SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 1996
RADIUS INC.
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
0-18690 68-0101300
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(Commission (IRS Employer
File Number) Identification No.)
215 Moffett Park Drive, Sunnyvale, CA 94089
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (408) 541-6100
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Items 5 and 7 of the Company's Current Report on Form 8-K/A are amended to
read in their entirety as follows:
ITEM 5: OTHER EVENTS.
On August 30, 1996, the Company entered into agreements with respect
to a debt for equity exchange with its creditors. IBM Credit Corporation ("IBM
Credit"), the Company's secured creditor, agreed to receive Series A
Convertible Preferred Stock in satisfaction of $3.0 million of the Company's
approximately $26.4 million of secured indebtedness to IBM Credit and to
restructure its loan with the Company, including extension by IBM Credit of an
additional advance of approximately $470,000 for making the discounted payments
to unsecured creditors described below. The Company and IBM Credit entered
into an amended loan agreement, anticipating a closing in early September.
The Company's unsecured creditors with aggregate claims of approximately
$47.8 million agreed to receive either shares of Common Stock or, in the case
of creditors, most of which with claims of less than $50,000 ("Convenience
Class Creditors), a discounted cash payment (approximately $470,000 in the
aggregate) in satisfaction of such claims. While the issuance of the Series
A Convertible Preferred Stock and the Common Stock did not require the
approval of the Company's shareholders, an increase in the authorized number
of shares of Common Stock, which was necessary to implement this plan,
required shareholder approval, which approval was obtained at a special
meeting of shareholders on August 27, 1996.
Unsecured creditors have agreed to receive approximately 36,294,198 shares
of Common Stock (which will represent approximately 60% of the outstanding
Common Stock of the Company). The Company's secured creditor, IBM Credit,
agreed to receive 750,000 shares of Series A Convertible Preferred Stock which
is convertible into approximately 5,523,030 shares of Common Stock of the
Company (or approximately 6,075,333 shares in certain circumstances). The
unsecured creditors who agreed to receive shares of Common Stock in satisfaction
of their claims also agreed to receive Rights ("Rights") to receive an aggregate
of approximately 11,046,060 additional shares of the Company's Common Stock in
the event that the Series A Convertible Preferred Stock is converted into Common
Stock so that the number of shares of Common Stock received by such unsecured
creditors continues to represent 60% of the Company's outstanding Common Stock.
The Company also expects to amend its stock option plans to reserve the issuance
thereunder of approximately 10% of the outstanding shares of the Company's
Common Stock. Therefore, shareholders holding shares of Common Stock
immediately prior to the closing of this debt-for-equity exchange ("Existing
Shareholders") will represent approximately 30% of outstanding shares of Common
Stock immediately after the closing. If and when the Series A Convertible
Preferred Stock is converted into Common Stock, Existing Shareholders will then
represent 23% of the outstanding shares of Common Stock assuming no other
issuances of the Company's securities and the exercise of all stock options.
As reported in the Company's current report on Form 8-K filed with the
Commission on September 13, 1996, the debt-for-equity exchange and loan
restructuring described above closed on September 13, 1996.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION.
Set forth below is the Company's Unaudited Pro Form Consolidated Balance
Sheet as of July 31, 1996 reflecting the implementation of the debt-for-equity
exchange.
The Unaudited Pro Forma Balance Sheet as of July 31, 1996 reflects (i) the
settlement of approximately $47.8 million of accounts payable, accrued
liabilities and customer credit balances in exchange for approximately
$470,000 in cash and approximately 36,294,198 shares of common stock;
(ii) the additional advance of approximately $470,000 from IBM Credit;
(iii) the restructuring of the IBM Credit loan and the issuance of
750,000 shares of Series A Convertible Preferred Stock to IBM Credit.
The pro forma financial information does not purport to be indicative of
the financial position that would actually have been reported had the
transactions underlying the pro forma adjustments actually been consummated on
such date or of the results of operations that may be reported by the Company in
the future.
RADIUS INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
JULY 31, 1996
(in thousands)
RADIUS INC. PRO FORMA TOTAL
CONSOLIDATED ADJUSTMENTS AS-ADJUSTED
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ASSETS:
Current assets:
Cash $ 2,533 471 (B) $ 2,533
(471) (B)
Accounts receivable, net 17,103 4,300 (C) 21,403
Inventories 15,227 15,227
Prepaid expenses and other current assets 260 260
Income tax receivable 514 514
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Total current assets 35,637 4,300 $39,937
Property and equipment, net 1,455 1,455
Deposits and other assets 146 146
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$37,238 4,300 $41,538
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LIABILITIES, CONVERTIBLE PREFERRED STOCK,
COMMON STOCK AND ACCUMULATED DEFICIT:
Current liabilities:
Accounts payable $33,248 (471) (B) $1,117
(1,466) (B)
(30,194) (C)
Accrued payroll and related expenses 2,580 2,580
Accrued warranty costs 598 598
Other accrued liabilities 7,831 7,831
Accrued income taxes 1,958 1,958
Accrued restructuring and other charges 15,100 (11,400) (C) 1,300
(2,400) (D)
Short term borrowings 25,113 (23,665) (A) 1,919
471 (B)
Obligation under capital leases - current portion 1,233 1,233
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Total current liabilities 87,661 (69,125) 18,536
Obligation under capital leases - noncurrent portion 254 254
Long-term borrowings 20,665 (A) 20,665
Convertible preferred stock and shareholders'
equity (net capital deficiency):
Convertible preferred stock 3,000 (A) 3,000
Common Stock 126,243 45,894 (C) 172,137
Accumulated deficit (176,922) 1,466 (B) (173,056)
2,400 (D)
Accumulated translation adjustment 2 2
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Total convertible preferred stock and
shareholder' equity (net capital deficiency) (50,677) 52,760 2,083
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$37,238 4,300 $41,538
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NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
$000
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(A) Restructuring of the IBM Credit loan to reduce the current
portion to $1,448,000 and transfer the balance to reflect
long-term debt and the issuance of preferred stock.
Short-term borrowings 1,448
Long-term borrowings 20,665
Preferred stock to be issued 3,000
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25,113
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(B) IBM Credit advance relating to the settlement for the
Convenience Class Creditors and the payment to such
creditors.
Cash settlement 471
Total Convenience Class Creditors claims 1,937
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Gain from the discounted cash payment 1,466
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(C) Common stock issued for the settlement of unsecured
creditors' claims and the settlement of customers
with credit balances. This adjustment assumes that
carrying value of the claims settled equals the value
of the stock issued. The difference, to be determined,
between the two values will not change the combined
total of common stock and accumulated deficit.
Customers with credit balances 4,300
Claims recorded in accounts payable 30,194
Claims recorded in the FY1995 restructuring 11,400
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Common stock issued 45,894
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(D) Reversal of excess 1995 restructuring reserves
directly related to the settlement of the related
cancellation fees accrued. 2,400
SIGNATURE
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.
Date: September 19, 1996
RADIUS INC.
By: /s/ Cherrie Fosco
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Cherrie Fosco
Vice President and Controller