-----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, LM3jZBKD9FvarfC+ln5lX0MG1JX82gYkN73PK+CnF/eeFZg6ooGPWqaMI8ZrRjHL oJ0N4raVgZggwXH9WxY+0A== 0000950134-98-009457.txt : 19981207 0000950134-98-009457.hdr.sgml : 19981207 ACCESSION NUMBER: 0000950134-98-009457 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980918 ITEM INFORMATION: FILED AS OF DATE: 19981204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: XETA CORP CENTRAL INDEX KEY: 0000742550 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 731130045 STATE OF INCORPORATION: OK FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-16231 FILM NUMBER: 98764303 BUSINESS ADDRESS: STREET 1: 4500 S GARNETT STE 1000 CITY: TULSA STATE: OK ZIP: 74146 BUSINESS PHONE: 9186648200 MAIL ADDRESS: STREET 1: 4500 S GARNETT SUITE 1000 CITY: TULSA STATE: OK ZIP: 74146 8-K/A 1 AMENDMENT NO. 1 TO FORM 8-K 1 U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A1 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Date of Report (Date of earliest event reported): October 2, 1998 (September 18, 1998) XETA Corporation ---------------------------------------------------- (Exact name of registrant as specified in its charter) Oklahoma 0-16231 73-1130045 --------------------------- ---------- ------------ (State or other jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 4500 S. Garnett, Suite 1000, Tulsa, Oklahoma 74146 -------------------------------------------- -------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 918-664-8200 Not Applicable ---------------------------------------------------- (Former name or address, if changed since last report.) 2 This Current Report on Form 8-K/A1 amends the Current Report on Form 8-K filed by XETA Corporation on October 2, 1998 solely to add the pro forma financial information required by Item 7(b). Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (b) Pro Forma Financial Information. The following pro forma financial information is set forth in the pages that follow: Description of Pro Forma Information 3 Pro Forma Condensed Balance Sheet at July 31, 1998 4 Note to Pro Forma Condensed Balance Sheet 5 Pro Forma Condensed Statement of Operations for the Year Ending October 31, 1997 6 Pro Forma Condensed Statement of Operations for the Nine Months Ending July 31, 1998 7 Note to Pro Forma Condensed Statement of Operations 8
2 3 XETA CORPORATION DESCRIPTION OF PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma condensed balance sheet at July 31, 1998, and the unaudited pro forma condensed statements of operations for the nine months ending July 31, 1998, and for the fiscal year ending October 31, 1997, reflect the pro forma financial position and results of operations, respectively of XETA Corporation (the "Company") after giving effect to the acquisition of certain contract rights and inventory from Williams Communications Solutions, LLC ("WCS"). The acquisition included substantially all of the service rights and spare parts inventory related to WCS' service base of Hitachi(R) HCX and DX switches and Centigram voice mail systems connected to those switches. The unaudited pro forma condensed statements of operations are not necessarily indicative either of the results of operations that would have occurred had the transaction been effected at the beginning of the periods being presented or of future results of operations. 3 4 XETA CORPORATION CONSOLIDATED BALANCE SHEETS JULY 31, 1998 (Unaudited)
ASSETS Pro Forma -------------------------------- Historical Adjustments Total ---------- ----------- ----- Current Assets: Cash and cash equivalents $ 5,214,986 $ (2,161,712)(a) $ 3,053,274 Current portion of net investment in sales-type leases 1,741,056 -- 1,741,056 Other receivables, net 2,644,185 -- 2,644,185 Inventories, net 2,338,329 580,500 (a) 2,918,829 Deferred tax asset, net 467,483 -- 467,483 Prepaid expenses and other assets 84,496 -- 84,496 ------------ ------------ ------------ Total current assets 12,490,535 (1,581,212) 10,909,323 ------------ ------------ ------------ Noncurrent Assets: Net investment in sales-type