-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mAe/OLeWOrgSWG9i2Kh2NsjqysWpDjDEQiQWod5kMGH4B8MIqFeWx4L0+q+QLfOf UcYbZ3ilm0PcEbxELp3hMg== 0000927356-95-000014.txt : 19950608 0000927356-95-000014.hdr.sgml : 19950608 ACCESSION NUMBER: 0000927356-95-000014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950126 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950130 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETWORK SYSTEMS CORP CENTRAL INDEX KEY: 0000319645 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] IRS NUMBER: 411231031 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09691 FILM NUMBER: 95503612 BUSINESS ADDRESS: STREET 1: 7600 BOONE AVE NORTH CITY: MINNEAPOLIS STATE: MN ZIP: 55428 BUSINESS PHONE: 6124244888 8-K 1 FORM 8-K 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): January 26, 1995 NETWORK SYSTEMS CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-9691 41-1231031 - ------------------- ------------------------ ------------------- (State of or (Commission File Number) (IRS Employer other jurisdiction Identification No.) of incorporation) 7600 Boone Avenue North, Minneapolis, MN 55428 ------------------------------------------------ (Address of principal executive offices) 612-424-4888 ------------------------------- (Registrant's telephone number) Item 5. OTHER EVENTS. 1994 Financial Results. - ---------------------- The Company issued a press release on January 26, 1995 announcing its 1994 financial results. A copy of this press release is attached as an exhibit to this Report and is incorporated by reference herein. Class Action Lawsuit. - -------------------- The Company issued a press release dated January 27, 1995 announcing that the Company had received notice that a complaint had been filed against the Company and its directors in Delaware Chancery Court alleging that the directors breached their fiduciary duty in connection with the pending merger between the Company and Storage Technology Corporation. The complaint asserts that it was filed on behalf of the Company's stockholders and seeks to enjoin the consumation of the merger with StorageTek or, in the event the merger is consumated, to recover damages. A copy of this press release is attached as an exhibit to this Report and is incorporated by reference herein. Item 7. EXHIBITS 99.1 Press Release dated January 26, 1995. 99.2 Press Release dated January 27, 1995. 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 hereunto duly authorized. NETWORK SYSTEMS CORPORATION Date: January 27, 1995 By: --------------------------- Malcolm D. Reid Vice President, Secretary and General Counsel EX-99.1 2 NSC PRESS RELEASE FOR IMMEDIATE RELEASE Contacts: Julia Samsal or Paul JJ Payack 800-672-7670 612/424-1555 612/424-1649 Internet: pjjpayack@network.com Internet: julie.samsal@network. com Web Server: HTTP://www.network.com NETWORK SYSTEMS CORPORATION REPORTS 1994 FOURTH QUARTER AND YEAR-END RESULTS Minneapolis, January 26, 1995--Network Systems Corporation (NASDAQ-NMS: NSCO), a leader in the high-performance internetworking marketplace, today announced unaudited results for the three- and twelve-months periods ended December 31, 1994. Reported revenues for the fourth quarter ended December 31, 1994, were $55.3 million, down 18 percent from the $67.1 million recorded in the fourth quarter of the prior year. The net loss was $26.5 million after taxes (87 cents per share). This includes a pre-tax charge of $8 million related to an expense reduction program, as previously announced in December 1994, and other expenses, partially related to the transition to new products, including inventory and receivable writedowns and increased development expenses. In addition, consistent with operating results for the quarter and the year, the company increased deferred tax-asset valuation reserves during the quarter. This compares to a net loss of $5.1 million (17 cents per share) in the fourth quarter of 1993. The fourth quarter of 1993 included a $15.6 million charge for the acquisition of Bytex and associated restructuring. For the year, revenues increased 7 percent to $231.8 million from $215.6 million recorded for the prior year. For the year, the net loss was $23.8 million after taxes (79 cents per share), including the restructing charge and the valuation reserve on deferred tax assets compared to net income of $2.2 million (7 cents per share) in the prior year. "While these are disappointing results, these measures will help keep NSC lean and