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): November 6, 2003
CHYRON CORPORATION
(Exact Name of Registrant as Specified in its Charter)
New York | 1-9014 | 11-2117385 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
5 Hub Drive | |
Melville, New York | 11747 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant's telephone number, including area code: (631) 845-2000
________________
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Item 2. Acquisition or Disposition of Assets
On November 6, 2003, Chyron Corporation completed the sale of the entire issued share capital of its wholly owned subsidiary, Chyron UK Holdings Limited (Chyron UK Holdings), including its operating subsidiary, Pro-Bel Limited, to Oval (1883) Limited, pursuant to the terms of a Sale and Purchase Agreement. In effect, this eliminates the entire operations of the Signal Distribution and Automation segment and only the Graphics Division will remain. For the nine month period ended September 30, 2003, revenues and the net loss attributable to the Signal Distribution and Automation segment were $15.5 million and $0.7 million, respectively. As a result, the Company will now focus completely on its core-competency, the development of real-time graphics solutions for its worldwide professional video and TV broadcast customers.
The gross proceeds were approximately $15.3 million, before the required settlement of Pro-Bel bank obligations of approximately $3.4 million and related transaction costs, estimated to be $1.3 million. This resulted in net proceeds of $10.6 million of which $0.4 million will be paid in April 2005, $0.4 million will be held in escrow pending the final valuation of net assets sold and the balance of $9.8 was paid in cash at closing. The resultant net cash of approximately $10.6 will be used to pay off the remaining balance on our credit facility with our U.S. bank and to retire debt obligations of $3 million that mature December 31, 2003, with the balance to be used for working capital purposes and to pay down a portion of the Series A and B debentures that are due December 31, 2004. The Company's preliminary estimate of the gain on sale, which will be recorded in the fourth quarter of 2003, is approximately $2.5 million, subject to post closing adjustments.
Item 7. Financial Statements, Pro Forma Information and Exhibits
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
On November 6, 2003, Chyron Corporation ("Chyron") completed the sale of the entire issued share capital of its wholly owned subsidiary, Chyron UK Holdings Limited, including its operating subsidiary Pro-Bel Limited, pursuant to the terms of a Sale and Purchase Agreement. Based on the carrying value of the assets and liabilities attributed to Chyron UK Holdings on November 6, 2003, and the estimated costs and expenses incurred in connection with the sale, Chyron anticipates that it will record a gain of approximately $2.5 million in its fourth quarter 2003 results. The anticipated gain will be adjusted to reflect final net assets attributable to Chyron UK Holdings on the date of the sale.
The following unaudited pro forma financial statements and notes thereto are being filed herewith:
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- Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2003.
- Unaudited Pro Forma Statements of Operations for the years ended December 31, 2002, 2001 and 2000.
The pro forma financial information represents, in the opinion of management, all adjustments necessary to present Chyron's pro forma results of operations and financial position in accordance with Article 11 of the United States Securities and Exchange Commission ("SEC") Regulation S-X and are based upon available information and certain assumptions considered reasonable under the circumstances. The pro forma statements of operations also excludes the gain on sale noted above, and any other non-recurring charges or credits attributable to the transaction.
The pro forma financial statements should be read in conjunction with Chyron's unaudited consolidated financial statements and notes thereto included in Chyron's Quarterly Report on Form 10-Q for the period ended September 30, 2003 and audited consolidated financial statements and notes thereto included in Chyron's Annual Report on Form 10-K for the year ended December 31, 2002, filed on November 14, 2003 and March 31, 2003, respectively. The pro forma information may not necessarily be indicative of what Chyron's financial position or results of operations would have been had the transaction been in effect as of and for the periods presented, nor is such information necessarily indicative of Chyron's results of operations or financial position for any future period or date.
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Chyron Corporation
Unaudited Pro Forma Condensed Consolidated Balance Sheet
September 30, 2003
(In thousands)
Remove | ||||
As | Net Assets | Pro forma | ||
Reported | Sold | Adjustments | Pro Forma | |
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 1,033 | $10,200(1) | $11,233 | |
Restricted cash | 1,000 | 1,000 | ||
Accounts receivable, net | 2,117 | 2,117 | ||
Inventories, net | 1,932 | 1,932 | ||
Other current assets | 916 | 916 | ||
Assets held for sale | 17,782 | $(17,782) |
|
|
Total current assets | 24,780 | (17,782) | 10,200 | 17,198 |
Property and equipment, net | 701 | 701 | ||
Other assets | 311 |
| 400(1) | 711 |
Total Assets | $25,792 | $(17,782) | $10,600 | $18,610 |
LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||
Current liabilities: | ||||
Accounts payable and accrued expenses | $ 3,997 | $ 3,997 | ||
Current portion of long-term debt | 936 | 936 | ||
Convertible senior notes | 2,710 | 2,710 | ||
