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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
Date of Report (Date of earliest event reported): SEPTEMBER 6, 1996
FUSION SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-23628 52-0915080
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
7600 Standish Place, Rockville, MD 20855
(Address of principal Executive Offices) (Zip Code)
(301) 251-0300
(Registrant's telephone number, including area code)
No change since last report.
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 14, 1996, Fairey Investments, Inc., a Delaware corporation
("FII"), Fusion UV Systems, Inc., a Delaware corporation ("Sub"), Fairey
Overseas Development Limited, a corporation organized under the laws of England
and Wales ("Overseas"), and Fusion UV Systems Limited, a corporation organized
under the laws of England and Wales ("UK Sub") (FII, Sub, Overseas and UK Sub
are collectively referred to herein as the "Buyers") entered into a purchase
agreement (the "Agreement") with Fusion Systems Corporation, a Delaware
corporation (the "Registrant"), Fusion UV Curing Systems Corporation, a
Maryland corporation and wholly-owned subsidiary of the Registrant ("Curing"),
Fusion Technology International, Inc., a Delaware corporation and a
wholly-owned subsidiary of ("Fusion Technology"), and Fusion Europe Limited, a
corporation organized under the laws of England and Wales and a wholly-owned
subsidiary of Fusion Technology ("Fusion Europe") (the Registrant, Curing,
Fusion Technology, and Fusion Europe are collectively referred to herein as the
"Sellers"). Pursuant to the Agreement, the Buyers agreed, subject to
obtaining required regulatory approval and certain other conditions, to
purchase substantially all of the assets relating to the business of designing,
manufacturing, marketing and servicing ultraviolet curing systems used in
manufacturing, printing and coating applications in numerous industries as
conducted by the Registrant through its direct and indirect wholly-owned
subsidiaries (the "Business"). The Buyers are direct or indirect subsidiaries
of Fairey Group, plc.
On September 6, 1996 (the "Closing Date"), the closing of the sale of
the Business was completed, and the Buyers acquired substantially all of the
assets of Curing and Fusion Europe relating to the Business and all of the
outstanding stock of Fusion Aetek UV Systems, Inc., a Delaware corporation,
Fusion Japan KK, a corporation organized under the laws of Japan, and Fusion
VuS GmbH, a corporation organized under the laws of the Federal Republic of
Germany, each of which was a direct or indirect subsidiary of the Registrant.
In consideration for the sale of such shares and assets comprising the
Business, on the Closing Date the Buyers paid to the Sellers an aggregate of
$121,000,000 in cash, subject to adjustment as provided in the Agreement, and
assumed certain liabilities of the Sellers related to the Business.
In the Agreement, the Sellers made various representations, warranties
and covenants as to themselves and the Business and have agreed to indemnify
the Buyers for any breaches thereof. Claims for indemnification for breaches
of representations, warranties and covenants must be brought before December
31, 1997, except with respect to certain specific indemnities which survive
either for longer time periods or without time limitation. Sellers' maximum
indemnification obligation for any losses is initially $9,000,000, but such
cap will be reduced to $3,000,000 for claims made after March 31, 1997.
The Agreement included a reciprocal noncompetition agreement pursuant
to which each party agreed not to compete with the business of the other for a
ten-year period and also agreed not to hire or solicit the employment of
employees of the other party for certain limited time periods. Effective as of
the Closing Date, the Sellers and the Buyers entered into an agreement to
provide to each other certain services and products for a transition period.
Also effective as of the Closing Date, the Registrant entered into a cross
license agreement with Sub to license its patents to Sub for Sub's field of use
but retained the right to use such patents in its own field of use.
In a separate transaction, Sub paid $5 million to Fusion Lighting,
Inc., a former subsidiary of the Registrant which makes visible lighting
products ("Fusion Lighting"), in consideration for a mutual noncompetition
agreement, a cross license of technology, a change of corporate name of Fusion
Lighting and a right of first refusal to serve as Fusion Lighting's exclusive
distributor for certain of its products in the curing field. Daniel Tessler,
Chairman of the Board of Directors of the Registrant, also serves as Chairman
of the Board of Directors and Chief Executive Officer of Fusion Lighting and is
a shareholder of Fusion Lighting. Leslie S. Levine, a director and President
and Chief Executive Officer of the Registrant, also serves as a director and
President of Fusion Lighting and is a shareholder of Fusion Lighting.
