-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D9iId/bO3aYA17rmI5cg3aMkuBox7M3j55mjVtoI0TfcRMS9npwQGlAbcaNPaF4o oLolmmfc2sWPYqm7dOCuPw== 0001157523-07-009130.txt : 20070912 0001157523-07-009130.hdr.sgml : 20070912 20070912161514 ACCESSION NUMBER: 0001157523-07-009130 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070906 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070912 DATE AS OF CHANGE: 20070912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNTAX-BRILLIAN CORP CENTRAL INDEX KEY: 0001232229 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 050567906 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50289 FILM NUMBER: 071113437 BUSINESS ADDRESS: STREET 1: 1600 NORTH DESERT DRIVE CITY: TEMPE STATE: AZ ZIP: 85281-1230 BUSINESS PHONE: 6023898888 MAIL ADDRESS: STREET 1: 1600 NORTH DESERT DRIVE CITY: TEMPE STATE: AZ ZIP: 85281-1230 FORMER COMPANY: FORMER CONFORMED NAME: BRILLIAN CORP DATE OF NAME CHANGE: 20030512 8-K 1 a5491333.txt SYNTAX-BRILLIAN CORP. 8-K UNITED STATES 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 September 6, 2007 --------------------------------------------------- Date of Report (Date of earliest event reported) Syntax-Brillian Corporation --------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 000-50289 05-0567906 - ------------------------------ ------------------------ ------------------------ (State or Other (Commission File Number) (IRS Employer Jurisdiction of Incorporation) Identification No.) 1600 N. Desert Drive Tempe, Arizona 85281 --------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (602) 389-8888 --------------------------------------------------- (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. The registrant is furnishing information pursuant to Item 2.02 in connection with the disclosure of information, in the form of the textual information from a press release released on September 12, 2007. The information in this Item 2.02 and in Exhibit 99.1 to this Report on Form 8-K is furnished pursuant to Item 2.02 and shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. The registrant does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in the registrant's expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based. The text included with this Item 2.02 is available on the registrant's website located at www.syntaxbrillian.com, although the registrant reserves the right to discontinue that availability at any time. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers On September 12, 2007, Syntax-Brillian Corporation announced the resignation of Wayne A. Pratt, Chief Financial Officer, effective September 30, 2007. A copy of the press release announcing Mr. Pratt's resignation is filed herewith as Exhibit 99.2. Mr. Pratt informed the Board of Directors of his decision to resign on September 6, 2007. Item 9.01. Financial Statements and Exhibits. (a) Financial Statements of Business Acquired. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Shell Company Transactions. Not applicable. (d) Exhibits. Exhibit Number ------ 99.1 Press release from Syntax-Brillian Corporation, dated September 12, 2007, titled "Syntax-Brillian Corporation Reports Fourth Quarter and Full Year Financial Results" 99.2 Press release from Syntax-Brillian Corporation, dated September 12, 2007, titled "Syntax-Brillian Announces Departure of Chief Financial Officer" 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. SYNTAX-BRILLIAN CORPORATION Date: September 12, 2007 By: /s/ Wayne A. Pratt ---------------------------------- Wayne A. Pratt Executive Vice President and Chief Financial Officer EXHIBIT INDEX 99.1 Press release from Syntax-Brillian Corporation, dated September 12, 2007, titled "Syntax-Brillian Corporation Reports Fourth Quarter and Full Year Financial Results" 99.2 Press release from Syntax-Brillian Corporation, dated September 12, 2007, titled "Syntax-Brillian Announces Departure of Chief Financial Officer" EX-99.1 2 a5491333ex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 Syntax Brillian Corporation Reports Fourth-Quarter and Full Year Financial Results Record Revenue, Increased Gross Margins, and a Swing to Profitability Are among the Milestones Achieved During Fiscal 2007 TEMPE, Ariz.