FORM 8-K/A CURRENT REPORT
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report June 7, 1996
(Date of earliest event reported)
MOLECULAR DEVICES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-27316 94-2914362
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NUMBER)
1311 Orleans Drive, Sunnyvale, California 94089 94089
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(408) 747-1700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Item 7, (a) and (b) on page 2 of the current report on Form 8-K dated June 7,
1996 are amended in their entirety as follows:
a) Financial Statements of Business Acquired. The following 8 pages contain
the balance sheet of NovelTech Systems, Inc. as of March 31, 1996 and the
related statements of operations, cash flows and stockholders' deficit for
the year ended March 31, 1996, together with the report of NovelTech
Systems Inc.'s independent auditors thereon.
1
NOVELTECH SYSTEMS, INC.
Financial Statements
March 31, 1996
with
Report of Independent Auditors
2
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
NovelTech Systems, Inc.:
We have audited the accompanying balance sheet of NovelTech Systems, Inc. as
of March 31, 1996, and the related statements of operations, stockholders'
deficit and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also incudes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NovelTech Systems, Inc. as of
March 31, 1996, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Palo Alto, California
June 28, 1996
3
NOVELTECH SYSTEMS, INC.
BALANCE SHEET
MARCH 31, 1996
ASSETS:
Current Assets:
Cash ..................................................... $ 129,596
Accounts Receivable ...................................... 127,894
Inventories .............................................. 198,852
---------
Total Current Assets .................................... 456,342
Property and equipment, net: .............................. 23,927
Other assets: ............................................. 288
---------
$ 480,557
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable .......................................... $ 70,830
Other Accrued Liabilities ................................. 273,078
Customer Deposits ......................................... 240,205
---------
Total Current Liabilities ............................... 584,113
Stockholders' Deficit:
Common Stock, no par value, 60,000 ........................ 1,000
shares authorized, 10,000 outstanding
Accumulated deficit ....................................... (104,556)
---------
Total Stockholders' deficit ............................. (103,556)
---------
$ 480,557
=========
The accompanying notes are an integral part of this financial statement.
4
NOVELTECH SYSTEMS, INC.
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1996
REVENUES ....................................................... $ 993,685
COST OF REVENUES ................................................ 535,687
---------
Gross margin ................................................... 457,998
OPERATING EXPENSES
Selling, general and administrative ............................ 603,240
---------
NET LOSS ........................................................ ($145,242)
=========
5
NOVELTECH SYSTEMS, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
TOTAL
ACCUMULATED STOCKHOLDERS'
COMMON STOCK DEFICIT DEFICIT
-------------- ------------- ---------------
BALANCE AT MARCH 31, 1995 ....... $ 1,000 $ 40,686 $ 41,686
Net Loss ....................... -- (145,242) (145,242)
--------- --------- ---------
BALANCE AT MARCH 31, 1996 ....... $ 1,000 $(104,556) $(103,556)
========= ========= =========
6
NOVELTECH SYSTEMS, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 1996
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss ................................................ $ (145,242)
Adjustments to reconcile net loss to net cash provided
by operating activities ................................
Depreciation ........................................... 2,725
(Increase) decrease in assets:
Accounts Receivable .................................... (127,894)
Inventory .............................................. (192,171)
Other Assets ........................................... 237
Increase (decrease) in liabilities:
Accounts Payable ....................................... 65,230
Other accrued liabilities .............................. 233,560
Customer deposits ...................................... 240,205
------------
Net cash provided by operating activities ............... 76,650
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .................................... (26,652)
------------
Net cash used in investing activities ................... (26,652)
------------
Net increase in cash .................................... 49,998
Cash beginning of year .................................. 79,598
------------
Cash at end of year ..................................... $ 129,596
============
7
NOVELTECH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis Of Presentation
NovelTech Systems, Inc. (the "Company") was founded in 1993 as a Michigan
Corporation and is primarily involved in the development and sale of
bioanalytical measurement systems for life sciences applications. The primary
market for the Company's products is large pharmaceutical companies.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company sells its products primarily to corporations within the life
sciences research market. The company performs ongoing credit evaluations of its
customers and generally does not require collateral. The Company has not
experienced any material credit losses.