leases, less current portion above 1,185,991 -- 1,185,991 Purchased long distance contracts, net 785,310 -- 785,310 Purchased service contracts, net 1,694,500 (a) 1,694,500 Property, plant & equipment, net 1,921,518 -- 1,921,518 Capitalized software production costs, net of accumulated amortization of $423,066 at July 31, 1998 and $333,066 at October 31, 1997 626,586 -- 626,586 Other assets 78,174 -- 78,174 ------------ ------------ ------------ Total noncurrent assets 4,597,579 1,694,500 6,292,079 ------------ ------------ ------------ Total assets $ 17,088,114 $ 113,288 $ 17,201,402 ============ ============ ============ LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,171,379 $ -- $ 1,171,379 Unearned revenue 3,170,267 113,288 (a) 3,283,555 Accrued liabilities 768,240 -- 768,240 Accrued federal and state income taxes 132,522 -- 132,522 ------------ ------------ ------------ Total current liabilities 5,242,408 113,288 5,355,696 ------------ ------------ ------------ Unearned service revenue 662,714 -- 662,714 ------------ ------------ ------------ Noncurrent deferred tax liability, net 504,060 -- 504,060 ------------ ------------ ------------ Commitments Shareholders' equity: Common stock; $.10 par value; 10,000,000 shares authorized, 2,286,284 and 2,207,285 issued at July 31, 1998 and October 31, 1997, respectively 228,628 -- 228,628 Paid-in capital 5,135,818 -- 5,135,818 Retained earnings 6,796,039 -- 6,796,039 ------------ ------------ ------------ 12,160,485 12,160,485 Less treasury stock, at cost (1,481,553) -- (1,481,553) ------------ ------------ ------------ Total shareholders' equity 10,678,932 -- 10,678,932 ------------ ------------ ------------ Total liabilities & shareholders' equity $ 17,088,114 $ 113,288 $ 17,201,402 ============ ============ ============
The accompanying notes are an integral part of these statements. 4 5 XETA CORPORATION NOTE TO PRO FORMA CONDENSED BALANCE SHEET JULY 31, 1998 The historical consolidated statements reflect the unaudited balances of XETA Corporation and its dormant subsidiary at July 31, 1998. The pro forma condensed balance sheet assumes the disposition occurred at the end of the period. The pro forma adjustments are as follows: (a) To record the cash used for the acquisition of the service contracts and spare parts inventory. Netted from the cash paid and recorded as deferred revenue was $113,288 representing customer service fees that were prepaid to WCS for services to be provided by the Company. 5 6 XETA CORPORATION PRO FORMA STATEMENT OF OPERATIONS For the Year Ending October 31, 1997 (Unaudited)
Pro Forma ------------------------------ Historical Adjustments Total ---------- ----------- ----- Installation & service $ 9,355,360 $ 2,294,798 (a) $ 11,650,158 Sales of systems 9,405,120 -- 9,405,120 ------------ ------------ ------------ Total service and sales revenues 18,760,480 2,294,798 21,055,278 ------------ ------------ ------------ Installation & service costs (5,884,096) (1,440,300)(b) (7,324,396) Cost of systems (6,074,116) -- (6,074,116) ------------ ------------ ------------ Total cost of service and sales (11,958,212) (1,440,300) (13,398,512) ------------ ------------ ------------ Gross profit 6,802,268 854,498 7,656,766 ------------ ------------ ------------ Operating expenses Selling, general & administrative 3,629,250 138,997 (c) 3,768,247 Engineering, research and development, and amortization of capitalized software production costs 509,777 -- 509,777 Amortization of service contracts -- 1,694,500 (d) 1,694,500 ------------ ------------ ------------ Total operating expenses 4,139,027 1,833,497 5,972,524 ------------ ------------ ------------ Income from operations 2,663,241 (978,999) 1,684,242 ------------ ------------ ------------ Interest & other income 667,069 -- 667,069 ------------ ------------ ------------ Income/(loss) before taxes 3,330,310 (978,999) 2,351,311 (Provision)/benefit for income taxes (1,190,000) 359,000 (e) (831,000) ------------ ------------ ------------ Net income/(loss) $ 2,140,310 $ (619,999) $ 1,520,311 ============ ============ ============ Earnings per share: Basic $ 1.07 $ 0.76 Diluted $ 0.90 $ 0.64 Weighted average shares outstanding 2,006,255 2,006,255 Weighted average shares-diluted 2,365,244 2,365,244
