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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): MAY 31, 2001
EXTENDED SYSTEMS INCORPORATED
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(Exact Name of Registrant as Specified in Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
000-23597 82-0399670
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(Commission (IRS Employer
File Number) Identification No.)
5777 NORTH MEEKER AVENUE, BOISE, IDAHO 83713
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(Address of Principal Executive Offices) (Zip Code)
(208) 322-7575
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(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS.
Extended Systems Incorporated and certain subsidiaries ("ESI") entered into an
Asset Purchase Agreement, dated May 30, 2001, pursuant to which ESI agreed to
sell various assets, including all assets primarily used in ESI's printing
solutions business, to Troy Group, Inc ("Troy").
Pursuant to the terms of the Asset Purchase Agreement, on May 31, 2001, ESI
transferred to Troy certain inventory, equipment, patents, trademarks and other
intellectual property rights, customer and supplier lists and rights under
certain contracts that existed as of the close of business on May 30, 2001. Troy
also assumed from ESI certain contractual and warranty obligations and purchase
commitments. ESI's printing solutions business includes its network print server
and non-network printer sharing products.
We determined the aggregate purchase price of approximately $1.8 million in
cash, on the basis of arm's length negotiations with Troy.
You should refer to the full text of the Asset Purchase Agreement, which is
filed as an exhibit to this report, for a complete description of the
agreement's terms.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma Financial Information
The unaudited pro forma condensed financial information giving effect to the
disposition of our printing solutions business is included at pages F-1 to F-6
attached to this report.
(c) Exhibits.
The following exhibits are filed with this report:
2.1 Asset Purchase Agreement between Troy Group, Inc., as Purchaser,
Extended Systems of Idaho, Incorporated, as Seller, and Extended
Systems Incorporated, as Co-Obligor with Seller, dated May 30, 2001
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SIGNATURE
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 thereunto duly authorized.
EXTENDED SYSTEMS INCORPORATED
Date: June 15, 2001
By: /s/ Karla K. Rosa
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Karla K. Rosa
Vice President of Finance and Chief
Financial Officer (Principal Financial and
Accounting Officer)
EXTENDED SYSTEMS INCORPORATED
PRO FORMA CONDENSED BALANCE SHEET
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
AS OF
MARCH 31, 2001 ADJUSTMENTS PROFORMA
-------- -------- --------
ASSETS
Current:
Cash and cash equivalents ...................... $ 4,498 $ 1,508 $ 6,006
Receivables .................................... 12,979 (1,902) 11,077
Inventories .................................... 2,460 (1,250) 1,210
Prepaids and other ............................. 1,323 (34) 1,289
Deferred income taxes .......................... 679 (187) 492
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Total current assets ........................ 21,939 (1,865) 20,074
Property and equipment, net ........................ 7,342 (48) 7,294
Intangibles, net ................................... 5,029 -- 5,029
Deferred income taxes .............................. 10,260 (72) 10,188
Other assets ....................................... 293 -- 293
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Total assets ................................ $ 44,863 $ (1,985) $ 42,878
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LIABILITIES AND STOCKHOLDERS'
EQUITY
Current:
Current debt ................................... $ -- $ -- $ --
Accounts payable ............................... 4,327 (446) 3,881
Accrued expenses ............................... 2,729 (206) 2,523
Deferred revenue ............................... 1,361 -- 1,361
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Total current liabilities ................... 8,417 (652) 7,765
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Stockholders' equity:
Preferred stock; $0.001 par value per share,
5,000 shares authorized; no shares issued or
outstanding ................................. -- -- --
Common stock; $0.001 par value per share,
75,000 shares authorized; 10,768 shares
issued and outstanding ...................... 11 -- 11
Additional paid-in capital ..................... 31,886 -- 31,886
Retained earnings .............................. 5,473 (1,333) 4,140
Deferred compensation .......................... (128) -- (128)
Accumulated other comprehensive loss ........... (796) -- (796)
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Total stockholders' equity .................. 36,446 (1,333) 35,113
