1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) December 24, 1996
---------------------
SpecTran Corporation
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-12489 04-2729372
- - --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction) File No.) Identification No.)
50 Hall Road, Sturbridge, MA 01566
- - --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (508) 347-2261
---------------------
- - --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 24, 1996, SpecTran Corporation (the "Company") announced the
formation of General Photonics, LLC ("General Photonics"), a 50-50 joint venture
between the Company and General Cable Corporation ("General Cable"). To form the
joint venture, the Company's subsidiary, Applied Photonic Devices, Inc. ("APD"),
sold certain of its assets to General Cable Industries, Inc., a subsidiary of
General Cable ("GCI") for approximately $6.3 million, subject to adjustment
based on audited Financial Statements. GCI contributed the assets it purchased
from APD to General Photonics for a fifty percent equity interest in General
Photonics and APD contributed its remaining assets to General Photonics for a
fifty percent equity interest in General Photonics. General Photonics' primary
mission will be the design and manufacture of optical fiber cable for the
customer premises market in the United States, Canada and Mexico. Both the
Company and General Cable have agreed not to compete with General Photonics. In
addition, General Cable has agreed that it will not, without the Company's
consent, acquire any interest in the Company's securities for at least the life
of the joint venture. General Photonics will purchase its optical fiber from
SpecTran Communication Fiber Technologies, Inc. Fiber optic cable and other
products manufactured by General Photonics will be marketed primarily through
General Cable's direct sales force and sales representatives.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following has been filed as a part of this report:
(a) Pro forma financial information.
Pro forma condensed consolidated Balance Sheet as of September 30, 1996 and
pro forma consolidated Statements of Operations for the year ended December 31,
1995 and nine months ended September 30, 1996.
(b) Exhibits
10.98 Limited Liability Company Agreement between Applied Photonic Devices,
Inc. and General Cable Industries, Inc. dated as of December 23, 1996.
10.99 Asset Purchase Agreement among Applied Photonic Devices, Inc.,
SpecTran Corporation, General Cable Industries, Inc. and General Cable
Corporation dated as of December 23, 1996.
10.100 Investor's Representations, Contribution Agreement and Subscription
Agreement among Applied Photonic Devices, Inc., SpecTran Corporation and General
Photonics, LLC dated as of December 23, 1996.
10.101 Non-Competition Agreement among General Cable Industries, Inc.,
General Cable Corporation, Applied Photonic Devices, Inc., SpecTran Corporation
and General Photonics, LLC dated December 23, 1996. (The Company has applied
for confidential treatment for portions of this Exhibit).
10.102 Standstill Agreement between General Cable Corporation and SpecTran
Corporation dated as of December 23, 1996.
10.103 Letter Amendment to Three Year Multimode Optical Fiber Supply
contract between Corning Incorporated and SpecTran Corporation dated as of
January 1, 1996. (The Company has applied for confidential treatment for
portions of this Exhibit).
10.104 Letter Amendment to Employment Agreement between SpecTran Specialty
Optics Company and William B. Beck dated April 18, 1996.
2
3
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.
SPECTRAN CORPORATION
-------------------------------
(Registrant)
Date: January 8, 1997 /s/ Bruce A. Cannon
------------------------------
Bruce A. Cannon
Secretary
3
4
SPECTRAN CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On December 23, 1996, the Company formed General Photonics, a 50-50 joint
venture between the Company and General Cable, a subsidiary of Wassall plc.
General Cable purchased certain assets of the Company's optical cable fiber
subsidiary, Applied Photonic Devices, Inc. ("APD") for approximately $6.3
million and then contributed them to General Photonics for a 50% equity
interest. APD contributed its remaining assets to General Photonics in exchange
for its 50% equity interest. See - "Pro forma Financial Information." The
Company will account for its interest in the joint venture under the equity
method.
The following pro forma condensed consolidated balance sheet at September
30, 1996 and pro forma condensed consolidated statements of operations for the
year ended December 31, 1995 and nine months ended September 30, 1996 present
the condensed consolidated balance sheet and results of operations of the
Company as if the joint venture with General Photonics existed as of January 1,
1995 and, as previously reported on Form 8-K dated December 31, 1996, as if the
December 1996 sale of $24 million of senior notes to investors and the
restructuring of bank loan agreements existed as of September 30, 1996
(in thousands, except per share data).
4
5
SPECTRAN CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
September 30, 1996
--------------------------------------------
Pro forma
Historical Adjustments Pro forma
---------- ----------- ---------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 2,174 $18,483 (1)(2)(3) $20,657
Current Portion of Marketable Securities 972 -- 972
Trade Accounts Receivable, net 10,201 (2,252) (1) 7,949
Inventories 8,967 (3,511) (1) 5,456
Prepaid Expenses and Other Current Assets 1,252 (12) (1) 1,240
------- ------- -------
Total Current Assets 23,566 12,708 36,274
Investment in Joint Venture -- 2,448 (1)(4) 2,448
Property, Plant and Equipment, net 14,702 (893) (1) 13,809
Other Assets:
Long-term Marketable Securities 1,422 -- 1,422
Other Long-Term Assets 6,871 (2,978) (1) 3,893
------- ------- -------
Total Other Assets 8,293 (2,978) 5,315
------- ------- -------
Total Assets $46,561 $11,285 $57,846
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities 7,398 (913) (1) 6,485
Long-term Debt 12,000 12,000 (2)(3) 24,000
Stockholders' Equity:
Common Stock, voting 539 -- 539
Common Stock, non-voting -- -- --
Paid-In Capital 26,745 -- 26,745
Net Unrealized Gain on Marketable Securities 15 -- 15
Retained Earnings (Deficit) (136) 198 (4)(10) 62
------- ------- -------
Total Stockholders' Equity 27,163 198 27,361
------- ------- -------
Total Liabilities and Stockholders' Equity $46,561 $11,285 $57,846
======= ======= =======
See accompanying notes to pro forma financial statements.
