1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 29, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from _____ to _____
Commission File Number 0-24918
-------
SHIVA CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-2889151
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
28 Crosby Drive, Bedford, MA 01730
(Address of principal executive offices, including Zip Code)
(617) 270-8300
(Registrant's telephone number, including area code)
----------------------------
Indicate by check mark 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
--- ---
The number of shares outstanding of the registrant's Common Stock as of June 29,
1996 was 28,493,368.
Total Number of Pages: 14
- --------------------------------------------------------------------------------
1
2
SHIVA CORPORATION
INDEX
-----
Part I Financial Information Page
----
Item 1 Consolidated Financial Statements
Consolidated Balance Sheet
June 29, 1996 and December 30, 1995 3
Consolidated Statement of Operations
Three and six months ended June 29, 1996 and July 1, 1995 4
Consolidated Statement of Cash Flows
Six months ended June 29, 1996 and July 1, 1995 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II Other Information
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 6 Exhibits and Reports on Form 8-K 12
Signature 14
2
3
SHIVA CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE RELATED DATA)
JUNE 29, DECEMBER 30,
1996 1995
-------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 95,233 $ 93,203
Short-term investments 4,992 9,125
Accounts receivable, net of allowances of $5,941 at
June 29, 1996 and $5,252 at December 30, 1995 36,260 22,982
Inventories 11,852 7,846
Prepaid expenses and other current assets 3,738 2,351
-------- --------
Total current assets 152,075 135,507
Property, plant and equipment, net 18,371 12,965
Deferred income taxes 4,219 548
Other assets 1,573 1,103
-------- --------
Total assets $176,238 $150,123
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations $ 478 $ 700
Accounts payable 13,453 9,032
Accrued compensation and benefits 6,018 5,367
Accrued expenses 11,478 7,509
Deferred revenue 2,766 3,523
-------- --------
Total current liabilities 34,193 26,131
Long-term debt and capital lease obligations 235 452
Other long-term liabilities 393 401
Deferred income taxes 235 235
-------- --------
Total liabilities 35,056 27,219
-------- --------
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares
authorized, none issued - -
Common stock, $.01 par value; 100,000,000 and
50,000,000 shares authorized, 28,493,368 and
27,960,580 shares issued and outstanding at
June 29, 1996 and December 30, 1995, respectively 285 280
Additional paid-in capital 142,383 133,457
Unrealized gain on investments 112 137
Cumulative translation adjustment (528) (586)
Accumulated deficit (1,070) (10,384)
-------- --------
Total stockholders' equity 141,182 122,904
-------- --------
Total liabilities and stockholders' equity $176,238 $150,123
======== ========
The accompanying notes are an integral part
of the consolidated financial statements.
3
4
SHIVA CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ -----------------------
JUNE 29, JULY 1, JUNE 29, JULY 1,
1996 1995 1996 1995
-------- ------- -------- -------
Revenues $51,485 $26,376 $94,794 $52,113
Cost of revenues 21,397 11,180 38,782 22,257
------- ------- ------- -------
Gross profit 30,088 15,196 56,012 29,856
------- ------- ------- -------
Operating expenses:
Research and development 5,462 3,537 10,656 6,356
Selling, general and administrative 16,801 10,280 31,506 20,032
Merger expenses 1,987 - 1,987 -
------- ------- ------- -------
Total operating expenses 24,250 13,817 44,149 26,388
------- ------- ------- -------
Income from operations 5,838 1,379 11,863 3,468
Interest income 987 475 2,331 980
Interest expense (180) (215) (298) (462)
------- ------- ------- -------
Income before income taxes 6,645 1,639 13,896 3,986
Income tax provision 1,670 666 4,582 1,631
======= ======= ======= =======
Net income $ 4,975 $ 973 $ 9,314 $ 2,355
======= ======= ======= =======
Net income per share $ 0.16 $ 0.04 $ 0.30 $ 0.09
======= ======= ======= =======
Shares used in computing net income per share 32,067 27,030 31,296 27,045
======= ======= ======= =======
The accompanying notes are an integral part
of the consolidated financial statements.
