SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8K/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) March 21, 1996
NETWORK PERIPHERALS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-23970 77-021613
(State or Other (Commission (IRS Employer
Jurisdiction of Incorporation) File Number) Identification No.)
1371 McCarthy Boulevard
Milpitas, CA 95035
(Address, including zip code of principal executive offices)
(408) 321-7300
(Registrant's telephone number, including area code)
The undersigned hereby amends its Form 8-K dated March 21, 1996 and filed on
March 31, 1996 by adding items 7(a), 7(b), and 7(c).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of NuCom Systems, Inc.
The following are attached:
Auditors' report.
Consolidated Balance Sheets as of December 31, 1995 and 1994.
Consolidated Statements of Operations for the year ended December 31,
1995 and for the period from September 12 to December 31, 1994.
Consolidated Statements of Stockholders' Equity for the year ended
December 31, 1995 and for the period from September 12 to December
31, 1994.
Consolidated Statements of Cash Flow for the year ended December 31,
1995 and for the period from September 12 to December 31, 1994.
Notes to Consolidated Financial Statements.
(b) Pro Forma Financial Information
The following are attached:
For the three months ended March 31, 1996 and the year ended December
31, 1995
Unaudited Pro Forma Combined Statement of Operations.
Unaudited Notes to Pro Forma Combined Statements of Operations.
(c) Exhibits
2.1* Acquisition Agreement among Network Peripherals Inc., Network
Peripherals International, Ltd., NuCom Systems, Inc., and the
shareholders of NuCom, dated January 31, 1996.
23.1 Consent of Independent Auditors
99.0* Press Release
* Previously filed on March 31, 1996.
NUCOM SYSTEMS, INC.
CONSOLIDATED FINANCIAL
STATEMENTS & AUDITOR'S REPORT
FOR THE YEARS 1995 AND 1994
THINK & CO., C.P.A.s
3rd Floor No. 169 Ho Ping East Road Sec. 1.
Taipei, Taiwan, Republic of China
Tel: (02)322-5671
Fax: (02)357-6443
NUCOM SYSTEMS, INC.
AUDITOR'S REPORT
To: The board of directors and stockholders
We have examined the consolidated balance sheets of NUCOM SYSTEMS, INC. &
its subsidiary as of December 31, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for the year then
ended 1995 and from September 12 to December 31, 1994. Our examinations were
made in accordance with generally accepted auditing standards and Rules
Governing Certified Public Accountants Certification of Financial Statements
and, accordingly included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances.
As explained in Note 8, the financial statements of the subsidiary of NUCOM
SYSTEMS, INC. are not required to be audited in accordance with Preparation
Standard of Financial Statements of SEC's Regulation. According to this
regulation and material respects, we are not required to examine the financial
statements of NUCOM SYSTEMS, INC's subsidiary.
In our opinion, the consolidated financial statements referred to above
fairly present, in all material respects, the financial position of NUCOM
SYSTEMS, INC. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the year then ended 1995 and from September 12
to December 31, 1994, in conformity with generally accepted accounting
principles and Preparation Standard of Financial Statement of SEC's Regulation
applied on a consistent basis.
TAIPEI, TAIWAN, R.O.C.
February 10, 1996
NUCOM SYSTEMS, INC.
