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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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)
FEBRUARY 23, 1998
JTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE COMMISSION FILE NUMBER 77-0364572
(STATE OR OTHER JURISDICTION OF 0-21085 (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
166 BAYPOINTE PARKWAY, SAN JOSE, CA 95134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(408) 468-1800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Item 2. Acquisition or Disposition of Assets.
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On February 23, 1998, JTS Corporation (the "Company") sold substantially
all of the assets of the Company's Atari Division, consisting primarily of Atari
home computer games and the intellectual property rights and license agreements
associated with such games (the "Atari Assets"), to HIACXI, Corp. ("HIAC"), a
wholly-owned subsidiary of Hasbro Interactive, Inc., for $5,000,000 in cash.
The purchase price was determined based upon arm's-length negotiations between
the Company and HIAC. The Atari Assets were acquired by the Company in July
1996 when the Company merged with Atari Corporation. There is no material
relationship between HIAC and the Company, any of its affiliates, any director
or officer of the Company, or any associate of any such director or officer.
Item 7. Financial Statements and Exhibits.
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(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Unaudited Pro Forma Condensed Combined Financial Statements of the
Company.
(c) Exhibits
99.1 Asset Purchase Agreement, dated February 23, 1998, between the Company
and HIAC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, JTS
Corporation has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JTS CORPORATION
Date: March 9, 1998 BY /s/ Joseph Prezioso
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Joseph Prezioso
Chief Financial Officer
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements give
effect to the disposition of the Atari Division which was consummated on
February 23, 1998. The accompanying pro forma condensed balance sheet as of
November 2, 1997 assumes that the disposition of the Atari Division by the
Company took place on November 2, 1997. The accompanying pro forma condensed
statements of operations for the year ended February 2, 1997 and the nine
months ended November 2, 1997 assumes that the disposition took place as of
the beginning of the periods. The pro forma condensed statements of
operations do not include the effect of any nonrecurring charges directly
attributable to the disposition. The results are not necessarily indicative
of what would have occurred had the disposition actually been made at the
beginning of each of the respective periods presented or of future operations
of the Company.
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
(IN THOUSANDS)
AS OF NOVEMBER 2, 1997
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HISTORICAL PRO FORMA PRO
JTS ADJUSTMENTS FORMA
ASSETS
CURRENT ASSETS:
Cash, and cash equivalents and
restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,986 5,000 (b) $ 6,986
Trade and other receivable. . . . . . . . . . . . . . . . . . . . . . . 6,644 6,644
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,463 7,463
Prepaid and other current assets. . . . . . . . . . . . . . . . . . . . . 1,006 1,006
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 17,099 22,099
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET . . . . . . . . . . . . . . . . 26,440 26,440
OTHER INTANGIBLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 383
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TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,922 48,922
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LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Bank line of credit and short-term borrowing. . . . . . . . . . . . . . $ 8,833 $ 8,833
Accounts payable -- Trade . . . . . . . . . . . . . . . . . . . . . . . 60,553 60,553
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 23,836 23,836
Current portion of capitalized lease obligations and long-term debt . . 3,152 3,152
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Total current liabilities . . . . . . . . . . . . . . . . . 96,374 96,374
LONG-TERM LIABILITES. . . . . . . . . . . . . . . . . . . . . . . . . . . 52,305 52,305
STOCKHOLDERS' DEFICIT:
Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 165
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . 364,317 364,317
Notes receivable from stockholders. . . . . . . . . . . . . . . . . . . (2,460) (2,460)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . (466,779) 5,000 (b) (461,779)
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Total Stockholders Equity. . . . . . . . . . . . . . . . . . . . (104,757) (99,757)
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TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,922 48,922
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See notes to unaudited pro forma condensed financial statements.
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE NINE MONTHS ENDED NOVEMBER 2, 1997
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HISTORICAL PRO FORMA PRO FORMA
JTS ADJUSTMENTS
REVENUES............................. 125,806 (1,689)(a) 124,117
COST OF SALES........................ (174,092) (174,092)
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GROSS MARGIN (DEFICIT)............... (48,286) (49,975)
OPERATING EXPENSES:
Write off of in process R&D........ (38,008) (38,008)
Research and development........... (15,880) (15,880)
Selling, general and
administrative.................... (17,488) 879 (a) (16,609)
Amortisation of existing
technology & goodwill............. (2,388) (2,388)
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OPERATING LOSS....................... (122,050) (122,860)
OTHER INCOME (EXPENSE):
Interest expense................... (6,038) (6,038)
Other, net......................... (2,566) 5,000 (b) 2,433
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NET LOSS............................. (130,654) (126,464)
Dividends............................ (975) (975)
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS........................ (131,629) (127,439)
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NET LOSS PER COMMON SHARE............ $ (1.04) $ (1.01)
SHARES USED IN COMPUTING NET LOSS
PER SHARE........................... 126,429 126,429
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See notes to unaudited pro forma condensed financial statements.
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
NOTE 1.
The disposition of the Atari Division assets was effective February 23,
1998. These pro forma condensed financial statements illustrate the impact
on the nine months ended November 2, 1997 as if the disposition occurred on
November 2, 1997 for the pro forma condensed balance sheet and as at February
2, 1997 for the pro forma condensed statement of operations.
NOTE 2. PRO FORMA ADJUSTMENTS
Certain pro forma adjustments have been made to the accompanying pro forma
condensed balance sheet and statement of operations as described below:
(a) Elimination of the revenue and expenses for the Atari Division.
(b) Reflects the profit on disposal of the Atari Assets.
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED FEBRUARY 2, 1997
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HISTORICAL PRO FORMA PRO FORMA
JTS ADJUSTMENTS
REVENUES.............................................. 90,530 (4,479)(a) 86,051
COST OF SALES......................................... (100,328) 5,655 (a) (94,673)
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GROSS MARGIN (DEFICIT)................................ (9,798) (8,622)
OPERATING EXPENSES:...................................
Write off of in process R&D......................... (110,012) (110,012)
Research and development............................ (12,849) 679 (a) (12,170)
Selling, general and administrative................. (13,067) 3,647 (a) (9,420)
Amortization of existing technology & goodwill...... (3,923) (3,923)
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OPERATING LOSS........................................ (149,649) (144,147)
OTHER INCOME (EXPENSE):
Interest expense.................................... (3,545) (3,545)
Other, net.......................................... 699 5,000 (b) 1,564
(4,135)(a)
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NET LOSS.............................................. (152,495) (146,128)
DIVIDENDS............................................. (227) (227)
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NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS......................................... (152,722) (146,355)
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NET LOSS PER COMMON SHARE............................. $ (1.81) $ (1.74)
SHARES USED IN COMPUTING NET LOSS
PER SHARE............................................ 84,322 84,322
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See notes to unaudited pro forma condensed financial statements.
JTS CORPORATION AND
THE DISPOSITION OF THE ATARI DIVISION
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
NOTE 1.
The disposition of the Atari Division assets was effective February 23,
1998. These pro forma condensed financial statements illustrate the impact on
the year ended February 2, 1997 as if the disposal occurred at the beginning of
the period.
NOTE 2. PRO FORMA ADJUSTMENTS
Certain pro forma adjustments have been made to the accompanying pro forma
condensed balance sheet and statement of operations as described below:
(a) Elimination of the Atari Division revenue and associated cost of
sales and expenses from the 1997 results.
(b) Reflects the gain on sale of the Atari Assets.