4
5
SHIVA CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
SIX MONTHS ENDED
-------------------------
JUNE 29, JULY 1,
1996 1995
-------- --------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,314 $ 2,355
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,726 1,686
Gain on sale of property, plant and equipment (42) (22)
Deferred income taxes (1,511) 95
Changes in assets and liabilities:
Accounts receivable (13,199) (896)
Inventories (4,028) (1,717)
Prepaid expenses and other current assets 444 (463)
Accounts payable 4,416 (483)
Accrued compensation and benefits 644 452
Accrued expenses 7,595 1,802
Deferred revenue (734) 1,621
Other long term liabilities (9) (12)
-------- --------
Net cash provided by operating activities 5,616 4,418
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (7,739) (2,686)
Capitalized software development costs (593) (264)
Purchases of short-term investments -- (10,334)
Proceeds from sales of short-term investments 4,108 550
Change in other assets (211) (141)
-------- --------
Net cash used by investing activities (4,435) (12,875)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments under short-term debt -- (677)
Principal payments on long-term debt and capital
lease obligations (439) (880)
Proceeds from exercise of stock options and warrants 1,338 473
-------- --------
Net cash provided (used) by financing activities 899 (1,084)
-------- --------
Effects of exchange rate changes on cash and cash equivalents (50) 22
-------- --------
Net increase (decrease) in cash and cash equivalents 2,030 (9,519)
Cash and cash equivalents, beginning of period 93,203 36,068
Elimination of Spider net cash activiy for the three months
ended April 1, 1995 -- (998)
======== ========
Cash and cash equivalents, end of period $ 95,233 $ 25,551
======== ========
The accompanying notes are an integral part
of the consolidated financial statements
5
6
SHIVA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries,
and have been prepared by the Company in accordance with generally
accepted accounting principles. In the opinion of management, these
unaudited consolidated financial statements contain all adjustments,
consisting only of those of a normal recurring nature, necessary for a
fair presentation of the Company's financial position, results of
operations and cash flows at the dates and for the periods indicated.
The results of operations for the three-month and six-month periods
ended June 29, 1996 are not necessarily indicative of the results
expected for the full fiscal year. While the Company believes that the
disclosures presented are adequate to make the information not
misleading, these consolidated financial statements should be read in
conjunction with the consolidated financial statements and related
notes included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
In June 1996, the Company issued approximately 691,587 shares of its
common stock in exchange for all the outstanding shares of AirSoft,
Inc. (the "AirSoft Acquisition"). AirSoft, Inc. ("AirSoft") designs,
manufactures and sells performance enhancement software products. The
AirSoft Acquisition has been accounted for as a pooling of interests,
and therefore the consolidated financial statements for all periods
prior to the AirSoft Acquisition have been restated to include the
accounts and operations of AirSoft with those of the Company.
Certain amounts have been reclassified with regard to presentation of
the financial information of the two companies. Revenues and net income
(loss) for each of the previously separate companies for the periods
prior to the AirSoft Acquisition are as follows (in thousands):
Year Ended Three Months Ended
---------------------------------------------- --------------------------
December 30, December 31, January 1, March 30, April 1,
1995 1994 1994 1996 1995
------------ ------------ ---------- --------- --------
(Fiscal 1995) (Fiscal 1994) (Fiscal 1993)
Revenues:
Shiva $117,721 $80,971 $61,259 $42,513 $25,703
AirSoft 860 87 3 79 34
-------- ------- ------- ------- -------
$118,581 $81,058 $61,262 $43,309 $25,737
======== ======= ======= ======= =======
Net income (loss):
Shiva $ (2,879) $ 3,881 $ 909 $ 4,366 $ 2,157
AirSoft (1,973) (1,841) (493) (27) (775)
-------- ------- ------- ------- -------
$ (4,852) $ 2,040 $ 416 $ 4,339 $ 1,382
======== ======= ======= ======= =======
In connection with the AirSoft Acquisition, the Company incurred
charges to operations of $1,987,000 in the quarter ended June 29, 1996,
the quarter in which the acquisition was consummated. Such charges
include: (a) transaction costs to effect the acquisition, consisting of
financial advisor fees of $1,350,000 plus $325,000 for legal,
regulatory and accounting expenses and (b) employee severance payments
and other miscellaneous expenses of $312,000.