Consolidated Balance Sheets
December 31, 1995 and 1994
(Expressed in New Taiwan Dollars)
(Development Stage's Companies from September 12, 1994 to April 30, 1995)
Dec. 31, 1995 Dec. 31, 1994
------------------------- -----------------------
Assets Notes Amount % Amount %
- ------------------------------------ ----- --------------- ------ ------------- ------
Current Assets
Cash and Cash Equivalents 2-3 $ 42,769,892 27.17 $ 5,511,833 49.23
Pledged Time Deposits 4 8,750,000 5.56 - -
Notes Receivables, net 2-5 896,504 0.57 - -
Other Notes Receivables 17 5,258,126 3.34 - -
Accounts Receivables, net 2-6 12,932,326 8.22 - -
Net Inventories 2-7 44,565,697 28.31 355,244 3.17
Prepayments 2,891,297 1.84 84,011 0.75
Deferred Tax Assets-current 2-14 9,750,000 6.19 - -
Other Current Assets 3,804,403 2.42 198,476 1.77
--------------- ------ ------------- ------
Total Current Assets 131,618,245 83.62 6,149,564 54.92
--------------- ------ ------------- ------
Net Property, Plant and Equipment 2-9 14,928,679 9.48 4,008,503 35.80
--------------- ------ ------------- ------
Other Assets
Guarantee Deposit Paid 1,462,788 0.93 219,396 1.96
Organization Cost 2 95,194 0.06 114,917 1.03
Deferred Tax Assets-noncurrent 2-14 9,311,955 5.91 704,301 6.29
--------------- ------ ------------- ------
Total Other Assets 10,869,937 6.90 1,038,614 9.28
--------------- ------ ------------- ------
Total Assets $ 157,416,861 100.00 $ 11,196,681 100.00
=============== ====== ============= ======
<FN>
(See Accompanying Notes to Financial Statements)
</FN>
NUCOM SYSTEMS, INC.
Consolidated Balance Sheets
December 31, 1995 and 1994
(Expressed in New Taiwan Dollars)
(Development Stage's Companies from September 12, 1994 to April 30, 1995)
Dec. 31, 1995 Dec. 31, 1994
------------------------- --------------------
Liabilities and Stockholder's Equity Notes Amount % Amount %
- ------------------------------------------ ------- --------------- ------ ------------- -----
Current Liabilities
Loan Payable 10 $ 27,340,000 17.37 $ - -
Loan From Banks 11 5,773,125 3.67 - -
Notes Payables 8,676,178 5.51 161,222 1.44
Other Notes Payables 1,020,297 0.65 1,235,236 11.03
Accounts Payables 8,728,739 5.55 - -
Accrued Expenses 16,374,925 10.40 169,421 1.52
Due to Stockholders 17 100,238 0.06 1,727,841 15.43
Other Current Liabilities 1,330,020 0.84 75,002 0.67
--------------- ------ ------------- -------
Total Current Liabilities 69,343,522 44.05 3,368,722 30.09
--------------- ------ ------------- -------
Other Liabilities
Guarantee Deposit receipt 10,000,000 6.35 - -
--------------- ------ ------------- -------
Total Liabilities 79,343,522 50.40 3,368,722 30.09
--------------- ------ ------------- -------
Stockholders' Equity
Capital Stock 12 110,640,000 70.29 10,000,000 89.31
Additional Paid - in Capital 15,320,000 9.73 - -
Retained Earnings 13 (47,990,079) (30.49) (2,136,023) (19.08)
Cumulative Translation Adjustment 8 103,418 0.07 (36,018) (0.32)
--------------- ------ ------------- -------
Total Stockholders' Equity 78,073,339 49.60 7,827,959 69.91
--------------- ------ ------------- -------
Commitments and Contingent Liabilities 15
Total Liabilities and Stockholders' Equity $ 157,416,861 100.00 $ 11,196,681 100.00
=============== ====== ============= =======
<FN>
(See Accompanying Notes to Financial Statements)
</FN>
NUCOM SYSTEMS, INC.
Consolidated Statements of Income
(Expressed in New Taiwan Dollars)
(Development Stage's Companies from
September 12, 1994 to April 30, 1995)
For the year ended December 31, 1995 and
from Sep. 12 to Dec. 31, 1994
1995 1994
----------------------- --------------------
Items Notes Amount % Amount %
- ------------------------------- ------ ------------- ------- ----------- -------
Net Sales $ 23,803,768 100.00 $ - -
Cost of Goods Sold (21,938,531) (92.16) - -
-------------- ------- ----------- -------
Gross Profit 1,865,237 7.84 - -
Operating Expenses (57,709,323) (242.44) (2,864,352) -
-------------- ------- ----------- -------
Operating Income (Loss) (55,844,086) (234.60) (2,864,352) -
Non-operating Income
Interest Income 977,004 4.10 24,028 -
Gains of Physical Inventory 826,384 3.47 - -
Exchange Gains 2 41,536 0.17 - -
Other Nonoperating Income 211,646 0.89 - -
Non-Operating Expense
Interest Expenses (109,417) (0.46) - -
Exchange Losses 2 (214,777) (0.90) - -
Indemnity Losses 18 (10,100,000) (42.43) - -
-------------- ------- ----------- -------
Net Income (loss) Before Tax (64,211,710) (269.76) (2,840,324) -
Income Tax 2-14 18,357,654 77.12 704,301 -
-------------- ------- ----------- -------
Net Income (loss) After Tax $ (45,854,056) (192.64) $(2,136,023) -
============== ======= =========== =======
<FN>
(See Accompanying Notes to Financial Statements)
</FN>
NUCOM SYSTEMS, INC.
