-----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, ErZPRavKPq7Wb1EppScCZ59Uhg9IAaR75a2mrbSGrF1Wtes/HOTYbgDrdvyXT/rb nzVhRkoUj0NhFVuwWPHxsg== 0000883322-96-000005.txt : 19960726 0000883322-96-000005.hdr.sgml : 19960726 ACCESSION NUMBER: 0000883322-96-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960710 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960725 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROTOCOL SYSTEMS INC/NEW CENTRAL INDEX KEY: 0000883322 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 930913130 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19943 FILM NUMBER: 96598488 BUSINESS ADDRESS: STREET 1: 8500 S W CREEKSIDE PLACE CITY: BEAVERTON STATE: OR ZIP: 97008 BUSINESS PHONE: 6126862500 MAIL ADDRESS: STREET 1: 8500 SW CREEKSIDE PLACE CITY: BEAVERTON STATE: OR ZIP: 97008 8-K 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 July 10, 1996 ------------------------- Date of Report (Date of earliest event reported) Protocol Systems, Inc. ---------------------------------- (Exact name of registrant as specified in its charter) Oregon 0-19943 93-0913130 (State or other jurisdiction (Commission (IRS Employer of incorporation) File No.) Identification No.) 8500 S.W. Creekside Place, Beaverton, Oregon 97008 --------------------------------------------------- (Address of principal executive offices) (503) 526-8500 (Registrant's telephone number, including area code) Not applicable ----------------------------------------------------------- (Former name or former address, if changed since last report) Item 2. Acquisition or Disposition of Assets ------------------------------------ Pursuant to the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated as of February 20, 1996 among Protocol Systems, Inc., an Oregon corporation ("Protocol"), Protocol Merger Corporation, a Wisconsin corporation and wholly owned subsidiary of Protocol ("Merger Sub") and Pryon Corporation, a Wisconsin corporation ("Pryon"), Merger Sub was merged with and into Pryon (the "Merger") effective as of July 10, 1996 (the "Effective Time"). As a result of the Merger, Pryon became a wholly-owned subsidiary of Protocol. The Merger will be accounted for as a pooling of interests. At the Effective Time of the Merger, each share of capital stock of Pryon outstanding immediately prior to the Effective Time was converted into and exchanged for 5.645823 shares of Protocol Common Stock. The aggregate number of shares of Common Stock of Protocol issued in accordance with the terms of the Merger Agreement upon such conversion and exchange was 1,211,100 shares. In addition, pursuant to the Merger Agreement, Protocol issued options to purchase Protocol Common Stock in replacement of all options to purchase Pryon Common Stock that were outstanding immediately prior to the Effective Time based on the exchange ratio of 5.645823 shares of Protocol Common Stock for each share of Pryon Common Stock, which options vest and become exercisable in accordance with the terms of the original Pryon stock options. Replacement stock options for a total of 121,385 shares of Protocol Common Stock were issued upon consummation of the Merger. The amount of consideration paid in connection with the Merger was determined in arms-length negotiations between the officers of Protocol and Pryon. Prior to the Merger, except for purchases by Protocol of Pryon products in the ordinary course of business amounting to approximately $1.0 million, $1.0 million and $1.7 million in 1993, 1994 and 1995, respectively, no material relationship existed between Protocol and Pryon or any of its affiliates, any director or officer of Protocol, or any associate of any such director or officer. Pryon is a leading supplier of capnography products for medical instrumentation manufacturers. Pryon will continue such business as a wholly owned subsidiary of Protocol. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits ------------------------------------------------------------------ (a) Financial Statements of Business Acquired. The financial statements of Pryon required pursuant to Rule 3-05 of Regulation S-X were previously reported in Amendment No. 3 to Protocol's Registration Statement on Form S-4, as filed with the Securities and Exchange Commission on June 4, 1996, and pursuant to General Instruction B.3. of Form 8-K are not additionally reported herein. (b) Pro Forma Financial Information. The pro forma financial information required pursuant to Article 11 of Regulation S-X was previously reported in Amendment No. 3 to Protocol's Registration Statement on Form S-4, as filed with the Securities and Exchange Commission on June 4, 1996, and pursuant to General Instruction B.3. of Form 8-K are not additionally reported herein. (c) Exhibits Number Description 2.1 Agreement and Plan of Merger dated as of February 20, 1996 Among Protocol Systems, Inc., Protocol Merger Corporation and Pryon Corporation 99.1 Press Release dated as of July 10, 1996 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. PROTOCOL SYSTEMS, INC. Date: July 23, 1996 By: /s/ Craig M. Swanson ---------------------------- Craig M. Swanson Vice President and Chief Financial Officer EXHIBIT INDEX ------------- Exhibit No. Description 2.1 Agreement and Plan of Merger dated as of February 20, 1996 Among Protocol Systems, Inc., Protocol Merger Corporation and Pryon Corporation (Incorporated by reference to Exhibit 2.1 to Protocol's Registration Statement on Form S-4 (File No. 333-03316)) 99.1 Press Release dated as of July 10, 1996 EX-99.1 2 Exhibit 99.1 Protocol Systems Inc., Pryon Corporation Stockholders Approve Merger Beaverton, Ore. -- July 10, 1996 -- Protocol Systems Inc. and Pryon Corporation today announced that the stockholders of both companies have approved the merger of Pryon Corporation with a wholly-owned subsidiary of Protocol Systems Inc. Pryon shareholders voted July 8 and Protocol shareholders voted at the Protocol annual meeting held today. The transaction closed today, July 10. "The merger with Pryon not only grows our company and provides us a key technology, but also gives us a pathway to expand our business by becoming a significant provider of OEM technologies to the medical device industry," said James B. Moon, Protocol Systems president and chief executive officer. "Strategically, we expect this merger to create immediate and long-term synergy in revenue and earnings growth. Excluding transaction-related charges of approximately $1,800,000, we expect earnings accretion in the first year." Under the terms of the merger agreement, 1,332,485 shares of Protocol common stock were exchanged for all of the outstanding capital stock of Pryon, or an exchange ratio of approximately 5.65 Protocol shares for each Pryon share. The merger is intended to qualify as a tax-free reorganization and a pooling-of-interests for accounting and financial reporting purposes. As of today, Protocol has a total market valuation of approximately $176 million. Since the merger agreement was announced February 20, 1996, the companies have been working together to move distribution of Pryon's standalone capnographs, the SC-210 and SC-300, to Protocol's worldwide sales organization. Protocol will operate Pryon as a wholly-owned subsidiary and will retain key management personnel and continue engineering, manufacturing and OEM sales operations at Pryon's current Menomonee Falls, Wisconsin facility. Daniel F. Carsten, 48, president and chief executive officer of Pryon, has assumed a position on the Protocol Systems board of directors. Protocol expects to selectively market other proprietary vital signs technologies it owns through Pryon's OEM channels. Protocol presently owns proprietary vital signs technologies relating to electrocardiography (ECG), noninvasive and invasive blood pressure, impedance respiration, and arrhythmia detection. Pryon is a leader in the design, manufacture and marketing of mainstream and sidestream CO2 sensors and electronic subsystems primarily to OEM customers which in turn package the Pryon technology in their own monitoring instrumentation. Pryon's OEM customers consist of leading worldwide manufacturers of various patient monitoring systems including Nellcor Puritan Bennett, SpaceLabs Medical, Marquette Electronics, NEC Medical Equipment and Nihon Kohden among others. Capnography refers to the measurement and continuous graphical display of the carbon dioxide (CO2) content