2. NET INCOME PER SHARE:
Net income per share is calculated based on the weighted average number
of common shares and common equivalent shares assumed outstanding
during the period.
6
7
3. COMMON STOCK:
On April 2, 1996, the Company's Board of Directors declared a
two-for-one stock split, payable in the form of a stock dividend, on
all shares of its common stock, which was paid on April 22, 1996 to
stockholders of record on April 12, 1996. These financial statements
and related notes have been retroactively adjusted, where appropriate,
to reflect this two-for-one stock split.
At the Annual Meeting of Stockholders on May 15, 1996, the stockholders
of the Company approved (1) an increase in the number of authorized
shares of common stock of the Company from 50,000,000 to 100,000,000
shares and (2) an increase in the number of shares available for
issuance under the Company's Amended and Restated 1988 Stock Plan from
4,100,000 to 4,850,000 shares.
4. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS:
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents, and
those with maturities of greater than three months as short-term
investments. At June 29, 1996, the Company had $4,992,000 of short-term
investments, including an unrealized gain of $112,000, recorded as a
separate component of stockholders' equity in accordance with Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The Company's short-term
investments at June 29, 1996, classified as available-for-sale, consist
of U.S. Treasury securities with various maturity dates through
September 1996. Realized gains or losses on the sale of securities are
calculated using the specific identification method. The Company has
had no realized gains or losses on its securities to date.
5. INVENTORIES:
Inventories consist of the following:
June 29, December 30,
(in thousands) 1996 1995
-------- ------------
Raw materials $ 5,871 $3,137
Work-in-process 1,043 1,037
Finished goods 4,938 3,672
------- ------
$11,852 $7,846
======= ======
7
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE-MONTH PERIOD ENDED JUNE 29, 1996 COMPARED WITH THE THREE-MONTH PERIOD
ENDED JULY 1, 1995.
RESULTS OF OPERATIONS
REVENUES. Revenues increased by 95%, to $51,485,000, for the
three-month period ended June 29, 1996, from $26,376,000 in the comparable
period in fiscal 1995. This increase was principally due to higher revenues
from the Company's remote access products. Remote access product revenues
increased by 145%, to $43,639,000, in the three-month period ended June 29,
1996 from $17,782,000 during the comparable period in fiscal 1995, principally
due to higher revenues from the Company's LanRover[Registered Trademark]
product family, including the LanRover Access Switch[Trademark]. Sales to
OEM customers accounted for 24% of revenues in the three months ended
June 29, 1996 and were not significant in the comparable period in fiscal 1995.
These increases were partially offset by a 16% decline in revenues from the
Company's other communications products. The Company anticipates that revenues
from other communications products will continue to decline and will account
for a decreasing percentage of revenue in future periods. The Company provides
its distributors and resellers with product return rights for stock balancing
and product evaluation. Revenues were reduced by provisions for product returns
of $2,291,000 and $2,104,000 in the three month periods ended June 29, 1996 and
July 1, 1995, respectively, representing 4% and 7% of gross revenues,
respectively. International revenues increased to $18,390,000, or 36% of
revenues, in the three-month period ended June 29, 1996, from $12,972,000, or
49% of revenues, in the comparable period in fiscal 1995.
GROSS PROFIT. Gross profit as a percentage of revenues was 58% in each
of the three-month periods ended June 29, 1996 and July 1, 1995. Increases in
gross profit that resulted from increased revenues from the Company's LanRover
product family, which carry higher gross margins than the Company's other
products, were offset by increased revenues from lower margin OEM remote access
products.