Inventories
Inventories are stated on a first-in, first out basis at the lower of cost
or market. Demonstration equipment, included in inventories, is amortized over
two years.
Equipment
Equipment is recorded at cost and depreciated using the straight-line
method over the estimated useful life of the assets (ranging from three to five
years).
Revenue Recognition and Warranty
The Company recognizes product revenue at the time of product shipment to
customers and provides for estimated warranty expense at the time of sale.
NOTE 2. BALANCE SHEET AMOUNTS
MARCH 31, 1996
--------------
Inventories:
Raw materials .............................. $ 1,239
Work in process ............................ 139,568
Finished goods and demonstration equipment 58,045
--------------
$ 198,852
==============
Property and equipment:
Machinery and equipment .................... $ 25,842
Furniture and Fixtures ..................... 19,675
--------------
45,517
Less: Accumulated depreciation ............. 21,590
--------------
Net property and equipment ................. $ 23,927
==============
NOTE 3. LEASE COMMITMENTS
The Company occupies a facility under an operating lease which expired
March 31, 1996. Subsequent to that date, the Company is committed to the lease
on a month-to-month basis at $2,205 per month.
8
NOTE 4. INCOME TAXES
As of March 31, 1996, the Company had deferred tax assets of approximately
$70,000. Deferred tax assets relate primarily to accrued expenses that are not
currently deductible for income tax purposes. Based upon the Company's lack of
earnings history, a valuation allowance for deferred assets of approximately
$70,000 at 3/31/96 is required to reduce the Company's net deferred asset to the
amount realizable at present (zero).
NOTE 5. SUBSEQUENT EVENTS
On June 7, 1996, all of the outstanding common stock of the Company was
acquired by Molecular Devices Corporation of Sunnyvale, California. The Company
is now fully-owned by Molecular Devices Corporation.
9
ITEM 7.
b) Pro Forma Financial Information. The following 4 pages contain the
unaudited pro forma condensed consolidated balance sheet of the Registrant
and NovelTech Systems Inc. ("NovelTech") as of December 31, 1995, and the
unaudited pro forma condensed consolidated statements of operations of the
Registrant and NovelTech for the year ended December 31, 1995 and for the
three month period ended March 31, 1996 and the notes thereto.
The following unaudited pro forma condensed consolidated balance sheet and
the condensed consolidated statements of operations of Molecular Devices
Corporation ("the Company") and NovelTech (collectively, the pro forma
statements) were prepared to illustrate the estimated effects of the acquisition
by the Company of all of the outstanding common shares of NovelTech for balance
sheet purposes as of December 31, 1995 and for purposes of the statements of
operations commencing January 1, 1995. The pro forma statements of operations
reflect the combined revenues and expenses of the Company and NovelTech. The pro
forma statements do not purport to represent what the Company's financial
position or results of operations would have been if the acquisition in fact had
occurred on the date or at the beginning of the periods indicated or to project
the Company's financial position or results of operations for any future date or
period.
The pro forma condensed consolidated balance sheet at December 31, 1995
includes the condensed consolidated balance sheet of the Company as of December
31, 1995 and the condensed balance sheet of NovelTech as of March 31, 1996. The
pro forma results of operations for the year ended December 31, 1995 include the
operating results of the Company for the twelve months ended December 31, 1995
and the operating results of NovelTech for the twelve months ended March 31,
1996. The pro forma results of operations for the three months ended March 31,
1996 include the operating results of the Company for the three months ended
March 31, 1996 and the operating results of NovelTech for the three months ended
March 31, 1996.
The pro forma adjustments are based upon available information and upon a
valuation performed as of June 7, 1996 that the Company believes are reasonable
in the circumstances. The purchase price has been allocated to the acquired
assets and liabilities based on a determination of their respective values. The
pro forma statements and accompanying notes should be read in conjunction with
the respective historical financial statements of the Company (included in its
1995 Annual Report on Form 10-K) and NovelTech, including the notes thereto. The
historical financial statements of NovelTech are included elsewhere in this Form
8-K/A.
