X-Rite and Its Founders Agree to Terminate Founders' Stock Repurchase Agreements
Press release from the issuing company
GRANDVILLE, Mich.--Nov. 12, 2004-- X-Rite, Incorporated today announced that it has reached an agreement with the five remaining Founders of the Company to terminate the Founders' Stock Repurchase Agreements entered into in January of 1998. These agreements covered 3.4 million shares and required the Company to repurchase the shares held by a Founder at a specified price upon the death of the Founder and his spouse. No Founders' Stock Repurchase Agreements remain in effect.
The Company stated that as a result of the termination of the Founders' Agreements, it will reverse charges of approximately $9.0 million related to the increase in the value of the agreements that has occurred since the adoption on July 1, 2003, of Statement of Financial Accounting Standards No. 150 (SFAS No 150), "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." Upon reversal of these charges, the remaining $34.2 million, representing the fair value of the Redemption Agreements as of the adoption of SFAS No 150, will be reclassified to shareholders' equity.
"The Founders' Agreements were put in place in 1998 to address a specific concern regarding our stock's liquidity," said Michael C. Ferrara, Chief Executive Officer of X-Rite. "That issue has improved dramatically. Further, the shift in standards over the years related to the accounting of these agreements created a significant impediment for our current and prospective investors who were evaluating our stock. In the current environment, the Company and its Founders concluded that the agreements were no longer useful."
"The impact on earnings and the complexity of the agreements just didn't make sense anymore," stated Ted Thompson, a Founder and former Chief Executive Officer of X-Rite. "I'm glad the Founders could help the Company with this matter. I have confidence in X-Rite's strategy, management and ability to grow in the future."
Mary E. Chowning, X-Rite's Vice President and Chief Financial Officer said, "The termination of the Founders' Agreements will simplify our accounting and make our financial results easier to understand. We really felt that this decision was in line with the spirit of the recent regulatory changes as it will bring great transparency to our financial results. We are also in the process of reviewing the related insurance program that was put in place to fund the repurchase of the shares under the Founders' Agreements."
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