<PAGE>
-------------------------------------------------------------------------------
UNITED STATES
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 30, 2000
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934
For the transition period from ______ to ______.
Commission File Number: 0-28100
-------------
AXENT TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 87-0393420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 Research Boulevard
Suite 200
Rockville, Maryland 20850
(Address of principal executive offices)
(301) 258-5043
(Registrant's telephone number including area code)
----------------
Indicate by check mark whether 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______
-----
As of August 10, 2000, there were 28,933,633 shares outstanding of the
Registrant's Common Stock, par value $.02 per share.
--------------------------------------------------------------------------------
<PAGE>
AXENT TECHNOLOGIES, INC.
------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page
Number
------
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets as of 4
June 30, 2000 (unaudited) and December 31, 1999
Unaudited Condensed Consolidated Statements of Operations 5
for the three and six months ended June 30, 2000 and 1999
Unaudited Condensed Consolidated Statements of Cash Flows 6
for the six months ended June 30, 2000 and 1999
Unaudited Condensed Consolidated Statements of Comprehensive 7
Income (Loss) for the three and six months ended June 30, 2000
and 1999
Notes to Unaudited Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of 11
Financial Condition and Results of Operations
Item 3. Qualitative and Quantitative Disclosures About Market Risk 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 23
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1.
-------
FINANCIAL STATEMENTS
The financial statements set forth below at June 30, 2000 and for the three and
six month periods ended June 30, 2000 and 1999 are unaudited and have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Certain information and note disclosures normally
included in annual financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to those rules and regulations.
These financial statements should be read in conjunction with the latest audited
consolidated financial statements and the notes thereto for the fiscal year
ended December 31, 1999, which are included in the Company's Annual Report on
Form 10-K as filed with the SEC on April 4, 2000.
3
<PAGE>
AXENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
June 30,
2000 December 31,
(unaudited) 1999
----------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 56,751 $ 61,534
Marketable securities 64,558 47,331
Accounts receivable, net 30,002 35,954
Other current assets 4,923 3,696
----------------- ----------------
Total current assets 156,234 148,515
Property and equipment, net 13,664 12,427
Goodwill and other intangible assets 26,376 29,554
Other assets 8,595 8,384
----------------- ----------------
Total assets $ 204,869 $ 198,880
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 17,436 $ 23,266
Deferred revenue 19,536 17,935
----------------- ----------------
Total current liabilities 36,972 41,201
Long term debt, net of current maturities -- 620
----------------- ----------------
Total liabilities 36,972 41,821
----------------- ----------------
Stockholders' equity:
Preferred stock, $0.02 par value (5,000,000 shares authorized, none
issued). -- --
Common stock, $0.02 par value (50,000,000 shares authorized,
28,864,375 and 28,047,696 issued and outstanding for the
six months ended June 30, 2000 and year ended
December 31, 1999, respectively). 577 561
Additional paid-in capital 201,516 191,272
Comprehensive income and other (1,247) (623)
Accumulated deficit (32,949) (34,151)
----------------- ----------------
Total stockholders' equity 167,897 157,059
----------------- ----------------
Total liabilities and stockholders' equity $ 204,869 $ 198,880
================= ================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
<PAGE>
AXENT TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------------- -----------------------------
2000 1999 2000 1999
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net revenues:
Product licenses $ 22,012 $ 17,545 $ 41,825 $ 32,731
Services 12,041 8,884 22,571 15,142
-------------- ------------- ------------- ------------
Total net revenues 34,053 26,429 64,396 47,873
Cost of net revenues 5,437 3,721 10,084 6,864
-------------- ------------- ------------- ------------
Gross profit 28,616 22,708 54,312 41,009
Operating expenses:
Sales and marketing 16,525 15,659 31,788 29,315
Research and development 7,028 6,922 13,824 13,216
General and administrative 3,450 2,667 6,861 5,369
Amortization of acquired intangible assets 1,473 1,309 2,952 1,460
Acquisition-related charges -- -- -- 3,753
-------------- ------------- ------------- ------------
Total operating expenses 28,476 26,557 55,425 53,113
-------------- ------------- ------------- ------------
Income (loss) before interest and taxes 140 (3,849) (1,113) (12,104)
Interest income 1,392 1,050 2,721 2,118
Income tax (provision) benefit (363) 598 (406) 1,717
-------------- ------------- ------------- ------------
Net income (loss) $ 1,169 $ (2,201) $ 1,202 $ (8,269)
============== ============= ============= ============
Net income (loss) per common share (basic) $ 0.04 $ (0.08) $ 0.04 $ (0.30)
============== ============= ============= ============
Number of shares used in computing net income (loss) per
common share outstanding (basic) 28,820 27,843 28,630 27,124
============== ============= ============= ============
