UNITED STATES
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): June 30, 2005
General DataComm Industries, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-8086 06-0853856
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
6 Rubber Avenue, Naugatuck, CT 06770
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203)-729-0271
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13c-4(c))
Item 2.01. Completion of Acquisition or Disposition of Assets
Item 8.01. Other Events
In August 2001, the Company received a note in the amount of $17.0 million as
partial consideration for the sale of its Broadband Systems division and
retained a security interest in the underlying assets sold. Shortly thereafter,
the Company, the purchaser (Ahead Communication Systems, Inc.) and the
purchaser's parent company in Austria (Ahead Communications Systems AG), which
had guaranteed payment of the note, all filed for bankruptcy protection, the
purchaser ("Ahead") defaulted on the note payment and disputes arose relating to
the division sale agreements. As a result, the Company established a valuation
reserve for a substantial portion of the note and, as a result, recorded a
related loss in fiscal 2001. The note is currently fully reserved so that any
future recoveries will result in recording a gain.
On May 19, 2005, the Company, Ahead and the Official Committee of Unsecured
Creditors in the Ahead bankruptcy case filed with the Bankruptcy Court for the
District of Connecticut a jointly approved Chapter 11 Plan (the "Plan") which
was confirmed on June 15, 2005 by the Bankruptcy Court and which became
effective June 30, 2005. The Plan provided for creation of a fund in the amount
of $500,000 for distribution to the unsecured creditors of Ahead. Under the
Plan, all remaining property, including cash (after payment of amounts due for
administration claims, priority tax claims, unsecured claims and priority
claims) was transferred to a newly organized Connecticut subsidiary of the
Company, Successor Communications Systems, Inc. ("New Ahead") which issued a
secured demand promissory note in the amount of $5,050,000 ("New Note") to
General DataComm, Inc., holder of the old note which was discharged. The New
Note is secured by all the assets of New Ahead. Under the Plan, Ahead was
dissolved in Delaware on the effective date and New Ahead's name was changed to
Ahead Communications Systems, Inc. Under the Plan, New Ahead offered employment
to all employees of Ahead and Mr. Anton Kaeslin, President of Ahead, became
President, Chief Executive Officer and a director of New Ahead. The Company
believes that all employees of old Ahead will accept employment with New Ahead,
which is operated as a wholly owned subsidiary of the Company at Ahead's former
office in Middlebury, Connecticut.
The Company anticipates that it will record a gain in the quarter ended June 30,
2005 to reflect the acquisition of the Ahead business received in settlement of
the note, as described above, that Ahead owed to the Company. Such gain cannot
be finalized until the fair value of the Ahead business as of June 30, 2005 is
determined, which valuation is expected to be completed in the quarter ending
September 30, 2005. The unaudited revenues of Ahead for the twelve months ended
June 30, 2005 were approximately $6.5 million, the unaudited net book value of
Ahead's tangible assets at June 30, 2005 is estimated to be between $2,000,000
and $2,500,000, and the number of Ahead employees at June 30, 2005 was 24. Such
unaudited amounts are subject to change based upon audit, and related review of
valuation accounts and reserves. There can be no assurance that New Ahead's
sales levels will remain at historical levels, that operations will be
profitable in the future, or that sufficient cash flows will be generated by New
Ahead to sustain current operating levels.
Beginning June 30, 2005 the Company's consolidated balance sheet will include
the assets and liabilities of New Ahead. Furthermore, the operating results and
cash flows of New Ahead will be included in the Company's consolidated income
and cash flow statements beginning with the quarter ending September 30, 2005.
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.
General DataComm Industries, Inc.
(Registrant)
By: /s/ WILLIAM G. HENRY
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William G. Henry
Vice President, Finance and
Administration, and
Principal Financial Officer
July 6, 2005