6-K/A 1 a2027681z6-ka.txt FORM 6-K/A Form 6-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 12a-16 or 15d-16 of the Securities Exchange Act of 1934 May 18, 2000 Commission File No 0-26498 NUR MACROPRINTERS LTD. (Exact Name of Registrant as specified in its Charter) Not Applicable (Translation of Registrant's Name into English) 6 David Navon Street Moshav Magshimim 56910 Israel (Address and principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-f or Form 40-f. Form 20-F /X/ Form 40-F / / Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-b(b) under the Securities Exchange Act of 1934. Yes / / No /X/ If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). Financial Statements and Pro Forma Financial Information filed herewith. (a) Financial Statements of Business Acquired. Combined financial statements of Salsa Digital Group, as defined in Note 1 thereto, including the following, are included as a part of this Form 6-K/A: o Report of Independent Auditors o Combined Balance Sheets for the years ended December 31, 1998 and December 31, 1999 and for the six months ended June 30, 2000 (unaudited) o Combined Statements of Operations for the years ended December 31, 1997, December 31, 1998 and December 31, 1999, and for the six months ended June 30, 1999 (unaudited) and June 30, 2000 (unaudited). o Statements of Changes in Partners' Account, balance as of January 1, 1997, December 31, 1997, December 31, 1998, December 31, 1999 and June 30, 2000 (unaudited) o Combined Statements of Cash Flows for the years ended December 31, 1997, December 31, 1998 and December 31, 1999, and for six months ended June 30, 1999 (unaudited) and June 30, 2000 (unaudited) o Notes to Combined Financial Statements (b) Pro Forma Financial Information Unaudited pro forma condensed financial statements of the Registrant giving effect to the acquisition of Salsa Digital Group, including the following are included as a part of this Form 6-K/A and are incorporated herein by this reference: o Unaudited Pro Forma Combined Condensed Balance Sheet at June 30, 2000 o Unaudited Pro Forma Combined Condensed Statement of Operations for the six months ended June 30, 2000 and for the year ended December 31, 1999 o Notes to Unaudited Pro Forma Combined Condensed Financial Statements SALSA DIGITAL GROUP COMBINED FINANCIAL STATEMENTS AS OF JUNE 30, 2000 IN U. S. DOLLARS INDEX PAGE ------------- REPORT OF INDEPENDENT AUDITORS F-2 COMBINED BALANCE SHEETS F-3 - F-4 COMBINED STATEMENTS OF OPERATIONS F-5 STATEMENTS OF CHANGES IN PARTNERS' ACCOUNT F-6 COMBINED STATEMENTS OF CASH FLOWS F-7 NOTES TO COMBINED FINANCIAL STATEMENTS F-8 - F- 16 - - - - - - - - - - - - ERNST & YOUNG [LOGO] -- KOST FORER & GABBAY -- Phone: 972-3-6232525 3 Aminadav St. Fax: 972-3-5622555 Tel-Aviv 67899, Israel REPORT OF INDEPENDENT AUDITORS SALSA DIGITAL GROUP We have audited the accompanying combined balance sheets of Salsa Digital Group ("The Group" as listed in Note 1) as of December 31, 1998 and 1999 and the related combined statements of operations, changes in partners' account and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. 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 audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the Group as of December 31, 1998 and 1999 and the combined results of its operations and cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Tel-Aviv, Israel KOST FORER & GABBAY August 15, 2000 A Member of Ernst & Young International F-2 SALSA DIGITAL GROUP COMBINED BALANCE SHEETS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
DECEMBER 31, -------------------- June 30, 1998 1999 2000 --------- --------- --------- UNAUDITED --------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 157 $ 256 $ 1,726 Trade receivables (net of allowance for doubtful accounts: $ 781, $ 1,200, and $ 985 as of December 31, 1998 and 1999 and June 30, 2000, respectively) 4,436 4,051 5,948 Other accounts receivable and prepaid expenses (Note 3) 1,064 739 542 Inventories (Note 4) 7,305 5,744 3,844 --------- --------- --------- TOTAL current assets 12,962 10,790 12,060 --------- --------- --------- LONG-TERM INVESTMENTS: Long-term trade receivable 198 - - Long-term lease deposit 47 53 53 --------- --------- --------- TOTAL long-term investments 245 53 53 --------- --------- --------- PROPERTY AND EQUIPMENT, NET (Note 5) 1,815 2,536 2,216 --------- --------- --------- TOTAL assets $ 15,022 $ 13,379 $ 14,329 ========= ========= =========
The accompanying notes are an integral part of the combined financial statements. F-3 SALSA DIGITAL GROUP COMBINED BALANCE SHEETS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
DECEMBER 31, ----------------------------- June 30, 1998 1999 2000 --------- --------- --------- UNAUDITED --------- LIABILITIES AND PARTNERS' ACCOUNT CURRENT LIABILITIES: Short-term bank credit $ 342 $ - $ - Trade payables 1,981 2,413 2,090 Accrued expenses and other liabilities (Note 6) 2,603 2,397 2,146 Customer advances 754 808 1,037 --------- --------- --------- TOTAL current liabilities 5,680 5,618 5,273 --------- --------- --------- PARTNERS' ACCOUNT 9,342 7,761 9,056 --------- --------- --------- TOTAL liabilities and partners' account $ 15,022 $ 13,379 $ 14,329 ========= ========= =========
The accompanying notes are an integral part of the combined financial statements. F-4 SALSA DIGITAL GROUP COMBINED STATEMENTS OF OPERATIONS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
