-----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, EVOb7VBqI70OSNqJKguEVXbounKlOYw6dOCplVgh+E6qnmQrlVnxJYgtj051kTIZ o8wLX6vwGIE0LHlTYr1zcw== 0001012870-98-002584.txt : 19981009 0001012870-98-002584.hdr.sgml : 19981009 ACCESSION NUMBER: 0001012870-98-002584 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980923 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981008 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARADIGM TECHNOLOGY INC /DE/ CENTRAL INDEX KEY: 0000945699 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 770140882 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-26124 FILM NUMBER: 98722736 BUSINESS ADDRESS: STREET 1: 694 TASMAN DR CITY: MILPITAS STATE: CA ZIP: 95035 BUSINESS PHONE: 4089540500 MAIL ADDRESS: STREET 1: PARADIGN TECHNOLOGY INC STREET 2: 694 TASMAN DRIVE CITY: MILPITAS STATE: CA ZIP: 95035 8-K 1 FORM 8-K 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): September 23, 1998 IXYS CORPORATION (Exact name of registrant as specified in its charter) Delaware 0-26124 770140882-5 (State or other jurisdiction (Commission File No.) (IRS Employer of incorporation) (Identification No.) 3540 Bassett Street Santa Clara, CA 95054 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (408) 982-0700 PARADIGM TECHNOLOGY, INC. 694 Tasman Drive Milpitas, CA 95035 (Former name or former address, if changed since last report) ITEM 1. CHANGE IN CONTROL OF REGISTRANT This Current Report on Form 8-K (the "Report") is filed by IXYS Corporation, a Delaware corporation formerly named Paradigm Technology, Inc. (the "Registrant"). This Report contains forward looking statements that involve risks and uncertainties, including risks that the integration of the operations, technologies, products and employees of IXYS USA, Inc., a Delaware corporation formerly named IXYS Corporation ("IXYS USA"), and the Registrant might not occur as anticipated; that the synergies expected to result from the merger described below might not occur as anticipated; that management's attention might be diverted from day-to-day business activities; and that greater than normal employee turnover might occur. In addition, there are normal risks and uncertainties associated with the Registrant's business, including risks relating to the timing and magnitude of product sales, timely development, acceptance and pricing of new products and technological advances and the impact of competitive conditions. Actual results and developments may differ materially from those described in this Report. For more information about the Registrant and risks relating to investing in the Registrant, refer to the Registrant's most recent reports on Form 10-K and Form 10-Q, and to Amendment No. 2 to the Form S-4 Registration Statement relating to the merger described below, as filed by the Registrant with the United States Securities and Exchange Commission (the "Commission"). On September 23, 1998, Paradigm Enterprises, Inc. ("Merger Sub"), which was a wholly-owned subsidiary of the Registrant, was merged with and into IXYS USA (the "Merger"), pursuant to an Agreement and Plan of Merger and Reorganization (the "Agreement") dated as of March 9, 1998, as amended, among IXYS USA, Merger Sub and the Registrant. In connection with the Merger, Michael Gullett and George Collins resigned as directors of the Registrant, and Nathan Zommer, Arnold Agbayani and Rolf Karg became directors of the Registrant. James Kochman was the only individual to remain a director of the Registrant before and after the Merger. Dr. Karg is affiliated with Asea Brown Boveri AG ("ABB"). Upon the Merger, Dr. Zommer became the President and Chief Executive Officer of the Registrant and Mr. Agbayani became the Vice President of Finance and Administration, Chief Financial Officer and Secretary of the Registrant. Pursuant to the Merger, Dr. Zommer acquired beneficial ownership of approximately 3,356,188 shares of Common Stock of the Registrant, representing approximately 27.9% of the outstanding Common Stock of the Registrant, and ABB and entities affiliated with ABB acquired approximately 5,452,419 shares of Common Stock of the Registrant, representing approximately 45.5% of the outstanding Common Stock of the Registrant. (The foregoing percentages were calculated in accordance with Rule 13d-3 promulgated under the Securities Exchange Act.) Dr. Zommer acquired shares of Common Stock of a California corporation predecessor to IXYS USA in exchange for a promissory note due and payable December 31, 1999, bearing interest at the rate of 5.79% per annum and in the original amount of $707,238.83 and such shares were pledged to the predecessor California corporation as security for such note. Such shares have successively been converted into shares of Common Stock of IXYS USA and 2. into shares of Common Stock of the Registrant. IXYS USA holds such promissory note and is the pledgee under the related pledge agreement. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. The Merger became effective at the time of the filing of a Certificate of Merger with the Delaware Secretary of State on September 23, 1998 (the "Effective Time"). At the Effective Time: (i) Merger Sub ceased to exist; (ii) IXYS USA, as the surviving corporation in the Merger, became a wholly-owned subsidiary of the Registrant; and (iii) subject to the provisions of the Agreement relating to the payment of cash in lieu of fractional shares, each share of IXYS USA Common Stock, par value $0.001 per share ("IXYS Common Stock"), and each share of IXYS Preferred Stock, par value $0.001 per share, outstanding immediately prior to the Effective Time (except for any such shares held by the Registrant as treasury stock and any such shares held by IXYS USA or any subsidiary of IXYS USA or the Registrant, which shares, if any, were canceled) was converted into the right to receive .057842 of a share of Common Stock, $0.01 par value per share, of the Registrant ("Registrant Common Stock"). Following the Merger, the Registrant changed its name to IXYS Corporation. In addition, pursuant to the Agreement, at the Effective Time, all rights with respect to IXYS Common Stock under IXYS USA stock options then outstanding, were converted into and became rights with respect to Registrant Common Stock, and the Registrant assumed each such outstanding IXYS USA stock option in accordance with the terms of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. By virtue of the assumption by the Registrant of such IXYS USA stock options, from and after the Effective Time: (i) each IXYS USA stock option assumed by the Registrant may be exercised solely for Registrant Common Stock; (ii) the number of shares of Registrant Common Stock subject to each such IXYS USA stock option is equal to the number of shares of IXYS Common Stock subject to such IXYS USA stock option immediately prior to the Effective Time multiplied by .057842 (the exchange ratio in the Merger), rounded down to the nearest whole share (with cash, less the applicable exercise price, being payable for any fraction of a share); and (iii) the per share exercise price under each such Registrant stock option was adjusted by dividing the per share exercise price under such Registrant stock option by .057842 and rounding up to the nearest cent. The former stockholders of IXYS USA are receiving approximately 11,513,821 shares of Registrant Common Stock pursuant to the Merger. In addition, approximately 274,914 shares of Registrant Common Stock may be issued in connection with the exercise of the IXYS USA stock options assumed by the Registrant. The Merger is intended to be a tax-free reorganization under the Internal Revenue Code of 1986, as amended, and is expected to be accounted for as a purchase. Prior to the Merger, all outstanding shares of Preferred Stock of the Registrant were converted into Common Stock of the Registrant, and a reverse stock split of the Common Stock of the Registrant, pursuant to which each 15 shares were combined into one share, occurred. Following such conversion and reverse stock split, and after giving effect to the Merger, as of September 3. 30, 1998, there were approximately 11,955,670 shares of Common Stock of Registrant outstanding, options to acquire approximately 281,773 shares of Common Stock of Registrant outstanding and warrants to acquire approximately 198,515 shares of Common Stock of Registrant outstanding. On such date, the weighted average exercise price per share of such options was approximately $5.94, the weighted average exercise price per share of the 195,881 warrants assumed under the Merger was approximately $1.42, and the weighted average exercise price per share of the 2,634 warrants which the Registrant had outstanding prior to the Merger was approximately $372.00. IXYS USA designs, develops and markets a broad spectrum of power semiconductors used primarily in controlling energy in motor drives, power conversion (including uninterruptible power supplies and switch mode power supplies) and medical devices. IXYS USA's power semiconductors convert electricity at relatively high voltage and current levels to create efficient power as required by a specific application. IXYS USA's target market includes segments of the power semiconductor market that require medium to high power semiconductors, with a particular emphasis on "higher power" semiconductors, which are semiconductors capable of processing greater than 500 watts of power. The Registrant intends to continue to use the assets of IXYS USA for the purposes for which such assets were used prior to the Merger. See Item 1 for additional information. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of the Business Acquired The audited consolidated financial statements of IXYS Corporation as of March 31, 1997 and 1998 and for the three years in the period ended March 31, 1998 were included as part of the Registration Statement on Form S-4 (No. 33-57003) filed by the registrant with the Commission on June 6, 1998, and incorporated by reference herein. The unaudited condensed consolidated financial statements of IXYS Corporation as of June 30, 1998 and for the three month periods ended June 30, 1997 and 1998 are included as Exhibit 99.1. (b) Pro Forma Financial Information The required pro forma financial information with respect to the acquired business referred to in Item 2 of this Report are included as Exhibit 99.1. (c) Exhibits EXHIBIT No. DESCRIPTION - ------- ----------- 2.1 Agreement and Plan of Merger and Reorganization dated as of March 9, 1998, as amended, among IXYS, Merger Sub and Paradigm./(1)/ 4. 23.1 Consent of PricewaterhouseCoopers LLP, independent accountants. 99.1 Financial Statements. ____________________________ /(1)/ Filed as an Annex to the Joint Proxy Statement/Prospectus forming part of the Registration Statement on Form S-4 (No. 333-57003) filed by the Registrant with the Commission on June 6, 1998, and incorporated by reference herein. Item 8. Change in Fiscal Year. In connection with the Merger on September 23, 1998, the Registrant's fiscal year end will become March 31 of each calendar year. Because the transaction constituted a reverse acquisition under generally accepted accounting principles, no transition report will be filed with the Commission. 5. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. IXYS CORPORATION Dated: October 8, 1998 By: /s/ Arnold P. Agbayani --------------------------------- Arnold P. Agbayani Vice President of Finance and Administration and Chief Financial Officer 6. Exhibit Index EXHIBIT NO. DESCRIPTION ------- ----------- 2.1 Agreement and Plan of Merger and Reorganization dated as of March 9, 1998, as amended, among IXYS, Merger Sub and Paradigm./(1)/ 23.1 Consent of PricewaterhouseCoopers LLP, independent accountants. 99.1 Financial Statements. ____________________________ /(1)/ Filed as an Annex to the Joint Proxy Statement/Prospectus forming part of the Registration Statement on Form S-4 (No. 333-57003) filed by Paradigm Technology, Inc. with the Commission on June 6, 1998, and incorporated by reference herein. EX-23.1 2 CONSENT OF PRICEWATERHOUSECOOPERS, LLP Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this report on Form 8-K of our report dated May 1, 1998, on our audit of the consolidated financial statements of IXYS Corporation as of March 31, 1997 and 1998, and for the three years in the period ended March 31, 1998, appearing in the registration statement on Form S-4 (SEC File No. 333-57003) of Paradigm Technology, Inc. filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended. /s/ PricewaterhouseCoopers LLP San Jose, California May 1, 1998 EX-99.1 3 FINANCIAL STATEMENTS EXHIBIT 99.1 IXYS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
March 31, June 30, ASSETS 1998 1998 ------------- ------------ Current assets: (unaudited) Cash and cash equivalents $ 10,594 $ 9,289 Accounts receivable, less allowance for doubtful accounts of $588 in 1998 and $944 in 1999 10,009 10,642 Inventories, net 17,103 19,100 Deferred income taxes 1,617 1,615 ------------- ------------ Total current assets 39,323 40,646 Plant and equipment, net of accumulated depreciation and amortization 10,602 11,097 Other assets 1,143 1,172 Deferred income taxes 3,272 3,272 ------------- ------------ Total assets $ 54,340 $ 56,187 ============= ============ LIABILITIES Current liabilities: Current portion of capitalized lease obligations $ 428 $ 584 Current portion of notes payable to bank 4,168 4,628 Current portion of mandatorily redeemable convertible preferred stock 9,300 9,300 Accounts payable 4,474 3,940 Accrued expenses and other liabilities 7,119 6,006 ------------- ------------ Total current liabilities 25,489 24,458 Notes payable to bank, net of current portion 6,624 7,040 Capitalized lease obligations, net of current portion 814 1,305 Pension liabilities 5,113 5,288 ------------- ------------ Total liabilities 38,040 38,091 ------------- ------------ Series A and B mandatorily redeemable convertible preferred stock, $.001 par value: Authorized: 116,000,000 shares in 1998 and 1999; Issued and outstanding: 111,409,671 shares in 1998 and 1999 28,256 28,256 (Aggregate liquidation value of $37,589 in 1998 and 1999) STOCKHOLDERS' DEFICIT Common stock, $.001 par value: Authorized: 250,000,000 shares in 1998 and 1999 Issued and outstanding: 72,211,873 shares in 1998 and 1999 72 72 Additional paid-in capital 1,001 1,001 Notes receivable from stockholders (936) (936) Accumulated deficit (11,359) (10,232) Cumulative translation adjustment (734) (65) ------------- ------------ Total stockholders' deficit (11,956) (10,160) ------------- ------------ Total liabilities, mandatorily redeemable convertible preferred stock and stockholders' deficit $ 54,340 $ 56,187 ============= ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 1 IXYS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (amounts in thousands, except per share data)
