SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
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For the quarterly period ended March 31, 2003 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
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For the transition period from to |
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Commission file number: 333-73786-01 |
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HEWLETT-PACKARD ERSTE
VERMÖGENSVERWALTUNGS- und
BETEILIGUNGSGESELLSCHAFT mbH
(Exact name of registrant as specified in its charter)
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Germany |
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Not applicable |
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(State or other jurisdiction of |
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(IRS Employer Identification No.) |
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Herrenberger Strasse
140 |
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— |
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(Address of principal executive offices) |
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(Zip Code) |
++49-7031-14-1742
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark is whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act). Yes o No ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class |
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Outstanding at May 13, 2003 |
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Common Stock, Euro 25,000 nominal value |
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1 share |
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Condensed Statement of Operations
(Unaudited)
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Three Months Ended |
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2003 |
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2002 |
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Equity in net loss of Indigo |
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$ |
— |
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$ |
(51,976,918 |
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Recoupment of
equity in net loss of Indigo through gains on |
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— |
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51,976,918 |
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Interest income and other, net |
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(49 |
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(4 |
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Loss before income taxes |
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(49 |
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(4 |
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Benefit from income taxes |
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(18 |
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— |
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Net loss |
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$ |
(31 |
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$ |
(4 |
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The accompanying notes are an integral part of these condensed financial statements.
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HEWLETT-PACKARD ERSTE
VERMÖGENSVERWALTUNGS- und BETEILIGUNGSGESELLSCHAFT mbH
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March 31, |
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December 31, |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash |
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$ |
22,479 |
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$ |
22,528 |
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Total assets |
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$ |
22,479 |
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$ |
22,528 |
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LIABILITIES AND STOCKHOLDER’S EQUITY |
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Liabilities |
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$ |
18 |
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$ |
36 |
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Commitments and contingencies |
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Stockholder’s equity: |
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Common stock,
nominal value 25,000 euro (1 share authorized, issued and |
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22,425 |
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22,425 |
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Retained earnings |
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36 |
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67 |
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Total stockholder’s equity |
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22,461 |
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22,492 |
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Total liabilities and stockholder’s equity |
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$ |
22,479 |
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$ |
22,528 |
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The accompanying notes are an integral part of these condensed financial statements.
4
HEWLETT-PACKARD ERSTE
VERMÖGENSVERWALTUNGS- und BETEILIGUNGSGESELLSCHAFT mbH
Condensed Statement of Cash Flows
(Unaudited)
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Three Months Ended |
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2003 |
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2002 |
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Cash flows from operating activities: |
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Net loss |
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$ |
(31 |
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$ |
(4 |
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Decrease in accrued taxes |
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(18 |
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— |
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Net cash used in operating activities |
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(49 |
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(4 |
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Cash flows from investing activities: |
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Purchase of Hewlett-Packard common stock |
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— |
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(562,650,000 |
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Net cash used in investing activities |
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— |
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(562,650,000 |
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Cash flows from financing activities: |
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Proceeds of loan from affiliated entity |
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— |
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562,650,000 |
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Net cash provided by financing activities |
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— |
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562,650,000 |
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Decrease in cash |
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(49 |
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(4 |
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Cash at beginning of period |
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22,528 |
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22,437 |
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Cash at end of period |
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$ |
22,479 |
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$ |
22,433 |
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The accompanying notes are an integral part of these condensed financial statements.
5
HEWLETT-PACKARD ERSTE
VERMÖGENSVERWALTUNGS- und BETEILIGUNGSGESELLSCHAFT mbH
Notes to Condensed Financial Statements
(Unaudited)
Hewlett-Packard Erste Vermögensverwaltungs- und Beteiligungsgesellschaft mbH (“HP Erste V&B”), a corporation organized under the laws of Germany, was incorporated in September 2001 with the minimum statutory capital requirement of 25,000 euro under the name David Hundertdreiundreissigste Vermögensverwaltungs-GmbH by a third party for the purpose of establishing an inactive shell company. In September 2001, Hewlett-Packard Company, a corporation organized under the laws of Delaware (“HP Parent”), entered into an Offer Agreement (as amended in February 2002) with Indigo N.V., a corporation organized under the laws of The Netherlands (“Indigo”), pursuant to which HP Parent, either directly or through a subsidiary, would commence an exchange offer to acquire all of the outstanding shares of Indigo (the “Offer”). In December 2001, all of the outstanding stock of HP Erste V&B was purchased by an indirect subsidiary of HP Parent for the purpose of utilizing HP Erste V&B to effect the Offer. In March 2002, the Offer expired and, according to its terms, HP Erste V&B accepted for payment 94,522,517 common shares of Indigo that were tendered pursuant to the Offer (the “Tendered Indigo Shares”). In April 2002, HP Erste V&B delivered the Offer consideration in exchange for the Tendered Indigo Shares, which consisted of 31,578,153 shares of HP Parent common stock, 52,625,240 contingent value rights (“CVRs”) and $5,940 cash paid in lieu of the issuance of fractional shares of HP Parent common stock. The shares of HP Parent common stock were purchased by HP Erste V&B from HP Parent in March and April 2002. Prior to the completion of the Offer, HP Erste V&B had not conducted any business.
