6-K 1 w49161e6-k.txt XEIKON, FORM 6-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 6-K Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the period ended March 31, 2001 Xeikon N.V. ----------------------------------------------------------------- [Translation of registrant's name into English] 72 Vredebaan, 2640 Mortsel, Belgium ----------------------------------------------------------------- [Address of principal executive offices] [Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.] Form 20-F [X] Form 40-F [ ] [Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.] Yes [X] No [ ] 2 XEIKON N.V. INDEX FORM 6-K

-2- 3 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS XEIKON N.V. CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts in thousands of US dollars)

-3- 4 XEIKON N.V. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (All amounts in thousands of US dollars, except share and per share amounts)

-4- 5 XEIKON N.V. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (All amounts in thousands of US dollars)

-5- 6 XEIKON N.V. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) AND SHAREHOLDERS' EQUITY (All amounts in Thousands of US Dollars, Except Share and Per Share Amounts)

-6- 7 XEIKON N.V. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (ALL AMOUNTS IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS) 1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Xeikon N.V., a Belgian corporation, (the "Company") was established in 1988 and develops, manufactures and markets an innovative digital color printing system specifically designed to meet the speed, quality, reliability, cost, variable content and on demand requirements of the short run color printing market. The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation of interim period results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The results for the interim periods presented are not necessarily indicative of results to be expected for any future period. These condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1999, filed with the Securities and Exchange Commission on Form 20-F dated June 30, 2000. 2. INVENTORY Inventory is comprised of material, labor and manufacturing overhead, and is stated at the lower of cost (determined on a weighted average basis) or net realizable value. Management performs periodic reviews of inventory and provides reserves for excess and obsolete inventory or disposes of such inventory. Inventory consists of the following:

3. EARNINGS PER SHARE Basic net income/(loss) per share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the period. Diluted net income/(loss) per share is computed by dividing net income/(loss) by the weighted average number of common and common equivalent shares outstanding during the period. Given the net loss for the 3 months ended March 31, 2001 there is no dilutive effect on the loss per share. -7- 8 4. INVESTMENT Until April 21, 2001, Xeikon had the right to acquire the remaining 20% of Nipson International (337,500 shares) from Bull or Dai Nippon Printing, a permitted transferee of 10% of the shares, for a price per share equal to 71.11 FF per share plus interest calculated from April 21, 1999 in an amount equal to EURIBOR (three months) plus 1% through the date of acquisition (the "Purchase Price"). This right was extended for an additional six months for no additional consideration. If Xeikon does not exercise its option, the holder(s) of the 20% minority interest may require Xeikon, during the period beginning October 21, 2001 and ending April 21, 2002, to purchase all or part of their shares at a per share price equal to the Purchase Price. In connection with the acquisition from Bull, Xeikon assumed two intercompany loans of Nipson International and its wholly owned subsidiary Nipson Printing Systems, Inc. in the amount of 70,000,000 FF and US $2,321,000, respectively. Xeikon has agreed to cause the first such loan to be repaid in six equal semi-annual installments over a three year period beginning April 21, 2001. This loan bears interest at 1% above the EURIBOR (three months). The second loan will be repaid in two equal annual installments over a two-year period beginning April 21, 2005 and does not bear interest. Bull agreed to indemnify Xeikon until April 21, 2001 for breaches of customary representations and warranties subject to a maximum indemnification amount of 35,000,000 FF. The Company submitted claims for indemnification to Bull for approximately 35,000,000 FF (approximately $5 million) under the agreement and has recorded such claims as a receivable. The set up of this receivable was registered against goodwill in the second quarter of 2000. -8- 9 5. SEGMENT AND GEOGRAPHIC INFORMATION The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information in the fiscal year ended December 31, 1998. SFAS 131 establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS 131 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions about how to allocate resources and assess performance. The Company's chief decision maker, as defined under SFAS 131, is a combination of the Chief Executive Officer, and the Chief Financial Officer. The Company has viewed its operations and manages its business as principally two segments, the sale of printing systems and options and the sale of consumables, spares, tools and others. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. There are no intersegment sales and transfers. The segment revenues and cost of revenues are as follows:

