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) May 28, 1996
SECURE COMPUTING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-27074 52-1637226
(State or other jurisdiction) (Commission File Number) (IRS Employer
of incorporation Identification No.)
2675 LONG LAKE ROAD
ROSEVILLE, MINNESOTA 55113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 628-2700
Item 5. Other Events.
On May 28, 1996, Secure Computing Corporation (the "Company") and
Border Network Technologies Inc., an Ontario, Canada corporation, ("Border")
reached a definitive agreement for the Company to acquire Border.
The Company will issue 0.5 shares of Common Stock of the Company for
each outstanding share of the capital stock of Border. The Company also will
grant options to purchase shares of Common Stock of the Company to holders of
options and warrants to purchase the capital stock of Border. Each such holder
will be granted an option to purchase 0.5 shares of the Company's Common Stock
for each share of the capital stock of Border subject to an option or warrant
held by such person. The acquisition is expected to be accounted for as a
pooling of interests and should close in late August, 1996.
On June 26, 1996, the Company reached a definitive agreement to acquire
Enigma Logic, Inc., a California corporation ("Enigma").
The Company will issue .112715 shares of Common Stock of the Company
for each outstanding share of capital stock of Enigma. The Company also will
grant options to purchase shares of Common Stock of the Company to holders of
options to purchase the capital stock of Enigma. Each such holder will be
granted an option to purchase .112715 shares of the Company's Common Stock for
each share of the capital stock of Enigma subject to an option held by such
person. The acquisition is expected to be accounted for as a pooling of
interests and should close in late August, 1996.
Item 7. Exhibits.
99.1 Press Release of Secure Computing Corporation dated May 28, 1996.
99.2 Press Release of Secure Computing Corporation dated June 26, 1996.
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, thereunto duly authorized.
SECURE COMPUTING CORPORATION
Date: July 23, 1996 By /s/ Timothy P. McGurran
-----------------------
Timothy P. McGurran
Vice President of Finance, Treasurer
and Chief Financial Officer
EXHIBIT INDEX
No. Exhibit No. Page
99.1 Press Release of Secure Computing Corporation Filed Electronically
dated May 28, 1996.
99.2 Press Release of Secure Computing Corporation Filed Electronically
dated June 26, 1996.
EXHIBIT 99.1
May 28, 1996
FROM: FOR:
Padilla Speer Beardsley Inc. Secure Computing Corp.
224 Franklin Avenue West 2675 Long Lake Road
Minneapolis, Minnesota 55404 St. Paul, Minnesota 55113
John Beardsley Tim McGurran
(612) 872-3710 (612) 628-6262
E-mail: [email protected] E-mail: [email protected]
FOR IMMEDIATE RELEASE
SECURE COMPUTING CORPORATION ANNOUNCES DEFINITIVE AGREEMENT
TO ACQUIRE BORDER NETWORK TECHNOLOGIES INC.
Merger of Top Engineering Company with Global Marketing Expert
Creates Second Largest Network Security Company
ST. PAUL, Minn./TORONTO, Ontario, May 28 -- Secure Computing Corporation
(Nasdaq: SCUR) and Border Network Technologies Inc., leading providers of
computer network security products, today announced the signing of a definitive
agreement for Secure Computing to acquire Border. The merger wi11 create the
second largest network security company. The two companies will merge their
resources and product lines under the Secure Computing name.
Closely held Border is a leading provider of business-critical network security
solutions. An expert international marketer, Border has built a global
distribution network and ranks second in the world for Internet firewall unit
sales, according to International Data Corporation. The combined entity will
rank an even stronger second.
The agreement provides for the exchange of 0.5 shares and options of Secure
Computing common stock for each of the approximately 13.1 million outstanding
shares, options and warrants of Border. As of Friday's market close, the
transaction is valued at approximately $190 million. Holders representing over
one-half of the outstanding shares of Secure Computing and approximately 70
percent of the outstanding shares of Border have entered into agreements to vote
in favor of the transaction, thus assuring the required shareholder approval on
both sides. The transaction is intended to be a tax-free reorganization and will
be accounted for as a pooling of interests. The transaction is expected to close
in August 1996.
