UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-50464
NETRIX CORPORATION
(Exact name of registrant as specified in charter)
Delaware 54-1345159
(State of Incorporation) (IRS Employer Identification No.)
13595 Dulles Technology Drive, Herndon, Virginia 20171
(Address of principal executive offices) (Zip Code)
(703) 742-6000
(Registrant's telephone number, including area code)
Indicate by check number whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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At July 31, 1997 there were 9,549,205 shares of the registrant's Common
Stock, $.05 par value per share, outstanding.
NETRIX CORPORATION
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FORM 10-Q
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JUNE 30, 1997
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INDEX
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Page No.
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PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
Condensed Consolidated Statements of Operations for the six
and three months ended June 30, 1997 and 1996 2
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Cash Flows 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9
PART II -- OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURE 13
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
NETRIX CORPORATION
------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Six Months Ended Three Months Ended
June 30, June 30,
-------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Product....................... $11,691 $16,362 $ 5,755 $ 7,729
Service....................... 5,217 5,372 2,732 2,809
------- ------- ------- -------
Total revenues.......... 16,908 21,734 8,487 10,538
------- ------- ------- -------
Cost of revenues:
Product....................... 5,711 6,892 3,011 3,018
Service....................... 3,756 3,457 1,761 1,742
------- ------- ------- -------
Total cost of revenues.. 9,467 10,349 4,772 4,760
------- ------- ------- -------
Gross profit..... 7,441 11,385 3,715 5,778
Operating expenses:
Sales and marketing........... 5,900 6,044 2,684 2,850
Research and development...... 4,839 5,588 2,067 2,694
General and administrative... 2,059 2,160 962 1,064
Restructuring reserve......... 875 900 (475) --
------- ------- ------- -------
Loss from
operations........ (6,232) (3,307) (1,523) (830)
Interest income, net............... 110 263 1 86
Foreign exchange loss.............. (70) (45) (115) (34)
------- ------- ------- -------
Loss before income
taxes............. (6,192) (3,089) (1,637) (778)
Provision for income taxes......... 40 36 20 18
------- ------- ------- -------
Net loss........................... $(6,232) $(3,125) $(1,657) $ (796)
======= ======= ======= =======
Earnings per share................. $(0.65) $(0.33) $(0.17) $(0.08)
======= ======= ======= =======
Weighted average shares outstanding 9,521 9,441 9,526 9,447
======= ======= ======= =======
See notes to unaudited condensed consolidated financial statements.
2
NETRIX CORPORATION
------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands)
June 30, December 31,
1997 1996
-------- ------------
(Unaudited)
Current assets:
Cash and cash equivalents........................... $ 1,096 $ 687
Short-term investments.............................. 1,697 5,350
Accounts receivable, net of allowance for doubtful
accounts of $1,537 and $1,380, respectively........ 9,000 11,649
Inventories......................................... 10,172 8,403
Other current assets................................ 772 1,011
------- -------
Total current assets.............................. $22,737 $27,100
Property and equipment, net of accumulated
depreciation of $16,799 and $15,297,
respectively........................................ 5,273 6,023
Deposits and other assets............................ 255 244
Goodwill, net of accumulated amortization of $1,286
and $1,090, respectively............................ 954 1,412
------- -------
$ 29,219 $ 34,779
======== ========
See notes to unaudited condensed consolidated financial statements.
3
NETRIX CORPORATION
------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
June 30, December 31,
1997 1996
--------- -------------
(Unaudited)
Current liabilities:
Line of credit...................................... $ 854 $ 754
Accounts payable.................................... 4,970 3,459
Accrued liabilities................................. 3,976 4,864
Current portion of long-term debt................... 361 241
-------- --------
Total current liabilities........................ 10,161 9,318
Other liabilities......................................... 162 --
Long-term debt, net of current portion.................... -- 240
Deferred rent, net of current portion..................... 240 374
-------- --------
10,563 9,932
-------- --------
Stockholders' equity:
Preferred stock, $0.05 par value; 1,000,000 shares
authorized; none issued and outstanding............ -- --
Common stock, $0.05 par value; 15,000,000
shares authorized; 9,545,872 and 9,510,109
shares issued and outstanding, respectively....... 477 476
Additional paid-in capital.......................... 55,671 55,603
Unrealized investment holding gain/(loss)........... 1 (7)
Cumulative translation adjustment................... (83) (45)
Accumulated deficit................................. (37,410) (31,180)
-------- --------
Total stockholders' equity.......................... 18,656 24,847
-------- --------
$ 29,219 $ 34,779
======== ========
See notes to unaudited condensed consolidated financial statements.