Consolidated Statements of Stockholders' Equity
(Expressed in New Taiwan Dollars)
(Development Stage's Companies from September 12, 1994 to April 30, 1995)
For the year ended December 31, 1995 and from September 12 to December 31, 1994
Additional Cumulative
Capital Paid-in Retained Translation
Items Stock Capital Earnings Adjustment Total
- ---------------------------------- ------------- ------------- -------------- ------------ -------------
Paid-in Capital $ 10,000,000 $ - $ - $ - $ 10,000,000
Net Loss for 1994 - - (2,136,023) - (2,136,023)
Cumulative translation adjustment - - - (36,018) (36,018)
------------- ------------- -------------- ------------ -------------
Balance at Dec. 31, 1994 10,000,000 - (2,136,023) (36,018) 7,827,959
Capital increase at October 1995 70,000,000 - - - 70,000,000
Capital increase at December,
1995-Premium ($15 per share) 30,640,000 15,320,000 - - 45,960,000
Net Loss for 1995 - - (45,854,056) - (45,854,056)
Cumulative Translation adjustment - - - 139,436 139,436
------------- ------------- -------------- ------------ -------------
Balance at Dec. 31, 1995 $ 110,640,000 $ 15,320,000 $ (47,990,079) $ 103,418 $ 78,073,339
============= ============= ============== ============ =============
<FN>
(See Accompanying Notes to Financial Statements)
</FN>
NUCOM SYSTEMS, INC.
Consolidated Statements of Cash Flows
(Expressed in New Taiwan Dollars)
(Development Stage's Companies from
September 12, 1994 to April 30, 1995)
For the year ended December 31, 1995 and
from September 12 to December 31, 1994
Items 1995 1994
- --------------------------------------------- ------------ ------------
Cash Flow From Operating
Activities (see next page)
Net cash provided by (used in)
operating activities $(97,127,865) $(1,737,058)
Cash Flow From Investing Activities:
Purchase of property, plant and equipment (13,205,642) (4,105,824)
Increase in guarantee deposit paid (1,243,392) (219,396)
Increase in organization cost -- (117,712)
Increase in pledged time deposits (8,750,000) --
------------ ------------
Net cash provided by (used in)
investing activities (23,199,034) (4,442,932)
Cash Flow From Financing Activities:
Increase (decrease) in loan payables 27,340,000 --
Increase (decrease) in loans from banks 5,773,125 --
Increase (decrease) in due to stockholders (1,627,603) 1,727,841
Increase (decrease) in guarantee deposit
receipt 10,000,000 --
Proceeds from issue of capital stock -- 10,000,000
Increase in capital 115,960,000 --
Cumulative translation adjustment 139,436 (36,018)
------------ ------------
Net Cash provided by (used in)
financing activities 157,584,958 11,691,823
------------ ------------
Net Increase (decrease) in Cash
and Cash Equivalents 37,258,059 5,511,833
Cash and Cash Equivalents at Beginning
of the Years 5,511,833 --
------------ ------------
Cash and Cash Equivalents at End of the
Years $42,769,892 $ 5,511,833
============ ============
Supplemental Disclosures of
Cash Flow Information:
Income tax $ 86,538 $ 1,929
============ ============
Interest (net of amount capitalized) $ 109,417 $ --
============ ============
(See Accompanying Notes to Financial Statements)
NUCOM SYSTEMS, INC.