YEAR ENDED SIX MONTHS ENDED DECEMBER 31, JUNE 30, ------------------------------ ------------------- 1997 1998 1999 1999 2000 -------- -------- -------- -------- -------- UNAUDITED ------------------- Sales $ 13,049 $ 24,906 $ 33,070 $ 15,598 $ 17,498 Cost of sales 5,844 14,250 19,556 8,980 10,462 -------- -------- -------- -------- -------- Gross profit 7,205 10,656 13,514 6,618 7,036 -------- -------- -------- -------- -------- Operating expenses: Research and development 243 690 1,844 922 591 Selling and marketing 3,071 4,015 5,053 2,686 3,679 General and administrative 949 2,870 6,402 2,566 1,762 Impairment of property and equipment -- -- -- -- 288 -------- -------- -------- -------- -------- TOTAL operating expenses 4,263 7,575 13,299 6,174 6,320 -------- -------- -------- -------- -------- Operating income 2,942 3,081 215 444 716 Financial expenses (income), net 184 263 202 151 (45) -------- -------- -------- -------- -------- 2,758 2,818 13 293 761 Taxes on income -- 47 45 2 34 -------- -------- -------- -------- -------- Net income (loss) $ 2,758 $ 2,771 $ (32) $ 291 $ 727 ======== ======== ======== ======== ========
The accompanying notes are an integral part of the combined financial statements. F-5 SALSA DIGITAL GROUP STATEMENTS OF CHANGES IN PARTNERS' ACCOUNT -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS PARTNERS' ACCOUNT -------- Balance as of January 1, 1997 $ 4,848 Accrued interest on partners` account (184) Contribution from partners 446 Net income 2,758 -------- Balance as of December 31, 1997 7,868 Accrued interest on partners` account (270) Distribution to partners (1,027) Net income 2,771 -------- Balance as of December 31, 1998 9,342 Accrued interest on partners` account (207) Distribution to partners (1,342) Net loss (32) -------- Balance as of December 31, 1999 7,761 Contribution from partners (unaudited) 568 Net income (unaudited) 727 -------- Balance as of June 30, 2000 (unaudited) $ 9,056 ======== The accompanying notes are an integral part of the combined financial statements. F-6 SALSA DIGITAL GROUP COMBINED STATEMENTS OF CASH FLOWS ------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
YEAR ENDED SIX MONTHS ENDED DECEMBER 31, JUNE 30, ------------------------------- --------------------- 1997 1998 1999 1999 2000 --------- --------- ---------- ---------- ---------- UNAUDITED --------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 2,758 $ 2,771 $ (32) $ 291 $ 727 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 652 548 624 283 243 Impairment of property and equipment - - - - 288 Decrease (increase) in trade receivables and long-term trade receivables, net (2,732) 318 583 (189) (1,897) Decrease (increase) in other accounts receivable and prepaid expenses 91 (1,025) 325 502 197 Decrease (increase) in inventories (1,075) (3,506) 1,561 (240) 1,900 Increase (decrease) in trade payables (22) 983 432 706 (323) Increase (decrease) in accrued expenses and other liabilities 844 1,160 (206) (644) (251) Increase in customer advances - 754 54 8 229 Accrued interest on partners' account (184) (270) (207) (147) - --------- --------- ---------- ---------- ---------- Net cash provided by operating activities 332 1,733 3,134 570 1,113 --------- --------- ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (778) (844) (1,345) (180) (211) Investment in long-term lease deposit - (47) (6) (6) - --------- --------- ---------- ---------- ---------- Net cash used in investing activities (778) (891) (1,351) (186) (211) --------- --------- ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Contribution from (distribution to) partners 446 (1,027) (1,342) 47 568 Short-term bank credit, net - 342 (342) (342) - --------- --------- ---------- ---------- ---------- Net cash provided by (used in) financing activities 446 (685) (1,684) (295) 568 --------- --------- ---------- ---------- ---------- Increase in cash and cash equivalents - 157 99 89 1,470 Cash and cash equivalents at the beginning of the period - - 157 157 256 --------- --------- ---------- ---------- ---------- Cash and cash equivalents at the end of the period $ - $ 157 $ 256 $ 246 $ 1,726 ========= ========= ========== ========== ==========
The accompanying notes are an integral part of the combined financial statements. F-7 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS NOTE 1:- GENERAL Salsa Digital Group ("the Group" or "Salsa") is engaged in the development, manufacturing and selling of digital printing systems for on-demand, short-run, wide format and super wide format printing, and also in selling of related consumable products. The Group operates in the U.S. in a form of a partnership ("The Partnership"), in Japan through a subsidiary of the Partnership, and in Brazil through a company held by the partners (the combined company). The Group's operations in Belgium are conducted in a form of a branch of the Partnership, while the operations in China and Dubai are conducted in a form of representative offices. The accompanying financial statements refer to the combined Group. In 1978, Sign-Tech, the predecessor of the Group, was founded by the Gandy family in Toronto, and was engaged in the manufacturing of extrusions used for black-lit acrylic signs. Later it expanded its operations also to the manufacturing of ink, substrates and ink-jet printers. In 1986, Sign-Tech was listed on the Toronto Stock Exchange, until its bankruptcy in 1992. In 1993, the Gandy family repurchased the operations from the trustee, and started operating in the form of a partnership, with worldwide branches and companies under the partnership and the partners' control. On February 29, 2000, the family, in two separate transactions, sold the extrusion and substrates