Net income (loss) per common share (diluted) $ 0.04 $ (0.08) $ 0.04 $ (0.30)
============== ============= ============= ============
Number of shares used in computing net income (loss) per
common share outstanding (diluted) 29,584 27,843 29,732 27,124
============== ============= ============= ============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
5
<PAGE>
AXENT TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
-----------------------------------
2000 1999
--------------- ----------------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ 1,202 $ (8,269)
Non-cash items:
Depreciation and amortization 5,649 3,143
Deferred income taxes -- (2,141)
Write-off of in process research and development -- 2,000
Change in assets and liabilities (176) 3,251
--------------- ----------------
Net cash provided by (used for) operating activities 6,675 (2,016)
--------------- ----------------
Cash flow from investing activities:
Capital expenditures (3,727) (3,140)
Purchases of marketable securities (187,315) (2,067)
Maturity of marketable securities 171,074 25,067
Payments for business acquisitions, net of cash acquired (506) (2,160)
--------------- ----------------
Net cash (used for) provided by investing activities (20,474) 17,700
--------------- ----------------
Cash flow from financing activities:
Proceeds from issuance of common stock 10,260 2,579
Principal payments on note payable (620) --
--------------- ----------------
Net cash provided by financing activities 9,640 2,579
--------------- ----------------
Effect of exchange rate changes on cash (624) (313)
--------------- ----------------
Net (decrease) increase in cash and cash equivalents (4,783) 17,950
Cash and cash equivalents, beginning of period 61,534 80,035
--------------- ----------------
Cash and cash equivalents, end of period $ 56,751 $ 97,985
=============== ================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
6
<PAGE>
AXENT TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------------ -------------------------------
2000 1999 2000 1999
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net income (loss) $ 1,169 $ (2,201) $ 1,202 $ (8,269)
Currency translation effects (545) 59 (624) (313)
------------ -------------- ------------- --------------
Comprehensive income (loss) $ 624 $ (2,142) $ 578 $ (8,582)
============ ============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
7
<PAGE>
AXENT TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
Basis of Presentation
AXENT Technologies, Inc. and its wholly owned subsidiaries (collectively, the
"Company" or "AXENT") is a global leader in information security and provides
e-security solutions that maximize our customers' business advantage. AXENT
delivers integrated products and expert services to assess, protect, enable and
manage business processes and information assets. Through our unique Lifecycle
Security(TM) methodology, combined with Smart Security Architecture, we deliver
the "right" level of security for customers. Award-winning solutions offer
assessment and policy compliance, firewall, intrusion detection, authentication,
VPN, Web-access, single sign-on and user administration for the entire
enterprise.
The accompanying unaudited condensed consolidated financial statements reflect
all the adjustments, consisting of normal recurring adjustments, that, in the
opinion of management, are necessary for a fair presentation of the results for
the interim periods presented. The results for the three and six month periods
ended June 30, 2000 may not necessarily be indicative of the results for the
entire year or any future period. The December 31, 1999 condensed consolidated
balance sheet was derived from audited financial statements as of the same date
but does not include all disclosures required by accounting principles generally
accepted in the United States.
These financial statements should be read in conjunction with the Company's
annual audited financial statements and notes thereto for the year ended
December 31, 1999, which are included in the Company's Annual Report on Form
10-K filed with the SEC on April 4, 2000.
Business Combinations
On March 31, 1999, the Company completed the acquisition of United Kingdom-based
CKS Limited, the parent of PassGo Technologies Limited, a worldwide leader in
centralized user access and control, single sign-on and password synchronization
products. In conjunction with the acquisition, the Company issued 1,486,146
shares of common AXENT stock to holders of shares and warrants of CKS Limited
and agreed to exchange stock options to purchase 64,157 AXENT shares for all
outstanding CKS Limited stock options. The transaction was accounted for using
the purchase method of accounting and accordingly, the net assets and operating
results of PassGo have been included in the accompanying consolidated financial
statements from the date of acquisition. The purchase price, including
transaction costs of $6.0 million, was approximately $30.96 million. The
allocation of the purchase price was based on the results of an independent
third party valuation and allocated to assets acquired and liabilities assumed,
based on their respective fair values at the acquisition date. The purchase
price allocation resulted in goodwill and other intangibles of approximately
$27.8 million, which is being amortized, on a straight-line basis over their
useful lives, of between three and seven years. During 1999, the Company
recorded a charge for acquired in-process research and development of
approximately $2.0 million related to PassGo. The charge reflects technology
acquired for which technological feasibility had not been reached and for which
there is no alternative future use.