Cash Flows From Operating Activities
(Expressed in New Taiwan Dollars)
(Development Stage's Companies from
September 12, 1994 to April 30, 1995)
For the year ended December 31, 1995 and
from September 12 to December 31, 1994
Items 1995 1994
----------------------------------------------------- ------------ -----------
Cash Flow From Operating Activities
Net income (loss) $(45,854,056) $(2,136,023)
Adjustments:
Depreciation 2,285,466 97,321
Amortization 19,723 2,795
Bad debts 215,619 -
Decrease (increase) in notes receivables (905,559) -
Decrease (increase) in other notes receivables (5,258,126) -
Decrease (increase) in accounts receivables (13,138,890) -
Decrease (increase) in inventories (44,210,453) (355,244)
Decrease (increase) in prepayments (2,807,286) (84,011)
Decrease (increase) in other current assets (3,605,927) (198,476)
Increase (decrease) in notes payables 8,514,956 161,222
Increase (decrease) in other notes payables (214,939) 1,235,236
Increase (decrease) in accounts payables 8,728,739 -
Increase (decrease) in accrued expenses 16,205,504 169,421
Increase (decrease) in other current liabilities 1,255,018 75,002
Decrease (increase) in deferred tax
assets-current (9,750,000) -
Decrease (increase) in deferred tax
assets-noncurrent (8,607,654) (704,301)
------------ -----------
Net cash provided by (used in)
operating activities $(97,127,865) $(1,737,058)
============ ===========
<FN>
(See Accompanying Notes to Financial Statements)
</FN>
NUCOM SYSTEMS, INC.
Notes to Consolidated Financial Statements
(Amounts are expressed in New Taiwan Dollars)
(Development Stage's Companies from September 12, 1994 to April 30, 1995)
December 31, 1995 and 1994
1 - Organization and business
-------------------------
NUCOM SYSTEMS, INC. was planned and prepared to set up from September 12,
1994 until it was established completely on November 28, 1994 in accordance with
the Corporation Law of Republic of China. In December of the same year, it
substantially established a 100% owned subsidiary, NUCOM INC., U.S.A. Because
their planned principle operations had not commenced, NUCOM and its subsidiary
remained as development stage enterprises from Sep. 12, 1994 to April 30, 1995.
Since the beginning of May, 1995, productions and sales were started in the
networking field.
As of December 31, 1995, the total outstanding capital of NUCOM SYSTEMS,
Inc. was $110,640,000. The company is primarily engaged in the following
business:
A. Research, development, manufacture and sale in connection with networking
devices and related accessories.
B. Import and export of related networking products.
"NUCOM SYSTEMS, INC. U.S.A." is primarily engaged only in the sale of networking
products.
2 - Summary of Significant Accounting Policies
------------------------------------------
Business Combination
--------------------
When the financial statements are consolidated, the investment in NUCOM-USA
(NUCOM's books) and the stockholders' equity accounts (NUCOM-USA's books) are
eliminated. Their intercompany receivables and payables are reciprocals and thus
required elimination. The unrealized profits from downstream are also
eliminated.
The Basis for the Statement of Cash Flows Presented
---------------------------------------------------
The statement of cash flows is presented as cash and cash equivalents. Cash
and cash equivalents consist of cash on hand and in bank, and short-term
investments that are highly liquid and are not significantly affected by
interest rate fluctuations.
Inventories
-----------
Inventories are stated at the lower of cost (weighted average method) or
market. Market for raw materials and work in process is based on replacement
costs, and for other inventory classifications, it is based on net realizable
value.
The Principle of Capitalization or Expense
------------------------------------------
The expenditures that provide future benefits to the asset either by
extending its useful life or increasing its productive capacity or efficiency
are capitalized and recorded as assets. The other expenditures are recorded as
expenses or losses.
Property, Plant and Equipment
-----------------------------
Property, Plant and Equipment are stated at cost when purchased, and the
carrying amount is valued at the amount of cost less accumulated depreciation.
Depreciation of Property, Plant and Equipment is provided using the
straight-line method over the estimated useful lives of the assets in accordance
with the Tax Law. Major additions, betterments and renewals are capitalized.
Repairs and maintenance are recorded as current period expenses.
Gain or loss on disposal of Property, Plant and Equipment is recognized in
the current period. After-tax gain on disposal of Property, Plant and Equipment
is transferred to additional paid-in capital in accordance with the Corporation
Law.
