-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GNJzBKIqKhFKRUWQD9Bx6AXtrtl7yxirg+pS+9eQhSfqZTRjvrWnK5y9R6okuxSD xFR6SMC0hglBLb2yMscuHg== 0000950168-95-000370.txt : 19950511 0000950168-95-000370.hdr.sgml : 19950511 ACCESSION NUMBER: 0000950168-95-000370 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950425 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLENAYRE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000808918 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 980085742 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15761 FILM NUMBER: 95535715 BUSINESS ADDRESS: STREET 1: 4201 CONGRESS ST STE 455 CITY: CHARLOTTE STATE: NC ZIP: 28209 BUSINESS PHONE: 7045530038 FORMER COMPANY: FORMER CONFORMED NAME: N W GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: NU WEST GROUP INC DATE OF NAME CHANGE: 19880221 FORMER COMPANY: FORMER CONFORMED NAME: NU WEST GROUP LTD DATE OF NAME CHANGE: 19871126 8-K 1 GLENAYRE 8-K 5/9/95 #80888.1 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) April 25, 1995 GLENAYRE TECHNOLOGIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 0-15761 98-0085742 (STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.) 4201 Congress Street, Suite 455, Charlotte, North Carolina 28209 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code (704) 553-0038 Not applicable (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.) Page 1 of 20 Pages ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On April 25, 1995, the Registrant acquired 100% of the outstanding Common Stock of Western Multiplex Corporation, a California corporation ("MUX") pursuant to the terms of an Acquisition Agreement (the "Acquisition Agreement") dated as of January 3, 1995 among the Registrant, MUX Acquisition Corp., a wholly-owned subsidiary of the Registrant ("Glenayre Sub"), MUX and certain equity holders of MUX. Pursuant to the terms of the Acquisition Agreement, Glenayre Sub was merged with and into MUX, with MUX as the surviving corporation and continuing as a wholly-owned subsidiary of the Registrant. In connection with the merger, each share of MUX Common Stock outstanding at April 25, 1995 was converted into .0943848 of a share of the Registrant's Common Stock. Cash was paid in lieu of fractional shares. In addition, each issued and unexercised option to purchase MUX Common Stock (a "MUX Stock Option") was converted into an option to purchase that number of shares of the Registrant's Common Stock equal to the number of shares of MUX Common Stock covered by the MUX Stock Option multiplied by .0943848 and the exercise price was proportionately adjusted. A total of 526,767 shares of the Registrant's Common Stock was issued in the merger in exchange for MUX Common Stock, and a total of 223,203 shares of the Registrant's Common Stock was reserved for issuance upon the exercise of MUX Stock Options. The terms of the Acquisition Agreement, including the consideration to be paid, were negotiated on an arms-length basis by senior members of the managements of the Registrant and MUX. During the negotiations, the Registrant based its valuation of MUX on (i) its assessment of valuation parameters of companies in the same or related business as MUX; (ii) MUX's historical financial results and its prospects; and (iii) the potential effects that a transaction would have on the Registrant's financial results. MUX designs, manufactures and markets products for use in point-to-point microwave communications systems. These products include microwave radios, both in analog and digital transmission formats, and analog baseband products. MUX's products are sold to communications service providers, including cellular, specialized mobile radio and inter-exchange common carriers; industrial companies, including utilities, railroads and petroleum producers; federal, state and local governmental entities; and users of wireless data communications. The Registrant currently intends to continue to use the plant, equipment and other physical property of MUX to design, manufacture and market the same or similar products. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Businesses Acquired. (1) The consolidated financial statements of Western Multiplex Corporation for its fiscal year ended June 30, 1994, including the Consolidated Balance Sheet as of June 30, 1994, the Consolidated Statement of Income for the year ended June 30, 1994, the Page 2 of 20 Pages Consolidated Statement of Cash Flows for the year ended June 30, 1994, the notes to the June 30, 1994 Consolidated Financial Statements and the related report on such financial statements of Shilling & Kenyon, Inc., are incorporated by reference to the Registrant's Registration Statement on Form S-4, registration no. 33-88818. A copy of such financial statements, the related notes and the report of Shilling & Kenyon, Inc. is attached hereto as Exhibit 99. (2) Consolidated financial statements of Western Multiplex Corporation for the nine-months ended March 31, 1995 are not available at this time but will be filed by the Registrant as an amendment to this Form 8-K as soon as they are available but in any event no later than July 10, 1995. (b) Pro forma financial information. (1) Pro forma financial information for the Registrant with respect to the acquisition of Western Multiplex Corporation by the Registrant is not available at this time but will be filed by the Registrant as an amendment to this Form 8-K as soon as it is available but in any event no later than July 10, 1995. (c) Exhibits 2 Acquisition Agreement dated as of January 3, 1995, incorporated by reference to Exhibits 2.1 and 2.2 to the Registrant's Registration Statement on Form S-4, registration number 33-88818. 