-9- 10 Revenues by geographic area: -United States $8,165 $17,242 -Rest of Europe 8,716 2,617 -Belgium 487 3,982 -The Netherlands 2,456 7,147 -United Kingdom 2,603 2,534 -Germany 6,235 4,224 -Other 4,942 2,818 -------------------------- $33,604 $40,564 ========================== As a percentage of total revenue: -United States 24.30% 42.51% -Rest of Europe 25.94% 6.45% -Belgium 1.45% 9.82% -The Netherlands 7.31% 17.62% -United Kingdom 7.75% 6.25% -Germany 18.55% 10.41% -Other 14.70% 6.95% -------------------------- 100.00% 100.00% ==========================

-10- 11 Revenues by geographic area: -United States $4,678 $12,983 -Rest of Europe 4,342 -228 -Belgium 375 3,873 -The Netherlands 2,337 7,070 -United Kingdom 1,567 1,021 -Germany 5,153 2,260 -Other 3,585 1,239 ------------------------- $22,037 $28,218 ========================= As a percentage of total revenue: -United States 21.23% 46.01% -Rest of Europe 19.70% -0.81% -Belgium 1.70% 13.73% -The Netherlands 10.60% 25.05% -United Kingdom 7.11% 3.62% -Germany 23.38% 8.01% -Other 16.28% 4.39% ------------------------- 100.00% 100.00% =========================

-11- 12 Revenues by geographic area: -United States $3,487 $4,259 -Rest of Europe 4,374 2,845 -Belgium 112 109 -The Netherlands 119 77 -United Kingdom 1,036 1,513 -Germany 1,082 1,964 -Other 1,357 1,579 ------------------------- $11,567 $12,346 ========================= As a percentage of total revenue: -United States 30.15% 34.50% -Rest of Europe 37.81% 23.04% -Belgium 0.97% 0.88% -The Netherlands 1.03% 0.62% -United Kingdom 8.96% 12.25% -Germany 9.35% 15.91% -Other 11.73% 12.79% ------------------------- 100.00% 100.00% =========================