On January 12, 1999, the Company completed its merger with Internet Tools, Inc.
("ITI") in which it acquired 100% of the outstanding stock of ITI for 703,194
shares of AXENT common stock and assumed stock options covering a total of
46,806 shares of AXENT common stock. The Company incurred approximately $1.75
million in acquisition-related transaction and other related costs in connection
with the merger. The business combination was accounted for by the pooling of
interests method of accounting and, accordingly, the assets, liabilities, and
stockholders' equity of ITI were combined with the Company's respective accounts
at recorded values. This acquisition did not meet the criteria for a significant
business combination and, as such, pro forma disclosures are not included
herein.
Net Income Per Common Share
Basic earnings per common share have been computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share have been computed by dividing net
8
<PAGE>
income by the weighted average number of common shares outstanding plus an
assumed increase in common shares outstanding for dilutive securities.
Potentially dilutive securities consist of options and warrants to acquire
common stock for a specified price and their dilutive effect is measured using
the treasury method. Potentially dilutive securities are not included in the
diluted earnings per share calculations for the three and six months ended June
30, 1999 as their inclusion would be anti-dilutive to the basic loss per share
calculations.
Recent Accounting Pronouncements
On January 1, 1999, the Company adopted the Accounting Standards Executive
Committee of the American Institute of Certified Public Accountants (the
"AICPA") Statement of Position ("SOP") No. 98-5, "Reporting on the Costs of
Start-Up Activities," issued by the Accounting Standards Executive Committee of
the AICPA. SOP No. 98-5 established standards on accounting for start-up and
organization costs and, in general, requires such costs to be expensed as
incurred. The adoption of SOP No. 98-5 did not impact the Company's financial
position or results of operations.
In December 1998, the AICPA issued SOP 98-9, "Modification of SOP 97-2, Software
Revenue Recognition, With Respect to Certain Transactions." SOP 98-9 modifies
SOP 97-2 by requiring revenue to be recognized using the "residual method" if
certain conditions are met. SOP 98-9 is effective for the Company's 2000
financial statements. The Company adopted SOP 98-9 on January 1, 2000.
The Financial Accounting Standards Board (the "FASB") issued Statement of
Financial Accounting Standards ("'SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes a reporting standard for
derivative instruments which will require the Company to record all derivatives
as either assets or liabilities and requires that those instruments are recorded
at their fair value. During June 1999, the FASB issued SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities--Deferral of the Effective
Date of SFAS No. 133". This statement defers the effective date of SFAS 133 to
2001. The Company plans to adopt SFAS No. 133 for the fiscal year beginning
January 1, 2001. The Company believes the adoption of SFAS 133 will not have a
material effect on the consolidated financial statements.
In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 became effective
January 1, 1999. The adoption of SOP 98-1 did not impact the Company's financial
position or results of operations.
Information Concerning Business Segments
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 established standards for
reporting information about operating segments in annual financial statements
and requires selected information about operating segments in interim financial
reports issued to stockholders. Operating segments are defined as components of
an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker, or decision making
group, in deciding how to allocate resources and in assessing performance.
The Company's approach to information security is to develop, market and support
security software products that perform a broad range of security functions and
to provide consulting services to address customers' security needs. As such,
the Company has two reportable segments: a software product segment and a
consulting services segment. The software product segment includes products
which provide security assessment and policy management, host and network based
intrusion detection, systems and network access control, data confidentiality,
user administration, activity monitoring, secure authentication solutions for
remote network access and virtual private networking capabilities for remote
users and remote sites. The consulting services segment includes training and
"Lifecycle Security Services" designed to help organizations develop a framework
and roadmap for assessing potential vulnerabilities; developing security
policies, guidelines, practices and metrics; selecting and implementing
solutions; conducting training; and ensuring appropriate monitoring and
compliance.
The Company evaluates the performance of its operating segments based on income
before royalty, interest, taxes and gains on the sale of marketable securities.
Intersegment sales and transfers are not significant.