10
MOLECULAR DEVICES CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
MOLECULAR NOVELTECH
DEVICES SYSTEMS, INC. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
------------ --------------- --------------- -----------
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 20,379 $ 130 $(1,710)[2(i)] $ 18,799
Accounts receivable ................................. 3,987 128 -- 4,115
Inventories ......................................... 1,393 199 -- 1,592
Deferred tax assets ................................. 1,161 -- -- 1,161
Other current assets ................................ 141 -- -- 141
-------- -------- -------- --------
Total current assets ............................... 27,061 457 (1,710) 25,808
Equip & leasehold improvements, net .................. 1,588 24 -- 1,612
Other assets ......................................... 151 -- -- 151
Acquired technology .................................. -- -- 4,795 [2(i)]
(4,645)[2(ii)]
(75)[2(ii)] 75
-------- -------- -------- --------
$ 28,800 $ 481 $(1,635) $ 27,646
======== ======== ======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 932 $ 71 $ -- $ 1,003
Accrued compensation ................................ 876 60 -- 936
Other accrued liabilities ........................... 1,915 453 -- 2,368
Deferred revenue .................................... 476 -- -- 476
Current obligations under credit arrangements ....... 76 -- -- 76
NovelTech promissory notes .......................... -- -- 1,500[2(i)] 1,500
-------- -------- -------- --------
Total current liabilities .......................... 4,275 584 1,500 6,359
Stockholders' equity:
Common stock--MDC ................................... 8 -- -- 8
APIC--MDC ........................................... 35,159 -- 1,482[2(i)] 36,641
Accumulated deficit--MDC ............................ (10,100) -- (4,720) (14,820)
Common stock--NTS ................................... -- 1 (1)[2(i)] --
Accumulated deficit--NTS ............................ -- (104) 104 [2(i)] --
Deferred compensation ............................... (537) -- -- (537)
Accumulated translation adjustment .................. (5) -- -- (5)
-------- -------- -------- --------
Total stockholders' equity ......................... 24,525 (103) (3,135) 21,287
-------- -------- -------- --------
$ 28,800 $ 481 $(1,635) $ 27,646
======== ======== ======== ========
<FN>
See accompaning notes to the unaudited pro forma condensed consolidated financial statements
</FN>
11
MOLECULAR DEVICES CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
MOLECULAR NOVELTECH
DEVICES SYSTEMS, INC. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
------------ --------------- ------------- -----------
REVENUES:
Product revenues ................................. $ 23,116 $ 994 $ -- $ 24,110
Contract revenues ................................ 2,499 -- -- 2,499
-------- -------- -------- --------
Total revenues .................................. 25,615 994 -- 26,609
-------- -------- -------- --------
COST OF REVENUES:
Cost of product revenues ......................... 8,482 536 -- 9,018
Cost of contract revenues ........................ 1,934 -- -- 1,934
-------- -------- -------- --------
Total cost of revenues .......................... 10,416 536 -- 10,952
-------- -------- -------- --------
Gross margin ..................................... 15,199 458 -- 15,657
-------- -------- -------- --------
OPERATING EXPENSES:
Company-funded research & development ............ 3,639 -- -- 3,639
Selling, general and administrative .............. 8,549 603 75[3(a)] 9,227
-------- -------- -------- --------
Total operating expenses ........................ 12,188 603 75 12,866
-------- -------- -------- --------
Income (loss) from operations ..................... 3,011 (145) (75) 2,791
Other income (expense), net ....................... (33) -- -- (33)
-------- -------- -------- --------
Income (loss) before income taxes ................. 2,978 (145) (75) 2,758
Income tax benefit ................................ 1,081 -- -- 1,081
-------- -------- -------- --------
NET INCOME (LOSS) ................................. $ 4,059 $ (145) $ (75) $ 3,839
======== ======== ======== ========
NET INCOME PER SHARE .............................. $ 0.52 $ 0.48
======== ========
SHARES USED IN COMPUTING NET INCOME PER SHARE ..... 7,851 7,997
======== ========
<FN>
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
</FN>
12
MOLECULAR DEVICES CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
MOLECULAR NOVELTECH