23 Consent of Shilling & Kenyon, Inc. 99 Consolidated Financial Statements of Western Multiplex Corporation for the fiscal year ended June 30, 1994. Page 3 of 20 Pages 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 thereunto duly authorized. GLENAYRE TECHNOLOGIES, INC. By /s/ Stanley Ciepcielinski Stanley Ciepcielinski Executive Vice President and Chief Financial Officer Dated: May 9, 1995 Page 4 of 20 Pages SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. EXHIBITS FORM 8-K CURRENT REPORT Date of Report Commission File Number April 25, 1995 0-15761 GLENAYRE TECHNOLOGIES, INC. EXHIBIT INDEX Exhibit No Exhibit Description 2 Acquisition Agreement dated as of January 3, 1995, incorporated by reference to Exhibits 2.1 and 2.2 to the Registrant's Registration Statement on Form S-4, registration no. 33-88818. 23 Consent of Shilling & Kenyon, Inc. (page 6 of the sequentially numbered pages). 99 Consolidated financial statements of Western Multiplex Corporation for the fiscal year ended June 30, 1994 (page 7 of the sequentially numbered pages). Page 5 of 20 Pages EX-23 2 EXHIBIT 23 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference into this Current Report on Form 8-K for Glenayre Technologies, Inc. dated April 25, 1995 of our report dated August 8, 1994 relating to the financial statements of Western Multiplex Corporation for the fiscal year ended June 30, 1994 included in the Registration Statement on Form S-4 of Glenayre Technologies, Inc., registration number 33- 88818. SHILLING & KENYON, INC. San Jose, California May 9, 1995 Page 6 of 20 Pages EX-99 3 EXHIBIT 99 EXHIBIT 99 INDEPENDENT AUDITORS' REPORT To the Stockholders Western Multiplex Corporation We have audited the accompanying consolidated balance sheet of Western Multiplex Corporation as of June 30, 1994, and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Western Multiplex Corporation as of June 30, 1994, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Shilling & Kenyon, Inc. San Jose, California August 8, 1994 Page 7 of 20 Pages WESTERN MULTIPLEX CORPORATION CONSOLIDATED BALANCE SHEET JUNE 30, 1994 ASSETS CURRENT ASSETS Cash and cash equivalents - Note 3 $ 1,067,505 Accounts receivable, less allowance for doubtful accounts of $20,000 - Notes 3 and 4 2,641,080 Inventories - Notes 2, 3 and 4 2,598,510 Prepaid expenses 34,617 Deferred income taxes - Note 9 287,896 Total current assets 6,629,608 PROPERTY AND EQUIPMENT - Notes 3,4 and 5 Office equipment 407,843 Test and production equipment 1,031,928 Equipment under capital lease obligations 632,726 Leasehold improvements 28,851 2,101,348 Less accumulated depreciation and amortization 1,207,304 894,044 OTHER ASSETS Deposits 22,295 Other assets 76,381 98,676 $ 7,622,328 Page 8 of 20 Pages WESTERN MULTIPLEX CORPORATION CONSOLIDATED BALANCE SHEET JUNE 30, 1994 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 50,580 Current portion of obligations under capital leases 182,654 Accounts payable 261,453 Accrued expenses - Note 6 1,623,909 Income taxes payable 922,960 Total current liabilities 3,041,556 LONG-TERM DEBT, less current portion - Note 4 31,505 OBLIGATIONS UNDER CAPITAL LEASES, less current portion - Note 5 329,812 DEFERRED INCOME TAXES - Note 9 182,000 COMMITMENTS - Note 10 - STOCKHOLDERS' EQUITY - Note 8 Common stock, no par value, 25,000,000 shares authorized, 5,477,445 outstanding 749,132 Retained earnings 3,288,323 4,037,455 $ 7,622,328 Page 9 of 20 Pages WESTERN MULTIPLEX CORPORATION CONSOLIDATED STATEMENT OF INCOME YEAR ENDED JUNE 30, 1994 Amount Percent NET SALES $ 15,759,232 100.0% COST OF SALES 7,117,086 45.2 GROSS PROFIT 8,642,146 54.8 OPERATING EXPENSES Sales and marketing 2,265,301 14.4 Engineering and development 1,511,463 9.6 General and administrative 1,948,091 12.3 5,724,855 36.3 OPERATING INCOME 2,917,291 18.5 OTHER INCOME (EXPENSE) Interest (net) (26,630) (.1) Other 14,429 - (12,201) (.1) INCOME BEFORE INCOME TAXES 2,905,090 18.4 PROVISION FOR INCOME TAXES - Note 9 1,220,000 7.7 NET INCOME $ 1,685,090 10.7% INCOME PER COMMON SHARE $ .23 Page 10 of 20 Pages WESTERN MULTIPLEX CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY YEAR ENDED JUNE 30, 1994 Total Common Stock Retained Stockholders' Shares Amount Earnings Equity BALANCES, July 1, 1993 5,444,945 $ 734,932 $ 1,603,233 $ 2,338,165 ISSUANCE OF COMMON STOCK - Note 8 32,500 14,200 - 14,200 NET INCOME - - 1,685,090 1,685,090 BALANCES, June 