--(BUSINESS WIRE)--Sept. 12, 2007--Syntax-Brillian Corporation (Nasdaq:BRLC), a leading designer, developer, and distributor of LCD and LCoS(TM) HDTVs and digital imaging products, today announced financial results for its fiscal 2007 fourth quarter and full year ended June 30, 2007. For the quarter ended June 30, 2007, Syntax-Brillian reported revenue of $205.3 million, up 243% from revenue of $59.8 million in the year-ago quarter. Full year revenue was $697.6 million, up 261% from revenue of $193.0 million for the year ended June 30, 2006. Net income in accordance with U.S. generally accepted accounting principles, or GAAP, for the quarter was $8.4 million compared with a net loss of $5.5 million for the fourth quarter of fiscal 2006. GAAP net income for the year ended June 30, 2007 was $29.8 million compared with a net loss of $18.9 million for the previous year. GAAP diluted net income per share was $0.11 for the fourth quarter of fiscal 2007 compared with a diluted net loss per share of $0.11 for the fourth quarter of fiscal 2006. Full year diluted net income per share was $0.48 compared with a diluted net loss per share of $0.46 for the fiscal year ended June 30, 2006. Adjusted EBITDA (as discussed below) for the fourth quarter of fiscal 2007 was $26.3 million compared with negative $580,000 for the fourth quarter of fiscal 2006. Adjusted EBITDA for the year ended June 30, 2007 was $75.6 million compared with negative $131,000 for the prior year. "We are extremely pleased with the company's performance for fiscal 2007," said Vincent F. Sollitto, Jr., Chairman and CEO of Syntax-Brillian. "The Olevia brand enjoys an outstanding reputation in performance and quality, and demand continues to exceed our sourcing capabilities. In addition, the response to the Vivitar founding sponsorship at the O2, an entertainment complex near the financial district in London, promises to increase demand and profitability of our digital camera products, especially in Europe. Unit shipments in the fourth-quarter exceeded our expectations as we experienced strong sell-through in our U.S. channels, aided in part by new retail partners as well as continued acceptance of the Olevia brand by consumers." Consolidated gross margins of 20.2% for the quarter ended June 30, 2007 represented an 800 basis point improvement from the fourth quarter of fiscal 2006. The gross margin improvement from the fiscal 2006 fourth quarter was a result of improvements in LCD gross margins from 18.6% in the June 2006 quarter to 24.1% in the June 2007 quarter as well as an overall increase in the amount of LCD revenue. In conjunction with its year-end closing, the Company completed its control assessment as required under section 404 of the Sarbanes-Oxley Act. In doing so two items were identified and revised on a year-to-date basis during the fourth quarter because their impact on net income for each of the quarters during 2007 was not material in total. We determined that our methodology to estimate warranty accruals did not adequately reflect information that had recently become available to better estimate the possible future exposure for warranty costs related to units which had already been sold. Using this newly available information resulted in the reversal of approximately $7.4 million of warranty expense which had been recorded in cost of sales through the third quarter of fiscal 2007. This accounted for approximately 360 basis points of improvement in our fourth quarter margins that may not be expected to recur in the future. This reduction in our warranty accrual was the result of lower-than-anticipated warranty claims, particularly in our national retail channels, where lower returns and warranty claims reflect, we believe, the ongoing improvement in the quality of our products. In addition, we also determined that the tax impact of dividends and accretion of discount on redeemable, convertible preferred stock, which are reported as interest expense under GAAP, cannot be treated as deductible in our income tax provision which resulted in approximately $5.9 million of income tax that should have been recorded through the third quarter of 2007 being recorded in the fourth quarter. This incremental income tax expense will not recur in future periods because at June 30, 2007 the redeemable, convertible preferred stock had all been redeemed. The increase in income tax expense, coupled with the decrease in warranty expense when taken on a net-of-tax basis, had an immaterial impact on the reported net income of prior quarters. Additionally, Syntax-Brillian completed its acquisition of Vivitar Corporation on November 21, 2006. Revenue for Vivitar for the three and twelve months ended June 30, 2007 was $14.6 million and $41.4 million, respectively. The merger of Syntax and Brillian was completed on November 30, 2005. Accordingly, the results of operations for the fiscal year ended June 30, 2006 include only the operations of