Ems (ELMG) 8-K Completion of Acquisition or Disposition of Assets

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

December 1, 2006
Date of report (Date of earliest event reported)

EMS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Georgia	000-06072	58-1035424
(State or other jurisdiction of incorporation or	(Commission	(I.R.S. Employer Identification No.)
organization)	File Number)

660 Engineering Drive
Norcross, Georgia 30092
(770) 263-9200

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2Financial Information

Item 2.01 Completion of Acquisition or Disposition of Assets

On December 1, 2006, the Registrant closed its previously announced sale of the assets and operating liabilities of its EMS Wireless (“Wireless”) division to Andrew Corporation (“Andrew”) of Westchester, Illinois.

At the closing of the sale, the Registrant received approximately $50 million in cash, representing the $50.5 million sales price, less an estimate of adjustments of the extent to which working capital (as defined in the asset purchase agreement) at closing is greater or less, respectively, than the amount thereof as of September 30, 2006. Further adjustments may be paid by the Registrant or Andrew upon final determination of such changes in working capital. Potential additional payments to the Registrant also may be made in future years depending on Andrew’s sales over a four-year period of the Select-a-Cell repeater product that has been developed by Wireless and is being transferred to Andrew as part of the transaction.

Under the agreement, the Registrant will have potential future liability for certain breaches of representations and warranties. In addition, the Registrant will be potentially liable for up to $1.2 million should Andrew encounter unanticipated warranty obligations during the first two years after the closing on products previously sold by Wireless, and is obligated to pay to Andrew an amount of up to $900,000 in the aggregate in respect of certain regulatory product approvals that were not obtained prior to closing. The aggregate amount of the payments to be made to Andrew will depend on the time required to obtain the required regulatory product approvals. Based on its current expectations as to the time that will be required to obtain such approvals, the Registrant estimates that the aggregate amount of such payments will be approximately $200,000.

The foregoing summary does not purport to be complete and is qualified by reference to the terms of the Asset Purchase Agreement dated October 31, 2006, and the Amending Agreement dated December 1, 2006, each by and between the Registrant and Andrew and filed as Exhibit 2.01 and Exhibit 2.02, respectively, to this report and incorporated herein by this reference.

Item 9.01 Financial Statements and Exhibits

(b)	Pro Forma Financial Information
	Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2006
	Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2006
	Pro Forma Condensed Consolidated Statements of Operations for the year ended December 31, 2005, 2004 and 2003
(c)	Exhibits

2.01	Asset Purchase Agreement dated as of October 31, 2006 between EMS Technologies, Inc. and Andrew Corporation.
2.02	Amending Agreement to the Asset Purchase Agreement dated as of December 1, 2006 between EMS Technologies, Inc. and Andrew Corporation.

PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma financial statements included below give effect to the sale of the Company’s EMS Wireless business to Andrew Corporation pursuant to the Asset Purchase Agreement and Amending Agreement included as Exhibits 2.01 and 2.02 to this Form 8-K.

The historical information was derived from the Company’s unaudited condensed consolidated balance sheet as of September 30, 2006, the Company’s unaudited condensed consolidated statement of operations for the nine months ended September 30, 2006, and the Company’s audited consolidated statements of operations for the fiscal years ended December 31, 2005, 2004 and 2003.

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2006 reflects the disposal of the EMS Wireless business as if it had occurred on that date. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2006 and for the years ended December 31, 2005, 2004 and 2003 assume that the disposal had occurred on the first day of the fiscal periods then ended.

The unaudited pro forma condensed consolidated financial statements include specific assumptions and adjustments related to the disposition of the EMS Wireless business. The pro forma adjustments have been made to illustrate the anticipated financial effect of the disposition. The adjustments are based upon available information and assumptions that the Company believes are reasonable as of the date of this Form 8-K filing. However, actual adjustments may differ from the information presented. Assumptions underlying the pro forma adjustments are described in the notes accompanying the pro forma financial statements and should be read in conjunction with the Company’s historical financial statements and related notes contained in the Company’s quarterly report on Form 10-Q for the period ended September 30, 2006 and the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2005.