operations and the Sign-Tech name, and continued the ink and ink-jet printers operations in a new partnership, Salsa Digital Group. On May 17, 2000 the Partnership and its related entities entered into an acquisition agreement with Nur Macroprinters Ltd. ("Nur") and its subsidiaries. According to the agreement, Nur and its subsidiaries acquired as of July 3, 2000, all the assets and assumed liabilities of the Group, in a total of $ 30 million, $ 20 million in cash and the rest in 666,667 ordinary shares of Nur. The acquired assets included: cash and cash equivalents, trade receivables, inventories, machinery and equipment, shares of a subsidiary in Japan, intellectual property, rights and interest in existing contracts, leases, permits and other instruments, prepaid expenses and the license rights to manufacture and market existing products. The liabilities assumed included: accounts payable, accrued expenses, deferred revenues, and other related liabilities. Since, as discussed above, Sign-Tech went through many changes, as well as legal changes, during the periods presented, management is of the opinion that it is more meaningful to present only the financial statements of the Salsa's operations acquired by Nur. Therefore, these financial statements refer to the carved-out, acquired ink and ink-jet printer operations, purchased by Nur and its subsidiaries. F-8 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS NOTE 2: SIGNIFICANT ACCOUNTING POLICIES The Group's combined financial statements have been prepared in accordance with generally accepted accounting principles in the United States. a. Basis of presentation: These financial statements include the acquired ink and ink-jet printers operations of the Group, as well as the related assets and liabilities. Certain items in the statements of operations have been recorded on a direct cost basis. Such items include: revenues from sales of ink and ink-jet printers, cost of revenues, selling, advertising and sales promotion costs, and certain general and administrative expenses (mainly bad debts). Certain selling and general expenses have been allocated to the Group proportion to the Group's sales. Management believes that such allocation method is reasonable in the circumstances. The financial information included in the financial statements does not necessarily reflect the financial position and results of operations of the Group if it had been a separate, stand-alone company during the reported periods. b. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. c. Financial statements in U.S. dollars: The accompanying combined financial statements have been prepared in U.S. dollars. Since the U.S. dollar is the primary currency in the economic environment in which the Group operates, the U.S. dollar is its functional and reporting currency. The Group's transactions and balances denominated in U.S. dollars are presented at their original amounts. Non-dollar transactions and balances have been remeasured into U.S. dollars in accordance with Statement 52 of the Financial Accounting Standards Board ("FASB") "Foreign Currency Translation". All transaction gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations as financial income or expenses, as appropriate. F-9 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS d. Principles of combination: The combined financial statements include the accounts of the Partnership (including the representative offices in China and Dubai), its subsidiary in Japan, its branch in Belgium, and the company in Brazil, owned by the partners but operated under the control of the Group. All Group transactions and balances, including profits from Group sales not yet realized outside the Group, have been eliminated in combination. e. Cash equivalents: The Group considers all highly liquid investments originally purchased with maturities of three months or less to be cash equivalents. f. Inventories: Inventories are stated at the lower of cost or market value. The Group annually reviews the inventory for obsolescence, based on the sales activity of its products, and provides a reserve where appropriate. Cost is determined as follows: Raw materials - using the "first in, first out" method. Work-in-progress and finished products - includes materials, labor and manufacturing overhead costs. g. Property and equipment: These assets are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The annual depreciation rates are as follows: % ------------------------- Machinery and industrial equipment 10 - 33 Office furniture and equipment 10 Leasehold improvements Over the term of the lease period Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Dispossed Of" requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets is less than the asset's carrying amount. The Group periodically assesses the recoverability of the carrying amount of property and equipment and provides for any impairment loss based upon the difference between the carrying amount and fair value of such assets. In the period ended June 30, 2000 the Group has recognized an impairment loss on machinery and industrial equipment in the amount of $ 288. F-10 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS h. Retirement Savings Plan The Group maintained a retirement savings plan (401(k) Plan) covering all nonunion full-time employees with six months of service. Contributions to the 401(k) Plan are at the discretion of the employee subject to the terms of the 401(k) Plan with a portion of the contribution matched at the discretion of the Group. There was approximately $ 10, $ 65 and $ 74 in expenses under the 401(k) Plan for the years ended December 31, 1997, 1998 and 1999, respectively. i. Income taxes: Since the Group was formed as a limited partnership, and not as a stand-alone taxable entity, the income and deductions of the Group for tax purposes are included in tax returns of the individual partners. Therefore, no provision for income tax is included in the accompanying combined financial statements with respect to the U.S. Partnership, except for the companies in Japan and Brazil and the branch in Belgium, which were immaterial. j. Revenue recognition Revenues from sales of products are recognized upon shipment provided that no significant vendor obligations remain and collection is deemed probable. Deferred revenues include unearned amounts billed to customers but not recognized as revenues. k. Warranty costs: The Group provides a warranty for up to six months, at no extra charge. A provision which to date has been insignificant is recorded for probable costs, in connection with warranties, based on the Group experience (in respect of most of these costs the Group has warranties from its suppliers). l. Research and development costs: Research and development costs are charged to expenses as incurred. m. Advertising costs: The Group expenses advertising costs, as incurred. Advertising expenses for the years ended December 31, 1997, 1998 and 1999, were $ 2,003, $ 1,197 and $ 1,255 respectively. F-11 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS n. Concentrations of credit risk: SFAS No. 105, "Disclosure of Information About Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk", requires disclosure of any significant off-balance-sheet and credit risk concentrations. The Group has no significant off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash and cash equivalents, long-term trade receivables and trade receivables. Cash and cash equivalents are deposited with major banks mainly in the U.S. Management believes that the financial institutions that hold the Group's cash and cash equivalents are financially sound, and, accordingly, minimal credit risk exists with respect to these financial instruments. The Group's trade receivables are mainly derived from sales to customers in the United States, Asia and Europe. The Group has adopted credit policies and standards intended to accommodate industry growth and inherent risk. Management believes that credit risks are moderated by the diversity of its end customers. The Group performs ongoing credit evaluations of its customers' financial condition and requires collateral as deemed necessary. In management's estimation, the allowance for doubtful accounts adequately covers anticipated losses in respect of its trade receivables credit risks. The allowance for doubtful accounts is determined with respect to specific debts that are doubtful of collection. o. Fair value of financial instruments: SFAS No. 107, "Disclosure About Fair Value of Financial Instruments" requires disclosures about the fair value of financial instruments. The estimated fair value of financial instruments has been determined by the Group, using available market information and valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein may not be indicative of the amounts that the Group could realize in a current market exchange. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. The carrying values of cash and cash equivalents, trade receivables, short-term bank credit and trade payables approximate fair values due to the short-term maturities of these instruments. The carrying amount of the Group's long-term trade receivables approximates its fair value. The fair value was estimated using discounted cash flow analysis, based on the Group's incremental rates for similar types of investment arrangements. F-12 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS p. Impact of recently issued accounting standards: In June 1998, the Financial Accounting Standards Board issued SFAS No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133") and its amendments Statements 137 and 138 in June 1999 and June 2000, respectively. These statements establish accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. These statements also require that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a business must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. The FASB has issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133". The Statement defers for one year the effective date of SFAS No. 133. The rule will apply to all fiscal quarters of all fiscal years commencing after June 15, 2000. The Group does not expect the impact of this new statement on the Group's combined balance sheets or results of operations, to be material. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements", as amended, which provides guidance related to revenue recognition based on interpretations and practices followed by the SEC. SAB 101 was effective the fourth fiscal quarter of 2000 and requires companies to report any changes in revenue recognition as cumulative change in accounting principle at the time of implementation in accordance with APB 20, "Accounting Changes". The Group has considered the effect of adoption of SAB101. Such adoption of SAB 101 will not have a material effect on the combined financial position or results of operations of the Group. q. Interim financial information: The financial statements include the unaudited combined balance sheet as of June 30, 2000, the statement of changes in partners' account for the six months ended June 30, 2000 and the combined statements of operations and cash flows for the six months ended June 30, 1999 and 2000. In the opinion of management, such financial information has been prepared on the same basis as the annual financial statements and includes all adjustments (consisting only of normal recurring adjustments), which the Group considers necessary for a fair presentation of the financial position at such date, and the operating results and cash flows for the respective periods. Results for the interim period are not necessarily indicative of the results to be expected for the entire year. F-13 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS NOTE 3:- OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES DECEMBER 31, --------------------- 1998 1999 --------- ------- Government authorities $ 50 $ 21 Advances to suppliers 463 463 Prepaid expenses 330 84 Other 221 171 --------- ------- $ 1,064 $ 739 ========= ======= NOTE 4:- INVENTORIES DECEMBER 31, ------------------------ JUNE 30, 1998 1999 2000 ----------- ------- ---------- UNAUDITED ---------- Raw materials $ 2,941 $ 1,945 $ 2,059 Work-in-progress 1,598 221 181 Finished products 2,766 3,578 1,605 ----------- ------- -------- $ 7,305 $ 5,744 $ 3,844 =========== ======= ======== NOTE 5:- PROPERTY AND EQUIPMENT DECEMBER 31, ------------------- 1998 1999 -------- -------- Cost: Machinery and industrial equipment $ 2,884 $ 4,218 Office furniture and equipment 27 37 Leasehold improvements 10 11 -------- -------- 2,921 4,266 -------- -------- Accumulated depreciation: Machinery and industrial equipment 1,093 1,707 Office furniture and equipment 10 18 Leasehold improvements 3 5 -------- ------- 1,106 1,730 -------- ------- Depreciated cost $ 1,815 $ 2,536 ======== ======= F-14 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS NOTE 6:- ACCRUED EXPENSES AND OTHER LIABILITIES
DECEMBER 31, -------------------------- 1998 1999 -------- -------- Employees and payroll accruals $ 136 $ 259 Government authorities 247 267 Deferred revenues 463 116 Warranty and installation 311 400 Provision for legal settlement (1) 850 850 Accrued expenses 596 505 -------- -------- $ 2,603 $ 2,397 ======== ========
(1) This was a result of a legal settlement, which awarded a third party in the amount of $850 thousands, which are included in General and Administrative expenses in the year ended December 31, 1998. NOTE 7:- CONTINGENT LIABILITIES From time to time, the Group may have certain contingent liabilities that arise in the ordinary course of its business activities. The Group accounts for contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. In the opinion of management, based on consultations with its legal advisors, there are no pending claims of which the outcome is expected to result in a material adverse effect on the financial position or the results of operations or cash flows of the Group. NOTE 8:- RELATED PARTY TRANSACTIONS The Group incurred management fees charged by its general partner, which consist of executive salaries and income tax liability reimbursements made to the unit holders who are also executives. Management fees in the amounts of approximately $ 352, $ 398 and $ 642, are included in general and administrative expenses for the years ended December 31, 1997, 1998 and 1999, respectively. On March 1, 2000, upon the sale of the non-inkjet division to a third party, the Group entered into an agreement with the partners for the lease of the office and manufacturing space of the Group in the U.S. Lease expenses for the four months ended June 30, 2000 which are included in general and administrative expenses are in the amount of $ 122. Prior to that, the Group used the facility at no charge. Financial expenses presented in the combined statements of operations consist of interest to partners in respect of partners' account, calculated at an annual rate of 6%. Amounts of long-term liabilities attributed to the carved out partnership were retained by the parents and thus included in the partners' account. F-15 SALSA DIGITAL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS NOTE 9:- REPORTABLE SEGMENTS DATA Summary information about geographic areas: The Group consists of one reportable segment (See note 1 for a brief description of the Group's operations). This data is presented in accordance with SFAS 131 "Disclosures About Segments of an Enterprise and Related Information", which the Group has retroactively adopted for all periods presented. The following presents total revenues for the years ended December 31, 1997, 1998 and 1999 and for the six months ended June 30, 2000, and long-lived assets as of December 31, 1997, 1998 and 1999 and as of June 30, 2000, based on the country of domicile:
DECEMBER 31, ------------------------------------------------------ JUNE 30, 1997 1998 1999 2000 ----------------- ----------------- ----------------- ------------------- UNAUDITED ------------------- LONG- LONG- LONG- LONG- TOTAL LIVED TOTAL LIVED TOTAL LIVED TOTAL LIVED REVENUES ASSETS REVENUES ASSETS REVENUES ASSETS REVENUES ASSETS -------- -------- -------- ------- ------- -------- -------- -------- Asia $ - $ - $ 2,690 $ 68 $ 3,367 $ 69 $ 2,311 $ 65 America 12,932 1,507 21,354 1,783 27,753 2,505 12,935 2,189 Europe 117 12 862 11 1,950 15 2,252 15 -------- -------- -------- ------- ------- -------- -------- -------- $13,049 $ 1,519 $24,906 $ 1,862 $33,070 $ 2,589 $ 17,498 $ 2,269 ======== ======== ======== ======= ======= ======== ======== ========