4
NETRIX CORPORATION
------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
June 30,
------------------------------
1997 1996
----------------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss..................................... $(6,232) $(3,125)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization............. 1,704 2,008
Noncash compensation expense.............. -- 86
Decrease in deferred rent credit.......... (119) (104)
Changes in assets and liabilities -
Accounts receivable..................... 2,649 (659)
Inventories............................. (2,118) (37)
Other current assets.................... 239 95
Deposits and other assets............... (11) 22
Decrease in goodwill.................... 262 --
Other liabilities....................... 162 --
Accounts payable........................ 1,511 (2,982)
Accrued liabilities..................... (900) (111)
------- -------
Net cash used in operating activities... (2,853) (4,807)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments....... (2,473) (3,080)
Sales of short-term investments........... 6,127 4,858
Purchases of property and equipment....... (402) (490)
Cash acquired from IDS acquisition........ -- --
------- -------
Net cash provided by investing
activities............................. 3,252 1,288
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit.............. 100 4
Proceeds from exercise of stock options... 68 244
Payments on long-term debt................ (120) --
------- -------
Net cash provided by financing
activities............................. 48 248
------- -------
Effect of foreign currency exchange rate
changes on
cash and cash equivalents................. (39) (28)
Net increase (decrease) in cash and cash
equivalents................................... 408 (3,299)
Cash and cash equivalents, beginning of period. 687 4,370
------- -------
Cash and cash equivalents, end of period....... $ 1,095 $ 1,071
======= =======
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest.. $ 79 $ 76
Cash paid during the period for income
taxes.................................... $ 11 $ 1
Capitalization of inventories into
manufacturing and test equipment......... $ 350 $ 393
See notes to unaudited condensed consolidated financial statements.
5
NETRIX CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation:
----------------------
Netrix Corporation (the "Company") was formed in 1985 to develop,
manufacture, market and support a family of high performance, integrated network
switching and network management products for use in enterprise-wide
communications networks. During 1989, the Company formed a wholly-owned
subsidiary, Netrix International Corporation (a Delaware corporation) which
maintains operations in the United Kingdom. The Company also maintains
operations in Germany and Italy through its wholly-owned subsidiaries Netrix
GmbH and Netrix S.r.l., respectively. These consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant
intercompany transactions have been eliminated.
The Company's operations are subject to certain risks and uncertainties
including, among others, rapidly changing technology and markets, current and
potential competitors with greater financial, technological, production and
marketing resources, reliance on certain sole source suppliers and a single
contract manufacturer, and dependence on key management personnel.
The unaudited 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 Company
believes, however, that its disclosures are adequate to make the information
presented not misleading. The results for such interim periods are not
necessarily indicative of results to be expected for the full year.
Certain reclassifications have been made to the prior year financial
statements to conform with current year presentation.
2. Cash Equivalents:
-----------------
Cash equivalents are primarily bank deposits, commercial paper, and
government agency securities with original maturities of three months or less.
These investments are carried at cost which approximates market value.
3. Short-Term Investments:
-----------------------
Short-term investments consist primarily of commercial paper with
maturities of more than three months and less than twelve months and longer-term
investments which are primarily US government obligations with maturities
between twelve and eighteen months. Longer-term investments are bought and held
principally for the purpose of selling them in the near term. Short-term
investments are reported at fair value.
Under Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," debt securities that are
classified as available-for-sale are reported at fair value, with unrealized
gains and losses reported as a separate component of stockholders' equity. At
June 30, 1997 and December 31, 1996, the unrealized net holding gain/loss on
short-term investments was a gain of approximately $1,000 and a loss of
approximately $7,000, respectively, and is reported as a separate component of
stockholders' equity.