DEVICES SYSTEMS, INC. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
------------ --------------- ------------- -----------
REVENUES:
Product revenues ................. $ 6,005 $ 488 $ -- $ 6,493
Contract revenues ................ 97 -- -- 97
------- ------- ------- -------
Total revenues .................. 6,102 488 -- 6,590
------- ------- ------- -------
COST OF REVENUES:
Cost of product revenues ......... 2,196 237 -- 2,433
Cost of contract revenues ........ 46 -- -- 46
------- ------- ------- -------
Total cost of revenues .......... 2,242 237 -- 2,479
------- ------- ------- -------
Gross margin ..................... 3,860 251 -- 4,111
------- ------- -------
OPERATING EXPENSES:
Company-funded research & development 1,029 -- -- 1,029
Selling, general and administrative 2,103 382 19[3(a)] 2,504
------- ------- ------- -------
Total operating expenses ........ 3,132 382 19 3,533
------- ------- ------- -------
Income (loss) from operations ..... 728 (131) (19) 578
Other income (expense), net ....... 265 -- -- 265
------- ------- ------- -------
Income (loss) before income taxes . 993 (131) (19) 843
Income tax benefit ................ 100 -- -- 100
------- ------- ------- -------
NET INCOME (LOSS) ................. $ 1,093 $ (131) $ (19) $ 943
======= ======= ======= =======
NET INCOME PER SHARE .............. $ 0.12 $ 0.10
======= ======= ======= =======
SHARES USED IN COMPUTING
NET INCOME PER SHARE ............. 9,427 9,573
======= ======= ======= =======
<FN>
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
</FN>
13
MOLECULAR DEVICES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The pro forma information presented is theoretical in nature and not
necessarily indicative of future consolidated results of operations of the
Company or the consolidated results of operations which would have resulted had
the Company acquired a 100% ownership interest in NovelTech Systems, Inc.
("NovelTech") during the periods presented. The pro forma condensed consolidated
financial statements reflect the effects of the NovelTech acquisition, assuming
that the acquisition and related events occurred as of December 31, 1995 for the
purposes of the condensed consolidated balance sheet, and as of January 1, 1995
for the purposes of the condensed consolidated statements of operations for the
year ended December 31, 1995 and for the three months ended March 31, 1996.
NOTE 2. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET ADJUSTMENTS
(i) The purchase price for NovelTech was determined as follows:
Cash ......................................................... $1,710
Promissory notes ............................................. $1,500
Issuance of 146,342 shares common stock ...................... 1,482
------
$4,692
======
The purchase price was allocated based on an independent appraisal as
follows:
Assumption of NovelTech liabilities in excess of assets at $ (103)
December 31, 1995 ...............................................
Acquired developed technology .................................... 150
Acquired in-process technology ................................... 4,645
-------
$ 4,692
=======
(ii) Write-off acquired in-process technology.
In the second quarter of 1996, $4,645,000 of acquired in-process research and
development will be charged against operations. Only the liabilities in excess
of assets of $103,000 and the $150,000 of acquired technology will remain on the
balance sheet after this $4,645,000 charge. The $150,000 of acquired technology
will be amortized over an estimated useful life of two years.
NOTE 3. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ADJUSTMENTS
(a) Amortization of capitalized technology, assuming an amortization period
of two years.
In the second quarter of 1996, the Company charged $4,645,000 to expense
which is the portion of the purchase price allocated to acquired in-process
technology. In accordance with SEC Regulation S-X, Rule 11-02 (b) (5), non
recurring charges, such as the charge for acquired in-process technology
resulting from the acquisition are not reflected in the Pro Forma statements of
operations.
NOTE 4. PER SHARE CALCULATIONS
The pro forma combined net income per share and shares used in computing
amounts for the year ended December 31, 1995 and the three months ended March
31, 1996 have been calculated assuming that the acquisition occurred on January
1, 1995. Accordingly, the 146,342 common shares issued have been treated as
outstanding since that date.
14