------------ F-16 UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS The following Unaudited Pro Forma Combined Condensed Balance Sheet at June 30, 2000 gives effect to the acquisition of Salsa Digital Group ("The Group" or "Salsa") by Nur Macroprinters Ltd. and its subsidiaries ("Nur" or "the Company") on July 3, 2000, as if it had occurred at that date. The following Unaudited Pro Forma Combined Condensed Statements of Operations for the year ended December 31, 1999 and for the six months period ended June 30, 2000 give effect to the acquisition as if it had occurred on January 1, 1999. The pro forma financial statements give effect to the acquisition using the "purchase" method of accounting after giving effect to the Pro Forma adjustments described in the accompanying notes; the purchase price, including transaction costs has been allocated to the acquired assets and liabilities of the Group (including in process Research and Development) based on their estimated fair values at the date of acquisition. The excess of the consideration paid by Nur in the acquisition over the fair value of the Group's identifiable assets and liabilities has been recorded as goodwill. This pro forma information should be read in conjunction with the respective audited consolidated historical financial statements (including notes thereto) of Nur and the Group, for the year ended December 31, 1999 and for the six months period ended June 30, 2000, appearing elsewhere herein. The following information is not necessarily indicative of the future financial position or operating results of the combined company or the financial position or operating results of the combined company had the acquisition occurred at the dates indicated. The pro forma adjustments are based on available financial information and certain estimates and assumptions that the Company believes are reasonable and that are set forth in the notes to the unaudited pro forma combined financial information. We have undertaken an independent study to identify and determine the fair value of the Group's intangible assets (as for the allocation of the purchase price see Note c). NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
JUNE 30, 2000 -------------------------------------------------------- PRO FORMA PRO FORMA NUR SALSA ADJUSTMENTS NOTE COMBINED ---------- ---------- ------------ ---------- ---------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,295 $ 1,726 $ (962) 2a $ 9,059 Trade receivables 22,437 5,948 -- 28,385 Other accounts receivable and prepaid expenses 5,640 542 -- 6,182 Inventories 12,106 3,844 -- 15,950 ---------- ---------- ---------- -------- Total current assets 48,478 12,060 (962) 59,576 ---------- ---------- ---------- -------- LONG-TERM INVESTMENTS: Investments and other non-current assets 1,162 53 -- 1,215 Severance pay fund 614 -- -- 614 ---------- ---------- ---------- -------- Total long-term investments 1,776 53 -- 1,829 ---------- ---------- ---------- -------- PROPERTY AND EQUIPMENT, NET 2,695 2,216 -- 4,911 ---------- ---------- ---------- -------- GOODWILL AND OTHER INTANGIBLE ASSETS, NET 21 -- 17,439 2e 17,460 ---------- ---------- ---------- -------- Total assets $52,970 $14,329 $16,477 $83,776 ========== ========== ========== ========
2 NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
JUNE 30, 2000 ----------------------------------------------------------- PRO FORMA PRO FORMA NUR SALSA ADJUSTMENTS NOTE COMBINED ---------- ---------- ------------ ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short term bank credit $ 4,675 $ -- $ -- $ 4,675 Current maturities of long-term loans 762 -- 5,000 2a 5,762 Trade payables 8,951 2,090 -- 11,041 Accrued expenses and other liabilities 10,160 2,146 395 2c 12,701 Advances from customers 605 1,037 -- 1,642 -------- ------- ------- ------- Total current liabilities 25,153 5,273 5,395 35,821 -------- ------- ------- ------- LONG TERM LIABILITIES: Long-term loans 1,237 -- 15,000 2a 16,237 Long-term liabilities 147 -- -- 147 Accrued severance pay 853 -- -- 853 -------- ------- ------- ------- Total long-term liabilities 2,237 -- 15,000 17,237 -------- ------- ------- ------- SHAREHOLDERS' EQUITY: Share capital 3,138 -- 164 2d 3,302 Additional paid-in capital 19,919 -- 9,274 2d 29,193 Accumulated other comprehensive loss (458) -- -- (458) Retained earnings (accumulated deficit) 2,981 -- (4,300) 2d (1,319) Partner's account -- 9,056 (9,056) 2d -- -------- ------- ------- ------- Total shareholders' equity 25,580 9,056 (3,918) 30,718 -------- ------- ------- ------- Total liabilities and shareholders' equity $52,970 $14,329 $16,477 $83,776 ======== ======= ======= =======
3 NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
SIX MONTH ENDED JUNE 30, 2000 --------------------------------------------------------------------- PRO FORMA PRO FORMA NUR SALSA ADJUSTMENTS NOTE COMBINED ---------- ------- ----------- ---- ---------- Sales $ 45,627 $17,498 $ -- $ 63,125 Cost of sales 23,580 10,462 -- 34,042 ---------- ------- ------- ---------- Gross profit 22,047 7,036 -- 29,083 ---------- ------- ------- ---------- Operating expenses: Research and development expenses, net 3,847 591 -- 4,438 Selling and marketing expenses, net 7,338 3,679 -- 11,017 General and administrative expenses 4,184 1,762 61 2g 6,007 Impairment of property and equipment -- 288 -- 288 Amortization of goodwill and other intangible assets -- -- 1,453 2e 1,453 ---------- ------- ------- ---------- Total operating expenses 15,369 6,320 1,514 23,203 ---------- ------- ------- ---------- Operating income (loss) 6,678 716 (1,514) 5,880 Financial income (expenses), net (375) 