SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 12, 2000
(Date of earliest event reported): July 25, 2000
DITECH COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-26209 94-2935531
(Commission File No.) (IRS Employer Identification No.)
825 E. MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA 94043
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (650) 623-1300
-------------------------
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The undersigned registrant, Ditech Communications Corporation, a
Delaware corporation (the "Company"), hereby amends its Current Report on
Form 8-K previously filed with the Securities and Exchange Commission on
August 8, 2000, relating to the Company's acquisition of Atmosphere Networks,
Inc., a Delaware corporation ("Atmosphere"), on July 25, 2000, by means of a
reverse triangular merger in which a wholly-owned subsidiary of the Company
("Merger Sub") was merged with and into Atmosphere. Such Current Report
indicated that the required financial statements and pro forma financial
information would be filed as soon as practicable after the date of such
report. The financial statements and pro forma financial information are
filed herewith.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
See Exhibit 99.3 for audited financial statements of Atmosphere
Networks, Inc.
(b) PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
The following unaudited pro forma condensed combined financial
statements, including the notes thereto, are qualified in their entirety by
reference to, and should be read in conjunction with, the historical
financial statements and notes thereto of the Company's Annual Report on Form
10-K/A for the fiscal year ended April 30, 2000, as filed with the Securities
and Exchange Commission on August 10, 2000, and the historical financial
statements and notes thereto of Atmosphere, included as exhibits herein.
The following unaudited pro forma condensed combined financial
statements give effect to the Company's acquisition of Atmosphere, which was
accounted for as a purchase. The unaudited pro forma condensed combined
balance sheet presents the combined financial position of the Company and
Atmosphere as of April 30, 2000, assuming that the merger had occurred as of
April 30, 2000. Such pro forma information is based upon the historical
balance sheet data of the Company as of April 30, 2000 and Atmosphere as of
March 31, 2000. The unaudited pro forma condensed combined statement of
operations gives effect to the merger, assuming that it had occurred as of
May 1, 1999, of the Company and Atmosphere by combining the results of
operations of the Company for the year ended April 30, 2000 and Atmosphere
for the year ended March 31, 2000.
The unaudited pro forma information is presented for illustrative
purposes only and is not necessarily indicative of the operating results or
financial position that would have occurred if the mergers had been
consummated at the beginning of the periods presented, nor is it necessarily
indicative of future operating results or financial position.
1.
DITECH COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF APRIL 30, 2000
(in thousands)
Pro Forma Pro Forma
Ditech Atmosphere Adjustments Combined
----------------- ---------------- ---------------- ----------------
ASSETS
Cash and Cash Equivalents $88,616 $17,599 $(8,310)(b) $97,905
Accounts Receivable, net 20,349 171 -- 20,520
Inventory, net 6,596 300 -- 6,896
Income Taxes Receivable 1,412 -- -- 1,412
Prepaids and Other Current Assets 2,191 480 -- 2,671
----------------- ---------------- ---------------- ----------------
Total Current Assets 119,164 18,550 (8,310) 129,404
Property, Plant and Equipment, net 2,680 2,716 (950)(a) 4,446
Purchased Technology and Goodwill, net 35,407 -- 63,153(b) 98,560
Deferred Income Taxes 4,703 -- 10,977(a) 15,680
Other Assets 3,198 -- 1,500(b) 4,698
----------------- ---------------- ---------------- ----------------
TOTAL ASSETS $165,152 $21,266 $66,370 $252,788
================= ================ ================ ================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts Payable $5,201 $1,231 $ -- $6,432
Accrued Expenses 4,228 3,296 192(a) 7,716
Other Current Liabilities 2,074 1,915 1,662(a) 5,651
Current Portion of Long-Term Obligations 55 3,402 2,595(a) 6,052
----------------- ---------------- ---------------- ----------------
Total Current Liabilities 11,558 9,844 4,449 25,851
Long-Term Obligations 21 2,088 (2,088)(a) 21
----------------- ---------------- ---------------- ----------------
Total Liabilities 11,579 11,932 2,361 25,872
----------------- ---------------- ---------------- ----------------
Preferred Stock -- 12 (12)(b) --
Common Stock 28 7 (6)(b) 29
Deferred Stock Compensation (21,937) -- (19,683)(d) (41,620)
Additional Paid in Capital 171,119 41,246 51,792(b)(d) 264,157
Notes Receivable from Shareholders -- (13) -- (13)
Accumulated Translation Adjustment -- (265) 265(a) --
Retained Earnings/(Accumulated Deficit) 4,363 (31,653) 31,653(a) 4,363
----------------- ---------------- ---------------- ----------------
Total Stockholders' Equity 153,573 9,334 64,009 226,916
----------------- ---------------- ---------------- ----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $165,152 $21,266 $66,370 $252,788
================= ================ ================ ================
The accompanying notes are an integral part of these unaudited pro forma
condensed combined financial statements.