(more)
Secure Computing Corporation
May 28, 1996
Page 2
Kermit Beseke, Secure Computing's president and CEO, said "In the Border
organization, we have found an ideal partner. This merger represents a major
advance toward our goal to be the industry's total network security solutions
provider. Secure Computing is known for its technological excellence. Border is
a superior international marketer and a strong product developer. Quite simply,
we are bringing together the largest development organization and the best
marketing organization to create the strongest publicly owned network security
company in terms of technical expertise and global marketing infrastructure and
the second largest firm in terms of revenues."
Beseke will become chairman and chief executive officer of the merged
organization. Steven Lamb, co-founder and chairman and chief executive officer
of Border, will become president and chief operating officer of the company,
directing all commercial design and marketing initiatives.
Lamb said, "We are extremely pleased to join forces with Secure Computing. This
corporate union will create a business model supported by a best-of-breed
product line and an established global channel program. The end result will be
delivery of exceptional network security products and support to our customers."
Secure Computing had total revenues of $20.7 million for the fiscal year ended
Dec. 31, l995. Border's revenues were $3.3 million (see accompanying table).
Before transaction-related expenses, the merger is expected to be modestly
accretive to earnings in fiscal 1996.
Beseke said, "As the network security market consolidates, the strongest
companies will be those with a broad product suite and international
distribution. We have been investing heavily in expanding our product suite,
recently adding intrawall, secure client and Web screening products. With
Sidewinder and BorderWare firewall products, we now offer a full array of
firewalls to meet customers' needs for multiple price points and security
functionality. By leveraging Border's well-established distribution system, we
can take our total network security solution to the global market faster and
with less cost than if we were to develop these channels ourselves."
In addition to the Border acquisition, Secure Computing recently acquired
Webster Network Strategies Inc., Naples, Fla. Webster's industry-leading
corporate Internet monitoring
(more)
Secure Computing Corporation
May 28, 1996
Page 3
and filtering software product, WebTrack, allows organizations to control access
by employees and students to the World Wide Web for productivity and liability
reasons.
The merged company will have more than 2,000 customers worldwide. Secure
Computing's headquarters will remain in St. Paul, Minn., while Webster will
continue to operate as a wholly owned subsidiary in Naples and Border will
operate as a wholly owned subsidiary of Secure Computing in the Toronto area.
The statement that the merger is expected to be modestly accretive to earnings
in fiscal 1996 is a forward-looking statement that involves risks and
uncertainties, and actual results may be materially different. Factors that
could cause actual results to differ include the successful integration of the
two corporations, retention of key employees of both companies, combining
Border's two-tiered distribution sales model with Secure's technically oriented
direct sales model, integration of Secure's type enforcement technology into
Border's BorderWare products, retention of Secure's security clearance for its
government contracts business, as well as competitive conditions in the computer
security industry.
Secure Computing's products include the Sidewinder Internet firewall; the
LOCKout system to identify and authenticate remote users; the LOCK system to
provide high-assurance, multilevel protection; information security consulting
services; and its exclusive Security Alert Service to notify customers of
viruses and other Internet security risks. Its highly security-conscious
customers are primarily top U.S. government agencies and Fortune 500 companies.
Secure Computing's Web site is located at http://www.sctc.com.
Border is a leading worldwide provider of network security products. The
company's flagship product, the BorderWare Firewall Server, is a secure,
complete and easy-to-use Internet firewall. Founded in 1994, Border services
customers across a broad spectrum of industries on six continents. Border's Web
site can be found at http://www.border.com.
(more)
Secure Computing Corporation
May 28, 1996
Page 4
Secure Computing Corporation
Financial Summary
(In thousands, except per share amounts)
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31 DECEMBER 31*
------------------ ------------------
1996 1995 1995 1994
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Products and services revenue US$ 2,002 US$ 1,097 US$ 5,863 US$ 1,486
Government contracts revenue 5,351 3,450 14,849 13,744
Total revenue 7,353 4,547 20,712 15,230
Net income (loss) (174) 67 (974) 1,493
Net income (loss) per share US$ (.03) US$ .02 US$ (.20) US$ .43
Weighted average shares outstanding 6,557 4,105 4,458 3,864
</TABLE>
Border Network Technologies Inc.