RESEARCH AND DEVELOPMENT. Research and development expenses increased
to $5,462,000, or 11% of revenues, in the three-month period ended June 29,
1996, from $3,537,000, or 13% of revenues, during the comparable period in
fiscal 1995. The absolute increase in these expenses was primarily due to the
hiring of additional research and development staff. Research and development
expenses during the three-month period ended June 29, 1996 related primarily to
continued enhancements and development of the Company's remote access products,
including the LanRover Access Switch and the Shiva AccessPort[Trademark], a new
ISDN client router. Customer-funded development fees reimbursed to the Company,
which are reflected as an offset to research and development expenses, were
$564,000 in the three-month period ended June 29, 1996 compared to $250,000 for
the comparable period in fiscal 1995. Capitalized software development costs
were $147,000 in the three-month period ended June 29, 1996. No software
development costs were capitalized in the three-month period ended July 1,
1995. The Company anticipates continued significant investment in research and
development.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased to $16,801,000 for the three-month period
ended June 29, 1996 from $10,280,000 for the comparable period in fiscal 1995.
These expenses represented 33% and 39% of revenues in the three-month periods
ended June 29, 1996 and July 1, 1995, respectively. The absolute increase in
expenses was primarily due to worldwide expansion of the Company's sales,
marketing and administrative operations necessary to support the Company's
growth. The Company plans to further invest in its distribution channels in
order to continue its global market penetration.
MERGER EXPENSES. In connection with the AirSoft Acquisition, the
Company incurred charges to operations of $1,987,000 in the quarter ended June
29, 1996, the quarter in which the acquisition was consummated. Such charges
include: (a) transaction costs to effect the acquisition, consisting of
financial advisor fees of $1,350,000 plus $325,000 for legal, regulatory and
accounting expenses and (b) employee severance payments and other miscellaneous
expenses of $312,000. Approximately $778,000 of such expenses were paid in the
quarter ended June 29, 1996, and the remaining $1,209,000 of these charges are
expected to be cash outflows in the third quarter of fiscal 1996.
INTEREST INCOME AND EXPENSE. The Company had higher interest income
during the three-month period ended June 29, 1996, due to higher investment
balances related to funds generated by the Company's secondary public offering
in November 1995. Interest expense decreased due to the Company's repayment of
the outstanding
8
9
debt of Spider Systems, Ltd. ("Spider") assumed as part of the Company's
acquisition of Spider on August 22, 1995, (the "Spider Acquisition") with the
exception of the European Coal and Steel Community Fund loans, in the third
quarter of fiscal 1995.
INCOME TAX PROVISION. The Company's effective tax rate was 25% for the
three-month period ended June 29, 1996, compared to 41% for the comparable
period in fiscal 1995. The decrease in the effective tax rate for the
three-month period ended June 29, 1996 was due to a reduction in the net
deferred tax asset valuation allowance as a result of certain net operating
losses that could now be realized, partially offset by non-deductible merger
expenses.
SIX-MONTH PERIOD ENDED JUNE 29, 1996 COMPARED WITH THE SIX-MONTH PERIOD ENDED
JULY 1, 1995.
RESULTS OF OPERATIONS
REVENUES. Revenues increased by 82%, to $94,794,000, for the six-month
period ended June 29, 1996, from $52,113,000 in the comparable period in fiscal
1995. This increase was principally due to higher revenues from the Company's
remote access products. Remote access product revenues increased by 136%, to
$79,016,000, in the six-month period ended June 29, 1996, from $33,497,000
during the comparable period in fiscal 1995, principally due to higher revenues
from the Company's LanRover product family, including the LanRover AccessSwitch.
Sales to OEM customers accounted for 20% of revenues in the six months ended
June 29, 1996 and were not significant in the comparable period in fiscal 1995.
These increases were partially offset by a 24% decline in revenues from the
Company's other communications products. The Company anticipates that revenues
from other communications products will continue to decline and will account for
a decreasing percentage of revenue in future periods. The Company provides its
distributors and resellers with product return rights for stock balancing and
product evaluation. Revenues were reduced by provisions for product returns of
$3,978,000 and $4,077,000 in the six month periods ended June 29, 1996 and July
1, 1995, respectively, representing 4% and 7% of gross revenues, respectively.
International revenues increased to $37,247,000, or 39% of revenues, in the
six-month period ended June 29, 1996, from $27,259,000, or 52% of revenues, in
the comparable period in fiscal 1995.