6 7 XETA CORPORATION PRO FORMA STATEMENT OF OPERATIONS For the Nine Months Ending July 31, 1998 (Unaudited)
Pro Forma ----------------------------- Historical Adjustments Total ---------- ----------- ----- Installation & service $ 9,564,188 $ 1,798,492 (a) $ 11,362,680 Sales of systems 8,475,713 -- 8,475,713 Long distance services 759,508 -- 759,508 ------------ ------------ ------------ Total service and sales revenues 18,799,409 1,798,492 20,597,901 ------------ ------------ ------------ Installation & service costs (5,986,941) (1,125,691) (b) (7,112,632) Cost of systems (5,766,507) -- (5,766,507) Cost of long distance services (315,024) -- (315,024) ------------ ------------ ------------ Total cost of service and sales (12,068,472) (1,125,691) (13,194,163) ------------ ------------ ------------ Gross profit 6,730,937 672,801 7,403,738 ------------ ------------ ------------ Operating expenses Selling, general & administrative 3,233,424 195,326 (c) 3,428,750 Engineering, research and development, and amortization of capitalized software production costs 376,885 -- 376,885 Amortization of service contracts -- -- (d) -- ------------ ------------ ------------ Total operating expenses 3,610,309 195,326 3,805,635 ------------ ------------ ------------ Income from operations 3,120,628 477,475 3,598,103 ------------ ------------ ------------ Interest & other income 505,206 -- 505,206 ------------ ------------ ------------ Income before taxes 3,625,834 477,475 4,103,309 Provision for income taxes (1,346,000) (175,000) (e) (1,521,000) ------------ ------------ ------------ Net income $ 2,279,834 $ 302,475 $ 2,582,309 ============ ============ ============ Earnings per share: Basic $ 1.12 $ 1.27 Diluted $ 0.96 $ 1.09 Weighted average shares outstanding 2,030,898 2,030,898 Weighted average shares-diluted 2,369,203 2,369,203
7 8 XETA CORPORATION NOTE TO PRO FORMA CONDENSED OPERATING STATEMENTS The historical consolidated statements reflect the unaudited results of operations of the Company and its dormant subsidiary for the fiscal year ending October 31, 1997 and for the nine months ending July 31, 1998. The pro forma condensed statements of operations assume the acquisition occurred at the beginning of the periods being presented. The pro forma adjustments are as follows: (a) To record the revenues earned by WCS from services provided to its base of customers with Hitachi(R) switches. (b) To record cost of goods sold on the additional revenues. These costs are computed based on the cost structure of the Company for the periods presented. The Company believes that this presentation properly reflects the nature of the transaction in that the purchased contracts will be placed into the Company's existing service business. (c) To record additional selling and administrative costs, including commissions and bonuses, assumed to be incurred to earn the revenues presented in each period. (d) To record the amortization of the purchase price of the service contracts. Of the total purchase price, $1,694,000 was allocated to the service contracts. This amount is subject to adjustment. The amortization amounts shown generally reflect the average remaining contractual life of the underlying contracts, which the Company has determined to be approximately one year. While some of the contracts purchased by the Company have expiration dates extending significantly beyond one year, management believes that the nature of the industry is such that it must earn each customer's business within one year of the acquisition or face the probable cancellation of that service contract. (e) To record (provision)/benefit for federal and state income taxes. 8 9 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. XETA Corporation (Registrant) Dated: December 3, 1998 By: /s/ ROBERT B. WAGNER --------------------------------- Robert B. Wagner Vice President-Finance 9 -----END PRIVACY-ENHANCED MESSAGE-----