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) May 30, 1997
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AXSYS TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-16182 11-1962029
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(State or other jurisdiction) (Commission) (IRS Employer
Identification Number)
645 MADISON AVENUE, NEW YORK, NEW YORK 10022
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(Address of principal executive offices, including zip code)
(212) 593-7900
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Registrant's telephone number, including area code
ITEM 2. Acquisition or Disposition of Assets
On May 30, 1997, Axsys Technologies, Inc. (the "Company") completed the
acquisition of Teletrac, Inc. ("Teletrac"), a California corporation. The
acquisition was completed for a purchase price of approximately $7.7 million and
the issuance of 153,000 shares of Axsys common shares, 53,000 of which shares
were issued at the closing, and 100,000 of which shares will be issued pursuant
to Stockholder Agreements entered into as of May 30, 1997 with certain selling
shareholders and employees of Teletrac.
Teletrac designs and manufactures laser-based precision measurement
systems and precision linear (x-y) and rotary positioning servo systems for use
in the mass data storage (such as disk drive), semiconductor and flat panel
industries.
The Company paid for the cash portion of purchase price from the proceeds
of borrowings under its credit agreement. Teletrac will operate as a
wholly-owned subsidiary of the Company.
ITEM 7. Financial Statements and Exhibits
(a) The financial statements of Teletrac and its subsidiaries required
to be filed hereunder are attached hereto as Exhibit A and
incorporated herein by reference.
(b) Pro Forma Financial Information
As of the time of filing this Current Report, it is impracticable to
provide the pro forma financial information required by this Item 7(b). The
registrant intends to file the required pro forma financial information as soon
as practicable and in any event not later than 60 days after the date of this
Current Report.
(c) Exhibits
(2) Stock Purchase Agreement By and Between Axsys Technologies, Inc.
("Buyer"), Teletrac, Inc. ("Company") and David Barker, Richard
Howitt, William Hurst, William Kingsbury, Barton Norton, John Van
Dyke and Mary Erdahl ("Sellers"), dated as of May 27, 1997.
(99) Press Released dated June 2, 1997.
2
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
Axsys Technologies, Inc.
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Registrant
Date: June 13, 1997 By:/s/ Raymond F. Kunzmann
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Raymond F. Kunzmann
Vice President
3
Exhibit A
TELETRAC, INC.
FINANCIAL STATEMENTS
AS OF JANUARY 31, 1997
TOGETHER WITH AUDITORS' REPORT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Teletrac, Inc.:
We have audited the accompanying balance sheet of TELETRAC, INC. (a California
corporation) as of January 31, 1997, and the related statements of income,
shareholders' equity 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 includes
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 Teletrac, Inc. as of January
31, 1997, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Los Angeles, California
March 28, 1997
TELETRAC, INC.
BALANCE SHEET
JANUARY 31, 1997
ASSETS
CURRENT ASSETS:
Cash $ 371,961
Short-term investments 201,281
Accounts receivable 890,736
Inventories 1,174,958
Prepaid expenses and other 20,173
Deferred income tax asset 41,850
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Total current assets 2,700,959
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PROPERTY AND EQUIPMENT, at cost:
Machinery and equipment 205,498
Computer hardware and software 264,846
Furniture and fixtures 8,486
Leasehold improvements 85,058
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563,888
Less: Accumulated depreciation
and amortization (333,974)
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229,914
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OTHER ASSETS:
Shareholder loan 19,248
Other assets 19,265
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38,513
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$ 2,969,386
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The accompanying notes are an integral part of this balance sheet.
TELETRAC, INC.
BALANCE SHEET
JANUARY 31, 1997
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of note payable $ 20,325
Accounts payable 257,685
Accrued liabilities 158,316
Deferred revenue 46,480
Customer advances 39,477
Income taxes payable 494,500
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Total current liabilities 1,016,783
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NOTE PAYABLE, net of current portion 44,038
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY:
Common stock, no par value:
Authorized -- 10,000,000 shares
Issued and outstanding -- 207,815 shares 51,037
Retained earnings 1,857,528
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Total shareholders' equity 1,908,565
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$2,969,386
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The accompanying notes are an integral part of this balance sheet.
TELETRAC, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED JANUARY 31, 1997
NET SALES $7,994,833
COST OF GOODS SOLD 4,548,048
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Gross profit 3,446,785
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OPERATING EXPENSES:
General and administrative expenses 1,003,723
Selling and marketing expenses 467,490
Research and development expenses 390,197
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1,861,410
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Income from operations 1,585,375
OTHER INCOME (EXPENSE):
Interest expense (14,341)
Interest income 2,213
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(12,128)
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Income before provision
for income taxes 1,573,247
PROVISION FOR INCOME TAXES 633,770
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NET INCOME $ 939,477
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The accompanying notes are an integral part of this balance sheet.
TELETRAC, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED JANUARY 31, 1997
Common Stock Retained
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Shares Amount Earnings Total
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BALANCE, January 31, 1996 207,815 $51,037 $ 918,051 $ 969,088
Net income -- -- 939,477 939,477
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BALANCE, January 31, 1997 207,815 $51,037 $1,857,528 $1,908,565
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The accompanying notes are an integral part of this balance sheet.