GROSS PROFIT. Gross profit increased as a percentage of revenues to 59%
in the six-month period ended June 29, 1996, compared to 57% for the comparable
period in fiscal 1995. This increase was primarily attributable to increased
revenues from the Company's LanRover product family, which carry higher gross
margins than the Company's other products, partially offset by increased
revenues from lower gross margin OEM remote access products.
RESEARCH AND DEVELOPMENT. Research and development expenses increased
to $10,656,000, or 11% of revenues, in the six-month period ended June 29, 1996
from $6,356,000, or 12% of revenues, during the comparable period in fiscal
1995. The absolute increase in these expenses was primarily due to the hiring of
additional research and development staff. Research and development expenses
during the six-month period ended June 29, 1996 related primarily to continued
enhancement and development of the Company's remote access products, including
the LanRover Access Switch and the Shiva AccessPort, a new ISDN client router.
Customer-funded development fees reimbursed to the Company, which are reflected
as an offset to research and development expenses, were $851,000 in the
six-month period ended June 29, 1996, compared to $515,000 for the comparable
period in fiscal 1995. Capitalized software development costs were $593,000 in
the six-month period ended June 29, 1996 compared to $264,000 in the comparable
period in fiscal 1995.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased to $31,506,000 for the six-month period ended
June 29, 1996, from $20,032,000 for the comparable period in fiscal 1995. These
expenses represented 33% and 38% of revenues in the six-month periods ended June
29, 1996 and July 1, 1995, respectively. The absolute increase in expenses was
primarily due to worldwide expansion of the Company's sales, marketing and
administrative operations necessary to support the Company's growth. The Company
plans to further invest in its distribution channels in order to continue its
global market penetration.
MERGER EXPENSES. In connection with the AirSoft Acquisition, the
Company incurred charges to operations of $1,987,000 in the quarter ended June
29, 1996, the quarter in which the acquisition was consummated. Such charges
include: (a) transaction costs to effect the acquisition, consisting of
financial advisor fees of $1,350,000 plus $325,000 for legal, regulatory and
accounting expenses and (b) employee severance payments and other miscellaneous
expenses of $312,000. Approximately $778,000 of such expenses were paid in the
quarter ended June 29, 1996, and the remaining $1,209,000 of these charges are
expected to be cash outflows in the third quarter of fiscal 1996.
9
10
INTEREST INCOME AND EXPENSE. The Company had higher interest income
during the six-month period ended June 29, 1996, due to higher investment
balances related to funds generated by the Company's secondary public offering
in November 1995. Interest expense decreased due to the Company's repayment of
the outstanding debt of Spider assumed as part of the Spider Acquisition, with
the exception of the European Coal and Steel Community Fund loans, in the third
quarter of fiscal 1995.
INCOME TAX PROVISION. The Company's effective tax rate was 33% for the
six-month period ended June 29, 1996 compared to 41% for the comparable period
in fiscal 1995. The decrease in the effective tax rate for the six-month period
ended June 29, 1996 was due to a reduction in the net deferred tax asset
valuation allowance as a result of certain net operating losses that could now
be realized, partially offset by non-deductible merger expenses.
FOREIGN CURRENCY FLUCTUATIONS
A substantial portion of the Company's international revenues is
denominated in currencies other than the U.S. dollar and is consequently subject
to foreign exchange fluctuations. The net income impact of such fluctuations is
offset to the extent that expenses of the Company in international operations
are incurred in the same currencies as its revenues. Foreign currency
fluctuations did not have a significant impact on the comparison of results of
operations in the three-month or six-month periods ended June 29, 1996 with
those of the comparable periods in fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of June 29, 1996, the Company had $95,233,000 of cash and cash
equivalents and $4,992,000 of short-term investments. Working capital increased
to $117,882,000 at June 29,1996 from $109,376,000 at December 30, 1995.