The unaudited pro forma condensed consolidated financial information presented is for informational purposes only. This information is not intended to represent or be indicative of the consolidated results of operations or financial position that would have been reported had the disposition been completed as of the dates presented. The information is not representative of the Company’s future results of operation or financial position.

EMS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
(in thousands, except share data)
(Unaudited)

	Historical						Pro forma
	September 30,		Pro forma				September 30,
	2006		Adjustments				2006
ASSETS
Current assets:
Cash and cash equivalents	$	64,232		50,090		a,b	$	114,322
Trade accounts receivable, net		86,053		(8,311	)	a		77,742
Inventories		39,454		(14,212	)	a		25,242
Other current assets		1,433		—				1,433
Assets held for sale		—		—				—
Total current assets		191,172		27,567				218,739
Property, plant and equipment, net		34,010		(2,850	)	a		31,160
Goodwill		13,526		(3,544	)	a		9,982
Other assets		20,869		(1,415	)	a		19,454
Total assets	$	259,577		19,758			$	279,335
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	3,252		—			$	3,252
Accounts payable		26,386		(3,780	)	a,e,f		22,606
Liabilities related to assets held for sale		—		—				—
Other current liabilities		28,728		7,197		a,d		35,925
Total current liabilities		58,366		3,417				61,783
Long-term debt, excluding current installments		12,036		—				12,036
Other long-term liabilities		1,891		—				1,891
Total liabilities		72,293		3,417				75,710
Stockholders’ equity:
Preferred stock of $1.00 par value per share. Authorized 10,000,000 shares; none issued		—		—				—
Common stock $.10 par value share. Authorized 75,000,00 shares; issued and outstanding 15,232,000		1,523		—				1,523
Additional paid-in capital		131,559		—				131,559
Foreign currency translation adjustment		5,500		(164	)	c		5,336
Retained earnings		48,702		16,505		h		65,207
Total stockholders’ equity		187,284		16,341				203,625
Total liabilities and stockholders’ equity	$	259,577		19,758			$	279,335

See accompanying notes to the unaudited condensed consolidated pro forma financial statements.

EMS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

	Historical							Pro forma
	Nine months ended							Nine months ended
	September 30,			Pro forma				September 30,
	2006			Adjustments				2006
Net sales	$	228,757			(40,005	)	g		188,752
Cost of sales		147,619			(27,833	)	g		119,786
Selling, general and administrative expenses		55,014			(6,224	)	g		48,790
Research and development expenses		15,080			(3,126	)	g		11,954
Operating income		11,044			(2,822	)			8,222
Non-operating income, net		778			14		g		792
Interest expense		(1,691	)		239		g		(1,452	)
Earnings from continuing operations before income taxes		10,131			(2,569	)			7,562
Income tax benefit		481			770		i		1,251
Earnings from continuing operations	$	10,612			(1,799	)			8,813
Earnings per share from continuing operations:
Basic	$	0.74			(0.13	)			0.61
Diluted	$	0.73			(0.12	)			0.61
Weighted average number of shares:
Common		14,426			14,426				14,426
Common and dilutive common equivalents		14,481			14,481				14,481

See accompanying notes to the unaudited condensed consolidated pro forma financial statements.

EMS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

	Historical							Pro forma
	Year ended							Year ended
	December 31,			Pro forma				December 31,
	2005			Adjustments				2005
Net sales	$	310,033			(84,146	)	g		225,887
Cost of sales		209,808			(62,791	)	g		147,017
Selling, general and administrative expenses		66,597			(9,329	)	g		57,268
Research and development expenses		15,893			(4,139	)	g		11,754
Operating income		17,735			(7,887	)			9,848
Non-operating income, net		442			(142	)	g		300
Interest expense		(4,018	)		714		g		(3,304	)
Earnings from continuing operations before income taxes		14,159			(7,315	)			6,844
Income tax expense		(4,736	)		2,546		i		(2,190	)
Earnings from continuing operations	$	9,423			(4,769	)			4,654
Earnings per share from continuing operations:
Basic	$	0.84			0.42				0.42
Diluted	$	0.84			0.43				0.41
Weighted average number of shares:
Common		11,179			11,179				11,179
Common and dilutive common equivalents		11,225			11,225				11,225

See accompanying notes to the unaudited condensed consolidated pro forma financial statements.

