method.
-5-
Depreciation and Amortization: Depreciation of plant and equipment is generally
provided by the degressive method over their estimated useful lives. Only the
depreciation of instruments for measurement and controlling purposes is provided
by the straight-line method, Major renewals and betterments are capitalized
while minor replacements, maintenance, and repairs which do not extend useful
lives are expensed. The cost and accumulated depreciation applicable to assets
retired or sold are removed from the respective accounts and the resultant gain
or loss is recognized at that time.
Research and Development: Until the end of 1994 We Company performed research
and development under company-sponsored programs and (to a little extend)
contracts with others. Since 1995 all research and development has been done by
the Company's engineers. With the exception of the order bound development costs
related to company-sponsored research and development for new products and major
product improvements are expensed as incurred.
Income Taxes: Daimler-Benz Aerospace AG, Munchen, (being TELEFUNKEN's holding
company up to the end of 1995) was obliged by a profit and loss pooling
agreement to receive its subsidiary's annual profits and compensate for its
losses. Therefore, TELEFUNKEN did not have to pay income taxes.
-6-
Note 2-
Receivables
Receivables are summarized as follows (in thousands Deutschmarks):
For the Year Ended December 31,
-------------------------------
1995 1994
------- -------
Germany ................. 3,367 2,899
Abroad .................. 1,239 2,422
Intercompany ............ 33,169 53,903
Less allowance for losses (145) (241)
------- -------
37,630 58,983
Note 3 - Inventories
Inventories are summarized as follows (in thousands Deutschmarks):
For the Year Ended December 31,
-------------------------------
1995 1994
------- -------
Raw materials 4,566 3,996
Work in progress 3,128 3,111
Semifinished goods 8,894 3,673
Finished goods 1,423 1,838
Less advance payments
received (3,387) (6,259)
------- -------
14,624 6,259
-7-
Note 4 The Components of plant and equipment are summarized as
follows(in thousands Deutschmarks):
Plant and Equipment
For the Year Ended December 31,
-------------------------------
1995 1994
------- -------
At cost:
Machinery and equipment 15,149 15,166
Less accumulated
depreciation 13,602 12,648
------- -------
1,547 2,518
The estimated lives amount from 2 to 10 years.
Note 5- (in thousands Deutschmarks):
Long-term Debt
For the Year Ended December 31,
-------------------------------
1995 1994
------- -------
Daimler-Benz AG Stuttgart 780 1,040
The loan granted by Daimler-Benz AG originally amounted to DM 1,300.
Aggregate maturities due after 1996 are DM 260 in 1997, 260 in 1998, and DM
260 in 1999.
-8-
Note 6- Income Taxes
Due to the profit and loss pooling agreement with Daimler-Benz Aerospace
AG, Munchen, TELEFUNKEN did not have to pay income taxes.
Deferred taxes have been calculated at an effective tax rare of 57%.
Deferred tax liabilities (assets) at
December 31, 1995 and December 31, 1994 are
comprised of the following (in thousands
Deutschmarks):
For the Year Ended December 31,
-------------------------------
1995 1994
------- -------
Plant and equipment (91) (165)
Accrued pension cost (3,641) (3,081)
Other accrued liabilities 2,007 1,644
------- -------
(1,725) (1,602)
Valuation allowance 1,725 1,602
------- -------
0 0
Due to the loss situation of the Company and the uncertainty of any future
profit expectations a 100% valuation allowance was recorded.
-9-
Note 7- Benefit Plans
The Company has a defined contribution retirement plan, covering most of
the employees. The plan is unfunded. The annual benefit payments were DM
374 for 1995 and DM 259 for 1994. The status of the plan was as follows (in
thousands Deutschmarks):
For the Year Ended December 31,
-------------------------------
1995 1994
------- -------
Accumulated benefit
obligation 19,994 18,986
------- -------
Projected benefit obligation 22,743 21,778
------- -------
Unrecognized net gain 884 107
------- -------
Unfunded accrued pension
cost, December, 31 23,627 21,885
The projected benefit obligation was developed under the assumption of a
discount rate of 7% in 1995 and 1994, and 7.5% in 1993.
The accrued liabilities (long-term) can be summarized as follows (in thousands
Deutschmarks):
For the Year Ended December 31,
-------------------------------
1995 1994
------- -------
Unfunded accrued pension cost 23,627 21,885
Jubilee liabilities 1,007 1,563
------- -------
24,634 23,448
-10-
Note 8- Commitments and Contingencies
Lease Commitments: The Company leases offices, stores, and facilities under
certain long-term agreements which expire at various dates to 2000,
Future minimum rental commitments under all noncancellable operating leases in
effect at December 31, 1995 total 1,274 as follows: 1996 l,5l5; and 1997-2000
123.
Other Financial Commitments: Apart from lease commitment there are other
financial commitments regarding several service contracts. The complete
obligations for the years from 1996 to 2000 amount to 1,629.
Litigation, Contingencies: The Company is involved neither in pending nor
threatened legal actions.