Financial Summary **
(In thousands, except per share amounts)
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31 DECEMBER 31*
------------------ ------------------
1996 1995 1995 1994
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Total revenue US$ 2,346 US$ 278 US$ 3,317 US$ 138
Net income (loss) 337 47 50 (9)
</TABLE>
* Derived from audited financial statements.
** Canadian results converted at $1.36 Canadian dollars = $1 US dollar.
EXHIBIT 99.2
FINANCIAL/INVESTOR RELATIONS: MEDIA:
Tim McGurran Deborah Brooks
Secure Computing Corporation Secure Computing Corporation
612/628-6262 612/368-7157 ext. 224
[email protected] [email protected]
John Beardsley Charlie Guyer/Tracey Davis
Padilla Speer Beardsley Inc. Neva Group
612/871-8877 617/441-4000 ext. 248/250
[email protected] [email protected]/[email protected]
Aaron Tachibana
Enigma Logic, Inc.
510/827-5707 ext. 108
[email protected]
FOR IMMEDIATE RELEASE
SECURE COMPUTING ANNOUNCES DEFINITIVE AGREEMENT
TO ACQUIRE ENIGMA LOGIC
LEADING NETWORK SECURITY VENDOR TO INCORPORATE BEST-OF-BREED
AUTHENTICATION PRODUCTS
ST. PAUL, MINN., JUNE 26, 1996 -- Secure Computing Corporation (Nasdaq: SCUR), a
leading provider of network security products, today announced a definitive
agreement to acquire closely held Enigma Logic, Inc., a Concord, Calif.-based
provider of client server user identification, authentication and authorization
(I&A) software products. This acquisition will position Secure Computing solidly
as a world leader in total network security, with products covering firewalls,
I&A, Internet monitoring and filtering, and encryption.
The acquisition of Enigma Logic by Secure Computing is consistent with its
strategic plan and is the company's third announced acquisition in the last two
months. On May 28, Secure Computing signed a definitive agreement to acquire
Border Network Technologies Inc., a Toronto-based provider of complementary
Internet firewall technology with a successful two-tiered global distribution
system. Earlier in May, Secure Computing acquired Florida-based
(more)
Secure Computing Corporation
June 26, 1996
Page 2
Webster Network Strategies, a leading provider of corporate Internet monitoring
and filtering software products. The Enigma and Border acquisitions are expected
to close late in August.
Under the terms of the new agreement, Secure Computing will issue approximately
2.69 million shares of stock and options for all outstanding shares and options
of Enigma Logic. As of Tuesday's market close, the acquisition is valued at a
total of $71.3 million.
Secure Computing had total revenues of $20.7 million for the fiscal year ended
Dec. 31, 1995. Enigma Logic's revenues were $3.9 million (see accompanying
table). The acquisition is expected to be mildly dilutive to earnings in 1996
and accretive in 1997.
"With the explosive growth of Internet and intranet environments, identification
and authentication have become essential for secure business-critical
communications," said Kermit Beseke, chairman and chief executive officer of
Secure Computing. "After closely monitoring the industry and talking with
several Internet Service Providers and major corporations, we chose Enigma Logic
as our authentication partner because of their depth of experience and proven
software solutions. Enigma's products can support up to one million users per
server and are capable of operating over many computer platforms, using the
widest array of authentication technologies and communication protocols. This
acquisition is designed to fulfill the I&A portion of our strategic plan for
providing total network security solutions."
Enigma Logic will operate as a wholly owned subsidiary of Secure Computing,
responsible for I&A and related technologies. Gerald L. Hilton, president and
chief executive officer of Enigma Logic, will become a Secure Computing
director, vice president and the general manager of the new California business
unit.
"We are very excited about merging with Secure Computing," said Hilton.
"Secure's established global channel program will enhance Enigma's ability to
distribute our products to a larger number of customers worldwide. Together we
will be able to bring forth many new and innovative enterprise security
solutions that no other company has the technological expertise to produce and
distribute." As a result of the acquisition, Secure Computing will also have
access to Enigma Logic's blue-chip installed customer base to deploy other
network security products.