Organization Cost
-----------------
The cost that was incurred in establishing a business, which was necessary
to file for incorporation, is recorded as organization cost. Its amortization is
provided using the straight-line method over five years.
Income Tax
----------
Income tax expense or benefit followed the methods of interperiod tax
allocation and intraperiod tax allocation in accordance with provision SFAS
No.22 [Accounting for Income Tax].
The taxable temporary differences are recognized as deferred tax
liabilities. The tax credits, loss carryforwards and deductible temporary
differences are recognized as deferred tax assets in accordance to all evidences
of their realization. The allowance is reduced by the amount of deferred tax
assets if there are not enough potential taxable income to be realized in future
years.
Foreign Currency Transactions
-----------------------------
Foreign currency transactions are recorded in New Taiwan dollars at the
rates of exchange in effect when the transactions occur. Gains or losses
resulting from settlement of foreign currency assets and liabilities are
credited or charged to income. At year end, the balances of foreign currency
assets and liabilities are restated based on year-end exchange rates and
resulting exchange gains or losses are credited or charged to current income.
All elements of subsidiary's financial statements shall be translated into
New Taiwan dollars by using a current exchange rate at balance sheet date. The
translation adjustments will result from the process of translating that
financial statements of NUCOM-USA into NUCOM's currency. Translation adjustments
are reported separately and accumulated in a separate component of equity.
3 - CASH AND CASH EQUIVALENTS
Dec. 31, 1995 Dec. 31, 1994
--------------------- ----------------------
Cash
Cash on hand $ 29,258,273 $ 18,045
Cash in bank
Demand deposits 7,741,639 143,680
Checking deposits 221,000 850,108
Time deposits 5,000,000 4,500,000
Foreign currency deposits 548,980 -
--------------------- ----------------------
Total $ 42,769,892 $ 5,511,833
===================== ======================
4 - PLEDGED TIME DEPOSITS
Dec. 31, 1995 Dec. 31, 1994
--------------------- ----------------------
Pledged time deposits $ 8,750,000 $ -
The above time deposits are secured by banks for loans.
5 - NET NOTES RECEIVABLES
Dec. 31, 1995 Dec. 31, 1994
--------------------- ----------------------
Notes Receivables $ 905,559 $ -
Allowance for bad debts (9,055) -
--------------------- ----------------------
Net Notes Receivables $ 896,504 $ -
===================== =====================
6 - NET ACCOUNTS RECEIVABLES
Dec. 31, 1995 Dec. 31, 1994
--------------------- ----------------------
Accounts Receivables $ 13,138,890 $ -
Allowance for bad debts (206,564) -
--------------------- ----------------------
Net Accounts Receivables $ 12,932,326 $ -
===================== ======================
7 - Net Inventories
---------------
Dec. 31, 1995 Dec. 31, 1994
------------------ -------------------
Merchandises $ 1,076,522 $ -
Finished goods 9,549,555 -
Work in process 18,315,686 355,244
Raw Materials 15,586,655 -
Supplies 37,279 -
------------------ -------------------
Total 44,565,697 355,244
Less: Allowance for Inventory
value declining loss - -
------------------ -------------------
Net Inventories $ 44,565,697 $ 355,244
================== ===================
8 - Subsidiary's combination Policy
-------------------------------
According to Preparation Standard of Financial Statement of SEC's Regulation
as below, investee company that meets both of those criteria is not subject to
audit.
Criteria:
a. Investee company's capital is under NT$30 million.
b. Investee company's operating revenue is under NT$50 million.
Investee of NUMCOM SYSTEMS, INC., NUCOM USA, meets the criteria above, and
thus is not subject to audit.