The company has no contingencies.
Note 9- Other Financial Information
Foreign sales as a percentage of total sales are summarized by geographic area
as follows:
For the Year Ended December 31,
-----------------------------------------
1995 1994 1993
------ ------ ------
Germany 77.1 % 67.2 % 67,8 %
Europe
(without Germany) 14.6 6.1 10.0
Asia 3.3 3.8 17.3
Africa 4.9 22.7 4.2
Other Areas 0.1 0.2 0.7
------ ------ ------
100.0% 100.0 % 100.0 %
-11-
Other accrued liabilities comprised the following (in
thousands Deutschmarks):
For the Year Ended December 31,
-------------------------------
1995 1994
------- -------
Product warranty and
related services 13,453 13,887
Restructuring costs 7,497 0
Accrued losses on contracts
and binding offers 196 0
Other 1,352 1,056
------- -------
22,498 14,943
-12-
Confirmation
This 1995 Annual Report is based upon the Company's financial statements
according to German-GAAP as at December 31, 1995 on which we gave an
unqualified audit opinion. The transformation to US-GAAP takes into account
all valuation differences recognized for SEC reporting by Daimler-Benz AG
Berlin,
February 16, 1996
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft
Dr. Kuhne Breidenbach
Wirtschaftsprufer Wirtschaftsprufer
<PAGE>
ITEM 7(B)
TECH-SYM CORPORATION AND TELEFUNKEN SENDERTECHNIK GMBH
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect to
the acquisition of TELEFUNKEN Sendertechnik GmbH ("TFS") by Continental
Electronics Corporation, a wholly-owned subsidiary of Tech-Sym Corporation
("Tech-Sym"), in a transaction to be accounted for as a purchase. The unaudited
pro forma balance sheet is based on the individual balance sheets of Tech-Sym
and TFS, and has been prepared to reflect the acquisition by Tech-Sym of TFS as
if the acquisition had occurred on December 31, 1995. The unaudited pro forma
statement of operations is based on the individual statements of operations of
Tech-Sym and TFS, and combines the results of operations of Tech-Sym and of TFS
(acquired by Tech-Sym as of January 1, 1996) for the year ended December 31,
1995 as if the acquisition occurred on January 1, 1995.
The pro forma results are not necessarily indicative of the actual results that
would have occurred if the acquisition had been made at the beginning of the
period presented. In addition, they are not intended to be a forecast of future
results and do not reflect any synergies that might be achieved from the
combined operations.
<PAGE>
UNAUDITED PRO-FORMA COMBINED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
As of December 31, 1995
----------------------------------------------------------------------
Historical
------------------------- Pro Forma
Tech-Sym Telefunken Adjustments Note 2 Combined
--------- ---------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents ...................... $ 20,715 $14,642 $ 22,157 (a) $ 57,514
Marketable securities .......................... 100 0 -- 100
Receivables - net .............................. 54,199 25,965 (22,157) (a) 58,007
Unbilled revenue ............................... 39,137 0 -- 39,137
Inventories .................................... 59,492 10,091 -- 69,583
Other .......................................... 4,675 0 -- 4,675
--------- ------- -------- ---------
Total current assets ........................ 178,318 50,698 0 229,016
--------- ------- -------- ---------
Plant and equipment - net ............................ 42,469 1,067 (1,067) (b) 42,469
Long-term receivables - net .......................... 10,567 0 -- 10,567
Other assets, including intangibles .................. 33,672 1,066 (1,066) (b) 33,672
--------- ------- -------- ---------
Total assets ................................ $ 265,026 $52,831 ($ 2,133) $ 315,724
========= ======= ======== =========
Current liabilities:
Notes payable .................................. $ 24,237 $ 0 $ 2,208 (c) $ 26,445
Current maturities of long-term debt ........... 4,861 179 -- 5,040
Accounts payable ............................... 14,480 933 -- 15,413
Billings in excess of revenues ................. 10,313 0 -- 10,313
Taxes on income ................................ 1,366 0 -- 1,366
Other accrued liabilities ...................... 19,304 20,685 -- 39,989
--------- ------- -------- ---------
Total current liabilities ................... 74,561 21,797 2,208 98,566
Long-term debt ....................................... 29,522 538 6,900 (c) 36,960
Other liabilities and deferred credits ............... 10,925 17,556 1,699 (b) 30,180
--------- ------- -------- ---------
Total liabilities ........................... 115,008 39,891 10,807 165,706
--------- ------- -------- ---------
Shareholders' investment:
Common stock ................................... 786 0 -- 786
Nominal capital ................................ 0 6,900 (6,900) (d) 0
Additional capital ............................. 38,486 831 (831) (d) 38,486
Accumulated earnings ........................... 122,855 5,209 (5,209) (a),(d) 122,855
Cumulative translation adjustments ............. (1,095) 0 -- (1,095)
Common stock held in treasury .................. (11,014) 0 -- (11,014)
--------- ------- -------- ---------
Total shareholders' investment .............. 150,018 12,940 (12,940) 150,018
--------- ------- -------- ---------
Total liabilities and shareholders'
investment ................................. $ 265,026 $52,831 ($ 2,133) $ 315,724
========= ======= ======== =========
</TABLE>
See accompanying notes to unaudited pro forma combined
financial statements.