Net cash provided by operations totaled $5,616,000 for the six-month
period ended June 29, 1996, compared with net cash provided by operations of
$4,418,000 during the comparable period in fiscal 1995. Net cash provided by
operations during the six-month period ended June 29, 1996 consisted primarily
of net income adjusted for non-cash expenses including depreciation and
amortization, and increased current liabilities, partially offset by increased
accounts receivable and inventories. The increase in accounts receivable was due
to increased revenue levels. The increase in inventories is necessary to support
the Company's revenue growth and the introduction of the LanRover Access Switch
product.
Net cash used by investing activities totaled $4,435,000 for the
six-month period ended June 29, 1996, compared to $12,875,000 during the
comparable period in fiscal 1995. Investment activity in the six months ended
June 29, 1996 consisted primarily of purchases of property and equipment to
support the Company's growth, partially offset by proceeds from short-term
investments upon maturity. Investment activity for the comparable period in
fiscal 1995 consisted primarily of purchases of short-term investments and
property, plant and equipment.
Net cash provided by financing activities, which consisted of proceeds
from stock option exercises, partially offset by payments on long-term debt and
capital lease obligations, totaled $899,000 for the six-month period ended June
29, 1996. Net cash used by financing activities was $1,084,000 during the
comparable period in fiscal 1995, and consisted primarily of payments on the
Company's outstanding debt and capital lease obligations.
The Company has a $5,000,000 unsecured revolving credit facility with a
bank which expires in June 1997. Borrowings under the revolving credit facility
bear interest at the bank's prime rate. The terms of the Credit Agreement
require the Company to maintain a minimum level of profitability and specified
financial ratios. The Company had no borrowings outstanding under this line at
June 29, 1996. The Company also has a foreign credit facility of approximately
$1,552,000, of which approximately $587,000 was available at June 29, 1996.
Available borrowings under this facility are decreased by the value of the
outstanding debt payable to the European Coal and Steel Community Fund and
guarantees on certain foreign currency transactions. The terms of the foreign
credit facility require the Company to maintain a minimum level of profitability
and specified financial ratios. There were no borrowings outstanding under this
foreign credit facility at June 29, 1996.
10
11
The Company enters into forward exchange contracts to hedge against
certain foreign currency transactions for periods consistent with the terms of
the underlying transactions. The forward exchange contracts have maturities that
do not exceed one year. At June 29, 1996, the total amount of forward exchange
transactions covered by hedging contracts was $17,020,000.
The Company believes that its existing cash and short-term investment
balances, together with available borrowings available under the Company's bank
credit facilities, are sufficient to meet the Company's cash requirements for
the foreseeable future.
FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information provided by the Company or statements
made by its employees may contain `forward-looking' information which involve
risks and uncertainties. In particular, statements contained in the Management's
Discussion and Analysis of Financial Condition and Results of Operations which
are not historical facts (including, but not limited to, statements concerning
anticipated operating expense levels and the availability of funds to meet cash
requirements) may be `forward-looking' statements. The Company's actual future
results may differ significantly from those stated in any forward-looking
statements. Factors that may cause such differences are discussed more fully in
the Company's Annual Report to Stockholders, Form 10-K and the Company's other
Securities and Exchange Commission filings.
11
12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders (the "Annual Meeting") held on
May 15, 1996, the stockholders of the Company entitled to vote thereat approved:
(i) the election of two Class II Directors. The following table sets
forth each Class II Director elected at the Annual Meeting (with the vote
results) and each Director whose term of office extended beyond the Annual
Meeting:
Name Class Will Expire For Withheld
- -------------------------------------------------------------------------------------------------
Henry F. McCance I 1998 -- --
Paul C. O'Brien I 1998 -- --
David C. Cole II 1999 10,339,058 1,094,109
Mitchell E. Kertzman II 1999 10,339,058 1,094,109
L. John Doerr III 1997 -- --
Frank A. Ingari III 1997 -- --
(ii) by vote of 9,528,702 shares of Common Stock in favor, 715,383
shares opposed, 1,114,549 shares abstaining and 74,533 broker non-votes, the
stockholders approved an amendment to the Restated Articles of Organization, as
amended, of the Company to increase the number of authorized shares of common
stock, par value $0.01 per share (the "Common Stock"), of the Company from
50,000,000 to 100,000,000 shares.