-12- 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain of the statements included in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as elsewhere in this report on Form 6-K are forward-looking statements. These statements involve risks and uncertainties that could cause the actual results to differ materially from those expressed in or implied by such statements. These statements should be read in the context of those factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 1999 filed with the Securities and Exchange Commission on June 30, 2000. OVERVIEW On March 4, 1999, Xeikon entered into a Securities Acquisition Agreement with Varis Corporation ("Varis"), a company engaged in the design, development, manufacture and marketing of controllers and systems for use with electronic print engines. Under the terms of the agreement, Xeikon purchased 1,617.25 shares of Series B Preferred Stock of Varis for $2,500,000. Contemporaneously with its purchase of the Series B Preferred Stock, Xeikon provided a $3,000,000 loan to Varis in return for a promissory note, bearing interest at the Prime Rate plus 2.5%, which is due on March 4, 2001. Xeikon may extend the maturity date of the promissory note for one year in exchange for a warrant to acquire an additional 64.69 shares of Series B Preferred Stock. The investment is accounted at cost. In view of the uncertain future operations of Varis Corporation, the Company elected to register an impairment of the total investment amounting to $5.3 million valuated at the actual exchange rate. This is separately reflected as a non-recurring charge in the Consolidated Statements of Operations of the Company of 2000. On April 21, 1999, the Company acquired from Bull Europe Centrale et Oriental S.A. ("Bull") 80% of the outstanding shares of Nipson International S.A., a limited liability company organized under French law. The purchase price was 96,000,000 French Francs ("FF") (approximately U.S.$15.8 million, or 71.11 per share). From April 21, 2000 through April 21, 2001, Xeikon had the right to acquire the remaining 20% of Nipson International (337,500 shares) from the minority shareholders for a price per share equal to 71.11 FF per share plus interest calculated from April 21, 1999 in an amount equal to EURIBOR (three months) plus 1% through the date of acquisition. This right was extended for a six month period and now expires on October 21, 2001. If Xeikon does not exercise this option, the holder(s) of the 20% minority interest may require Xeikon, during the period beginning October 21, 2001 and ending April 21, 2002, to purchase all or part of their shares at a per share price equal to the Purchase Price. The acquisition of Nipson International was accounted for as a purchase. Accordingly, the purchase price was allocated to the net assets acquired based upon their fair market values. The excess purchase price over the fair value of net assets acquired has been accounted for as goodwill and is being amortized over 10 years using the straight line method. Bull has agreed to indemnify Xeikon until April 21, 2001 for breaches of customary representations and warranties subject to a maximum indemnification amount of 35,000,000 FF (approximately $5 million). The Company introduced claims for indemnification to Bull for approximately 35,000,000 FF (approximately $5 million) under the agreement and has recorded such claims as a receivable. The set up of this receivable was registered against goodwill in the second quarter of 2000 reducing the net book value of the goodwill by $4.9 million. In connection with the acquisition, Xeikon assumed two loans of Nipson and its wholly owned subsidiary Nipson Inc. from its former majority shareholder Bull in the amount of 70,000,000 FF (approximately $10 million) and U.S. $2,321,000, respectively. Xeikon has agreed to cause the first such loan to be repaid in six equal semi-annual installments over a three year period beginning April 21, 2001. This loan bears interest at 1% above the EURIBOR (three months). The second loan will be repaid in two equal annual installments over a two-year period beginning April 21, 2005 and does not bear interest. -13- 14 On June 30, 2000 the Company acquired the digital printing systems ("DPS") business of Agfa. Agfa received 1,751,741 newly issued restricted shares of Xeikon N.V. and $1.2 million in cash. The transferred business assets of Agfa include toner, developer and digital front end technology, intellectual property and manufacturing operations - including a manufacturing facility in Heultje, Belgium- research and development staff, as well as the Belgium based marketing and support staff and a sales and service organization based mostly in Europe, North America and Japan. On July 1, 2000 the Company entered into a joint venture with PrimeSource Corporation, called Canopy LLC ("Canopy"). The Company owns 26% of the voting shares and PrimeSource owns the remaining 74%. Canopy is controlled by Primesource and the joint venture agreement provides for certain protective rights for the Company. Canopy markets Xeikon- branded products in the United States and will also assume the technical service activities. BUSINESS SEGMENTS Xeikon has two reportable business segments: - Color (digital color presses and related consumables, parts and service) - B & W (black and white presses and related consumables, parts and service) EFFECTS OF CURRENCY CHANGES Xeikon's functional currency is the Euro. When translated into US dollars, Xeikon's revenues and net income are negatively affected by the appreciation in the value of the US dollar against the Euro between the first quarter of 2000 and the first quarter of 2001. The US dollar was 7% higher against the Euro for the first quarter of 2001 than for the first quarter of 2000. The Nipson functional currency is the French Franc. Since the French Franc and Euro are linked, the impact of the Dollar versus Euro or French Franc is similar. -14- 15 RESULTS OF OPERATIONS THREE-MONTH PERIOD ENDED MARCH 31, 2001 COMPARED TO THREE-MONTH PERIOD ENDED MARCH 31, 2000. Revenues. Revenues decreased 17% from $40.6 million for the three-month period ended March 31, 2000 to $33.6 million for the three-month period ended March 31, 2001. Revenues were principally affected by (1) the slowdown in equipment revenues in the VAD channel, (2) the decrease in equipment sales prices, (3) the delay in the first commercial shipments of the new CSP, (4) the low number of shipments in the OEM channel and (5) the unfavorable product mix. The Company expects that there will be no future equipment sales to Xerox. Revenues were also affected by currency changes noted above. Revenues from consumables, spare parts and other decreased 3% from $21.6 million during the first quarter