9
<PAGE>
Summarized financial information concerning the Company's reportable segments is
shown in the following table. The "Other" segment includes the consulting
services segment as it is below the quantitative thresholds, corporate related
items and, as it relates to segment profit (loss), income and expense not
allocated to reportable segments.
<TABLE>
<CAPTION>
For the Three Months For the Six Months
(amounts in thousands) Ended June 30, Ended June 30,
--------------------------------- ------------------------------------
2000 1999 2000 1999
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net revenues:
Software products $ 31,201 $ 24,670 $ 59,634 $ 44,755
Other 2,852 1,759 4,762 3,118
-------------- -------------- --------------- ---------------
Total net revenues $ 34,053 $ 26,429 $ 64,396 $ 47,873
============== ============== =============== ===============
Segment operating loss:
Software products $ 1,033 $ (1,829) $ 1,283 $ (3,775)
Other (893) (2,020) (2,396) (8,329)
-------------- -------------- --------------- ---------------
Total segment operating loss $ 140 $ (3,849) $ (1,113) $ (12,104)
============== ============== =============== ===============
Total assets:
Software products $ 43,104 $ 37,659
Other 161,765 149,614
---------------- ---------------
Total assets $204,869 $ 187,273
================ ===============
</TABLE>
The Company's areas of operations are principally in the United States.
Operations outside of the United States are worldwide but primarily in the
United Kingdom, Europe and Asia. Foreign operations' revenue, profit and
identifiable assets are shown in the following table.
<TABLE>
<CAPTION>
For the Three Months For the Six Months
(amounts in thousands) Ended June 30, Ended June 30,
-------------------------------- -------------------------------------
2000 1999 2000 1999
------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Net revenues:
U.S. $ 24,455 $ 18,646 $ 46,408 $ 34,670
International 9,598 7,783 17,988 13,203
------------- -------------- --------------- ----------------
Total net revenues $ 34,053 $ 26,429 $ 64,396 $ 47,873
============= ============== =============== ================
Profit (loss):
U.S. $ 630 $ (2,517) $ 1,733 $ (8,540)
International 539 316 (531) 271
------------- -------------- --------------- ----------------
Total profit (loss) $ 1,169 $ (2,201) $ 1,202 $ (8,269)
============= ============== =============== ================
Total assets:
U.S. $ 181,419 $ 168,926
International 23,450 18,347
--------------- ----------------
Total assets $ 204,869 $ 187,273
=============== ================
</TABLE>
Subsequent Events
On July 26, 2000, AXENT entered into a definitive merger agreement which will
result in the Company being acquired by Symantec Corporation ("Symantec"), a
provider of broad range content and network security solutions to individuals
and enterprises. The agreement has been approved by the Boards of Directors of
both companies, and provides that this acquisition will be treated as a
stock-for-stock transaction, which was valued at approximately $975 million at
the time of the announcement. Under the terms of the agreement, AXENT
shareholders will receive
10
<PAGE>
0.50 shares of Symantec common stock for each share of AXENT common stock in a
tax-free exchange. Symantec will issue approximately 15.3 million shares of
common stock to AXENT shareholders to complete the transaction. Completion of
the acquisition is subject to customary conditions, including the approval of
the transaction by the shareholders of both companies, the receipt of necessary
governmental approvals and the expiration of applicable waiting period under the
Hart-Scott-Rodino Act. The transaction will be accounted for using the purchase
method of accounting whereby AXENT net assets and operating results will be
included in the consolidated financial statements of Symantec from the date of
acquisition.
Item 2.
------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Portions of this report contain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933, which involve risk and uncertainties. These
forward-looking statements are identified by the use of the words "believes",
"expects", "anticipates", "will", "would" or similar expressions that
contemplate future events. Our actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those identified below in
"Certain Factors Affecting Future Performance" and in AXENT's Form 10-K for the
year ended December 31, 1999 filed with the SEC on April 4, 2000 under the
captions "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Certain Factors Affecting Future Performance" and
"Business--Certain Factors That May Affect Future Results". The Company assumes
no obligation to update or correct forward-looking statements due to events or
changes after the date of this report.
Overview
We are a global leader in information security and provides e-security solutions
that maximize our customers' business advantage. We deliver integrated products
and expert services to assess, protect, enable and manage business processes and
information assets. Through our unique Lifecycle Security(TM) methodology,
combined with our Smart Security Architecture, solutions are provided that
permit customers to select the right level of security for their business needs.