in the patient's airway. CO2 concentration in a patient's respiratory gases serves as an early and accurate indicator of circulatory, pulmonary or metabolic distress. Protocol Systems Inc. (NASDAQ: PCOL) designs, manufactures and markets patient monitoring instruments and systems utilizing innovative design, advanced software concepts and leading electronic technology. Since shipping its first Propaq monitor in 1988, Protocol has now shipped over 35,000 Propaq monitors to health care providers in more than 80 countries throughout the world. Based in Beaverton, Ore., Protocol employs 270 people. Pryon Corporation employs 104 people in Menomonee Falls, Wisconsin. "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: the statements which are not historical facts contained in this release are forward looking statements that involve risks and uncertainties, including but not limited to, product demand and market acceptance risk, the effect of economic conditions, the impact of competitive products and pricing, product development, commercialization and technological difficulties, capacity and supply constraints or difficulties, the results of financing efforts, actual purchases under agreements, the effects of the Company's accounting policies, and other risks detailed in the Company's Securities and Exchange Commission filings. Protocol and Propaq are registered trademarks of Protocol Systems Inc. Other product names mentioned herein are for identification purposes only and may be the trademarks or registered trademarks of their respective companies. # # # CONSOLIDATED FINANCIAL HIGHLIGHTS (dollars in thousands except per share amounts) (unaudited) Protocol/Pryon - Consolidated 1995 1996 Q-1 Q-2 Q-3 Q-4 1995 Q-1 Sales $12,944 $13,343 $15,222 $18,093 $59,602 $16,239 Gross Profit $6,838 $7,139 $7,860 $9,972 $31,809 $8,884 % of sales 52.8% 53.5% 51.6% 55.1% 53.4% 54.7% R & D $2,064 $1,963 $1,848 $1,844 $7,719 $2,254 % of sales 15.9% 14.7% 12.1% 10.2% 13.0% 13.9% S,G & A $3,993 $4,524 $4,569 $4,994 $18,080 $4,749 % of sales 30.8% 33.9% 30.0% 27.6% 30.3% 29.2% Operating Income $781 $652 $1,443 $3,134 $6,010 $1,881 % of sales 6.0% 4.9% 9.5% 17.3% 10.1% 11.6% Other Income $224 $220 $239 $233 $916 $267 Income Taxes $192 $207 $430 $699 $1,528 $595 Net Income $813 $665 $1,252 $2,668 $5,398 $1,553 Net Income per Share $ .09 $ .07 $ .14 $ .29 $ .60 $ .17 Weighted Average Shares 8,940 8,911 9,092 9,133 9,010 9,369 (in thousands) Intercompany Eliminations 1995 1996 Q-1 Q-2 Q-3 Q-4 1995 Q-1 Sales ($291) ($520) ($485) ($445) ($1,741) ($685) Gross Profit ($27) ($77) ($77) $83 ($98) $23 Net Income ($27) ($77) ($77) $83 ($98) $23 Protocol Systems, Inc. - Historical 1995 1996 Q-1 Q-2 Q-3 Q-4 1995 Q-1 Sales $10,176 $10,761 $12,747 $15,383 $49,067 $13,789 Gross Profit $5,597 $5,905 $6,754 $8,617 $26,873 $7,481 % of sales 55.0% 54.9% 53.0% 56.0% 54.8% 54.3% R & D $1,695 $1,556 $1,442 $1,497 $6,190 $1,795 % of sales 16.7% 14.5% 11.3% 9.7% 12.6% 13.0% S,G & A $3,465 $3,905 $3,946 $4,272 $15,588 $4,083 % of sales 34.1% 36.3% 31.0% 27.8% 31.8% 29.6% Operating Income $437 $444 $1,366 $2,848 $5,095 $1,603 % of sales 4.3% 4.1% 10.7% 18.5% 10.4% 11.6% Other Income $257 $287 $287 $280 $1,111 $320 Income Taxes $192 $207 $430 $699 $1,528 $595 Net Income $502 $524 $1,223 $2,429 $4,678 $1,328 Net Income per Share $ .07 $ .07 $ .16 $ .31 $ .61 $ .17 Weighted Average Shares 7,632 7,603 7,794 7,810 7,701 8,042 (in thousands) Pryon Corporation - Historical 1995 1996 Q-1 Q-2 Q-3 Q-4 1995 Q-1 Sales $3,059 $3,102 $2,960 $3,155 $12,276 $3,135 Gross Profit $1,268 $1,311 $1,183 $1,272 $5,034 $1,380 % of sales 41.5% 42.3% 40.0% 40.3% 41.0% 44.0% R & D $369 $407 $406 $347 $1,529 $459 % of sales 12.1% 13.1% 13.7% 11.0% 12.5% 14.6% S,G & A $528 $619 $623 $722 $2,492 $666 % of sales 17.3% 20.0% 21.0% 22.9% 20.3% 21.2% Operating Income $371 $285 $154 $203 $1,013 $255 % of sales 12.1% 9.2% 5.2% 6.4% 8.3% 8.1% Other Income (Expense) ($33) ($67) ($48) ($47) ($195) ($53) Income Taxes $0 $0 $0 $0 $0 $0 Net Income $338 $218 $106 $156 $818 $202 Net Income per Share $ .26 $ .17 $ .08 $ .12 $ .63 $ .15 Weighted Average Shares 1,308 1,308 1,297 1,323 1,309 1,327 (in thousands)
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