2.
DITECH COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED APRIL 30, 2000
(in thousands, except per share amounts)
Pro Forma Pro Forma
Ditech Atmosphere Adjustments Combined
----------------- ---------------- ----------------- ----------------
Revenue $116,946 $2,494 $ -- $119,440
Cost of Goods Sold 34,913 2,618 -- 37,531
----------------- ---------------- ----------------- ----------------
Gross Profit 82,033 (124) 81,909
Operating Expenses
Sales and Marketing 9,411 4,542 -- 13,953
Research and Development 8,559 8,712 5,529(d) 22,800
General and Administrative 4,296 919 -- 5,215
Purchased Research and Development 8,684 -- -- 8,684
Amortization of Goodwill and Other
Acquisition Related Intangibles 1,860 -- 16,166(c) 18,026
----------------- ---------------- ----------------- ----------------
Total Operating Expenses 32,810 14,173 21,695 68,678
Operating Income/(Loss) 49,223 (14,297) (21,695) 13,231
Other Income/(Expense) 1,545 (58) -- 1,487
----------------- ---------------- ----------------- ----------------
Income/(Loss) Before Income Tax Expense 50,768 (14,355) (21,695) 14,718
Provision for Income Taxes 20,765 2 (8,152)(e) 12,615
----------------- ---------------- ----------------- ----------------
Net Income/(Loss) 30,003 (14,357) (13,543) 2,103
Accretion of Mandatorily Redeemable
Preferred Stock 99 -- -- 99
----------------- ---------------- ----------------- ----------------
Net Income/(Loss) Attributable to
Common Stockholders $29,904 (14,357) $(13,543) $2,004
================= ================ ================= ================
Net Income per Share
Basic $1.27 $(1.92) $0.08
================= ================ ================
Diluted $1.11 $(1.92) $0.07
================= ================ ================
Weighted Shares Used in Per Share
Calculation
Basic 23,505 7,455 24,346
================= ================ ================
Diluted 27,016 7,455 27,903
================= ================ ================
The accompanying notes are an integral part of these unaudited pro forma
condensed combined financial statements.
3.
DITECH COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS
1. BASIS OF PRESENTATION
Effective July 25, 2000, the Company acquired Atmosphere Networks,
Inc. in exchange for 841,897 shares of common stock and assumed options to
acquire 122,236 shares of common stock, valued at $73.4 million and $7.9
million of cash plus estimated acquisition costs of $400,000. The acquisition
is being accounted for as a purchase. Pursuant to Financial Accounting
Standards Board ("FASB") Interpretation No. 44, the Company has recorded $2.4
million of deferred compensation associated with unvested options assumed in
this acquisition. This deferred compensation will be recognized as
compensation expense over the remaining vesting period of the options.
The allocation of the purchase price is summarized below (in thousands):
Net assets acquired $15,218
Established workforce 1,500
Goodwill 64,948
----------------
Total purchase price $81,666
================
Based on the Company's intent to focus all future efforts of Atmosphere's
workforce on the Company's business and to substantially cease Atmosphere's
ongoing operations including sales of its existing products, no amounts have
been assigned to purchased research and development or purchased technology. The
amounts attributable to the established work force and goodwill will be
amortized over their estimated useful lives of four years.