EMS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

	Historical							Pro forma
	Year ended							Year ended
	December 31,			Pro forma				December 31,
	2004			Adjustments				2004
Net sales	$	246,518			(45,418	)	g		201,100
Cost of sales		159,597			(28,936	)	g		130,661
Selling, general and administrative expenses		58,907			(9,271	)	g		49,636
Research and development expenses		16,482			(4,448	)	g		12,034
Operating income		11,532			(2,763	)			8,769
Non-operating income, net		880			18		g		898
Interest expense		(2,296	)		505		g		(1,791	)
Earnings from continuing operations before income taxes		10,116			(2,240	)			7,876
Income tax expense		(2,823	)		540		i		(2,283	)
Earnings from continuing operations	$	7,293			(1,700	)			5,593
Earnings per share from continuing operations:
Basic	$	0.66			(0.16	)			0.50
Diluted	$	0.65			(0.15	)			0.50
Weighted average number of shares:
Common		11,094			11,094				11,094
Common and dilutive common equivalents		11,237			11,237				11,237

See accompanying notes to the unaudited condensed consolidated pro forma financial statements.

EMS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

	Historical							Pro forma
	Year ended							Year ended
	December 31,			Pro forma				December 31,
	2003			Adjustments				2003
Net sales	$	243,854			(51,381	)	g		192,473
Cost of sales		156,828			(31,942	)	g		124,886
Selling, general and administrative expenses		55,283			(9,348	)	g		45,935
Research and development expenses		15,853			(4,661	)	g		11,192
Operating income		15,890			(5,430	)			10,460
Non-operating income, net		215			(459	)	g		(244	)
Interest expense		(1,923	)		389		g		(1,534	)
Earnings from continuing operations before income taxes		14,182			(5,500	)			8,682
Income tax expense		(3,964	)		1,273		i		(2,691	)
Earnings from continuing operations	$	10,218			(4,227	)			5,991
Earnings per share from continuing operations:
Basic	$	0.95			(0.39	)			0.56
Diluted	$	0.95			(0.39	)			0.56
Weighted average number of shares:
Common		10,702			10,702				10,702
Common and dilutive common equivalents		10,785			10,785				10,785

See accompanying notes to the unaudited condensed consolidated pro forma financial statements.

EMS Technologies, Inc. and Subsidiaries
Notes to the Unaudited Condensed Consolidated
Pro Forma Financial Statements

PRO FORMA ADJUSTING ENTRIES:
(in thousands of $)

a	Eliminate all assets and liabilities of EMS Wireless that were included in the sales transaction.
b	Increase cash and cash equivalents with the proceeds received in the sale of $50,500.
c	Eliminate EMS Wireless’ foreign currency translation adjustment.
d	Record estimated income tax liability on the sales transaction of $10,116. The tax liability is calculated using a tax rate of approximately 38%.
e	Record estimated transaction fees related to the sale of $400.
f	Record estimated cost related to regulatory product approvals payable to Andrew Corporation of $200.
g	Eliminate the net sales, cost of sales and expenses of the EMS Wireless division, net of reallocated corporate charges.
h	Record the estimated gain on the sales transaction of $16,505, net of income taxes.
i	Adjust income tax expense to reflect the estimated effective tax rate after the disposal of EMS Wireless.

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.

	EMS TECHNOLOGIES, INC.
Date: December 7, 2006	By:	/s/ Don T. Scartz
		Don T. Scartz
		Executive Vice President, Chief
		Financial Officer and Treasurer