6
4. Inventories:
------------
Inventories consisted of the following (in thousands):
June 30, 1997 December 31, 1996
------------- -----------------
Raw materials...... $ 792 $ 326
Work in process.... 1,026 869
Finished goods..... 8,354 7,208
------- ------
Total inventories.. $10,172 $8,403
======= ======
5. Commitments and Contingencies:
------------------------------
Line of Credit
The Company renegotiated its line of credit with a lending institution to
provide for a $1.0 million line of credit for working capital at an interest
rate per annum equal to the lender's prime rate plus 1% (9.5% at June 30, 1997).
The line of credit agreement includes covenants that require the Company to
maintain certain levels of liquidity and tangible net worth and matures with
unpaid principal amounts due and payable on January 3, 1998. At June 30, 1997
and December 31, 1996, the Company had approximately $854,000 and $754,000
outstanding, respectively, under the working capital line of credit.
Long-term Debt
The Company utilized approximately $561,000 of available draws under an
equipment line of credit with a lending institution, which was capped at this
amount in January 1996 and began to amortize as a term loan over a 28-month
period in accordance with the credit agreement. The term loan was accelerated
in conjunction with the credit line renegotiation and is payable in monthly
installments of approximately $54,000 through December 31, 1997. It bears
interest at a rate per annum equal to the lender's prime rate plus 3/4% (9.25%
at June 30, 1997), and is secured by certain machinery and equipment. At June
30, 1997 and December 31, 1996, the Company had approximately $361,000 and
$481,000, respectively, outstanding under the equipment note payable.
6. Product Revenues:
-----------------
The Company's product revenues were generated in the following geographic
regions:
Six Months Ended Three Months Ended
June 30, June 30,
----------------- ------------------
1997 1996 1997 1996
------- -------- -------- --------
Domestic............... $ 4,791 $ 6,041 $2,372 $3,177
Europe................. 4,234 5,724 2,177 2,397
Pacific Rim and other 2,666 4,597 1,206 2,155
------- ------- ------ ------
Total.................. $11,691 $16,362 $5,755 $7,729
======= ======= ====== ======
All of the Company's products are manufactured and shipped out of its
facilities in Charlotte, North Carolina. Sales are primarily denominated in US
dollars.
7
7. Restructuring Charge:
---------------------
In March 1997, the Company recorded a restructuring charge of approximately
$1,350,000 before income taxes. The charge included anticipated costs
associated with an overall reduction in work force, the discontinuance of its
micro.pop product, and the discontinuance of its direct operation in Germany.
In May 1997, the Company reduced the restructuring charge of approximately
$1,350,000 recorded in the first quarter by approximately $475,000. The net
reduction was due mainly to the Company's decision to maintain its operation in
Germany. At June 30, 1997, approximately $290,000 remains in this accrual to
cover remaining severance payments and legal fees.
In March 1996, the Company recorded a restructuring charge of approximately
$900,000 before income taxes. The charge included anticipated costs associated
with the consolidation and relocation of facilities and the reduction of
personnel levels as part of management's restructuring plan for the Company. As
part of this plan, the Company vacated leased office space in Herndon, Virginia,
and Longmont, Colorado. Approximately $403,000 was charged against this reserve
during 1996 related to severance and other costs associated with an approximate
15% reduction of the Company's work force. Approximately, $118,000 of this
provision remained accrued at June 30, 1997 to cover anticipated losses from the
Herndon and Longmont lease commitments.
The accompanying financial statements include management's best estimate of
the amounts expected to be realized from the subleasing of its Herndon facility.
The estimates are based upon an analysis of the facility, the local real estate
markets and the advice of real estate professionals. The amounts the Company
will ultimately realize could differ materially in the near term from the
amounts assumed in the calculation of the accrual. The future minimum rental
payments under this lease are approximately $633,000. The lease also calls for
payments for the Company's proportionate share of certain operating expenses.