Three Months Ended June 30, ------------------------------- 1997 1998 --------------- -------------- (unaudited) Net revenues $ 13,247 $ 16,269 Cost of goods sold 8,328 11,448 --------------- -------------- Gross profit 4,919 4,821 --------------- -------------- Operating expenses: Research, development and engineering 731 730 Selling, general and administrative 2,188 2,300 --------------- -------------- Total operating expenses 2,919 3,030 --------------- -------------- Income from operations 2,000 1,791 Other income (expense), net (82) 16 --------------- -------------- Income before provision for income taxes 1,918 1,807 Provision for income taxes (868) (680) --------------- -------------- Net income $ 1,050 $ 1,127 =============== ============== Net income per share - basic $ 0.02 $ 0.02 =============== ============== Number of shares used in per share calculation - basic 65,501 72,212 =============== ============== Net income per share - diluted $ 0.01 $ 0.01 =============== ============== Number of shares used in per share calculation - diluted 201,866 205,343 =============== ==============
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 IXYS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (amounts in thousands, except per share data)
Three Months Ended June 30, -------------------- 1997 1998 ------- ------- (unaudited) Net income $ 1,050 $ 1,127 Other comprehensive income, net of tax: Foreign currency translation adjustments (251) 669 ------- ------- Comprehensive income $ 799 $ 1,796 ======= =======
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 IXYS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Three Months Ended June 30, -------------------------- 1997 1998 ------------ ------------ (unaudited) Cash flows from operating activities: Net income $ 1,050 $ 1,127 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 391 513 Provision for bad debts 368 334 Provision for excess and obsolete inventory (142) 670 (Gains) losses on foreign currency translation 187 542 Changes in operating assets and liabilities: Accounts receivable (488) (401) Inventories (262) (2,500) Prepaid expenses and other current assets (499) (422) Other assets (30) (24) Accounts payable 89 (571) Accrued expenses and other liabilities 848 (217) Pension liabilities 106 77 ------------ ------------ Net cash provided by (used in) operating activities 1,618 (872) ------------ ------------ Cash flows from investing activities: Purchases of plant and equipment (507) (879) ------------ ------------ Cash flows from financing activities: Proceeds from capital lease obligations 389 627 Principal payments on capital lease obligations (450) (319) ------------ ------------ Net cash provided by (used in) financing activities (61) 308 ------------ ------------ Effect of foreign exchange rate fluctuations on cash and cash equivalents (347) 138 ------------ ------------ Net increase (decrease) in cash and cash equivalents 703 (1,305) Cash and cash equivalents at beginning of year 8,231 10,594 ------------ ------------ Cash and cash equivalents at end of year $ 8,934 $ 9,289 ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 IXYS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Information as of June 30, 1998 and the quarters ended June 30, 1997 and 1998 and thereafter is unaudited) 1. Interim Financial Data (Unaudited): ---------------------------------- The unaudited financial statements for the quarters ended June 30, 1997 and 1998 have been prepared on the same basis as the audited financial statements and, in the opinion of management, include all material adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and results of operations in accordance with generally accepted accounting principles. Although certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission (S.E.C.), the Company believes the disclosures made are adequate to make the information presented not misleading. It is suggested that the accompanying financial statements be read in conjunction with the Company's annual financial statements for the year ended March 31, 1998 which have been included in Paradigm Technologies, Inc. Form S-4 filed with the S.E.C. (see Note 7). The Company's balance sheet as of March 31, 1998 was derived from the Company's audited financial statements, but does not include all disclosures necessary for the presentation to be in accordance with generally accepted accounting principles. 