of 2000 to $21 million for the first quarter of 2001. Cost of Revenues. Cost of revenues decreased 9% from $29.6 million in the first quarter of 2000 to $27.1 million in the first quarter of 2001. The decrease is the net effect of currency changes noted above, lower equipment shipments, higher material cost due to the unfavourable product mix and high service costs. Gross Profit. Gross profit decreased 40% from $10.9 million for the first quarter of 2000 to $6.6 million for the first quarter of 2001. Gross margin for printing systems and options decreased from 36% of revenue in the 2000 quarter to 13% of revenue in the 2001 quarter due to decreased sales prices because of the late introduction of the CSP (web-fed presses are delivered at lower prices) and less 500D shipments which is a high margin product line. Gross margin for the segment consumables, spares tools and other increased from 19% of revenue in the 2000 quarter to 23% of revenue in the 2001 quarter. The decrease in total gross margin is due to the factors affecting revenues noted above. Research and Development. Research and development expenses increased 9% from $6.2 million in the first quarter of 2000 to $6.7 million in the first quarter of 2001. Research and development expenses were 15% of revenues in the first quarter of 2000 and 20% in the first quarter of 2001. The increased ratio for the 2001 quarter is mainly explained by (1) the lower equipment revenues generated during third quarter, and (2) the incorporation of the digital front end and toner research department as a result of the Agfa DPS acquisition. During the 2001 quarter the Company received a non-refundable research and development subsidy of $0.9 million from a governmental institution. Without this subsidy the total research and development expenses were $7,599 or 23% of revenues. Selling, General and Administrative. Selling, general and administrative expenses increased to $11.3 million in the first quarter of 2001 from $10 million in the 2000 quarter. This increase is mainly due to the incorporation of the Agfa DPS division, the start-up of direct sales activities in specific markets and higher personnel costs in the different sales organizations. Other Income (Expense). Other income was $0.5 million for the first quarter of 2000 and $0.4 million for the first quarter of 2001. Other income consists mainly of exchange rate differences. Income Taxes. The Company had a net loss of $5.4 million for the three-month period ended March 31, 2000 and a net loss before of $11.1 million for the three-month period ended March 31, 2001. The Company did not record any income tax provision for the 2001 period and a tax charge of $1,000 in the 2000 period. -15- 16 LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities produced negative cash of $8.8 million during the three-month period ended March 31, 2001. At March 31, 2001, the Company had $1.5 million in cash and cash equivalents. The Company uses its credit line facilities in the event that its liquidity needs are not met by its then available cash. In addition, the Company intends to raise additional capital in the public or private markets through the issuance of equity securities, debt securities or a combination thereof to meet its liquidity needs. At March 31, 2001, the Company's notes payable to banks amounted to $23.9 million. The total available credit under the Company's credit lines at the end of March 2001 was approximately $33 million. Amounts due under the Company's credit lines are payable on demand and the credit lines may be cancelled for any reason upon 30 days notice (KBC, Fortis and BCH) and 15 days notice (BBL). In April 1999, Xeikon used approximately $15.8 million in cash to fund its acquisition of an 80% interest in Nipson International. Xeikon has the option until November 2001 to acquire the remaining 20% of Nipson International (337,500 shares) for a price per share equal to 71.11 FF plus interest calculated from April 21, 1999 in an amount equal to EURIBOR (three months) plus 1% through the date of acquisition (the "Purchase Price"). If Xeikon does not exercise this option, the holder(s) of the 20% minority interest may require Xeikon, during the period beginning October 21, 2001 and ending April, 2002, to purchase all or part of their shares at a per share price equal to the Purchase Price. In connection with the Nipson acquisition, Xeikon assumed two intercompany loans of Nipson International and its wholly owned subsidiary Nipson Printing Systems, Inc. from Bull, in the amount of 70,000,000 FF and US $2,321,000, respectively. Xeikon has agreed to cause the first such loan to be repaid in six equal semi-annual installments over a three year period beginning April 21, 2001. This loan will bear interest at 1% above the EURIBOR (three months). The second loan will be repaid in two equal annual installments over a two-year period beginning April 21, 2005 and will not bear interest. In connection with the acquisition of the land for expansion of its manufacturing facilities, the Company assumed a roll over credit facility of Euro 3 million as of July 1, 1999, bearing interest at the Euribor rate plus 0.20%. On July 27, 2000, the Company signed an off balance lease agreement for a new plant building in Lier for an amount of $28 million with quarterly payments (from the completion date currently estimated to be March 31, 2002) for a 15 year period with a purchase option. The interest rate is EURIBOR 3 months minus a discount (+5.6%). FOREIGN CURRENCY TRANSLATION The functional currency of the Company is the Euro (EUR) and the French Franc, which is directly linked to the Euro, for Nipson, but the Company has elected to present the financial statements in US dollars. The financial statements of the Company are translated from its functional currency, (the Euro), into the reporting currency, the US dollar, utilizing the current rate method. All cumulative translation gains or losses from the translation into the Company's reporting currency are included as a separate component of shareholders' equity in the accompanying balance sheet. The change in the cumulative translation adjustment reflects the strengthening of the US dollar against the EUR between December 31, 2000 and March 31, 2001. The exchange rate was US $1.00 for EUR 1.07 at December 31, 2000 and US $1.00 for EUR 1.1 at March 31, 2001. -16- 17 ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable -17- 18 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 6-K Xeikon France S.A. Lease -18- 19 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, thereunto duly authorized. XEIKON N.V. Date: May 15, 2001 By: /s/ Gerrit Keyaerts ---------------------------------------- Gerrit Keyaerts, Chief Financial Officer -19-

XEIKON NV 6-K