The Atmosphere Purchase Agreement includes the issuance of
nonqualified stock options on approximately 750,000 shares of the Company's
common stock at a price equal to a 50% discount from the market value of the
stock on its grant date. These options vest over a four-year period from the
date of grant on August 1, 2000. The discount from fair market value has been
recorded as deferred stock compensation and will be charged to the statement
of operations as stock compensation over the four-year vesting period. The
total deferred compensation recorded in August 2000 was $17.3 million.
2. PRO FORMA ADJUSTMENTS
(a) To adjust recorded assets and liabilities of Atmosphere to their fair
value.
(b) To reflect the purchase price (cash of $7.9 million and common
stock valued at $73.4 million) and the resulting intangible assets
for goodwill and established workforce as if the acquisition had
occurred on April 30, 2000.
4.
(c) To reflect the amortization of goodwill and the established
workforce intangible asset, as if the acquisition had occurred on
May 1, 1999.
(d) To reflect deferred stock compensation (balance sheet) and related
amortization (income statement) for options granted at a discount
to Atmosphere employees ($17.3 million) and the unvested options
assumed ($2.4 million).
(e) To reflect income taxes/benefits on pro forma losses of Atmosphere at
an assumed rate of 40.9%.
(c) EXHIBITS
The following Exhibits are filed as part of this report:
2.1* Agreement and Plan of Merger and Reorganization, dated as
of June 21, 2000, by and among the Company Communications
Corporation, a Delaware corporation, Oxygen Acquisition
Corporation, a Delaware corporation, and Atmosphere
Networks, Inc., a Delaware corporation
2.2* Amendment to Agreement and Plan of Merger and
Reorganization, dated as of July 25, 2000, by and among
the Company Communications Corporation, a Delaware
corporation, Oxygen Acquisition Corporation, a Delaware
corporation, and Atmosphere Networks, Inc., a Delaware
corporation
23.1 Consent of KPMG LLP, Independent Auditors
99.1* Press Release, dated June 22, 2000, entitled "the Company
Communications to Acquire Atmosphere Networks ---
Acquisition Gives the Company Key Optical Networking
Systems Expertise"
99.2* Press Release dated as of July 26, 2000, entitled "the
Company Communications Completes Acquisition of Atmosphere
Networks --- Acquisition Gives the Company Key Optical
Networking Systems Expertise"
99.3 Financial Statements for Atmosphere Networks, Inc.
- ------------------------
* Previously filed.
5.
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, thereunto duly authorized.
DITECH COMMUNICATIONS CORPORATION
a Delaware corporation
Dated: September 12, 2000 By: /s/ William J. Tamblyn
--------------------------------
William J. Tamblyn
Vice President and Chief Financial
Officer
INDEX TO EXHIBITS
2.1* Agreement and Plan of Merger and Reorganization, dated as
of June 21, 2000, by and among the Company Communications
Corporation, a Delaware corporation, Oxygen Acquisition
Corporation, a Delaware corporation, and Atmosphere
Networks, Inc., a Delaware corporation
2.2* Amendment to Agreement and Plan of Merger and
Reorganization, dated as of July 25, 2000, by and among
the Company Communications Corporation, a Delaware
corporation, Oxygen Acquisition Corporation, a Delaware
corporation, and Atmosphere Networks, Inc., a Delaware
corporation
23.1 Consent of KPMG LLP, Independent Auditors
99.1* Press Release, dated June 22, 2000, entitled "the Company
Communications to Acquire Atmosphere Networks ---
Acquisition Gives the Company Key Optical Networking
Systems Expertise"
99.2* Press Release dated as of July 26, 2000, entitled "the
Company Communications Completes Acquisition of Atmosphere
Networks --- Acquisition Gives the Company Key Optical
Networking Systems Expertise"
99.3 Financial Statements for Atmosphere Networks, Inc.
- ------------------------
* Previously filed.
1.