2. Foreign Currency Translation: ---------------------------- The local currency is considered to be the functional currency of the operations of IXYS GmbH. Accordingly, assets and liabilities are translated at the exchange rate in effect at year-end and revenues and expenses are translated at average rates during the year. Adjustments resulting from the translation of the accounts of IXYS GmbH into U.S. dollars are included in cumulative translation adjustment, a separate component of stockholders' deficit. Foreign currency transaction gains and losses are included as a component of other income and expense. 3. Computation of Net Income Per Share: ----------------------------------- The Company has adopted Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share," which is effective for all periods ending after December 15, 1997. SFAS 128 requires dual presentation of basic and diluted earnings per share (EPS) for complex capital structures on the face of the Statement of Income. Basic EPS is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution from the exercise or conversion of other securities into common stock. 5 IXYS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Information as of June 30, 1998 and the quarters ended June 30, 1997 and 1998 and thereafter is unaudited) 4. Recent Accounting Pronouncements: -------------------------------- In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an Enterprise and Related Information". This Statement establishes standards for disclosure about operating segments in annual financial statements and selected information in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. This Statement supersedes Statement of Financial Accounting Standards No. 14, "Financial Reporting for Segments of a Business Enterprise." The new standard becomes effective for the Company's fiscal year 1999 and requires that comparative information from earlier years be restated to conform to the requirements of this standard. The Company is evaluating the requirements of SFAS 131 and the effects, if any, on the Company's current reporting and disclosures. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), which establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the balance sheets and measure those instruments at fair value. This Statement becomes effective for the Company for fiscal years beginning after December 15, 1999. The Company is evaluating the requirements of SFAS 133 and the effects, if any, on the Company's current reporting and disclosures. 5. Comprehensive Income: -------------------- Effective in the first quarter of 1998, the Company has adopted Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income" (SFAS 130). Comprehensive income generally represents all changes in stockholders' equity except those resulting from investments or contributions by stockholders. The Company has reclassified earlier financial statements for comparative purposes. The only component of comprehensive income for the three months ended June 30, 1997 and 1998 was the change in the cumulative translation adjustment. 6 IXYS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Information as of June 30, 1998 and the quarters ended June 30, 1997 and 1998 and thereafter is unaudited) 6. Inventories: ----------- Inventories consist of the following (in thousands):
MARCH 31, JUNE 30, 1998 1998 ------- ------- Raw materials $ 3,789 $ 3,371 Work in progress 12,059 11,755 Finished goods 5,765 9,155 ------- ------- less inventory reserve 21,613 24,281 (4,510) (5,181) ------- ------- $17,103 $19,100 ======= =======
7. Acquisition and Merger: ---------------------- Effective September 23, 1998, the Company acquired and merged into Paradigm Technology, Inc. ("Paradigm"), a company that designs and markets fast SRAM products. The acquisition was structured as a reverse merger whereby Paradigm issued approximately 11,513,821 shares of its common stock in exchange for all outstanding shares of IXYS stock. At the conclusion of the merger, IXYS stockholders hold approximately 96% of the combined company. For financial accounting purposes, IXYS will be the surviving company and the historic financial information will be that of IXYS. 7 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION The following unaudited pro forma condensed combined financial statements give effect to the merger of Paradigm Technology, Inc. ("Paradigm") and IXYS Corporation ("IXYS") using the purchase method of accounting in accordance with generally accepted accounting principles. IXYS is considered the accounting acquiror. The unaudited pro forma condensed combined financial statements are based on the respective historical financial statements which are included in this Form 8-K or have previously been filed with the Securities and Exchange Commission (the "Commission") and are incorporated herein by reference. The unaudited pro forma condensed combined balance sheet assumes that the Merger took place on June 30, 1998 and combines Paradigm's June 30, 1998 historical