Our award-winning solutions offer assessment and policy compliance, firewall,
intrusion detection, authentication, virtual private network capabilities,
Web-access security, single sign-on and user administration for the entire
enterprise.
11
<PAGE>
Results of Operations
The following table sets forth certain unaudited condensed consolidated
statement of operations data expressed as a percentage of total revenues for the
periods indicated:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------------- ---------------------------
2000 1999 2000 1999
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenues:
Product licenses 64.6% 66.4% 64.9% 68.4%
Services 35.4 33.6 35.1 31.6
----- ----- ----- -----
Total net revenues 100.0 100.0 100.0 100.0
Cost of net revenues 16.0 14.1 15.7 14.3
----- ----- ----- -----
Gross profit 84.0 85.9 84.3 85.7
Operating expenses:
Sales and marketing 48.5 59.2 49.2 61.2
Research and development 20.6 26.2 21.5 27.6
General and administrative 10.1 10.1 10.7 11.2
Amortization of acquired intangible assets 4.4 5.0 4.6 3.0
Acquisition-related charges -- -- -- 7.8
----- ----- ----- -----
Total operating expenses 83.6 100.5 86.0 110.8
----- ----- ----- -----
Income (loss) before interest and taxes 0.4 (14.6) (1.7) (25.1)
Interest income 4.1 4.0 4.2 4.4
Income tax benefit (provision) (1.1) 2.3 (0.6) 3.6
----- ----- ----- -----
Net income (loss) 3.4% (8.3)% (1.9)% (17.1)%
===== ===== ===== =====
</TABLE>
Three Months Ended June 30, 2000 Compared to
Three Months Ended June 30, 1999
Net Revenues
Our net revenues increased approximately 28.8%, or $7.62 million from $26.43
million for the three months ended June 30, 1999 to $34.05 million for the three
months ended June 30, 2000. Our revenues are subject to a number of risks and
uncertainties, including but not limited to, the level of demand for our
products; the volume and timing of customer orders, many of which come at the
end of a quarter; product and price competition; our ability to maintain and
expand our domestic and international sales and marketing organizations; our
ability to develop new and enhanced products; the availability of personnel and
our ability to attract and retain key personnel; the mix of distribution
channels through which our products are sold; the extent to which unauthorized
access and use of online information is perceived as a threat to information
security; customer budgets and priorities; seasonal trends in customer
purchasing; foreign currency exchange rates; general economic factors; and risks
associated with the rapid change in technology. In addition, the value of
individual transactions as a percentage of our actual or anticipated quarterly
revenues can be substantial and the failure to close such transactions may have
a material adverse impact on our operating results.
Our net revenues from product licenses increased approximately 25.5%, or $4.46
million, from $17.55 million for the three months ended June 30, 1999 to $22.01
million for the three months ended June 30, 2000. For those three-month periods
ended June 30, 1999 and 2000, net revenues from product licenses represented
66.4% and 64.6%, respectively, of total net revenues. The increase in product
licenses is primarily attributable to increases in the number and size of
transactions, multiple product transactions and growth in our strategic product
areas (vulnerability assessment, intrusion detection and firewalls).
12
<PAGE>
Our net revenues from services increased approximately 35.5%, or $3.16 million,
from $8.88 million for the three months ended June 30, 1999 to $12.04 million
for the three months ended June 30, 2000, representing 33.6% and 35.4% of total
net revenues for the three months ended June 30, 1999 and 2000, respectively.
The increase in services revenues is primarily attributable to the increases in
consulting services, customer training courses and customers under maintenance
contracts.
Revenues derived from North American and international operations as a percent
of total revenues were 72% and 28%, respectively for the three months ended June
30, 2000 as compared to 71% and 29%, respectively for the three months ended
June 30, 1999.
Cost of Net Revenues
Our cost of net revenues includes the cost of media, product packaging,
documentation and other production costs, product royalties, and the direct and
indirect costs of providing technical support, training, and consulting services
to our customers. Cost of net revenues increased approximately 46.1%, or $1.72
million, from $3.72 million for the three months ended June 30, 1999 to $5.44
million for the three months ended June 30, 2000, representing 14.1% and 16.0%
of net revenues for the three months ended June 30, 1999 and 2000, respectively.