30, 1994 5,477,445 $ 749,132 $ 3,288,323 $ 4,037,455 Page 11 of 20 Pages WESTERN MULTIPLEX CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 1994 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 14,820,527 Cash paid to suppliers and employees (12,988,145) Income taxes paid (306,863) Interest paid (31,513) Interest received 4,883 Net cash provided by operating activities 1,498,889 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (109,583) Change in other assets (29,416) Net cash used by investing activities (138,999) CASH FLOWS FROM FINANCING ACTIVITIES Notes payable to bank (250,000) Payments on long term debt and capital lease obligations (158,692) Proceeds from issuance of common stock 14,200 Net cash used by financing activities (394,492) NET INCREASE IN CASH AND CASH EQUIVALENTS 965,398 CASH AND CASH EQUIVALENTS, July 1, 1993 102,107 CASH AND CASH EQUIVALENTS, June 30, 1994 $ 1,067,505 SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS: During the year ended June 30, 1994, the Company entered into capital lease obligations for equipment totaling approximately $367,700. Page 12 of 20 Pages WESTERN MULTIPLEX CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 1994 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net income $ 1,685,090 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 336,125 Deferred income taxes (1,896) Bad debts (20,491) Cash provided by (used for): Accounts receivable (932,643) Inventories (957,497) Prepaid expenses 15,764 Accounts payable (309,913) Accrued expenses 769,317 Income taxes payable 915,033 Total adjustments (186,201) Net cash provided by operating activities $ 1,498,889 Page 13 of 20 Pages WESTERN MULTIPLEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 NOTE 1 - DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Western Multiplex Corporation (the Company) was founded and incorporated under the laws of California in December, 1979. The Company is engaged in the development, manufacture, and distribution of analog and digital microwave radio and baseband equipment. (b) The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Western Multiplex International Sales Corporation, a Domestic International Sales Corporation (DISC). All significant intercompany accounts have been eliminated. (c) Revenue is recognized at the time products are shipped to customers. (d) Inventories are stated at the lower of average cost or market. (e) Property and equipment are stated at cost. Depreciation is computed on the straight-line and accelerated methods, with useful lives ranging from three to seven years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life. (f) The Company warrants certain products from between one and five years after sale. A provision for estimated warranty costs is recorded at the time of sale. (g) All research and development costs are expensed as incurred. (h) For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. (i) The Company accounts for income taxes in accordance with statement of Financial Accounting Standards (SFAS) No. 109, Accounting For Income Taxes. Tax credits are recorded as a reduction of tax expense when realized. (j) Primary income per common share was computed by dividing net income by the weighted average number of shares of common stock outstanding plus the shares that would be outstanding assuming exercise of dilutive stock options, which are considered to be common stock equivalents. Page 14 of 20 Pages WESTERN MULTIPLEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1994 NOTE 2 - INVENTORIES Inventories consist of the following: Raw materials $ 1,056,462 Work-in-process 357,939 Finished goods 1,184,109 $ 2,598,510 NOTE 3 - NOTE PAYABLE TO BANK The Company has a $1,000,000 bank line of credit which bears interest at the bank's prime rate (6.75% at June 30, 1994) plus 1.25%. Maximum borrowings are limited to eighty percent of eligible accounts receivable plus the lesser of $200,000 or twenty percent of inventories. The line is secured by substantially all the assets of the Company. The credit agreement requires the Company, among other things, to maintain a minimum quick ratio of .75 to 1, minimum working capital of $1,250,000 and a maximum debt to net worth ratio of 1.25 to 1. There were no outstanding borrowings on the line at June 30, 1994. In addition, the Company has a $500,000 term debt facility available under the above agreement through November, 1994 for the purchase of equipment. There were no borrowings outstanding under this facility at June 30, 1994. NOTE 4 - LONG-TERM DEBT Long-term debt consists of the following: Note payable, secured by accounts receivable, inventories and equipment, with monthly principal and interest payments of $3,265 through November, 1995, with interest at the Bank's prime rate plus 2% $ 55,485 Note payable, secured by accounts receivable, inventories and equipment, with monthly principal and interest payments of $950 monthly through November, 1996, with interest at the Bank's prime rate plus 2% 26,600 82,085 Less current portion 50,580 $ 31,505 Page 