balance sheet with IXYS' June 30, 1998 historical consolidated balance sheet. The unaudited pro forma condensed combined statement of operations assumes that the Merger took place as of April 1, 1997 for the twelve months ended March 31, 1998 and combines Paradigm's condensed statement of operations for the nine months ended December 31, 1997 (unaudited) and three months ended March 31, 1998 (unaudited) with IXYS' historical results of operations for the twelve months ended March 31, 1998. The unaudited pro forma condensed combined statement of operations for the three months ended June 30, 1998 combines Paradigm's condensed statement of operations (unaudited) for the three months ended June 30, 1998 with IXYS' condensed consolidated statement of operations for the same period (unaudited). The unaudited pro forma condensed combined financial statements are based on the estimates and assumptions set forth in the notes to such statements. The pro forma adjustments are based on a preliminary valuation of Paradigm that has yet to be finalized, made in connection with the development of the pro forma information for illustrative purposes to comply with the disclosure requirements of the Commission. The pro forma adjustments included in the unaudited pro forma condensed combined financial information may be revised upon the finalization of the valuation of the net assets acquired by IXYS. The unaudited pro forma condensed combined financial statements do not purport to be indicative of the results of operations for future periods or the combined financial position or results that would have been realized had the companies been a single entity during these periods. These unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and the related notes thereto of Paradigm and IXYS, which are included elsewhere herein or have previously been filed with the Commission. 8 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS for the three months ended June 30, 1998
Paradigm Technology, IXYS Pro Forma Pro Forma Inc. Corporation Adjustments Combined --------------- --------------- ----------------- -------------- Sales $ 1,036 $ 16,269 $ 17,305 Cost of sales 1,365 11,448 12,813 --------------- --------------- ------------- Gross profit (329) 4,821 4,492 --------------- --------------- ------------- Research and development 289 730 1,019 Selling, general and administrative 753 2,300 3,053 Amortization of intangibles $ 653 (1) 653 --------------- --------------- ----------------- ------------- Total operating expenses 1,042 3,030 653 4,725 --------------- --------------- ----------------- ------------- Operating income (loss) (1,371) 1,791 (653) (233) Other (income) expense, net 86 (16) 70 --------------- --------------- ----------------- ------------- Income (loss) before taxes (1,457) 1,807 (653) (303) Provision for income taxes (680) (680) --------------- --------------- ----------------- ------------- Net income (loss) $ (1,457) $ 1,127 $ (653) $ (983) =============== =============== ================= ============= Income (loss) per share - basic $ 0.02 $ (0.08) =============== ============= Shares used in per share calculation - basic 72,212 11,956 (2) =============== ============= Income (loss) per share - diluted $ 0.01 $ (0.08) =============== ============= Shares used in per share calculation - diluted 205,343 11,956 (2) =============== =============
See accompanying notes to unaudited pro forma condensed combined statement of operations. 9 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS: (1) Adjustment reflects the amortization of the amount of the purchase price allocated to identified intangible assets over three months ended June 30, 1998. Intangibles are being amortized over 2 years. (2) Shares used in the per share calculation reflect 11.5 million shares issued to IXYS stockholders as if they were outstanding from April 1, 1998 and Paradigm shares following the reverse stock split and assuming that all preferred stock had converted to common stock as of April 1, 1998. Shares used in proforma income (loss) per share calculations for the three months ended June 30, 1998 are as follows (in thousands): IXYS shares based on actual exchange ratio 11,514 Paradigm shares following one-for-fifteen reverse split and conversion of all preferred stock 442 ------ Shares used in per share calculation - basic and diluted 11,956 ====== 10 UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS for the year ended March 31, 1998 (unaudited)