45 -- (330) Other income, net 8 -- -- 8 ---------- ------- ------- ---------- Income before taxes on income 6,311 761 (1,514) 5,558 Taxes on income (tax benefit) 525 34 (37) 2h 522 ---------- ------- ------- ---------- Income after taxes on income 5,786 727 (1,477) 5,036 Equity in losses of affiliates, net (140) -- -- (140) ---------- ------- ------- ---------- Net income (loss) for the period $ 5,646 $ 727 $(1,477) $ 4,896 ========== ======= ======= ========== EARNINGS PER SHARE: Basic earnings per share 0.46 -- (0.08) 0.38 ========== ======= ======= ========== Diluted earnings per share 0.40 -- (0.07) 0.33 ========== ======= ======= ========== Weighted average number of shares used in computing basic EPS 12,145,662 -- 666,667 12,812,329 ========== ======= ======= ========== Weighted average number of shares used in computing diluted EPS 14,164,349 -- 666,667 14,831,016 ========== ======= ======= ==========
4 NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
YEAR ENDED DECEMBER 31, 1999 ------------------------------------------------------------------------- PRO FORMA PRO FORMA NUR SALSA ADJUSTMENTS NOTE COMBINED --- ----- ----------- ---- -------- Sales $ 60,719 $33,070 $ -- $ 93,789 Cost of sales 31,784 19,556 -- 51,340 ---------- ---------- ---------- ---------- Gross profit 28,935 13,514 -- 42,449 ---------- ---------- ---------- ---------- Operating expenses: Research and development expenses, net 4,809 1,844 -- 6,653 Selling and marketing expenses, net 9,485 5,053 -- 14,538 General and administrative expenses 6,275 6,402 366 2g 13,043 Amortization of goodwill and other intangible assets -- -- 2,906 2e 2,906 ---------- ---------- ---------- ---------- Total operating expenses 20,569 13,299 3,272 37,140 ---------- ---------- ---------- ---------- Operating income 8,366 215 (3,272) 5,309 Financial expenses, net (683) (202) -- (885) Gain on marketable securities 67 -- -- 67 Other income, net 176 -- -- 176 ---------- ---------- ---------- ---------- Income before taxes on income 7,926 13 (3,272) 4,667 Taxes on income (tax benefit) 798 45 (56) 2h 787 ---------- ---------- ---------- ---------- Income (loss) after taxes on income 7,128 (32) (3,216) 3,880 Equity in earnings of affiliates, net 75 -- -- 75 Minority interest in earnings of subsidiary (28) -- -- (28) ---------- ---------- ---------- ---------- Net income (loss) for the year $ 7,175 $ (32) $ (3,216) $ 3,927 ========== ========== ========== ========== EARNINGS PER SHARE: Basic earnings per share 0.64 -- (0.31) 0.33 ========== ========== ========== ========== Diluted earnings per share 0.56 -- (0.27) 0.29 ========== ========== ========== ========== Weighted average number of shares used in computing basic EPS 11,181,137 -- 666,667 11,847,804 ========== ========== ========== ========== Weighted average number of shares used in computing diluted EPS 12,722,600 -- 666,667 13,389,267 ========== ========== ========== ==========
5 NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS NOTE 1: BASIS OF PRESENTATION The pro forma statements are presented for informational purposes only and do not give effect to any potential cost savings or other synergies that could result from the acquisition of the Group. Plans are in development to integrate the operations of the combined companies. These plans may involve certain costs. Nur management believes that these costs, if any, will be immaterial to the Company's financial position and/or result of operations. NOTE 2: PRO FORMA ADJUSTMENTS AND ASSUMPTIONS One. Nur has financed the cash portion of the acquisition through commercial bank loans. The pro forma adjustments to the balance sheet reflect the cash received and consideration paid at the time of closing as well as other actual and estimated acquisition costs as follows: Loans received from banks $ 20,000 Cash paid in consideration of the acquisition (20,000) Actual and estimated acquisition expenses (400) Actual and estimated issuance expenses (562) ----------- $ (962) =========== b. Acquisition of In-Process Research and Development Pursuant to the sale agreement between Salsa and Nur, Nur acquired all assets and assumed certain liabilities of Salsa Digital Group. For accounting purposes, the transaction will be accounted for under the purchase method. Salsa is engaged in the development, manufacturing and selling of digital printing systems for on-demand, short-run, wide format and super wide format printing, and also in selling of related consumable products. Salsa devotes substantial resources to research and development ("R&D") activity in the normal course of its business. An independent third party appraisal company conducted a valuation of Salsa's intangible assets. These intangibles include current technology, in-process research and development ("IPR&D"), the customer list and the workforce in-place. The valuation of intangibles included $9,672 for existing technology, $4,300 for IPR&D, $3,094 for the customer list and $1,478 for the workforce. The excess of the purchase price over the fair value of identifiable 6 NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS tangible and intangible assets of $3,195 will be allocated to goodwill. Intangible assets will be amortized over periods of 5, 7 and 10 years (see Note e). The fair value of the IPR&D, which relates to Salsa II 2400/5000 and Bit Fire Down printer research projects, will be recorded as an R&D expense in the third quarter of 2000, in which the acquisition was completed. This expense has not been included in the pro-forma combined condensed statement of operations as it