UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 4, 2008
DTS, INC.
(Exact name of registrant as specified in its charter)
Delaware | | 000-50335 | | 77-0467655 |
(State or other jurisdiction
of incorporation) | | (Commission
File Number) | | (I.R.S. Employer
Identification No.) |
5171 Clareton Drive Agoura Hills, CA | | 91301 |
(Address of principal executive offices) | | (Zip Code) |
(818) 706-3525
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement
On April 4, 2008, DTS, Inc. (the “Company”), DTS Digital Images, Inc. (“DI”), and Reliance Big Entertainment Private Limited (“Reliance”), entered into a Stock Purchase Agreement (the “Agreement”) providing for the sale of DI by the Company to Reliance. The sale was consummated the same day. Pursuant to the terms of the Agreement, the Company received cash consideration of approximately $7.5 million. The Agreement contains customary representations, warranties and covenants.
DI is engaged in the business of digital restoration and enhancement of moving pictures. There is no material relationship, other than in respect of the Agreement, between the Company and its affiliates, or any director or officer of the Company, or any associate of any such director or officer on the one hand, and Reliance on the other hand.
This summary description of the Agreement and the transaction is not complete and is qualified in its entirety by the complete text of the Agreement, a copy of which is being filed as Exhibit 10.75 to this Report on Form 8-K and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
The information set forth above in response to Item 1.01 is incorporated in its entirety herein.
Item 8.01 Other Events
On April 8, 2008, the Company filed a press release announcing its entry into the Agreement and the consummation of the transaction. A copy of this press release is filed as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated balance sheet is based upon and should be read in conjunction with the historical consolidated financial statements and related notes thereto of the Company.
The results of operations of DI had been classified as a discontinued operation for all periods presented in the audited historical consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2007, in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). Accordingly, there are no pro forma adjustments to continuing operations necessary to reflect the Company’s sale of DI, and as such, the Company has not included a pro forma statement of operations in this Item 9.01(b).
The unaudited pro forma condensed consolidated balance sheet of the Company as of December 31, 2007 gives effect to the closing of the transaction contemplated by the Agreement. In accordance with SFAS 144, the assets and liabilities of DI were classified as held for sale on the Company’s consolidated balance sheet from March 31, 2007 in the Company’s Quarterly Report on Form 10-Q through December 31, 2007 in the Company’s Annual Report on Form 10-K.
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2007 has been prepared as if the sale of DI had been consummated on December 31, 2007 and is based upon currently available information, estimates and assumptions that are deemed appropriate by the Company’s management. The unaudited pro forma condensed consolidated balance sheet may be subject to adjustments based on the actual carrying value of net assets sold at the date of closing, among other considerations, and is not necessarily indicative of the results that would have been reported had such transaction actually occurred on the date specified, nor is it necessarily indicative of our future financial condition.
The unaudited pro forma condensed consolidated balance sheet is prepared in accordance with Article 11 of Regulation S-X, and is based on and should be read in conjunction with, and is qualified in its entirety by, the historical consolidated financial statements and notes thereto of the Company.
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PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2007
(UNAUDITED - AMOUNTS IN THOUSANDS)
DTS, Inc.
Pro Forma Consolidated Balance Sheet
| | As | | Disposition | | | |
| | Reported | | Adjustments | | Pro Forma | |
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 35,523 | | $ | 7,500 | (A) | $ | 43,023 | |
Short-term investments | | 49,879 | | | | 49,879 | |
Accounts receivable, net | | 8,675 | | | | 8,675 | |
Deferred income taxes | | 8,776 | | (2,252 | ) (B)(C) | 6,524 | |
Prepaid expenses and other current assets | | 1,342 | | | | 1,342 | |
Income taxes receivable, net | | 2,085 | | (864 | ) (D) | 1,221 | |
Assets of discontinued operations held for sale | | 8,629 | | (1,249 | ) (C) | 7,380 | |
Total current assets | | 114,909 | | 3,135 | | 118,044 | |
Property and equipment, net | | 5,861 | | | | 5,861 | |
Intangible assets, net | | 2,387 | | | | 2,387 | |
Deferred income taxes | | 8,584 | | (937 | ) (B)(C) | 7,647 | |
Other assets | | 3,019 | | | | 3,019 | |
Assets of discontinued operations held for sale | | 3,457 | | (1,223 | ) (C) | 2,234 | |
Total assets | | $ | 138,217 | | $ | 975 | | $ | 139,192 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable | | $ | 1,068 | | | | $ | 1,068 | |
Accrued expenses and other current liabilities | | 6,118 | | | | 6,118 | |
Liabilities of discontinued operations held for sale | | 7,503 | | (417 | ) (C) | 7,086 | |
Total current liabilities | | 14,689 | | (417 | ) | 14,272 | |
Other long-term liabilities | | 2,242 | | | | 2,242 | |
Liabilities of discontinued operations held for sale | | 474 | | | | 474 | |
| | | | | | | |
Stockholders’ equity: | | | | | | | |
Common stock and additional paid-in capital | | 140,010 | | | | 140,010 | |
Treasury stock, at cost | | (22,670 | ) | | | (22,670 | ) |
Accumulated other comprehensive income | | 193 | | | | 193 | |
Retained earnings | | 3,279 | | 1,392 | (E) | 4,671 | |
Total stockholders' equity | | 120,812 | | 1,392 | | 122,204 | |
| | | | | | | |
Total liabilities and stockholders’ equity | | $ | 138,217 | | $ | 975 | | $ | 139,192 | |
The accompanying notes are an integral part of this unaudited pro forma condensed consolidated balance sheet.
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NOTE 1 – BASIS OF PRESENTATION
Historical financial information of the Company as of December 31, 2007 has been derived from audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.
NOTE 2 – PRO FORMA BALANCE SHEET ADJUSTMENTS
(A) To reflect the total cash proceeds received from the sale of DI of $7.5 million.
(B) At December 31, 2007, the form of transaction for the sale of DI was uncertain and therefore these deferred tax assets were accounted for in continuing operations, as they would have been retained by the Company had the DI transaction been structured as an asset sale.
(C) To reflect the elimination of the assets sold and liabilities disposed of pursuant to the Agreement based on the balances recorded as of December 31, 2007.
(D) To reflect the income taxes payable related to the estimated change to the adjustment of carrying value of assets held for sale.
(E) To reflect the estimated change to the adjustment of carrying value of assets held for sale, net of tax.
(d) Exhibits
10.75 Stock Purchase Agreement, dated April 4, 2008, among DTS, Inc., DTS Digital Images, Inc., and Reliance Big Entertainment Private Limited
99.1 Press release dated April 8, 2008 of DTS, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| DTS, INC. |
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Date: April 10, 2008 | |
| /s/ Melvin Flanigan |
| Melvin Flanigan |
| Executive Vice President, |
| Finance and Chief |
| Financial Officer |
| (principal financial and |
| accounting officer) |
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Exhibit Index
Exhibit No. | | Description |
10.75 | | Stock Purchase Agreement, dated April 4, 2008, among DTS, Inc., DTS Digital Images, Inc., and Reliance Big Entertainment Private Limited |
99.1 | | Press release dated April 8, 2008 of the Company . |
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