(more)
Secure Computing Corporation
June 26, 1996
Page 3
Founded in 1982, Enigma Logic is a technology leader in enterprise user
authentication, authorization, and audit/accounting. The company's SafeWord(TM)
AS networ authentication server offers Dynamic Password ID, verification
regardless of how a user accesses the network -- remote dial-in, Internet or
intranet -- and can also secure local hosts and applications. Enigma Logic has
experienced rapid and profitable growth based on sales of SafeWord AS. Enigma
products are renowned for interoperability with multiple platforms, high
throughput, fault tolerance and strong centralized administration, and are the
products of choice for Fortune 500 companies such as CompuServe, Boeing,
Citibank, Novell, Sun Microsystems, Cisco, Silicon Graphics and American
Express.
As a result of the accelerated integration of the three businesses -- Secure
Computing, Border and Webster -- in the second quarter, the company said it
expects that revenues from products and services in the quarter ending June 30,
will be comparable to the $2 million in revenues from products and services in
the first quarter ended March 31. Moreover, there have been no product sales to
government agencies in the second quarter because of changes in government
spending patterns. However, these sales are still expected to occur in later
quarters this year. Product sales to government agencies totaled half a million
dollars in the first quarter.
The statement that the acquisition is expected to be mildly dilutive to earnings
in 1996 and accretive in 1997 and the comments on revenues from products and
services in the second quarter are forward-looking statements that involve risks
and uncertainties and actual results may be materially different. Factors that
could cause actual results to differ include uncertainties regarding the
successful integration of the corporations, retention of key employees,
combining of Enigma Logic's direct sales model with the new Secure Computing
sales model and the integration of Enigma Logic's technology into Secure
Computing's firewall products, as well as competitive conditions in the computer
security industry.
Headquartered in St. Paul, Minn., Secure Computing is the second largest network
security company worldwide. The new Secure Computing's suite of network security
solutions will include the award-winning Sidewinder(TM) Enterprise Security
Server and the BorderWare(TM)
(more)
Secure Computing Corporation
June 26, 1996
Page 4
product family, a total network security solution including Internet firewalls
and authentication and encryption products; WebTracker(TM), a best-of-breed
software solution for monitoring and filtering Internet access and content;
Enigma Logic's I&A security products; Security Alert Service to notify customers
of viruses and other Internet security risks; and information security
consulting services. Secure Computing will have over 2,000 customers worldwide,
including major government agencies in the U.S. and other countries, Fortune 500
companies, as well as small- to mid-sized corporations.
For more information, please visit the following Web sites: Secure Computing,
http://www.sctc.com; BorderWare, http://borderware.com; Webster Network
Strategies, http://www.webster.com; Enigma Logic, http://www.safeword.com.
Product and service names used within are trademarks, registered trademarks and
service marks of their respective owners.
Secure Computing Corporation
June 26, 1996
Page 5
Secure Computing Corporation
Financial Summary
(In thousands, except per share amounts)
Condensed Statements Of Operations
<TABLE>
<CAPTION>
Three Month Period Ending Year Ended
March 31 December 31*
------------------ ------------------
1996 1995 1995 1994
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Products and services revenue $ 2,002 $ 1,097 $ 5,863 $ 1,486
Government contracts revenue 5,351 3,450 14,849 3,744
Total revenue 7,353 4,547 20,712 15,230
Net income (loss) (174) 67 (974) 1,493
Net income (loss) per share (.03) .02 (.20) .43
Weighted average shares outstanding 6,557 4,105 4,458 3,864
</TABLE>
Enigma Logic, Inc.
Financial Summary
(in thousands)
Condensed Statements of Operations
<TABLE>
<CAPTION>
Three Month Period Ending Year Ended
March 31 December 31*
------------------ ------------------
1996 1995 1995 1994
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Total revenue $ 1,395 $ 1,499 $ 3,901 $ 2,426
Net income 69 538 292 57
</TABLE>
Border Network Technologies Inc.
Financial Summary **
(in thousands)
Condensed Statements of Operations
<TABLE>
<CAPTION>
Three Month Period Ending Year Ended
March 31 December 31*
------------------ ------------------
1996 1995 1995 1994
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Total revenue $ 2,346 $ 278 $ 3,317 $ 138
Net income (loss) 337 47 50 (9)
</TABLE>
* Derived from audited financial statements
** Canadian results converted at $1.36 Canadian dollars = $1 US dollar