should enable us to compete more effectively in the months ahead," said Michael F.G. Ashby, Chief Operating Officer. "We believe our results can, in part, be attributed to uncertainty over our planned merger with StorageTek, particularly true in the U.S. field, where we lost a number of sales representatives following the merger announcement. However, the situation has been stabilized, and we are currently close to nearly full field staffing." The $8 million charge covered a worldwide workforce reduction on the order of 10 percent that was completed in mid-January, and the cost of the abandonment of certain fixed assets and leases related to these actions. (more) The cost of transition to our new products and other expenses have significantly added to our loss in the fourth quarter. These costs include approximately $1.3 million of additional development costs related to the final stages of our new internetworking products to be introduced in early 1995; obsolesence reserves of approximately $1.4 million as a result of both the reduced revenue for the quarter and the transition to our new products, an additional provision of approximately $1.5 million related to bad debts identified in the fourth quarter, and $1.4 million related to our cancellation of an OEM contract in the quarter. As discussed earlier, the company increased deferred tax asset valuation reserves during the fourth quarter. These additional reserves (relating principally to previously established deferred tax assets) increased the fourth quarter and year-to-date income tax expense by approximately $7.2 million. In addition, the company recorded no tax benefit relating to the 1994 operating loss. The reductions in force excluded key field sales and service functions, as well as key development projects. NSC is in the final stages of the most extensive development effort in its history, which will result in eight new products being introduced in 1995. Five of these product launches will occur in the first quarter. These products, which address some of the fastest- growing segments of the internetworking marketplace, include the Enterprise Routing Switch(TM) (ERS(TM)), the Bytex 7700 Port-Switching Ethernet Hub(TM), and the Security Router(TM). Michael Ashby said, "We are exiting 1994 with a strong balance sheet and a healthy cash position and have received notification of an approximate $17 million refund from the IRS before the end of the first quarter. By aggressively cutting expenses in the first quarter, the corporation will more quickly return to fiscal health as our newly revitalized product line is rolled out during 1995," Michael Ashby concluded, "As a company, we are convinced that our new product set, together with the merger with StorageTek that we expect to complete shortly, will help us realize our vision." Network Systems Corporation (NASDAQ: NSCO) is a leader in providing high performance, heterogeneous, secure Networks-on- Demand(TM) creating virtual networks across the enterprise from the data center to the desktop. Network Systems Corporation and Storage Technology Corporation have entered into an agreement to merge. NSC consists of the Network Systems Corporation, Bytex(R)", Bus-Tech(R)" and TMD(R)"; Bus-Tech and Bytex were acquired during 1993, and TMD Software, which was acquired in 1994. Network Systems and TMD are headquartered in Minneapolis; Bytex (with switching hub technology) and Bus-Tech (with channel expertise) in Boston. NSC has 11 international subsidiaries and sales and service in more than 30 countries. Network Systems, an ISO 9001-certified company, posted 1993 revenues of $215 million. Note to Editors: Network Systems, NSC, Bytex, and BUS-TECH are registered trademarks of the Network Systems Corporation. ERS, Enterprise Routing Switch, Networks-on-Demand, and Security Router are trademarks of the NSC. (more) NETWORK SYSTEMS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS TWELVE MONTHS ENDED ENDED DECEMBER 31, DECEMBER 31, ------------------ ------------------ 1994 1993 1994 1993 -------- -------- -------- -------- (IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) REVENUES: Product.............................. $ 37,007 $ 50,082 $158,834 $150,280 Services............................. 18,323 17,028 72,922 65,278 -------- -------- -------- -------- Total revenues..................... 55,330 67,110 231,756 215,558 COST OF REVENUES: Product.............................. 23,121 23,441 77,866 66,770 Services............................. 