At March 31, 2003, HP Erste V&B’s sole business purpose is to hold the contingent liability related to the CVRs and to effect the payment, if any, related to the CVRs after April 2005. Any future liability for payments related to the CVRs as well as any performance obligations under the Contingent Value Rights Agreement (“CVR Agreement”) are guaranteed by HP Parent pursuant to the terms of the Corporate Guaranty, as described below in “Issuance of CVRs and HP Parent Guaranty.” In addition, pursuant to a Profit Transfer Agreement, entered into in May 2002 ( the "Profit Transfer Agreement") between HP Erste V&B and Hewlett-Packard Europa Holding GmbH & Co KG (“HP Europa KG”), HP Europa KG is obligated to compensate HP Erste V&B for any annual deficit if such deficit cannot be satisfied out of uncommitted reserves.
In March 2002 HP Erste V&B borrowed $562,650,000 and in April 2002, HP Erste V&B borrowed an additional $10,505,924 from an indirect subsidiary of HP Parent for the purpose of acquiring newly issued shares of HP Parent common stock to be exchanged for the Tendered Indigo Shares in connection with the Offer. The loan was made pursuant to the terms of a loan agreement between HP Erste V&B and HP Europa KG dated March 26, 2002 (the “Loan”). In March 2002 HP Erste V&B purchased 31,000,000 shares of HP Parent common stock for $562,650,000 and in April 2002, HP Erste V&B purchased an additional 578,153 shares of HP Parent common stock for $10,499,984 pursuant to the terms of a stock purchase agreement between HP Erste V&B and HP Parent dated March 22, 2002.
In April 2002 and pursuant to the terms of the Offer, HP Erste V&B entered into an indenture, the CVR Agreement, with J.P. Morgan Trust Company, National Association (the “Trustee”) and issued 52,625,240 CVRs. Each CVR entitles the holder to a one-time contingent cash payment of up to $4.50, based on the achievement of certain cumulative revenue results of HP Parent and its affiliates relating to Indigo (as described in the CVR Agreement) during the three-year period commencing April 1, 2002. In April 2002, and in connection with the issuance of the CVRs, HP Parent executed and delivered to the Trustee a Corporate Guaranty regarding HP Erste V&B’s payment obligations pursuant to the CVRs and the CVR Agreement (the “Corporate Guaranty”).
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In June 2002, HP Erste V&B sold the Tendered Indigo Shares to HP Europa KG in satisfaction of all remaining obligations under the Loan.
Note 2: Basis of Presentation
In the opinion of management, the accompanying condensed financial statements for HP Erste V&B contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly its financial position as of March 31, 2003 and December 31, 2002, its results of operations for the three-month periods ended March 31, 2003 and 2002 and its cash flows for the three-month periods ended March 31, 2003 and 2002.
The results of operations for the three-month period ended March 31, 2003 are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and the Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, of the HP Erste V&B Annual Report on Form 10-K as filed on March 31, 2003 for the fiscal year ended December 31, 2002.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed financial statements and accompanying notes. Actual results could differ from those estimates.
Note 3: Indigo Purchase and Sale
In March 2002, HP Erste V&B completed the Offer and thereby acquired 94,522,517 common shares of Indigo, which constituted approximately 85% of Indigo’s issued and outstanding share capital, excluding shares held by Indigo in treasury. As explained in Note 1, HP Erste V&B sold these shares to HP Europa KG, another HP Parent subsidiary. The common shares of Indigo were acquired and sold for the same amount resulting in no gain or loss to HP Erste V&B.
It was HP Erste V&B’s and HP Parent’s intent that the Tendered Indigo Shares would be sold to HP Europa KG immediately after the completion of the Offer so that none of Indigo’s results of operations would accrue to HP Erste V&B. However, due to administrative reasons, the transfer of the Tendered Indigo Shares to HP Europa KG was delayed until June 24, 2002. Accordingly, HP Erste V&B has accounted for the operations of Indigo during the period March 22, 2002 to June 24, 2002 using the equity method since HP Erste V&B’s control of Indigo was considered to be temporary. The losses from the operations of Indigo were then recouped by HP Erste V&B through gains on the related intercompany transactions, resulting in no net earnings to HP Erste V&B attributable to the transactions involving Indigo.
HP Erste V&B’s loss on its equity method investment in Indigo was $52.0 million during the three-month period ended March 31, 2002, which loss was offset by gains of the same amount on related intercompany transactions. Included in this equity loss was HP Erste V&B’s proportionate share of the pre-tax charge of approximately $58.2 million, which is the portion of the purchase price allocated to in-process research and development, and amortization expense related to specifically identified amortizable assets and additional expenses related to fair value adjustments to tangible assets.
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