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In connection with the sale of the Business, the Registrant has agreed
to pay Venture Advisors, Inc. ("VAI") a financial advisory fee of $1,028,500.
Mr. Tessler, Chairman of the Board of Directors of the Registrant, is the
President and controlling stockholder of VAI. The Board of Directors of the
Registrant was separately advised on the fairness of the financial terms of the
transaction by a different investment banking firm.
Following the sale of the Business, the Registrant continues to serve
as a leading worldwide suppler of single-wafer ashers and photostabilizers used
in the fabrication of advanced semiconductor devices.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
Not applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 28, 1996.....................................Page F-1
Unaudited Pro Forma Condensed Consolidated Statements of Operations:
For the Year Ended December 31, 1995..........................................................................Page F-2
For the Six Months Ended June 28, 1996........................................................................Page F-3
The Unaudited Pro Forma Condensed Consolidated Balance Sheet of the
Registrant as of June 28, 1996 reflects the financial position of the
Registrant after giving effect to the disposition of the assets and assumption
of the liabilities discussed in Item 2 and assumes the disposition took place
on June 28, 1996. The Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the year ended December 31, 1995 and for the six-month period
ended June 28, 1996 assume that the disposition occurred on December 31, 1994,
and are based on the operations of the Registrant for the year ended December
31, 1995 and the six months ended June 28, 1996. Transaction costs include
expenses associated with the transaction, severance cost for employees
terminated as a result of the transaction, and accrual for future expenses.
The unaudited pro forma condensed consolidated financial statements
have been prepared by the Registrant based upon assumptions deemed proper by
it. The unaudited pro forma condensed consolidated financial statements
presented herein are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or future results of
operations of the Registrant, or of the financial position or results of
operations of the Registrant that would have actually occurred had the
transaction been in effect as of the date and for the periods presented. In
addition, it should be noted that the Registrant's financial statements will
reflect the disposition as of September 6, 1996, the Closing Date.
The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the historical financial statements and
related notes of the Registrant.
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(c) Exhibits
NO. DESCRIPTION
- -- -----------
2.1 Purchase Agreement dated August 14, 1996 by and among the Buyers and
the Sellers. (The Registrant hereby agrees to furnish supplementally
to the Securities and Exchange Commission upon request a copy of any
omitted schedule or exhibit, all of which are listed in the
Agreement.)
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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.
FUSION SYSTEMS CORPORATION
September 19, 1996 By: /s/ Joseph F. Greeves
----------------------------
Joseph F. Greeves
Vice President and Chief Financial Officer
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PRO FORMA FINANCIAL INFORMATION
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 28, 1996
PRO FORMA ADJUSTMENTS
--------------------------------
UV PROCEEDS FROM
HISTORICAL CURING (a) DISPOSITION PRO FORMA
------------ ------------- --------------- -----------
ASSETS
Current Assets:
Cash, cash equivalents
and short-term marketable securities $ 26,737 $ 1,157 $121,000 (b) $141,332
(5,248)(c)
Accounts receivable, net 31,987 11,710 - 20,277
Inventories 25,663 8,591 - 17,072
Prepaid expenses and other current assets 1,647 667 - 980
Receivable from related party 229 - - 229
---------- --------- ---------- ---------
Total Current Assets 86,263 22,125 115,752 179,890
Fixed Assets, net of accumulated depreciation 17,713 5,366 - 12,347
Deferred Income Taxes 3,122 144 - 2,978
Other Assets 770 457 - 313
Intangible Assets, net of accumulated amortization 3,049 2,934 - 115
---------- --------- ---------- ---------
Total Assets $110,917 $31,026 $115,752 $195,643
========== ========= ========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $4,484 $1,646 - $ 2,838
Accrued expenses 8,952 3,306 - 5,646
Income taxes 248 90 36,250 (d) 36,408
Customer deposits 1,016 982 - 34
---------- --------- ---------- ---------
Total Current Liabilities 14,700 6,024 36,250 44,926
---------- --------- ---------- ---------
Total Stockholders' Equity 96,217 25,002 79,502 150,717
---------- --------- ---------- ---------
Total Liabilities and Stockholders' Equity $110,917 $31,026 $115,752 $195,643
========== ========= ========== =========
(a) To reflect the disposition of the Company's UV Curing business and the
elimination of its assets and liabilities as of June 28, 1996.