12,202 11,409 46,447 42,320 -------- -------- -------- -------- Total cost of revenues............. 35,323 34,850 124,313 109,090 GROSS PROFIT........................... 20,007 32,260 107,443 106,468 OPERATING EXPENSES: Research and development............. 9,957 8,388 36,272 27,762 Selling, general, and administrative. 21,871 19,349 79,749 68,499 Amortization of intangibles ......... 625 417 2,499 417 Acquisition, restructuring, and ac- quired research and development costs............................... 8,000 15,642 8,000 15,642 -------- -------- -------- -------- Total operating expenses........... 40,453 43,796 126,520 112,320 INCOME (LOSS) FROM OPERATIONS.......... (20,446) (11,536) (19,077) (5,852) INTEREST INCOME, NET................... 861 1,499 3,817 7,339 -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES...... (19,585) (10,037) (15,260) 1,487 PROVISION FOR (BENEFIT FROM) INCOME TAXES................................. 6,940 (4,960) 8,560 (720) -------- -------- -------- -------- NET INCOME (LOSS)...................... $(26,525) $ (5,077) $(23,820) $ 2,207 ======== ======== ======== ======== EARNINGS PER COMMON AND COMMON EQUIVA- LENT SHARE............................ $ (0.87) $ (0.17) $ (0.79) $ 0.07 Common and common equivalent shares used in the calculation of earnings per share............................. 30,366 29,707 30,120 30,118
(More) NETWORK SYSTEMS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) DECEMBER 31, DECEMBER 31, 1994 1993(1) ------------ ------------ (IN THOUSANDS) Assets: Cash and short-term investments and marketable secu- rities.............................................. $ 27,633 $ 33,813 Trade receivables, net............................... 58,778 64,495 Other receivables.................................... 1,995 5,531 Inventories.......................................... 21,686 26,599 Other current assets................................. 9,586 26,029 -------- -------- Total current assets............................. 119,678 156,467 Net property, plant, and equipment................... 53,304 43,849 Goodwill and other intangible assets, net............ 39,207 36,534 Income tax deposits, including interest.............. 17,611 39,804 Other assets......................................... 39,639 28,827 -------- -------- $269,439 $305,481 ======== ======== Liabilities and Stockholders' Equity: Current liabilities.................................. $ 42,761 $ 56,637 Long-term debt....................................... -- 1,000 Deferred compensation................................ 12,962 11,852 Deferred income taxes................................ -- 3,360 Other long-term liabilities.......................... 8,301 9,251 Total stockholders' equity....................... 205,415 223,381 -------- -------- $269,439 $305,481 ======== ========
- -------- 1 The balance sheet at December 31, 1993, has been condensed from the audited financial statements. EX-99.2 3 NETWORK PRESS RELEASE [LETTERHEAD OF NETWORK SYSTEMS CORPORATION APPEARS HERE] FOR IMMEDIATE RELEASE Contacts: Julia Samsal or Paul JJ Payack 800-672-7670 612-424-1555 Internet: julie.samsal@network.com or pjjpayack@network.com Web Server: HTTP://www.network.com NETWORK SYSTEMS CORPORATION (NSC) ANNOUNCES DEVELOPMENTS RELATED TO STORAGETEK MERGER Minneapolis, January 27--Network Systems Corporation (NASDAQ: NSCO) today announced that, in connection with its merger agreement with the Storage Technology Corporation (STK) of Louisville, Colorado, NSC intends to mail next week a supplement to the Proxy Statement/Prospectus previously sent to its stockholders and intends to reschedule the special meeting of stockholders currently planned for February 8, 1995. A new meeting date will be announced next week. In a related matter, NSC today announced that it has received notice that a complaint has been filed against Network Systems and its board directors in the state Chancery Court in Delaware. The complaint asserts that it was filed on behalf of Network Systems' shareholders and alleges that the directors breached their fiduciary duty in connection with the pending merger between Network Systems and Storage Technology Corporation. The plaintiff seeks to enjoin the consummation of the merger with StorageTek or, in the event the merger is consummated, to recover damages. Network Systems believes that the allegations contained in the complaint are without merit and intends to defend this lawsuit vigorously. -----END PRIVACY-ENHANCED MESSAGE-----