Syntax prior to the merger. Syntax-Brillian ended the June 30, 2007 quarter with cash, cash equivalents, and short-term investments of $28.7 million; working capital of $238.6 million; and stockholders' equity of $315.5 million. At June 30, 2007, Syntax-Brillian had $78.1 million outstanding under its revolving credit lines. At June 30, 2007, accounts receivable and due from factor totaled $210.1 million for total days sales outstanding ("DSOs") of 93.2. This compares with 77.3 DSOs at June 30, 2006 and 124.8 DSOs at March 31, 2007. Included in accounts receivable at June 30, 2007 was $138.1 million of accounts receivable from South China House of Technology, or SCHOT, our distributor in Asia. At June 30, 2007, there were no invoices due from SCHOT that had been outstanding longer than the 120 day terms. Accounts receivable and due from factor, excluding the Asian receivables, totaled $72.0 million which represents approximately 60.5 DSOs at June 30, 2007 compared with 77.3 DSOs at June 30, 2006 and 46.7 DSOs at March 31, 2007. Inventory balances totaled $34.5 million at June 30, 2007, down from $39.8 million at March 31, 2007. At June 30, 2007, there were 19.2 days of cost of sales in inventory compared with 22.8 days at June 30, 2006 and 27.4 days at March 31, 2007. Accounts payable at June 30, 2007 totaled $71.6 million, which represented approximately 39.8 days of cost of sales compared with 6.8 days at June 30, 2006 and 86.8 days at March 31, 2007. Highlights for the quarter ended June 30, 2007 The highlights and accomplishments for the quarter ended June 30, 2007 include the following: -- Fiscal fourth quarter revenue of $205.3 million, a 243% increase over last year's comparable quarter. -- Fiscal fourth quarter shipments of approximately 286,000 units, a 165% increase over the prior year comparable quarter. -- Increased gross margins by 800 basis points to 20.2% over the prior year period. -- Adjusted EBITDA of $26.3 million and $75.6 million for the three and twelve months ended June 30, 2007, respectively. -- Raised $143 million via a public offering of common stock. -- From the inception of our ESPN advertising campaign, brand awareness among males 18-49 has increased 473% and purchase consideration of non-HDTV owners who expect to purchase within 12 months has increased over 600%. -- Olevia featured in Target commercials and four color boxes will be featured on the retail floor. -- Olevia will be featured in Sears' NFL advertising campaign from August through December 2007. Business Outlook Syntax-Brillian also provided the following business outlook for its quarter ending September 30, 2007 and the calendar year ending December 31, 2007. The current business outlook is reflective of a severe tightening of credit in Asia that has significantly impacted the bank and other credit facilities of our supply chain partners. As a result of the tighter credit environment in Asia, we believe that the combined credit availability of our supply chain partners has been reduced by over $200 million. The current business outlook also reflects Syntax-Brillian's decision to take a more cautious approach to sales in Asia. For the quarter ending September 30, 2007, Syntax-Brillian anticipates revenue in the range of $170 million to $180 million, predominately from sales of LCD TVs on shipments of approximately 270,000 to 290,000 units. Gross margins for the quarter are anticipated to be in the range of 15% to 17%. For the calendar year ending December 31, 2007, Syntax-Brillian anticipates revenue in the range of $1.0 billion to $1.1 billion, and gross margins in the range of 16% to 18%. Conference Call Syntax-Brillian will host a conference call today, September 12, to discuss its fourth-quarter financial results and future outlook. The conference call may include forward-looking statements. The call will be Web cast and is scheduled to begin at 1:30 p.m. PDT (4:30 p.m. EDT). The live audio broadcast and replay of the conference call can be accessed on Syntax-Brillian's Web site at www.syntaxbrillian.com under the Investor Relations section. Syntax-Brillian will provide an audio replay of this conference call on its Web site. No other audio replay will be available. About Syntax-Brillian Corporation Syntax-Brillian Corporation (www.syntaxbrillian.com) is one of the world's leading manufacturers and marketers of LCD and LCoS(TM) HDTVs, digital cameras, and microdisplay entertainment products. The company's lead products include its Olevia(TM) brand (www.Olevia.com) high definition widescreen LCD and LCoS televisions - -- one of the fastest growing global TV brands -- and Vivitar brand (www.vivitar.com) digital still and video cameras. Syntax-Brillian has built an Asian supply chain coupled with an international manufacturing and distribution network to support worldwide retail sales channels and position the company as a market leader in consumer digital entertainment products. Brillian, Vivitar, and LCoS are trademarks or registered trademarks of Syntax-Brillian Corporation. All other trademarks are the property of their respective owners. Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and Syntax-Brillian intends that such forward-looking statements be subject to the safe harbor created thereby. Such forward-looking statements include, but are not limited to, expectations regarding revenue, unit shipments, and gross margins for the three months ending September 30, 2007 and the calendar year ending December 31, 2007; anticipated demand for and profitability of digital camera products; and the anticipated effect of the credit environment in Asia on the Company's business. Syntax-Brillian cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements contained herein. Such factors include (a) changes in markets for the Company's products; (b) changes in the market for customers' products; (c) the failure of the Company's products to deliver commercially acceptable performance; (d) the ability of the Company's management, individually or collectively, to guide the Company in a successful manner; and (e) other risks as detailed in Syntax-Brillian's Annual Report on Form 10-K/A for the fiscal year ended June 30, 2006 and subsequent filings with the Securities and Exchange Commission. SYNTAX-BRILLIAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data) Three Months Ended Fiscal Year Ended June 30, June 30, ------------------ ------------------ 2007 2006 2007 2006 --------- ------- -------- -------- Total net sales $ 205,262 $59,807 $697,620 $192,990 Cost of sales 163,828 52,523 573,155 169,096 --------- ------- -------- -------- 41,434 7,284 124,465 23,894 Operating expenses: Selling, distribution and marketing 5,160 2,867 19,796 8,319 General and administrative 10,952 4,477 32,464 18,124 Research and development 1,398 1,853 6,225 4,416 --------- ------- -------- -------- 17,510 9,197 58,485 30,859 --------- ------- -------- -------- Operating income (loss) 23,924 (1,913) 65,980 (6,965) Interest and other expense, net (2,898) (3,585) (18,373) (11,914) --------- ------- -------- -------- Income (loss) before income taxes 21,026 (5,498) 47,607 (18,879) Income tax expense 12,631 - 17,815 - --------- ------- -------- -------- Net income (loss) $ 8,395 $(5,498) $ 29,792 $(18,879) ========= ======= ======== ======== Income (loss) per common share: Basic $ 0.12 $ (0.11) $ 0.51 $ (0.46) ========= ======= ======== ======== Diluted $ 0.11 $ (0.11) $ 0.48 $ (0.46) ========= ======= ======== ======== Weighted average number of common shares: Basic 71,874 48,580 58,685 40,978 ========= ======= ======== ======== Diluted 74,620 48,580 63,108 40,978 ========= ======= ======== ======== SYNTAX-BRILLIAN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands) June 30, June 30, 2007 2006 -------- -------- ASSETS - -------------------------------------------------- Current Assets: Cash and cash equivalents $ 28,679 $ 7,375 Accounts receivable and due from factor, net 210,115 50,829 Inventories 34,499 13,151 Inventory deposits 78,253 - Deferred tax asset, current portion 14,029 2,666 Tooling deposit 65,253 - Other current assets 2,579 6,437 -------- -------- Total current assets 433,407 80,458 Property and equipment, net 13,921 16,703 Intangible assets, net 36,413 20,737 Goodwill 30,546 6,990 Deferred tax asset, long-term portion 23,141 - Other assets 377 1,461 Investments 1,540 1,307 -------- -------- Total assets $ 539,345 $127,656 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------- Current Liabilities: Loans payable, bank $ 78,139 $ 30,800 Notes payable - 650 Current portion of redeemable, convertible preferred stock (net of $3,390 discount) - 3,432 Accounts payable 71,563 3,924 Accrued rebates payable - 4,043 Accrued warranty 12,492 4,551 Income taxes payable 18,460 96 Deferred income tax liability, current portion 232 - Other current liabilities 13,903 5,540 -------- -------- Total current liabilities 194,789 53,036 -------- -------- Long-term debt (net of $2,635 discount) - 3,758 Redeemable convertible preferred stock (net of $3,390 discount) - 3,432 Deferred tax liability, long-term portion 29,040 2,628 Commitments and Contingencies Stockholders' Equity: Common stock 