<PAGE>
UNAUDITED PRO-FORMA COMBINED STATEMENT OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------------------------------------------
Historical
------------------------- Pro Forma
Tech-Sym Telefunken Adjustments Note 3 Combined
--------- ---------- ----------- ------ ---------
<S> <C> <C> <C> <C> <C>
Sales ....................................................... $ 246,487 $ 20,950 -- $ 267,437
--------- -------- -------- ---------
Costs and expenses:
Cost of sales ......................................... 160,509 27,034 -- 187,543
Selling, general and administrative expenses .......... 52,103 14,734 $ (1,055) (a) 65,782
Company-sponsored product development ................. 15,187 5,957 -- 21,144
Interest expense ...................................... 3,840 232 608 (b) 4,680
Interest and other income, net ........................ (4,087) (4,044) -- (8,131)
--------- -------- -------- ---------
227,552 43,913 (447) 271,018
--------- -------- -------- ---------
Income (loss) before taxes ......................... 18,935 (22,963) 447 (3,581)
Provision for income taxes .................................. 5,900 0 0 (c) 5,900
Loss compensation ........................................... 0 (22,157) 22,157 (d) 0
--------- -------- -------- ---------
Net income (loss) .................................. $ 13,035 $ (806) $(21,703) $ (9,481)
========= ======== ======== =========
Earnings (loss) per common share ............................ $ 2.00 $ (1.45)
========= =========
Weighted average shares outstanding ......................... 6,552 6,552
========= =========
</TABLE>
See accompanying notes to unaudited pro forma combined financial
statements.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The Unaudited Pro Forma Combined Financial Statements include the Unaudited Pro
Forma Combined Balance Sheet at December 31, 1995 and the Unaudited Pro Forma
Combined Statement of Operations for the year ended December 31, 1995 of
Tech-Sym Corporation and its subsidiaries ("Tech-Sym") and TELEFUNKEN
Sendertechnik GmbH ("TFS").
Note 2 - Pro Forma Adjustments to the Combined Balance Sheet
The Unaudited Pro Forma Combined Balance Sheet gives effect to the
acquisition of TFS by a subsidiary of Tech-Sym by combining the respective
balance sheets of Tech-Sym and TFS at December 31, 1995 on a purchase basis
for an aggregate price of $9,221,000. Pro forma adjustments were made to
reflect:
(a) The receipt of cash on the intercompany receivable related to the loss
subsidy provided to TFS by its former parent pursuant to an intercompany
agreement that required such former parent to make payments to TFS to
maintain TFS's net equity at a certain level as of December 31, 1995. This
agreement was terminated in connection with the acquisition;
(b) The reduction of non-current assets and recording of deferred credit to
reflect the excess of the fair value of net assets acquired over the
acquisition cost;
(c) $2,235,000 note payable no later than January 1, 1997, with interest at
Frankfurt Interbank Offer Rate plus 1%, and $6,986,000, long-term note
payable maturing on September 30, 2000, with interest at Frankfurt
Interbank Offer Rate, issued in connection with the acquisition;
(d) The elimination of the shareholders' investment accounts of TFS.
Note 3 - Pro Forma Adjustments to the Combined Statement of Operations
The Unaudited Pro Forma Combined Statement of Operations gives effect
to the acquisition of TFS by a subsidiary of Tech-Sym by combining the
respective statements of operations of Tech-Sym and TFS for the year ended
December 31, 1995. Pro forma adjustments were made to reflect:
(a) The elimination of annual depreciation on acquired property and equipment
written-off as a result of the excess of the fair value of net assets
acquired over the acquisition cost, and amortization of the excess of the
fair value of the net assets acquired over the acquisition cost on a
straight-line basis over 15 years;
(b) Annual interest charges on notes issued in connection with the acquisition;
(c) The income tax benefit derived from TFS's 1995 net loss at the German
statutory rate of 45% offset by a valuation allowance on the entire
deferred tax asset resulting from such benefit;
(d) Elimination of the loss subsidy provided to TFS by its former parent
pursuant to an intercompany agreement that required such former parent to
make payments to TFS to maintain TFS's net equity at a specified level as
of December 31, 1995. This agreement was terminated in connection with the
acquisition;
The historical results of operations for TFS for the year ended December
31, 1995, were significantly affected by costs and expenses relating to a
restructuring undertaken by TFS at the request of its former parent company and
severance and redundancy costs paid or reserved for by TFS which were required
by Tech-Sym before the transaction would be consummated. Pursuant to the
intercompany agreement between TFS and its former parent company, the former
parent company was required to make a payment of approximtely $22,157,000 to TFS
to maintain TFS's net equity at a specified level as of December 31, 1995. This
agreement was terminated following the closing of the acquisition.