15 of 20 Pages WESTERN MULTIPLEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1994 NOTE 4 - LONG-TERM DEBT (CONTINUED) Maturities on long-term debt are as follows: Year Ending June 30, 1995 $ 50,580 1996 27,705 1997 3,800 $ 82,085 NOTE5 - OBLIGATIONS UNDER CAPITAL LEASES The Company leases equipment which is classified as capital leases and consists of the following: Equipment $ 632,726 Less accumulated amortization 164,346 $ 468,380 The capital leases expire on various dates through February, 1999. The following is a schedule by year of future minimum lease payments under these leases together with the present value of the net minimum lease payments: Year Ending June 30, 1995 $ 231,723 1996 117,905 1997 108,435 1998 88,044 1999 43,569 Total payments 589,676 Less amounts representing interest 77,210 Present value of minimum lease payments 512,466 Current portion 182,654 Obligations under capital leases, less current portion $ 329,812 Page 16 of 20 Pages WESTERN MULTIPLEX CORPORATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1994 NOTE 6 - ACCRUED EXPENSES Accrued expenses consists of the following: Wages and related taxes and benefits $ 647,543 ESOP payable 306,537 Bonus payable 394,759 Warranty accrual 175,000 Other 100,070 $ 1,623,909 NOTE 7 - EMPLOYEE BENEFIT PLANS The Company has an Employee Stock Option Plan (ESOP) which covers substantially all qualified employees. Contributions are determined annually by the Board of Directors. The Company contributed approximately $516,500 to the plan for the year ended June 30, 1994. In addition, the Company has a 401(k) plan which covers all qualified employees. Semi-annual employer contributions to the plan are made at the discretion of the Board of Directors. The employer also matches 50% of employee contributions up to 2% of eligible compensation. The Company contributed approximately $141,300 to the plan for the year ended June 30, 1994. NOTE 8 - STOCK OPTIONS The Company has an incentive stock option plan that covers substantially all employees. Under the provisions of the plan options may be granted to employees to purchase common stock. The option price under the plan is determined by the Board of Directors and will not be less than the fair market value of the stock on the date the option is granted. Options are granted for a period not to exceed five years; some are exercisable at the date of grant, while others are exercisable according to a vesting schedule. The Company has the right of first refusal, to purchase at fair market value, shares issued under the plan. At June 30, 1994, 1,903,750 shares are fully vested and no shares were available for future grant. Page 17 of 20 Pages WESTERN MULTIPLEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1994 NOTE 8 - STOCK OPTIONS (CONTINUED) A summary of stock option activity follows: Option Shares Price Balance, July 1, 1993 2,168,750 $ .39-.51 Options granted 332,500 1.40 Options exercised (32,500) .39-.51 Balance, June 30, 1994 2,468,750 $ .39-1.40 NOTE 9 - PROVISION FOR INCOME TAXES The provision for income taxes consist of the following: Current Federal $ 1,032,200 State 297,800 Less research and development tax credits (100,000) 1,230,000 Deferred Federal 12,000 State (22,000) (10,000) $ 1,220,000 The effective tax rate differs from the federal statutory tax rate as follows: Tax computed at federal statutory rate 34.0% State income taxes, net of federal benefit 6.6 Research and development tax credits (3.4) Non-deductible expenses and other items 4.8 42.0% Page 18 of 20 Pages WESTERN MULTIPLEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1994 NOTE 9 - PROVISION FOR INCOME TAXES (CONTINUED) The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows: Deferred tax assets: Accounts receivable, due to allowances for doubtful accounts $ 6,660 Inventories, due to reserves and capitalized costs for tax purposes 73,240 Warranty accrued 72,775 Vacation accrual 49,800 State taxes 85,421 Gross deferred tax assets 287,896 Deferred tax liabilities: Depreciation (42,400) Undistributed earnings of the DISC (139,600) Gross deferred tax liabilities (182,000) Net deferred tax assets $ 105,896 NOTE 10 - COMMITMENTS The Company has a noncancelable operating lease for its office, manufacturing and warehousing facilities. The lease expires on April 30, 1998 with scheduled rent increase after July, 1995. Future minimum lease payment are approximately as follows: Year Ending June 30, 1995 $ 267,000 1996 293,000 1997 296,000 1998 246,000 $ 1,102,000 Total rent expense was approximately $271,500 for the year ended June 30, 1994. Company subleases a portion of the facilities on a month to month basis. Sublease income was approximately $31,800 for the year ended June 30, 1994. Page 19 of 20 Pages WESTERN MULTIPLEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1994 NOTE 12 - SUBSEQUENT EVENT Subsequent to June 30, 1994, the Company authorized a 5 for 1 stock split. All share and per share amounts have been restated to reflect the split. Page 20 of 20 Pages -----END PRIVACY-ENHANCED MESSAGE-----