Paradigm Technology, IXYS Pro Forma Pro Forma Inc. (3) Corporation Adjustments Combined -------------- ------------ ------------- ----------- Sales $ 10,791 56,856 $ 67,647 Cost of sales 10,402 38,048 48,450 -------------- ------------ ----------- Gross profit 389 18,808 19,197 -------------- ------------ ----------- Research and development 2,527 3,329 5,856 Selling, general and administrative 4,040 8,384 12,424 Amortization of intangibles $ 2,611 (1) 2,611 -------------- ------------ ------------- ----------- Total operating expenses 6,567 11,713 2,611 20,891 -------------- ------------ ------------- ----------- Operating income (loss) (6,178) 7,095 (2,611) (1,694) Other (income) expense, net 1,049 (3,218) (2,169) -------------- ------------ ------------- ----------- Income (loss) before taxes (7,227) 10,313 (2,611) 475 Provision for income taxes (4,229) (4,229) -------------- ------------ ------------- ----------- Net income (loss) $ (7,227) $ 6,084 $ (2,611) (3,754) ============== ============ ============= =========== Income (loss) per share - basic $ 0.09 $ (0.31) ============ =========== Shares used in per share calculation - basic 65,501 11,956 (2) ============ =========== Income (loss) per share - diluted $ 0.03 $ (0.31) ============ =========== Shares used in per share calculation - diluted 201,866 11,956 (2) ============ ===========
See accompanying notes to unaudited pro forma condensed combined statement of operations. 11 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS: (1) Adjustment reflects the amortization of the amount of the purchase price allocated to identified intangible assets and goodwill over twelve months ending March 31, 1998. Intangible assets are being amortized over 2 years. (2) Shares used in the per share calculation reflect 11.5 million shares issued to IXYS stockholders as if they were outstanding from April 1, 1997 and Paradigm shares following the reverse stock split and assuming that all preferred stock had converted to common stock as of April 1, 1997. Shares used in proforma income (loss) per share calculations for the twelve months ended March 31, 1998 are as follows (in thousands): IXYS shares based on actual exchange ratio 11,514 Paradigm shares following one-for-fifteen reverse split and conversion of all preferred stock 442 ------ Shares used in per share calculation - basic and diluted 11,956 ====== (3) The twelve months ended March 31, 1998 for Paradigm is unaudited and consists of the last three quarters of Paradigm's fiscal year ended December 31, 1997 and the first quarter of its fiscal year ending December 31, 1998. 12 UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET JUNE 30, 1998 (in thousands)
Paradigm Technology, IXYS Pro Forma Pro Forma Inc. Corporation Adjustments Combined ---------------- -------------- -------------- -------------- Cash and cash equivalents $ 254 $ 9,289 $ 9,543 Accounts receivable 891 10,215 11,106 Inventories 2,230 19,100 21,330 Other current assets 158 2,042 2,200 Intangible assets $ 5,221 (1) 5,221 Property and equipment, net 2,305 11,097 13,402 Other 113 4,444 4,557 ---------------- -------------- -------------- -------------- Total $ 5,951 $ 56,187 $ 5,221 $ 67,359 ================ ============== ============== ============== Current liabilities $ 5,017 $ 24,458 $ (9,300)(2) $ 20,175 Long-term liabilities 316 13,633 13,949 Mandatorily redeemable preferred stock, net 28,256 (28,256)(2) Stockholders' equity (deficit) 618 (10,160) 37,556 35,301 5,221 (1) 5,707 (3) (5,707)(3) ---------------- -------------- -------------- -------------- $ 5,951 $ 56,187 $ 5,221 $ 67,359 ================ ============== ============== ==============
See accompanying notes to unaudited pro forma condensed combined balance sheet. 13 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET: (1) Reflects allocation of a portion of the estimated purchase price of $5.6 million and assumption of liabilities in the amount of $6.7 million to goodwill and identified intangible assets and the related deferred tax liability. The total purchase price of $5.6 million was calculated based on the market price of Paradigm common stock at the date of the transaction ($0.71875 per share on September 23, 1998) multiplied by Paradigm's total stock outstanding (6,627,735 shares of common stock which includes the common stock issued upon conversion of all Paradigm preferred stock) and includes approximately $800,000 of transaction related costs born by IXYS. The excess of the purchase price over the net assets of Paradigm has been allocated to current products ($761), workforce and other identified intangibles ($597), goodwill ($3,863), and in-process research and development ($5,707). IXYS' management estimates that the net book value of Paradigm's fixed assets approximate their fair value at the purchase date. (2) Reflects the conversion of IXYS mandatorily redeemable convertible preferred stock into IXYS common stock at the date of the transaction. (3) Reflects the impact on stockholders' equity of the anticipated write-off of in-process research and development in the amount of $5,707, net of income tax effects. Amount is initially recorded in paid-in-capital and then is expensed into accumulated deficit. 14 -----END PRIVACY-ENHANCED MESSAGE-----