(b) To reflect the $121 million of proceeds from the sale of the UV Curing
business.
(c) To reflect transaction costs related to the transaction.
(d) To reflect income tax liability related to the transaction.
F-1
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PRO FORMA FINANCIAL INFORMATION
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
PRO FORMA ADJUSTMENTS
------------------------
UV
HISTORICAL CURING (a) INTEREST (b) PRO FORMA
---------- --------- ------------ ---------
Net Revenues $109,567 $51,086 $ - $58,481
Cost of Sales 49,883 24,347 - 25,536
---------- --------- -------- ---------
Gross Profit 59,684 26,739 - 32,945
---------- --------- -------- ---------
Operating Expenses:
Selling, general and administrative 26,441 13,677 - 12,764
Research, development and engineering 11,086 3,404 - 7,682
---------- --------- -------- ---------
Total operating expenses 37,527 17,081 - 20,446
---------- --------- -------- ---------
Operating Income 22,157 9,658 - 12,499
---------- --------- -------- ---------
Other Income:
Interest income, net 2,193 55 4,000 6,138
Foreign exchange gains (losses) 85 130 - (45)
Other, net (11) - - (11)
---------- --------- -------- ---------
Total other income, net 2,267 185 4,000 6,082
---------- --------- -------- ---------
Income before income taxes 24,424 9,843 4,000 18,581
Provision for Income Taxes 9,159 3,714 1,508 6,953
---------- --------- -------- ---------
Net Income $ 15,265 $ 6,129 $2,492 $11,628
========== ========= ======== =========
Earnings Per Share: $ 1.88 $ 0.75 $ 0.30 $ 1.43
========== ========= ======== =========
Weighted-Average Shares Outstanding 8,120 8,120 8,120 8,120
========== ========= ======== =========
(a) To eliminate the operations of the UV Curing business for the entire
period. No recognition has been given to the gain on the disposition
of the UV Curing business.
(b) To adjust for the interest income that would be earned on net proceeds
of $80 million.
F-2
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PRO FORMA FINANCIAL INFORMATION
FUSION SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 28, 1996
PRO FORMA ADJUSTMENTS
---------------------------
UV
HISTORICAL CURING (a) INTEREST (b) PRO FORMA
---------- ---------- ------------ ---------
Net Revenues $78,696 $28,676 $ - $50,020
Cost of Sales 35,216 13,421 - 21,795
--------- --------- -------- ---------
Gross Profit 43,480 15,255 - 28,225
--------- --------- -------- ---------
Operating Expenses:
Selling, general and administrative 18,536 8,274 - 10,262
Research, development and engineering 9,973 2,233 - 7,740
--------- --------- -------- ---------
Total operating expenses 28,509 10,507 - 18,002
--------- --------- -------- ---------
Operating Income 14,971 4,748 - 10,223
--------- --------- -------- ---------
Other Income:
Interest income, net 893 56 2,000 2,837
Foreign exchange gains (losses) 81 (18) - 99
Other, net 54 57 - (3)
--------- --------- -------- ---------
Total other income, net 1,028 95 2,000 2,933
--------- --------- -------- ---------
Income before income taxes 15,999 4,843 2,000 13,156
Provision for Income Taxes 6,000 1,817 750 4,933
--------- --------- -------- ---------
Net Income $ 9,999 $ 3,026 $1,250 $ 8,223
========= ========= ======== =========
Earnings Per Share: $ 1.24 $ 0.37 $ 0.15 $ 1.02
========= ========= ======== =========
Weighted-Average Shares Outstanding 8,089 8,089 8,089 8,089
========= ========= ======== =========
(a) To eliminate the operations of the UV Curing business for the entire
period. No recognition has been given to the gain on the disposition
of the UV Curing business.
(b) To adjust for the interest income that would be earned on net proceeds
of $80 million.
F-3
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EXHIBIT INDEX
Exhibit No. Description Page
- ---------- ------------- ----
2.1 Purchase Agreement dated August 14, 1996 by and among 10
the Buyers and the Sellers. (The Registrant hereby agrees to
furnish supplementally to the Securities and Exchange
Commission upon request a copy of any omitted schedule or
exhibit, all of which are listed in the Agreement.)
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