(iii) by vote of 5,745,288 shares of Common Stock in favor, 3,008,782
shares opposed, 1,115,010 shares abstaining and 1,564,087 broker non-votes, the
stockholders approved amendments to the Company's Amended and Restated 1988
Stock Plan (the "1988 Plan") to (a) increase the aggregate number of shares of
Common Stock of the Company available for issuance thereunder from 4,100,000
shares to 4,850,000 shares and (b) to extend the expiration date of the 1988
Plan from December 31, 1997 to December 31, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Lease by and between Walford Company, Landlord, and
Shiva Corporation, Tenant dated May 24, 1996.
10.2+ Amendment #2 dated June 27, 1996 to the License and
Development Agreement between Shiva Corporation and
Microsoft Corporation dated March 4, 1994.
10.3+ First Amendment dated June 28, 1996 to the
Development and License Agreement effective as of
December 30, 1994 between Shiva Corporation and
Hewlett-Packard Company.
10.4+ Letter Agreement dated March 15, 1996 between Shiva
Corporation and Northern Telecom Limited to amend the
Shiva/Nortel Contract dated May 15, 1995.
10.5+ First Amendment dated May 16, 1996 to the
Shiva/Nortel Contract dated May 15, 1995.
11.0 Statement of Computation of Earnings per share
included herein on page 14.
27.0 Financial Data Schedule.
<FN>
- --------------------
+ Confidential treatment requested.
12
13
(b) Reports on Form 8-K: The Company filed a Current Report on Form 8-K
dated June 27, 1996, as amended by Amendment No. 1 on Form 8-K/A dated July 9,
1996 and Amendment No. 2 on Form 8-K/A dated August 13, 1996. The Current
Report, as amended, announced the completion of the Company's acquisition of
AirSoft, Inc. ("AirSoft"), a Delaware Corporation, in exchange for approximately
691,587 shares of the Company's Common Stock. Amendment No. 2 to the Current
Report contained the following financial statements pursuant to Item 7 of Form
8-K for AirSoft: Balance Sheets as of December 31, 1995, December 31, 1994 and
March 31, 1996; Statements of Operations for the years ended December 31, 1995,
1994 and 1993 and the three months ended March 31, 1996 (unaudited) and March
31, 1995 (unaudited); Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994 and 1993; and Statements of Cash Flows for the years
ended December 31, 1993, 1994 and 1993 and the three months ended March 31, 1996
(unaudited) and March 31, 1995 (unaudited). Amendment No. 2 to the Current
Report also contained the following pro forma combined financial statements:
Unaudited Pro Forma Combined Balance Sheet at March 30, 1996 and Unaudited Pro
Forma Combined Statement of Operations for the years ended December 30, 1995,
December 31, 1994 and January 1, 1994 and the three months ended March 30, 1996
and April 1, 1995.
13
14
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.
SHIVA CORPORATION
Date: August 13, 1996 by: /S/ Cynthia M. Deysher
------------------------
Cynthia M. Deysher
Senior Vice President Finance and
Administration and Chief Financial Officer
(Principal Financial and Accounting Officer)
14
15
EXHIBIT INDEX
The following exhibits are filed herewith.
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ----------- ------------
10.1 Lease by and between Walford Company, Landlord, and
Shiva Corporation, Tenant dated May 24, 1996. 16
10.2+ Amendment #2 dated June 27, 1996 to the License and
Development Agreement between Shiva Corporation and
Microsoft Corporation dated March 4, 1994. 32
10.3+ First Amendment dated June 28, 1996 to the
Development and License Agreement effective as of
December 30, 1994 between Shiva Corporation and
Hewlett-Packard Company. 36
10.4+ Letter Agreement dated March 15, 1996 between Shiva
Corporation and Northern Telecom Limited to amend the
Shiva/Nortel Contract dated May 15, 1995. 37
10.5+ First Amendment dated May 16, 1996 to the
Shiva/Nortel Contract dated May 15, 1995. 39
11.0 Statement of Computation of Earnings per share
included herein on page 14. 44
27.0 Financial Data Schedule. 45
<FN>
- --------------------
+ Confidential treatment requested.
</FN>