9 - Property, Plant and Equipment
-----------------------------
Current
------------------------------
Items Jan. 1, 1995 Increase Decrease Dec. 31, 1995
------------------------------ ------------- -------------- ------------- -------------
Cost
Transportation Equipment $ 982,274 $ - $ - $ 982,274
Machinery Equipment 121,270 1,139,564 - 1,260,834
Instrument Equipment - 1,677,522 - 1,677,522
Office Equipment 3,002,280 7,783,015 - 10,785,295
Other Equipment - 2,605,541 - 2,605,541
------------- -------------- ------------- -------------
Sub-Total 4,105,824 13,205,642 - 17,311,466
------------- -------------- ------------- -------------
Accumulated Depreciation
Transportation Equipment 13,643 163,712 - 177,355
Machinery Equipment 6,064 198,961 - 205,025
Instrument Equipment - 208,656 - 208,656
Office Equipment 77,164 1,372,277 - 1,449,891
Other Equipment - 341,860 - 341,860
------------- -------------- ------------- -------------
Sub-Total $ 97,321 $ 2,285,466 $ - $ 2,382,787
------------- ============== ============= -------------
Net $ 4,008,503 $14,928,679
============= =============
10 - Loan Payable
------------
Dec. 31, 1995
--------------------------------------------------------------------
Interest
Creditor Amount rate Description of borrowing
------------------------- -------------- ------------------- -----------------------------
Network Peripherals Inc. $27,340,000 NO Fiduciary loan
11 - Loan From Banks
---------------
Dec. 31, 1995
---------------------------------------------------------------------------------
Interest Description
Creditor Amount rate Period of borrowing Collateral
----------------- ------------- -------------- ------------------ ------------ ------------
Overseas Chinese $ 5,773,125 8.75% 10/19/94 - 6/18/95 Materials Time
Bank purchased deposits
loan
12 - Capital Stock
-------------
The company was established on Nov. 28, 1994 in accordance with the
Corporation Law of Republic of China. In 1995, NUCOM increased its capital from
$10,000,000 to $110,640,000.
At the end of 1995, the corporations's capital stock included $110,640,000,
or 11,064,000 shares at $10.00 par value per share.
13 - Retained Earnings Distribution
------------------------------
In accordance with NUCOM's articles of Incorporation, the retained earnings
should be distributed as follows:
(1) Payment of income tax liability.
(2) Cover cumulative losses.
(3) 10% of the remaining balance transferred to legal reserve.
(4) Appropriate employee bonuses (at least 10% of the remaining balance).
(5) Appropriate special funds to charitable organizations (1% of the remaining
balance).
(6) Appropriate common stock dividend (proposed by the board of directors with
resolution by the shareholders' meeting).
14 - Income Tax
----------
a - Income Tax expense (benefit) consisted of the following:
1995 1994
------------ ----------
Deferred tax assets-current $ 9,750,000 $ -
Deferred tax assets-noncurrent 8,607,654 704,301
Accrued income tax-current - -
------------ ----------
Income Tax (expenses) benefit $ 18,357,654 $ 704,301
============ ==========
b - The deferred tax assets at Dec. 31, 1995 and 1994 follows:
1995 1994
------------ -----------
Deductible temporary differences $ 17,651,425 $ 212,542
Loss carryforwards 48,974,505 2,604,664
------------ -----------
Sub-total 66,625,930 2,817,206
Tax rate 25% 25%
------------ -----------
Deferred tax assets 16,656,482 704,301
Tax credit of R & D expenses 2,405,473 -
------------ -----------
Total deferred tax assets $ 19,061,955 $ 704,301
============ ===========
15 - Commitments and Contingent Liabilities
--------------------------------------
(1) At the end of 1995, the company has outstanding letters of credit from
overseas Chinese bank amounting to US.$187,400 on which it paid
US.$18,740 as a deposit.
(2) At the end of 1995, the company has commitments on guarantee note for
selling network products with VIA Technology, Inc. The amount is
$10,000,000.
16 - Development Stage Period's Revenue and Expenses of NUCOM SYSTEMS, INC.