5
6
SPECTRAN CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
For the twelve months ended
December 31, 1995
---------------------------------------------
Pro forma
Historical Adjustments Pro forma
---------- ----------- ---------
Net Sales $ 38,581 $(3,499) (5)(10) $ 35,082
Cost of Sales 25,520 (2,010) (5)(10) 23,510
---------- ------- ----------
Gross Profit 13,061 (1,489) 11,572
Operating Expenses 12,496 (1,033) (6) 11,463
---------- ------- ----------
Income from Operations 565 (456) 109
Other Income 212 330 (7) 542
Equity in Earnings of Joint Venture -- 179 (8) 179
---------- ------- ----------
Income before Income Taxes 777 53 830
Income Tax Expense 235 (104) (9) 131
---------- ------- ----------
Net Income $ 542 $ 157 $ 699
========== ======= ==========
Weighted Average shares outstanding 5,582,752 5,582,752
========== ==========
Net Income per Share of Common Stock $ 0.10 $ 0.13
========== ==========
For the nine months ended
September 30, 1996
---------------------------------------------
Pro forma
Historical Adjustments Pro forma
---------- ----------- ---------
Net Sales $ 44,915 $(7,043) (5)(10) $ 37,872
Cost of Sales 28,621 (4,727) (5)(10) 23,894
----------- ------- ----------
Gross Profit 16,294 (2,316) 13,978
Operating Expenses 12,230 (1,659) (6) 10,571
----------- ------- ----------
Income from Operations 4,064 (657) 3,407
Other Income (Expense) (240) 270 (7) 30
Equity in Earnings of Joint Venture -- 220 (8) 220
----------- ------- ----------
Income before Income Taxes 3,824 (167) 3,657
Income Tax Expense 1,300 (208) (9) 1,092
----------- ------- ----------
Net Income $ 2,524 $ 41 $ 2,565
=========== ======= ==========
Weighted Average shares outstanding 5,929,796 5,929,796
=========== ==========
Net Income per Share of Common Stock $ 0.43 $ 0.43
=========== ==========
See accompanying notes to pro forma financial statements.
6
7
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND
STATEMENTS OF OPERATIONS
(1) To record the receipt of $6.3 million cash in exchange for certain assets
of Applied Photonic Devices purchased by General Cable and to record the
contribution of the remaining Applied Photonic Devices net assets and
liabilities to General Photonics in return for half the equity in the joint
venture.
(2) To record the elimination of $2.2 million of outstanding debt incurred with
the original purchase of Applied Photonic Devices.
(3) To record the receipt of $24 million cash from the issuance of a series of
senior secured notes on December 30, 1996 and the repayment of outstanding
borrowings from the proceeds of the notes.
(4) To record the investment in the new joint venture, General Photonics, and
related earnings for the period from January 1, 1995.
(5) To eliminate sales and cost of sales of Applied Photonic Devices, net of
intercompany sales and gross profit between subsidiaries.
(6) To eliminate operating expenses of Applied Photonic Devices.
(7) To increase interest income on the $4.1 million cash increase and decrease
interest expense for the $2.2 million repayment of debt.
(8) To record SpecTran's 50% share of the after-tax earnings of the
unconsolidated joint venture, General Photonics.
(9) To record the tax effect of the above adjustments.
(10) To eliminate the intercompany profit in ending inventory of General
Photonics.
7
8
EXHIBIT INDEX
Exhibits
- - --------
10.98 Limited Liability Company Agreement between Applied Photonic Devices,
Inc. and General Cable Industries, Inc. dated as of December 23, 1996.
10.99 Asset Purchase Agreement among Applied Photonic Devices, Inc., SpecTran
Corporation, General Cable Industries, Inc. and General Cable
Corporation dated as of December 23, 1996.
10.100 Investor's Representations, Contribution Agreement and Subscription
Agreement among Applied Photonic Devices, Inc., SpecTran Corporation
and General Photonics, LLC dated as of December 23, 1996.
10.101 Non-Competition Agreement among General Cable Industries, Inc., General
Cable Corporation, Applied Photonic Devices, Inc., SpecTran Corporation
and General Photonics, LLC dated December 23, 1996. (The Company has
applied for confidential treatment for portions of this Exhibit).
10.102 Standstill Agreement between General Cable Corporation and SpecTran
Corporation dated as of December 23, 1996.
10.103 Letter Amendment to Three Year Multimode Optical Fiber Supply Contract
between Corning Incorporated and SpecTran Corporation dated as of
January 1, 1996. (The Company has applied for confidential treatment for
portions of this Exhibit).
10.104 Letter Amendment to Employment Agreement between SpecTran Specialty
Optics Company and William B. Beck dated April 18, 1996.