8. Foreign Currency Exchange Gain:
-------------------------------
Generally, assets and liabilities denominated in foreign currencies are
translated into US dollars at current exchange rates. Operating results are
translated into US dollars using the average rates of exchange prevailing during
the period. Gains or losses resulting from translation of assets and
liabilities are included in the cumulative translation adjustment account in
stockholders' equity, except for the translation effect of intercompany balances
that are anticipated to be settled in the foreseeable future. Included in the
condensed consolidated statements of operations for the six and three months
ending June 30, 1997 is approximately $70,000 and $115,000 in translation
losses, respectively, and for the six and three months ending June 30, 1996 is
approximately $45,000 and $34,000 in translation losses, respectively.
9. Earnings (Loss) Per Share:
--------------------------
Earnings (loss) per share amounts have been computed using the weighted
average number of common shares and common equivalent shares having a dilutive
effect during the periods. For the six and three months ended June 30, 1997 and
1996, the effect of options has not been considered as they would have been
antidilutive.
8
NETRIX CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
---------------------
Background. The results for the six and three months ended June 30, 1997
reflect a decrease in revenues over the comparable periods in 1996 and include
a significant restructuring charge. The decline in revenues is primarily a
result of decreased sales of current products in all of the Company's sales
territories, offset in part by the increased revenue generated by the
Company's new products - the 2210 and the 2550.
Revenues. Total revenues decreased by approximately $4.8 million or
22.2%, in the six months ended June 30, 1997 compared to the six months ended
June 30, 1996. Total revenues also decreased approximately $2.0 million, or
19.5%, in the second quarter of 1997 compared to the second quarter of 1996.
The decrease in revenues was primarily due to a higher than expected decrease
in product volume of Series 10 and acquired Republic Telcom product lines and
slower than expected sales of new products, specifically, the Series 2210
access product. Product revenues decreased approximately $4.7 million, or
28.5% for the first six months of 1997 compared to 1996. Service revenues
decreased by approximately $0.1 million, or 2.9%, for the six months ended
June 30, 1997 compared to the six months ended June 30, 1996. For the second
quarter of 1997, there was a decrease in service revenue of $77,000 or 2.7%
from second quarter of 1996.
Gross Profit. Gross profit decreased by approximately $3.9 million, or
34.6%, for the first six months of 1997 compared to the first six months of
1996, and decreased as a percentage of total revenues from 52.4% to 44.0%.
For the second quarter of 1997 compared to the second quarter of 1996, gross
profit decreased approximately $2.1 million or 35.7%, and decreased as a
percent of total revenues from 54.8% to 43.8%. Product gross margin decreased
from 57.9% in the first six months of 1996 to 51.2% in the first six months of
1997. This decrease in product gross margin primarily resulted from a
combination of a higher proportion of products sold through channels with
higher discounts and, to a lesser extent, a lower margin mix of products
shipped. As the product mix and channel mix change from quarter to quarter,
product gross margins can vary within a wide range. Due to this variable mix,
margins earned in the six months ended June 30, 1997 are not necessarily
indicative of margins that will be earned in the future. The gross margin for
service revenue decreased from 35.6% in the first six months of 1996 to 28.0%
in the first six months of 1997. This is due to the fact that while revenues
from maintenance agreements remained relatively flat, service costs increased.
Sales and Marketing. Sales and marketing expenses decreased by
approximately $0.1 million or 2.4% from the first six months of 1996 to the
first six months of 1997. For the second quarter of 1997 as compared to the
second quarter of 1996, the decrease was approximately $0.2 million, or 5.8%.
The decrease in expenses was principally due to the Company's planned
restructuring discussed above, which resulted in a decrease in personnel and
travel costs.
Research and Development. Research and development expenses decreased by
approximately $0.7 million or 13.4% from the first six months of 1996 to the
comparable period of 1997. This decrease was due principally to decreased
expenses related to salaries and related personnel costs due to the
restructuring that occurred earlier this year. Second quarter expenses
decreased 21.7% during this time period. Currently, all of the Company's
research and development costs are charged to operations as incurred.
