8-K

 

UNITED STATES
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): December 30, 2005

RSA Security Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	000-25120	04-2916506
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
174 Middlesex Turnpike, Bedford, Massachusetts		01730
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: (781) 515-5000

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets.

On December 30, 2005, pursuant to an Agreement and Plan of Merger dated December 2, 2005 among RSA Security Inc., Cyota, Inc., Powder Acquisition Corporation, a wholly owned subsidiary of RSA Security, and Andrew Zalasin, in his capacity as the Cyota stockholders’ representative (the "Merger Agreement"), RSA Security Inc. acquired all of the outstanding capital stock of Cyota, Inc., and Powder Acquisition Corporation merged with and into Cyota, with Cyota continuing as the surviving corporation and a wholly owned subsidiary of RSA Security (the "Merger").

Pursuant to the Merger Agreement, each share of Cyota common stock outstanding before the consummation of the Merger was converted into the right to receive $0.5176 in cash. RSA Security paid $128.8 million in cash in the aggregate for all of the outstanding capital stock of Cyota and $5.5 million in cash to fund a three-year retention pool. In addition, RSA Security assumed all outstanding Cyota stock options, with a value of approximatel y $10.7 million. The Cyota stock options were exercisable for approximately 954,088 shares of RSA Security common stock as of December 30, 2005, 628,880 of which shares were fully vested at that date and 325,208 of which shares vest over the next four years.

Pursuant to the Merger Agreement, RSA Security deposited $13.6 million of the cash consideration paid for Cyota’s outstanding capital stock into an escrow fund to secure certain indemnification obligations of the former stockholders of Cyota and to satisfy certain obligations of the former stockholders of Cyota to adjust the base purchase price. On or about December 30, 2006, the balance of the escrow fund in excess of any amounts held for unresolved claims will be distributed to the former stockholders of Cyota.

RSA Security issued a press release announcing the Merger on December 30, 2005, which press release is attached to this Report as Exhibit 99.1 and incorporated herein by reference.

This description of the Merger i s not a complete statement of the parties’ rights or obligations under the Merger Agreement and is qualified in its entirety by reference to the full text of the Merger Agreement, which was filed as an exhibit to Amendment No. 1 to RSA Security’s Current Report on Form 8 K dated December 2, 2005, and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of the Business Acquired.

The financial statements required by this item are not filed with this initial Report. RSA Security will file the required financial statements by amendment to this Report no later than March 17, 2006.

(b) Pro Forma Financial Information.

The pro forma financial information required by this item is not filed with this initial Report. RSA Security will file the required financial statements by amendment to this Report no later than March 17, 2006.

(d) Exhibits

See the Exhibit Index attached to this Report.

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 hereunto duly authorized.

	RSA Security Inc.
December 30, 2005	By:	/s/Arthur W. Coviello, Jr.
		Name: Arthur W. Coviello, Jr.
		Title: President and Chief Executive Officer

Exhibit Index

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated December 2, 2005, among RSA Security Inc., Cyota, Inc., Powder Acquisition Corporation and Andrew Zalasin in his capacity as the Cyota stockholders' representative (previously filed with the Securities and Exchange Commission on December 7, 2005 as an exhibit to Amendment No. 1 to RSA Security's Current Report on Form 8-K/A, and incorporated herein by reference).
99.1	Press release, dated December 30, 2005, issued by RSA Security Inc.

EX-2.1

EXHIBIT 2.1

The Agreement and Plan of Merger, dated December 2, 2005, among RSA Security Inc., Cyota, Inc., Powder Acquisition Corporation and Andrew Zalasin in his capacity as the Cyota stockholders’ representative was previously filed with the Securities and Exchange Commission on December 7, 2005 as an exhibit to Amendment No. 1 to RSA Security’s Current Report on Form 8-K/A, and is incorporated herein by reference.

Public Relations:	EXHIBIT 99.1 Investor Relations:
Matt Buckley RSA Security Inc. (781) 515-6212 mbuckley@rsasecurity.com	Jeremiah Sisitsky RSA Security Inc. (781) 515-6065 jsisitsky@rsasecurity.com

For Immediate Release

RSA Security Completes Acquisition of Cyota

Bedford, Mass., December 30, 2005 – RSA Security Inc. (Nasdaq: RSAS) today announced that it has completed its previously announced acquisition of Cyota, Inc., a privately-held company that delivers online security and anti-fraud solutions to thousands of financial institutions worldwide, for total consideration of $145 million. This includes $128.8 million in cash for all of the outstanding capital stock of Cyota, $5.5 million in cash to fund a three-year retention pool and RSA Security’s assumption of all vested and unvested Cyota stock options, which represents approximately $10.7 million in value.

As the Company had previously stated, RSA Security expects this transaction to add approximately $22 million to $25 million in revenue in 2006 and that it will be accretive to earnings for the second half of 2006.

“The acquisition of Cyota provides RSA Security with a portfolio of intelligent, risk-based authentication solutions,” said Art Coviello, president and CEO of RSA Security. “With our layered approach to authentication, we have multiple hardware and software solutions that meet the myriad needs of companies concerned with protecting online identities within enterprise and consumer applications. Both customers and prospects have provided overwhelmingly positive feedback to this acquisition.”

About RSA Security Inc.
RSA Security Inc. is the expert in protecting online identities and digital assets. The inventor of core security technologies for the Internet, the company leads the way in strong authentication and encryption, bringing trust to millions of user identities and the transactions that they perform. RSA Security’s portfolio of award-winning identity & access management solutions helps businesses to establish who’s who online – and what they can do.

With a strong reputation built on a 20-year history of ingenuity, leadership and proven technologies, we serve approximately 19,000 customers around the globe and interoperate with more than 1,000 technology and integration partners. For more information, please visit www.rsasecurity.com.

RSA and RSA Security are either registered trademarks or trademarks of RSA Security Inc. in the United States and/or other countries. All other products and services mentioned are trademarks of their respective companies.

This press release contains forward-looking statements regarding the expected effect of the Cyota acquisition on RSA Security’s financial performance in 2006. These statements involve a number of risks and uncertainties. Some of the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements are the ability of RSA Security to successfully integrate Cyota’s employees and operations, the ability to realize anticipated synergies and cost savings as a result of the transaction, material adverse changes in the financial condition or operations of Cyota, general economic conditions, the timing of the introduction or enhancement of our products and our competitors’ and strategic partners’ products, changes in product pricing, including changes in competitors’ pricing policies, development and performance of our direct and indirect distribution channels, delays in product development, competitive pressures, changes in customer and market requirements and standards, market acceptance of new products and technologies, technological changes in the computer industry, and the risk factors detailed from time to time in RSA Security’s periodic reports and registration statements filed with the Securities and Exchange Commission, including, without limitation, RSA Security’s Annual Report on Form 10-K filed on March 14, 2005 and its Quarterly Report on Form 10-Q filed on November 7, 2005.