---------------------------------------------------------------------------
From Jan. 1 1995 From Sep. 12, 1994
Items to April 30, 1995 to April 30, 1995
------------------------------- ----------------- ------------------
Net sales $ - $ -
Cost of goods sold - -
----------------- ------------------
Gross profit - -
Operating expenses (2,211,228) (4,988,038)
----------------- ------------------
Operating income (loss) (2,211,228) (4,988,038)
Non-operating income 99,238 123,266
Non-operating expense (2,808) (90,350)
----------------- ------------------
Net income (loss) $ (2,114,798) $ (4,955,122)
================= ==================
17 - Transactions With The Related Parties
-------------------------------------
(1)
Names of the related parties Relationship
--------------------------------- ---------------------------
Mr. Oliver Szu The Chairman of the Company
Mr. Frank Jiang The Director of the Company
Mr. John Lin The Director of the Company
Mr. Sando Wang The Director of the Company
Mr. Andy Chou The Director of the Company
Mr. David Chiang The Director of the Company
Miss Bih-Hwey Hsiao The Auditor of the Company
(2) Significant Transactions With The Related Parties
a. Financing
The receivables and payables from financing arrangements between
the company and the related parties are as follows:
In 1995
(a)
Payable to related The top The year Range of
parties balance end balance interest rate
------------------- ------------ ----------- -------------
Mr. Oliver Szu $ 10,065,000 $ 100,238 -
Mr. Frank Jiang 11,000,000 - -
Mr. John Lin 2,500,000 - -
Mr. Sando Wang 6,300,000 - -
Mr. Andy Chou 1,000,000 - -
Mr. David Chiang 3,000,000 - -
Miss Bih-Hwey Hsiao 4,990,000 - -
(b)
Receivable to related The top The year Range of
parties balance end balance interest rate
--------------------- ------------ ----------- -------------
Mr. Oliver Szu $ 5,258,126 $ 5,258,126 -
In 1994
Payable to related The top The year Range of
parties balance end balance interest rate
------------------- ------------ ----------- -------------
Mr. Oliver Szu $ 2,908,435 $ 1,445,221 -
Mr. Frank Jiang 10,532,000 282,620 -
18 - Significant Transactions
------------------------
NUCOM is named as a defendent in damaged patent right's action by D-LINK
SYSTEMS INC. on Oct. 9, 1995, in the Taiwan District Court for the Ban Chou
District of Taiwan. On Jan. 23, 1996, NUCOM SYSTEMS INC. agreed to pay
NT$10,100,000, including attorneys fees of NT$100,000 and compensatory damage of
NT$10,000,000 to D-LINK SYSTEMS, INC., who agreed to drop the suit. These losses
were accrued in 1995.
19 - Merge and Acquisition
---------------------
NUCOM SYSTEMS, INC. is currently in discussions with NETWORK PERIPHERALS
INC. concerning a merger of the two companies.
Item 7(b). Financial Statements and Exhibits
Included are the unaudited pro forma statement of operations for the three month
period ended March 31, 1996 and for the year ended December 31, 1995.
Effective March 21, 1996, the Company completed its acquisition of
NuCom Systems, Inc. (NuCom), a Taiwan-based company, by purchasing all the
outstanding shares of NuCom in exchange for $11,158,134 in cash, and 440,748
shares of the Company's Common Stock valued at $5,341,866, or $12.12 per share
for such purposes, for an aggregate purchase price of $17.1 million. The
transaction was accounted for using the purchase method; accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed
based on their estimated fair market values at the date of acquisition.
The following unaudited pro forma financial information gives effect to
the acquisition as if the transaction had taken place at the beginning of 1995
for the pro forma condensed statements of operations.
The unaudited pro forma statements of operations are not necessarily
indicative of the operating results that would have been achieved if the
transaction had occurred on the dates indicated and should not be construed as
representative of future operations. The historical financial statements of
NuCom are included elsewhere in this filing, and the unaudited pro forma
financial information presented herein should be read in conjunction with those
financial statements and related notes.
NETWORK PERIPHERALS INC.
PRO FORMA STATEMENTS OF OPERATIONS - Unaudited
For the three months ended March 31, 1996
(in thousands except per share data)
NPI NuCom Adjustments Pro Forma
-----------------------------------------
Net sales $ 10,128 $1,274 $ 11,402
Cost of sales 6,198 829 104(a) 7,132
-------- ------ --------
Gross profit 3,930 445 4,270
-------- ------ --------
Operating expenses:
Research and development 1,612 281 250(b) 2,143
Marketing and selling 2,045 264 2,309
General and administrative 591 191 782
-------- ------ --------
Total operating expenses 4,248 736 5,234
-------- ------ --------
Loss from operations (318) (291) (964)
Nonoperating income (expense)
Interest income, net 555 7 (118)(c) 444
Other nonoperating expense, net - (184) (184)
-------- ------ --------
Income (loss) before income taxes 237 (468) (704)
Provision for income taxes (83) 117 23(a) 57
-------- ------ --------
Net income (loss) $ 154 $ (351) $ (647)
======== ====== ========
Net income (loss) per share $ 0.01 $ (0.06)
======== ========
Weighted average common and
common equivalent shares 12,789 12,789
======== ========
NETWORK PERIPHERALS INC.
