SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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BGS SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Date of Report (Date of earliest event reported) October 26, 1995
MASSACHUSETTS 0-02192 04-2559993
(State of (Commission File (I.R.S. Employer
incorporation) Number) Identification
Number)
128 TECHNOLOGY CENTER, WALTHAM, MASSACHUSETTS 02254-9111
(Address of Principal Executive Office)
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Registrant's telephone number including area code (617) 891-0000
ITEM 5. Other Events.
On October 26, 1995, the registrant, executed a Contract of Sale
("Agreement") for the purchase of the land, building and improvements
(collectively the "Property") known as 580 Winter Street, Waltham,
Massachusetts. The land consists of approximately 4.45 acres improved by an
80,000 s.f. single-story, brick building.
580 Winter Street is owned by 580 Winter Street Corp., a Massachusetts
corporation having offices c/o Svenska Handlesbanken, 599 Lexington Avenue,
New York, New York 10022 (the "Seller"). There is no material relationship
between 580 Winter Street Corp. and the registrant or any of its affiliates,
any director or officer of the registrant, or any associate of any such
director or officer.
One of the most important determinations by the registrant in connection
with its decision to purchase the Property was the environmental assessment.
The Property is not completely free of all contaminants and is located near a
public drinking water supply. The registrant's decision-making process is
summarized below, and that information is qualified in its entirety by the
materials filed as exhibits hereto.
The Property is listed on the Massachusetts Department of Environmental
Protection's List of Confirmed Disposal Sites and Locations to be Inspected
("Investigation List"). The registrant has reviewed reports of environmental
engineers concerning their investigation of the Property. These reports
indicate (i) the Property was placed on the Investigation List because heating
oil contaminated soil was found on the site when a 10,000 gallon oil tank was
removed in 1987 (the heating fuel was converted to natural gas), (ii) the
storage tank was intact (iii) approximately 190 cubic yards of contaminated
soil was removed, (iv) investigation was undertaken pursuant to the
Massachusetts Contingency Plan (v) a Notice of Audit Findings/Notice of
Non-Compliance ("Notice") asserted that an initial LSP Evaluation opinion
failed to identify the applicable groundwater category for the site, (vi) The
Notice to the Seller asserted that because of the site's proximity to the
Cambridge Reservoir, the appropriate water quality standard was RCGW-1, (vii)
The Notice noted that the levels of trichloroethene and Total Petroleum
Hydrocarbons exceeded the RCGW-1 standard, (viii) The Notice required, among
other things, submission of a revised LSP Evaluation Opinion indicating that a
release subject to notification requirements occurred or may have occurred at
the subject site and that further response actions are necessary, (ix)the
Licensed Site Professional submitted a revised opinion including groundwater
category identification and analysis of the levels of fuel oil and
trichloroethene in the groundwater (x) the revised opinion concluded that the
proper water quality for the site was not RCGW-1 because, among other things,
the site was downgradient from the reservoir and groundwater from the site
does not flow into the reservoir, and (xi) the Licensed Site Professional
Response Action Outcome Statement and supporting documentation concluded that
all compounds at the site were below the applicable standards, that no
significant risk is posed by the presence of residual contamination and that
the site meets the groundwater environmental requirements applicable thereto.
Under the Massachusetts Contingency Plan, state inspection is performed
by "privatized inspectors" who become certified by the State as "Licensed Site
Professionals." Their opinions may be audited by the Department of
Environmental Protection for a period of five years from the date of filing of
the Report. According to the Licensed Site Professional interviewed by the
Registrant, specific regulations provide that sites located near wells and
water bearing aquifers used as public drinking water sources but which are
downgradient therefrom are not required to meet the RCGW-1 standard by virtue
of their proximity. At the moment no such regulations have been written to
cover the similar situation relative to reservoirs.
On the basis of its review of the foregoing materials, the registrant
has executed the Contract of Sale, which provides in part that the registrant
has examined various reports and correspondence related to this matter and is
fully satisfied with the testing, remediation, DEP disposition and
environmental conditions at the premises.
The privatization of the environmental inspection and implementation
process, the highly sensitive nature of environmental laws, the importance of
protecting the public drinking water supplies and the evolution of the
application and interpretation of regulations under the Massachusetts
Contingency Plan are but a few of the areas of uncertainty facing the
registrant in making its decision. The registrant has made the judgment to
rely on the findings of the License Site Professional--with whom the
registrant engaged in due diligence discussions at the site--that the site is
in compliance with all applicable requirements. The registrant expects that
managing environmental issues will be an ongoing aspect of its property
management activities.
The purchase price is Five Million Fifty Thousand Dollars
($5,050,000.00). Of this amount, Five Hundred Five Thousand Dollars
($505,000.00) has been paid to the escrow agent and counsel to Seller,
Sullivan & Worcester, a Registered Limited Liability Partnership and the
balance of which is due on the closing. The closing is scheduled to take
place on December 28, 1995.
The registrant expects to use some of its current assets which may
include cash, cash equivalents, and/or marketable securities to fund the
entire acquisition, renovation, refurbishment and relocation costs (expected
to be in the approximate range of $9.0 million).
The registrant expects that the cost of ownership and operation of the
building over the long term will be similar to what the registrant currently
pays for its present offices even though the new facility of approximately
80,000 s.f. will accommodate a substantial increase in the number of
employees. The registrant's lease for its current space of approximately
46,000 s.f. expires in January 1997.
The new Property is used as rental property by the Seller and as office
space by the tenants. The registrant intends to use the Property primarily as
its world-wide headquarters and to lease portions of it to tenants from time
to time. Two such tenants are leasing such space at the present time under
leases covering approximately 41,000 s.f. One lease (covering approximately
15,000 s.f.) is for a term of fifteen and one half years commencing October
1994 (with two five year options). The other lease is on its first (of two)
three year extension terms (which began in July 1995).
The operation of a facility by the registrant is a new area of endeavor
for the employees and involves the development and practice of new skills to
be done well. Additionally, the accounting treatment of owned facilities is
significantly different and dependent on variable tax laws and accounting
standards.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The Exhibits listed on the Exhibit Index (on page 6) are
incorporated herein by reference.
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.
BGS SYSTEMS, INC.
(Registrant)
By: /S/ C. RUSSEL HANSEN, JR.
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Vice President and General Counsel
INDEX TO EXHIBITS
10.1 Contract of Sale between BGS Systems, Inc. and 580 Winter Street Corp.
10.2 Lease between 580 Winter Street Limited Partnership, as Lessor and
Harte-Hanks Communications, Inc. d/b/a Harte-Hanks Community Newspapers,
Massachusetts, as Lessee, dated March 20, 1990.
10.3 Lease Agreement by and between 580 Winter Street Corp. and MFS Intelenet
of Massachusetts, Inc., dated October 20, 1994.
10.4 Massachusetts Department of Environmental Protection's, Notice of
Noncompliance, Notice of Audit Findings, dated October 10, 1995
10.5 Massachusetts Department of Environmental Protection's Response Action
Outcome (RAO) Statement & Downgradient Property Status Transmittal Form
10.6 Environmental Science Services' Report, Documentation Supporting
Response Action Outcome, dated October 2, 1995