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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): August 1, 1997
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WEBTV NETWORKS, INC.
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(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0406905
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation) Identification No.)
305 LYTTON AVENUE
PALO ALTO, CALIFORNIA 94301
(415) 326-3240
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(Address, including zip code, and telephone
number including area code, of registrant's principal
executive office)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Effective August 1, 1997 (the "Effective Time"), pursuant to an
Agreement and Plan of Recapitalization (the "Recapitalization Agreement") dated
as of April 5, 1997 and amended July 16, 1997, by and among Microsoft
Corporation ("Microsoft"), WebTV Networks, Inc. (the "Company") and certain
principal shareholders of the Company, the Company underwent a reorganization of
its capital (the "Recapitalization") whereby Microsoft became the controlling
shareholder of the Company.
As of the Effective Time, pursuant to the Recapitalization Agreement
and by virtue of the Recapitalization, the following occurred:
(i) The holders of shares of common stock of the Company, without par
value ("WNI Common Shares"), that were vested or otherwise unrestricted
received, at such holders' election, approximately $11.383 per share (net of
approximately $1.458 held in escrow pursuant to an Escrow Agreement entered into
in connection with the Recapitalization Agreement) in cash directly from
Microsoft or the equivalent value per share in new Class A Common Shares of the
Company, par value $0.001 per share (the "Class A Shares"), which are
exchangeable for common shares of Microsoft ("Microsoft Common Shares")
initially on a one-for-one basis, subject to adjustment in the event of a stock
split, combination, recapitalization of Microsoft and the like.
(ii) Holders of unvested WNI Common Shares received approximately
$11.383 per share (net of approximately $1.458 held in escrow pursuant to the
Escrow Agreement) in value per share in Class A Shares.
(iii) Holders of preferred stock of the Company, without par value
("WNI Preferred Shares"), and holders of warrants to purchase WNI Preferred
Shares ("WNI Warrants"), received either directly from Microsoft or from the
Company, at such holders' election, approximately $12.132 (net of approximately
$1.554 held in escrow pursuant to the Escrow Agreement) in cash.
Holders of options to purchase WNI Common Shares received replacement
nonqualified options to purchase Microsoft Common Shares on terms and conditions
set forth in the Recapitalization documents. In addition, certain employees and
consultants of the Company received certain additional options and other
compensation.
On the Effective Date, Microsoft transferred to the Company (i)
sufficient cash to satisfy the conversion rights of holders of WNI Preferred
Shares and WNI Warrants who did not elect to have their shares or warrants
purchased by Microsoft, and (ii) Microsoft Common Shares equal to not less than
five times the amount required to satisfy the exchange rights of the Class A
Shares. In addition, on the Effective Date, Microsoft executed an agreement
whereby, among other things, it agreed to use its reasonable best efforts to
ensure that, at all times, a sufficient number of Microsoft Common Shares or a
sufficient amount cash are available to the Company to permit the Company to
satisfy its obligation to deliver Microsoft Common Shares or cash to holders of
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Class A Shares upon the exercise of their exchange rights. In consideration for
the foregoing and other consideration, Microsoft received approximately
34,582,016 Class B Common Shares, par value $0.001 per share (the "Class B
Shares"), which equal four Class B Shares for each Class A Share issued in the
Recapitalization. Such Class B Shares represent approximately 80% of the
economic value of the Company and, because each Class A Share has one vote per
share and each Class B Share has ten votes per share, over 97% of the voting
power of the Company.
ITEM 8. CHANGE IN FISCAL YEAR
Effective August 13, 1997, the Company determined to change its fiscal
year end from March 31 to June 30, to conform to the June 30 fiscal year end of
Microsoft. The Company will file a report on Form 10-K covering the transition
period within 90 days of the effective date of such change.
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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.
WEBTV NETWORKS, INC.
Date August 13, 1997 /s/ Albert A. Pimentel
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Albert A. Pimentel, Principal Financial
and Accounting Officer