does not represent a continuing expense. The valuation of the current technology and the IPR&D was determined using the income approach. The income approach reflects the present value of the operating cash flows generated by the products after taking into account the cost to realize the revenue, the relative risk of offering the product, and an appropriate discount rate to reflect the time value of invested capital. Revenue and expense projections as well as technology assumptions were prepared through 2005 based on information provided by Salsa's management. The projected cash flows were discounted using 25% and 27% discount rates. In determining the discount rate for Salsa, we calculated the weighted average cost of capital for a company similar to Nur which was determined to be approximately 15%. To account for the additional risks associated with Salsa's IPR&D, we used discount rates of 25% and 27%.The valuation of the IPR&D was performed separately using the income approach. Each project was analyzed to determine the technological innovations included; the utilization of core technology; the complexity, cost and time to complete development. The percentage of completion ratio was estimated based on the complexity factors for each in-process development project to achieve technological feasibility. The value assigned to IPR&D relates mainly to two research projects: Salsa II 2400/5000 and the Bit Fire Down printer. These technologies have not yet reached technological feasibility nor have any alternative future use. Salsa II 2400/5000 are both intended to be entry-level wide format digital printers. They are targeting the market that requires a higher quality image with lower numbers of prints. The major development efforts include completion of design verification for a new material handling system and integration. The project is approximately 90% complete with an initial release date expected to occur during the forth quarter of 2000. The risks in development included the product's potential failure to meet costs requirements and failure to achieve adequate print quality. The Bit Fire Down printer will incorporate significantly new functions. This project is estimated to be 50% complete and is expected to reach technological feasibility in the third quarter of 2001. The risks in developments include potential failure to meet costs requirements, failure to develop a workable head orientation and failure to achieve adequate print quality. 7 NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS c. Allocation of purchase price The following represents the allocation of the purchase price to the acquired assets and liabilities of the Group at June 30, 2000. Assets acquired: Current assets $ 12,060 Long-lived assets 2,269 Goodwill and other intangible assets (see e follows) 17,439 IPR&D (see b above) 4,300 Current liabilities assumed (5,273) Other liabilities not purchased in Brazil (395) --------- Purchase price $ 30,400 ========= d. The adjustments reflect the additions to Nur's shareholders' equity and IPR&D: Issuance of 666,667 shares of Nur $ 164 ========= Additional paid-in capital $ 9,836 Actual and estimated issuance expenses (562) --------- Additional paid-in capital, net $ 9,274 ========= Elimination of partners' account $ (9,056) ========= Write off of IPR&D (included in retained earnings) $ (4,300) ========= e. Amortization of goodwill and other intangible assets The purchase price for the Salsa's acquisition amounted to $30,400 (out of which $20,000 was paid in cash and $10,000 was paid in 666,667 ordinary shares of Nur), of which $21,739 is allocated to intangible assets including goodwill. Nur plans to amortize the intangible assets and goodwill associated with the acquisition of the Group over periods of 5, 7 and 10 years. The pro forma adjustments to the Statements of Operations reflect amortization of the intangible assets and goodwill as if the transaction had occurred on January 1, 1999. 8 NUR MACROPRINTERS LTD. AND SALSA DIGITAL GROUP NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
AMORTIZATION AMORTIZATION INTANGIBLE AMORTIZATION EXPENSE PER EXPENSE PER ASSETS AMOUNT PERIOD ANNUM SIX MONTH --------------- ----------- ---------- ------------- ------------- Current product/ technology $ 9,672 5 $1,934 $ 967 Work force 1,478 7 211 106 Customer list 3,094 7 442 221 Goodwill 3,195 10 319 159 ------- ------ ------ $17,439 $2,906 $1,453 ======= ====== ======
f. Calculation of purchase price: Cash $ 20,000 Issuance of 666,667 shares of Nur (1) 10,000 Estimated professional fees and other direct transaction costs 400 ----------- $ 30,400 =========== (1) Average market price of each Nur share $ 15. g. Lease expenses: Since March 2000 the Group started paying lease expenses to the former owners of Salsa in the amount of $30.5 thousands per month. Previously, the Group used the property with no extra charge. The adjustments reflects the lease expenses of the Group as if it was leased since January 1999. h. Taxes on income: Since the acquired Group was formed as a limited partnership and not as a stand-alone taxable entity, the income deductions of the Group for tax purposes are included in the tax returns of the individual partners. The adjustments reflect the tax expenses of the acquired Group on a stand alone basis as if it was purchased in January 1, 1999. 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, thereunto duly authorized. NUR MACROPRINTERS LTD. Date: October 12, 2000 By: /s/ Erez Shachar --------------------------- Name: Erez Shachar Title: Chief Executive Officer