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Total liabilities and stockholders' equity .. $ 44,863 $ (1,985) $ 42,878
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See accompanying notes to the unaudited pro forma condensed financial information
F-1
EXTENDED SYSTEMS INCORPORATED
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS
ENDED MARCH
31, 2001 ADJUSTMENTS PROFORMA
------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
Net revenue ................................... $ 37,437 $ (10,602) $ 26,835
Cost of net revenue ........................... 14,871 (5,689) 9,182
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Gross profit ........................... 22,566 (4,913) 17,653
Operating expenses:
Research and development .................. 9,818 (563) 9,255
Marketing and sales ....................... 16,552 (1,547) 15,005
General and administrative ................ 3,980 (26) 3,954
Amortization of intangibles ............... 729 -- 729
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Income (loss) from operations .......... (8,513) (2,777) (11,290)
Other income, net ............................. (471) -- (471)
Interest expense .............................. 1 -- 1
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Income (loss) before income taxes ...... (8,043) (2,777) (10,820)
Income tax provision (benefit) ................ (2,976) (994) (3,970)
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Net income (loss) ...................... $ (5,067) $ (1,783) $ (6,850)
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Income (loss) per share:
Basic ..................................... $ (0.48) $ (0.65)
Diluted ................................... $ (0.48) $ (0.65)
Number of shares used in per share calculation:
Basic ..................................... 10,521 10,521
Diluted ................................... 10,521 10,521
See accompanying notes to the unaudited pro forma condensed financial information
F-2
EXTENDED SYSTEMS INCORPORATED
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED
JUNE 30, 2000 ADJUSTMENTS PROFORMA
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(UNAUDITED) (UNAUDITED)
Net revenue .................................... $ 56,512 $ (17,509) $ 39,002
Cost of net revenue ............................ 28,115 (8,572) 19,542
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Gross profit ............................ 28,397 (8,937) 19,460
Operating expenses:
Research and development ................... 9,614 (1,008) 8,606
Acquired in-process research and development
2,352 -- 2,352
Marketing and sales ........................ 17,787 (5,132) 12,655
General and administrative ................. 4,423 (44) 4,379
Amortization of intangibles ................ 891 -- 891
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Income (loss) from operations ........... (6,670) (2,753) (9,423)
Other expense, net ............................. 57 -- 57
Interest expense ............................... 259 -- 259
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Income (loss) before income taxes ....... (6,986) (2,753) (9,739)
Income tax provision (benefit) ................. (2,001) (994) (2,995)
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Net income (loss) ....................... $ (4,985) $ (1,759) $ (6,744)
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Income (loss) per share:
Basic ...................................... $ (0.52) $ (0.71)
Diluted .................................... $ (0.52) $ (0.71)
Number of shares used in per share calculation:
Basic ...................................... 9,552 9,552
Diluted .................................... 9,552 9,552
See accompanying notes to the unaudited pro forma condensed financial information
F-3
EXTENDED SYSTEMS INCORPORATED
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED
JUNE 30, 1999 ADJUSTMENTS PROFORMA
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(UNAUDITED) (UNAUDITED)
Net revenue .................................... $ 50,689 $ (25,415) $ 25,274
Cost of net revenue ............................ 25,202 (11,809) 13,393
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Gross profit ............................ 25,487 (13,606) 11,881
Operating expenses:
Research and development ................... 6,815 (1,241) 5,574
Acquired in-process research and development
758 -- 758
Marketing and sales ........................ 15,930 (5,799) 10,131
General and administrative ................. 3,703 (32) 3,671
Amortization of intangibles ................ 61 -- 61
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Income (loss) from operations ........... (1,780) (6,534) (8,314)
Other income, net .............................. (339) -- (339)
Interest expense ............................... 713 -- 713
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Income (loss) before income taxes ....... (2,154) (6,534) (8,688)