Capital lease obligations | 4 | 4 | ||
Liabilities held for sale | 9,389 | $(9,389) |
|
|
Total current liabilities | 17,036 | (9,389) | - | 7,647 |
Convertible debentures | 10,481 | 10,481 | ||
Pension liability | 2,330 | 2,330 | ||
Other liabilities | 244 |
|
| 244 |
Total liabilities | 30,091 | (9,389) | - | 20,702 |
Shareholders' deficit: | ||||
Common stock | 397 | 397 | ||
Additional paid-in capital | 71,499 | 71,499 | ||
Accumulated deficit | (76,115) | (9,548) | $10,600(1) | (75,063) |
Accumulated other comprehensive loss | (80) | 1,155 |
| 1,075 |
Total shareholders' deficit | (4,299) | (8,393) | 10,600 | (2,092) |
Total Liabilities and Shareholders' Deficit | $25,792 | $(17,782) | $10,600 | $18,610 |
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Chyron Corporation
Unaudited Pro Forma Consolidated Statement of Operations
For The Year Ended December 31, 2002
(In thousands, except per share amounts)
Business | |||
To Be | |||
As Reported | Disposed | Pro Forma | |
Net sales | $41,379 | $20,316 | $21,063 |
Cost of products sold | 19,977 | 9,454 | 10,523 |
Gross profit | 21,402 | 10,862 | 10,540 |
Operating expenses: | |||
Selling, general and administrative | 19,042 | 10,567 | 8,475 |
Research and development | 4,095 | 1,905 | 2,190 |
Total operating expenses | 23,137 | 12,472 | 10,665 |
Operating loss from continuing operations | (1,735) | (1,610) | (125) |
Interest expense | 2,220 | 206 | 2,014 |
Interest income | (14) | 0 | (14) |
Other income, net | (897) | (855) | (42) |
Net loss from continuing operations | $(3,044) | $(961) | $(2,083) |
Net loss per common share | |||
- basic and diluted | $(0.08) | $(0.03) | $(0.05) |
Weighted average shares used in computing | |||
net loss per common share | |||
- basic and diluted | 39,564 | 39,564 | 39,564 |
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Chyron Corporation
Unaudited Pro Forma Consolidated Statement of Operations
For The Year Ended December 31, 2001
(In thousands, except per share amounts)
Business | |||
To Be | |||
As Reported | Disposed | Pro Forma | |
Net sales | $46,182 | $27,106 | $19,076 |
Cost of products sold | 31,171 | 15,190 | 15,981 |
Gross profit | 15,011 | 11,916 | 3,095 |
Operating expenses: | |||
Selling, general and administrative | 28,952 | 14,003 | 14,949 |
Research and development | 5,635 | 2,881 | 2,754 |
Goodwill impairment, restructuring and | |||
unusual charges | 12,468 | 3,898 | 8,570 |
Total operating expenses | 47,055 | 20,782 | 26,273 |
Operating loss | (32,044) | (8,866) | (23,178) |
Interest expense | 1,495 | 234 | 1,261 |
Interest income | (226) | 0 | (226) |
Other expense, net | 354 | 143 | 211 |
Net loss | $(33,667) | $(9,243) | $(24,424) |
Net loss per common share | |||
- basic and diluted | $(0.86) | $(0.24) | $(0.62) |
Weighted average shares used in computing | |||
net loss per common share | |||
- basic and diluted | 39,352 | 39,352 | 39,352 |
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Chyron Corporation
Unaudited Pro Forma Consolidated Statement of Operations
For The Year Ended December 31, 2000
(In thousands, except per share amounts)
Business | |||
To Be | |||
As Reported | Disposed | Pro Forma | |
Net sales | $56,272 | $29,367 | $26,905 |
Cost of products sold | 30,344 | 15,698 | 14,646 |
Gross profit | 25,928 | 13,669 | 12,259 |
Operating expenses: | |||
Selling, general and administrative | 29,858 | 14,526 | 15,332 |
Research and development | 6,862 | 3,680 | 3,182 |
Total operating expenses | 36,720 | 18,206 | 18,514 |
Operating loss | (10,792) | (4,537) | (6,255) |
Interest expense | 2,139 | 314 | 1,825 |
Interest income | (774) | 0 | (774) |
Other (income) expense, net | (249) | 143 | (392) |
Net loss | $(11,908) | $(4,994) | $(6,914) |
Net loss per common share | |||
- basic and diluted | $(0.34) | $(0.14) | $(0.20) |
Weighted average shares used in computing | |||
net loss per common share | |||
- basic and diluted | 34,824 | 34,824 | 34,824 |
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NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
Basis of Presentation
The above unaudited pro forma consolidated financial statements present financial information for Chyron giving effect to the sale of Chyron UK Holdings, which was effective as of November 6, 2003. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2003 is presented as if the transaction occurred on that date. The historical amounts were derived from unaudited financial statements included in Chyron's quarterly report on Form 10-Q for the period ended September 30, 2003. The unaudited pro forma consolidated statements of operations for the years ended December 31, 2002, 2001 and 2000 are presented as if the transaction had occurred on December 31, 1999 and exclude the anticipated gain to be realized. The historical amounts were derived from audited financial statements included in Chyron's annual report on Form 10-K for the year ended December 31, 2002.
Unaudited Pro Forma Financial Information
(1) Reflects the sale on November 6, 2003 of the net assets of Chyron UK Holdings for gross proceeds of $15.3 million before the required settlement of bank obligations of approximately $3.4 million and related transaction costs, estimated to be $1.3 million. Approximately $0.4 million of the proceeds will be in the form of a promissory note due in April 2005.
(c) Exhibits
10.1 Agreement relating to the sale and purchase of the entire issued share capital of Chyron UK Holdings Limited, dated November 6, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
CHYRON CORPORATION
By: | /s/ Jerry Kieliszak | |
Name: | Jerry Kieliszak | |
Title: | Senior Vice President and | |
Chief Financial Officer |
Date: November 21, 2003
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