9
General and Administrative. General and administrative expenses
decreased by approximately $0.1 million or 4.7%, for the first six months of
1997 as compared to the same period in 1996. For the second quarter of 1997
compared to the second quarter of 1996 there was a decrease of approximately
$0.1 million, or 9.6%. The decrease in these expenses was due principally to a
reduction in personnel costs, and a lower level of legal and accounting
expenditures.
Restructuring Charge. In March 1997, the Company recorded a
restructuring charge of approximately $1,350,000 before income taxes. The
charge included anticipated costs associated with an overall reduction in work
force, the discontinuance of its micro.pop product, and the discontinuance of
its direct operation in Germany. In May 1997, the Company reduced the
restructuring charge of approximately $1,350,000 recorded in the first quarter
by approximately $475,000. The net reduction was due mainly to the decision
not the discontinue its operation in Germany. At June 30, 1997, approximately
$290,000 remains in this accrual to cover remaining severance payments and
legal fees.
In March 1996, the Company recorded a restructuring charge of
approximately $900,000 before income taxes. The charge included anticipated
costs associated with the consolidation and relocation of facilities and the
reduction of personnel levels as part of management's restructuring plan for
the Company. As part of this plan, the Company vacated leased office space in
Herndon, Virginia, and Longmont, Colorado. Approximately $403,000 was charged
against this reserve during 1996 related to severance and other costs
associated with an approximate 15% reduction of the Company's work force.
Approximately, $118,000 of this provision remained accrued at June 30, 1997 to
cover anticipated losses from the Herndon and Longmont lease commitments.
Interest and Other Income, Net. For the first six months of 1997, the
Company earned net interest and other income of approximately $110,000
compared to $263,000 in the comparable period of 1996. Net interest and other
income for the second quarter of 1997 was approximately $1,000 compared to
$86,000 in the second quarter of 1996. The decrease in net interest and other
income is due primarily to lower investment levels maintained in short-term
investments, combined with increased interest expense on the Company's
borrowings.
Foreign Exchange Gain (Loss). Included in foreign exchange income for
the six and three months ended June 30, 1997, is approximately $70,000 and
$115,000 in translation losses, respectively, and for the six and three months
ended June 30, 1996, is approximately $45,000 and $34,000 in translation
losses, respectively.
Net Income (Loss). For the first six months of 1997, the Company
generated a net loss of approximately $6.2 million compared to a net loss of
$3.1 million in the comparable period of 1996. The net loss for the second
quarter of 1997 was approximately $1.7 million compared to a net loss of $0.8
million in the second quarter of 1996. The decline in earnings for both the
year to date and second quarter results were due to the factors discussed
above.
Liquidity and Capital Resources
-------------------------------
At June 30, 1997, the Company had approximately $1.1 million of cash and
cash equivalents on hand, short-term investments of $1.7 million, and net
working capital of $12.2 million.
For the six months ended June 30, 1997 and 1996, the Company used
approximately $2.9 million and approximately $4.8 million of cash from
operating activities, respectively. In the first six months of 1997, the cash
used by operations was primarily due to the negative cash flow from operations
and the increase in inventory levels over the December 31, 1996 balances. In
the six months of 1996, the cash used by operations was primarily due to the
negative cash flow from operations and the reduction in accounts payable
levels over the December 31, 1995 balances.
10
For the six months ended June 30, 1997, the Company generated $3.3
million from investing activities, as sales of investments outpaced purchases
of investments and capital equipment. For the six months ended June 30,1996
the Company generated approximately $1.3 million from investing activities as
the result of a $1.8 million net decrease in short-term investments offset by
capital expenditures during the period. Capital expenditures in both periods
were financed with cash on hand and funds generated from operations. The
expenditures were primarily for additional research and development and test
equipment required to support the expanded product base of the Company.
The Company renegotiated its line of credit with a lending institution
to provide for a $1.0 million line of credit for working capital at an
interest rate per annum equal to the lender's prime rate plus 1% (9.5% at June
30, 1997). The line of credit agreement includes covenants that require the
Company to maintain certain levels of liquidity and tangible net worth and
matures with unpaid principal amounts due and payable on January 3, 1998. At
June 30, 1997 and December 31, 1996, the Company had approximately $854,000
and $754,000 outstanding, respectively, under the working capital line of
credit.