TELETRAC, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JANUARY 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 939,477
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 84,698
Decrease (increase) in:
Accounts receivable (132,716)
Inventories (546,649)
Prepaid expenses and other (40,942)
Deferred income tax asset (11,195)
Increase (decrease) in:
Accounts payable (76,029)
Accrued liabilities (13,179)
Customer advances (35,324)
Deferred revenue 46,480
Income taxes payable 418,492
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Net cash provided by operating activities 633,113
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (134,350)
Purchases of investments (201,281)
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Net cash used in investing activities (335,631)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable 81,301
Principal payments on notes payable (82,054)
Repayment of line of credit (110,000)
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Net cash used in financing activities (110,753)
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NET INCREASE IN CASH 186,729
CASH, beginning of year 185,232
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CASH, end of year $ 371,961
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The accompanying notes are an integral part of this balance sheet.
TELETRAC, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997
1. Background and Operations
Teletrac, Inc. (the Company) was incorporated in the state of California in
October 1980. The Company designs, markets, manufactures and sells equipment for
the testing of computer disk drives.
2. Summary of Significant Accounting Policies
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenue Recognition
Revenues are recognized at the time of shipment, except for revenues on
long-term contracts which are recorded on the percentage of completion
method.
In fiscal 1996, the Company entered into a long-term contract with a
customer to manufacture a specific product for the customer. At January
31, 1997, the entire amount of the contract had been billed to the
customer and $46,480 of deferred revenue was recorded relating to the
contract. The Company expects to complete its obligations under the
contract in early fiscal 1998.
Significant Customer
In fiscal 1997, sales to one customer accounted for approximately ten
percent of the Company's net sales. This customer accounted for
approximately 25 percent of the Company's accounts receivable balance as
of January 31, 1997.
Short-Term Investments
The Company accounts for its investments under the provisions of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."
At January 31, 1997, short-term investments consisted of two certificates
of deposit. As defined by the standard, the Company has classified its
investments as "held-to-maturity" investments. Both investments mature in
fiscal 1998.
Inventories
Inventories include material, labor and overhead, are valued at the lower
of cost (first-in, first-out) or market and consist of the following at
January 31, 1997:
Raw material $ 678,333
Work in progress 496,625
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$1,174,958
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Property and Equipment
Property and equipment is stated at acquisition cost, net of accumulated
depreciation and amortization, which is computed using straight-line and
accelerated methods over five to seven years.
Costs of normal maintenance and repairs are charged to expense as
incurred. Major replacements or betterments of property and equipment are
capitalized. When items are sold or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts and any
resulting gain or loss is included in operations.
Supplemental Cash Flow Information
Cash paid for income taxes was approximately $181,000 in fiscal 1997. Cash
paid for interest was approximately $14,000 in fiscal 1997.
3. Line of Credit
The Company has entered into a line of credit agreement with a bank under which
the Company may borrow up to $300,000. At January 31, 1997, no amounts were
outstanding under the agreement. The agreement expires on May 15, 1997.
Borrowings under the agreement bear interest at the bank's reference rate (8.25
percent at January 31, 1997) plus .75 percent. The line of credit is secured by
essentially all assets of the Company.
4. Note Payable to a Bank
In March 1996, the Company entered into a note payable agreement with a bank
under which the Company borrowed $81,301 for the purchase of equipment. The note
is repayable in 48 monthly principal payments of approximately $1,700 through
March 2000. At January 31, 1997, $64,363 was outstanding under the agreement.
Borrowings under the agreement bear interest at the bank's reference rate (8.25
percent at January 31, 1997) plus .75 percent.
The note is secured by the related equipment.
5. Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109.
The deferred income tax asset at January 31, 1997 primarily relates to an
accrued liability.
The provision for income taxes for the year ended January 31, 1997 is as
follows:
Current -Federal $ 495,120
-State 149,845
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644,965
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Deferred -Federal (8,836)
-State (2,359)
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(11,195)
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$ 633,770
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Differences between the provision for income taxes and income taxes at the
statutory federal income tax rate for the year ended January 31, 1997 is as
follows:
Income tax provision at
the statutory federal rate $534,904 34.0%
State and local income taxes,
net of federal benefit 95,968 6.1
Other 2,898 .2
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$633,770 40.3%
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6. Commitments and Contingencies
Lease Commitment
The Company leases its facility under an operating lease agreement that
expires in July 1999. Future minimum payments relating to this operating
lease as of January 31, 1997 are as follows:
Year Ending
January 31,
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1998 $ 121,256
1999 121,256
2000 60,628
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$ 303,140
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Rental expense relating to the lease for the year ended January 31, 1997
was approximately $108,000.
Litigation
The Company is subject to lawsuits in the normal course of business. In
the opinion of management, pending litigation will not result in any
material losses to the Company.
7. Subsequent Event
On February 5, 1997, the Company signed a letter of intent with Axsys
Technologies, Inc. (Axsys) to sell Axsys 100 percent of the outstanding common
shares of the Company.