PRO FORMA STATEMENTS OF OPERATIONS - Unaudited
For the year ended December 31, 1995
(in thousands except per share data)
NPI NuCom Adjustments Pro Forma
-----------------------------------------
Net sales $ 47,144 $ 888 $ 48,032
Cost of sales 24,690 818 1,064 (a) 26,572
-------- ------- --------
Gross profit 22,454 70 21,460
-------- ------- --------
Operating expenses:
Research and development 4,811 979 1,000 (b) 6,790
Marketing and selling 7,319 500 7,819
General and administrative 2,226 674 2,900
-------- ------- --------
Total operating expenses 14,356 2,153 17,509
-------- ------- --------
Income (loss) from operations 8,098 (2,083) 3,951
Nonoperating income (expense)
Interest income, net 2,236 36 (488)(c) 1,784
Other nonoperating expense, net - (349) (349)
-------- ------- --------
Income (loss) before income taxes 10,334 (2,395) 5,386
Benefit from (provision for) income
taxes (3,617) 685 317(d) (2,615)
-------- ------- --------
Net income (loss) $ 6,717 $(1,711) $ 2,771
======== ======= ========
Net income (loss) per share $ 0.55 $ 0.23
======== ========
Weighted average common and
common equivalent shares 12,177 12,177
======== ========
Unaudited Notes to Pro Forma Combined Statements of Operations
1. THE ACQUISITION
The total purchase price aggregates $17.1 million and includes $600,000
of direct acquisition costs. The purchase price was allocated to the assets
acquired and liabilites assumed based on their estimated fair market values and
independent appraisal for all other identifiable tangible and intangible assets
at the acquisition date. The allocation of the purchase price is as follows (in
thousands):
Research and development in process $ 13,032
Other intangible assets 1,716
Current assets 4,495
Non-current assets 613
Property and equipment 479
Current liabilites assumed (3,235)
-----------
$ 17,100
===========
2. ADJUSTMENTS TO STATEMENTS OF OPERATIONS
(a) To reflect the amortization of intangible assets over the estimated
lives:
Value at Estimated
Acquisition Lives Quarter Year
----------- ------------ ---------- ------------
Assembled workforce $ 633,000 Three years $ 53,000 $ 211,000
Covenant not to compete $ 155,000 Three years 13,000 52,000
Purchased technology $ 644,000 Nine months - 644,000
Goodwill $ 785,200 Five years 39,260 157,040
---------- ------------
$ 105,260 $ 1,064,040
========== ============
Deferred tax related to Nine months -
intangible assets $(501,200) five year $ 23,000 $ 317,000
---------- ========== ============
Total intangible assets 1,716,000
==========
(b) To reflect bonus paid to key employees of NuCom pursuant to an agreement
whereby the key employees of NuCom will receive an aggregate of $3
million to be paid over three years.
(c) To reflect the reduction in interest income resulting from a decreased
level of invested funds used to acquire NuCom.
3. NONRECURRING CHARGES
Research and development in process and product integration costs,
expensed in the period of the acquisition, are not reflected in the pro forma
information herewith pursuant to Article 11 of Regulation S-X. The research and
development in process represents the estimated current fair market value using
a risk adjusted income approach, of specifically identified technologies which
had not reached technological feasibility and had no future uses. The product
integration cost, which the Company otherwise would not have incurred, consists
of marketing and evaluation costs related to Nucom's products.
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Network Peripherals Inc.
Date: June 4, 1996 By: /s/ TRUMAN COLE
------------------------ ------------------------
Truman Cole
Vice President, Finance and
Chief Financial Officer
(Authorized Officer)