90 49 Additional paid-in capital 304,929 84,489 Retained earnings (accumulated deficit) 10,056 (19,736) Accumulated other comprehensive income, net of tax 441 - -------- -------- Total stockholders' equity 315,516 64,802 -------- -------- Total liabilities and stockholders' equity $ 539,345 $127,656 ======== ======== Use of Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States of America (GAAP), Syntax-Brillian provides additional financial metrics that are not prepared in accordance with GAAP (non-GAAP). Recent legislative and regulatory changes discourage the use of and emphasis on non-GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. The Company believes that the inclusion of these non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our performance, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts. The Company uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring its core operating performance and comparing such performance to that of prior periods. This measure is also used by the Company in its financial and operating decision-making. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of our operating results as reported under GAAP. Syntax-Brillian defines "Adjusted EBITDA" as net income before interest, taxes, depreciation, amortization, and share-based compensation. Syntax-Brillian considers Adjusted EBITDA to be an important indicator of the Company's operational strength and performance of its business and a good measure of the Company's historical operating trend. Adjusted EBITDA should be considered in addition to, not as a substitute for, the Company's operating income and net income, as well as other measures of financial performance reported in accordance with GAAP. Reconciliation of Non-GAAP Financial Measures In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial metrics to the comparable GAAP measures. SYNTAX-BRILLIAN CORPORATION RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA (unaudited) (in thousands) Three Months Fiscal Year Ended Ended June 30, June 30, --------------- ---------------- 2007 2006 2007 2006 ------ ------- ------ -------- Net income (loss) $ 8,395 $(5,498) $29,792 $(18,879) Income tax expense 12,631 - 17,815 - Interest and other, net 2,898 3,585 18,373 11,914 Depreciation and amortization 1,855 1,005 6,376 2,474 Share-based compensation 525 328 3,248 4,360 ------ ------- ------ -------- Adjusted EBITDA 26,304 (580) 75,604 (131) ====== ======= ====== ======== CONTACT: Syntax-Brillian Corporation Wayne Pratt Executive Vice President, Chief Financial Officer 602-389-8797 wayne.pratt@syntaxbrillian.com EX-99.2 3 a5491333ex99-2.txt EXHIBIT 99.2 EXHIBIT 99.2 Syntax-Brillian Announces Departure of Chief Financial Officer TEMPE, Ariz.--(BUSINESS WIRE)--Sept. 12, 2007--Syntax-Brillian Corporation (Nasdaq:BRLC), a manufacturer and marketer of LCD and LCoS(TM) HDTVs and digital entertainment products, announced that Wayne Pratt, its chief financial officer, will resign effective September 30, 2007 to take a position working with a longstanding colleague at a start-up company located in Tempe, Ariz. "We are extremely sorry to learn of Wayne's decision to leave the company to pursue an opportunity with a privately held company," said Vincent Sollitto, chairman and chief executive officer of Syntax-Brillian. "He has been a great addition to Syntax-Brillian since the formation of the company in late 2005, and we certainly wish him the very best in his new endeavor. With Wayne's assistance, Jack Hodgson, our audit committee chairman, and I have begun the search for a replacement." About Syntax-Brillian Corporation Syntax-Brillian Corporation (www.syntaxbrillian.com) is a leading designer, developer, and distributor of LCD and LCoS(TM) HDTVs, digital cameras, and microdisplay entertainment products. The company's lead products include its Olevia(TM) brand (www.Olevia.com) high definition widescreen LCD and LCoS(TM) televisions -- one of the fastest growing global TV brands -- and Vivitar brand (www.vivitar.com) digital still and video cameras. Syntax-Brillian has built an Asian supply chain coupled with an international manufacturing and distribution network to support worldwide retail sales channels and position the company as a market leader in consumer digital entertainment products. Olevia, Brillian, LCoS and Vivitar are trademarks or registered trademarks of Syntax-Brillian Corporation. All other trademarks are the property of their respective owners. CONTACT: Syntax-Brillian Corporation Vincent Sollitto Chairman and CEO 602-389-8888 -----END PRIVACY-ENHANCED MESSAGE-----