The Company utilized approximately $561,000 of available draws under an
equipment line of credit with a lending institution, which was capped at this
amount in January 1996 and began to amortize as a term loan over a 28-month
period in accordance with the credit agreement. The term loan was accelerated
in conjunction with the credit line renegotiation and is payable in monthly
installments of approximately $54,000 through December 31, 1997. It bears
interest at a rate per annum equal to the lender's prime rate plus 3/4% (9.25%
at June 30, 1997), and is secured by certain machinery and equipment. At June
30, 1997 and December 31, 1996, the Company had approximately $361,000 and
$481,000, respectively, outstanding under the equipment note payable.
Cash generated by financing activities was approximately $48,000 for the
first six months of 1997, compared to $248,000 of cash generated by financing
activities for the first six months of 1996.
The Company believes that existing cash resources, together with
internally generated funds, will be sufficient to meet its cash requirements
through fiscal 1997.
11
PART II -- OTHER INFORMATION
----------------------------
Items 1 through 4 are not applicable.
Item 5. Other Information.
-----------------
On July 11, 1997, the Board of Directors approved a stock
option exchange program (the "Exchange Program"), pursuant to
which full-time employees holding stock options under the
Company's stock option incentive plans with an exercise price
in excess of $2.33 per share were given the opportunity to
exchange the unexercised portion of such options (the
"Existing Options") for new options (the "New Options"),
covering such number of shares as is equal to the unexercised
portion of the Existing Options and having an exercise price
of $2.33 per share (120% of the fair market value of the
Company's Common Stock on such date). The New Options will
have the same terms as the Existing Options, including the
same vesting schedule, but are not exercisable for six months
from the date of grant.
The Company uses stock options as a significant element of
the compensation of employees, in part because it believes
options provide an incentive to employees to maximize
shareholder value. Stock options, because they become
exercisable over time, also serve as a means of retaining
employees. Because the market value of the Company's Common
stock has fallen below the exercise price of most outstanding
options, the value of such stock options as a means of
motivating and retaining employees has been significantly
diminished. Accordingly, the Board of Directors has concluded
that the Company needed to restore the value of the existing
stock options as a means of motivating and retaining
employees in order to promote the successful implementation
of the Company's growth strategies.
Item 6. Exhibits and Reports of Form 8-K
--------------------------------
(a) Exhibits
Exhibit No. Description
----------- -----------
10.13 Amendment No. 1 to the Severance and Settlement Agreement
and Release
10.14 Amended and Restated Nonstatutory Stock Option Agreement
for options to purchase 13,029 shares of the Company's
Common Stock ("Common Stock")
10.15 Amended and Restated Nonstatutory Stock Option Agreement
for options to purchase 10,423 shares of Common Stock
10.16 Amended and Restated Nonstatutory Stock Option Agreement
for options to purchase 19,577 shares of Common Stock
10.17 Amended and Restated Nonstatutory Stock Option Agreement
for options to purchase 24,471 shares of Common Stock
11 Computation of Earnings Per Share.
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Registrant during the quarter
ended June 30, 1997.
12
SIGNATURE
---------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NETRIX CORPORATION
Date: August 13, 1997 By: /s/ Robert W. Carroll
----------------------------------------
Robert W. Carroll
Vice President - Finance and Administration
(Principal Financial Officer)
13
EXHIBIT INDEX
-------------
Exhibit
No. Description
------- -----------
10.13 Amendment No. 1 to the Severance and Settlement Agreement and
Release
10.14 Amended and Restated Nonstatutory Stock Option Agreement for
options to purchase 13,029 shares of the Company's Common
Stock ("Common Stock")
10.15 Amended and Restated Nonstatutory Stock Option Agreement for
options to purchase 10,423 shares of Common Stock
10.16 Amended and Restated Nonstatutory Stock Option Agreement for
options to purchase 19,577 shares of Common Stock
10.17 Amended and Restated Nonstatutory Stock Option Agreement for
options to purchase 24,471 shares of Common Stock
11 Computation of Earnings Per Share.
14