Income tax provision (benefit) ................. (692) (2,300) (2,992)
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Net income (loss) ....................... $ (1,462) $ (4,234) $ (5,696)
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Income (loss) per share:
Basic ...................................... $ (0.17) $ (0.68)
Diluted .................................... $ (0.17) $ (0.68)
Number of shares used in per share calculation:
Basic ...................................... 8,409 8,409
Diluted .................................... 8,409 8,409
See accompanying notes to the unaudited pro forma condensed financial information
F-4
EXTENDED SYSTEMS INCORPORATED
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED
JUNE 30, 1998 ADJUSTMENTS PROFORMA
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(UNAUDITED) (UNAUDITED)
Net revenue ................................... $ 50,004 $ (31,244) $ 18,760
Cost of net revenue ........................... 20,710 (12,577) 8,133
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Gross profit ........................... 29,294 (18,667) 10,627
Operating expenses:
Research and development .................. 6,351 (1,331) 5,020
Marketing and sales ....................... 13,838 (5,791) 8,047
General and administrative ................ 3,340 (45) 3,295
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Income (loss) from operations .......... 5,765 (11,500) (5,735)
Other income, net ............................. (40) -- (40)
Interest expense .............................. 692 -- 692
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Income (loss) before income taxes ...... 5,113 (11,500) (6,387)
Income tax provision (benefit) ................ 1,815 (4,025) (2,210)
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Net income (loss) ...................... $ 3,298 $ (7,475) $ (4,177)
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Income (loss) per share:
Basic ..................................... $ 0.45 $ (0.57)
Diluted ................................... $ 0.44 $ (0.57)
Number of shares used in per share calculation:
Basic ..................................... 7,303 7,303
Diluted ................................... 7,577 7,303
See accompanying notes to the unaudited pro forma condensed financial information
F-5
EXTENDED SYSTEMS INCORPORATED
NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION
BASIS OF PRESENTATION
The unaudited pro forma condensed financial information is qualified in its
entirety by reference to, and should be read in conjunction with the financial
statements in our reports on Form 10-K and Form 10-Q, and have been adjusted to
exclude the effect of the discontinuance of the printing solutions business on
each respective financial statement.
The unaudited pro forma condensed financial information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have actually occurred if the
disposition had been consummated as of the date indicated, nor is it necessarily
indicative of future operating results or financial position.
The pro forma calculation of the gain on the disposition of our printing
solutions business to Troy is summarized below and is reflected in the
adjustments to the unaudited pro forma condensed balance sheet as of March 31,
2001 as if the disposition occurred as of that date. (Amounts in thousands.)
Cash received, net of $250 in expenses ..... $ 1,508
Net assets sold and liabilities transferred:
Inventory ............................... 1,250
Property and equipment, net ............. 48
Warranty obligation ..................... (128)
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Total ............................... 1,170
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Gain on the sale ................ $ 338
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The gain on the sale of our printing solutions business is reflected as an
increase in retained earnings in the unaudited pro forma condensed balance sheet
as of March 31, 2001.
Other adjustments to the pro forma condensed balance sheet as of March 31, 2001
were made to exclude other assets and liabilities that were directly
attributable to our printing solutions business.
Adjustments made in the pro forma condensed statements of operations include
historical results for our printing solutions business that agree to the segment
information presented in our Form 10-Q for the quarter ended March 31, 2001, and
our Form 10-K for the fiscal year ended June 30, 2000, adjusted to exclude
certain expenses that were previously allocated but are not directly
attributable to our printing solutions business.
F-6
INDEX TO EXHIBIT
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Exhibit No. Description
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2.1 Asset Purchase Agreement between Troy Group, Inc., as Purchaser,
Extended Systems of Idaho, Incorporated, as Seller, and Extended
Systems Incorporated, as Co-Obligor with Seller, dated as of May 30,
2001