The increase in the cost of net revenues is primarily attributable to the
increase in staff of our customer support and consulting services operations
necessary to support a larger installed customer base as well as additional
products offered by our company. The increase in the cost of net revenues as a
percentage of revenues is primarily attributable to the increased costs
associated with supporting a larger customer base and the increased percentage
of net revenues derived from consulting services, which typically have lower
margins. Cost of net revenues, as a percentage of revenues, may fluctuate from
period to period due, among other things, to a change in the mix of license
revenues and consulting service revenues, a change in the number or size of
transactions recorded in a quarter, integration of acquired operations or
products, or an increase or decrease in licenses of royalty-bearing products.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel costs, including
commissions, salaries, benefits and bonuses, travel, telephone, costs of
advertising, public relations seminars and trade shows. Sales and marketing
expenses increased 5.5%, or $866,000, from $15.66 million for the three months
ended June 30, 1999 to $16.53 million for the three months ended June 30, 2000,
representing 59.2% and 48.5% of total net revenues for 1999 and 2000,
respectively. The increase in dollar amount is due to an increase in staff and
marketing programs to support our sales and marketing activities. The decrease
in sales and marketing as a percentage of total net revenues is primarily due to
a greater increase in the growth of total net revenues in the three months ended
June 30, 2000. We currently anticipate that the dollar amount of sales and
marketing expenses will increase as we continue to hire necessary staff and
expand our sales and marketing activities to promote expansion of our business.
Research and Development
Research and development expenses consist primarily of personnel costs,
including salaries, benefits and bonuses, travel and other personnel-related
expenses of the employees engaged in ongoing research and development projects
and third party development contracts. Costs related to research and development
of products are expensed as incurred. Research and development expenses
increased 1.5%, or $106,000, from $6.92 million for the three months ended June
30, 1999 to $7.03 million for the three months ended June 30, 2000, representing
26.2% and 20.6% of total net revenues for the three months ended June 30, 1999
and 2000, respectively. The increase in dollar amount resulted from the addition
of staff and the use of outside consultants needed to develop, maintain and
enhance our software products. The decrease in research and development as a
percentage of total net revenues is primarily due to a greater increase in the
growth of total net revenues. We currently anticipate that the dollar amount of
research and development expenses will increase as we continue to commit
substantial resources to research and development in future periods.
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General and Administrative
General and administrative expenses consist primarily of personnel costs,
including salaries, benefits and bonuses, travel and related costs for
management, finance and accounting, legal and other professional services.
General and administrative expenses increased 29.4%, or $783,000, from $2.67
million for the three months ended June 30, 1999 to $3.45 million for the three
months ended June 30, 2000, representing 10.1% of total net revenues for both
1999 and 2000, respectively. The increase in dollar amount is primarily a result
of additional staff and investments in corporate infrastructure and information
systems needed to support our operations and the integration of acquisitions. We
currently anticipate that the dollar amount of general and administrative
expenses will increase as we continue to invest in the corporate infrastructure.
Amortization of Acquired Intangible Assets
Amortization of intangible assets consists primarily of the amortization of
purchased goodwill and other purchased intangible assets. Amortization of
intangible assets expenses increased $164,000, from $1.31 million for the three
months ended June 30, 1999 to $1.47 million for the three months ended June 30,
2000. The increase in dollar amount is primarily due to the amortization of
goodwill and intangibles resulting from the amortization of technology purchased
from Compaq Computer Corporation in the third quarter of 1999, which is being
amortized ratably over three years.
Income (loss) from Continuing Operations before Interest and Taxes
Profit from continuing operations before interest and taxes was $140,000 for the
three months ended June 30, 2000 and loss from continuing operations before
interest and taxes was $3.85 million for the three months ended June 30, 1999.
The profit in the second quarter of 2000 is primarily attributable to the growth
in net revenues, while the loss in the second quarter of 1999 was primarily
attributable to a decrease in license revenues (compared to the increase in
operating expenses).
Interest Income
Interest income increased 32.6%, or $342,000, from $1.05 million for the three
months ended June 30, 1999 to $1.39 million for the three months ended June 30,
2000. The increase in interest income is primarily due to the increase in cash
and cash equivalents and our investments are yielding a higher return due to an
increase in interest rates. It is currently our policy to hold securities until
they mature. Interest income and other may fluctuate from period to period due
to changes in investment mix, varying cash balances and fluctuations in interest
rates.
Income Taxes
We account for income taxes under SFAS 109. Under SFAS 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the carrying amounts of existing assets and liabilities for
financial statement purposes and their respective tax basis. The Company records
a valuation allowance for deferred tax assets when in management's judgment it
is more likely than not that all or a portion of the deferred asset will not be
realized.
We recorded a tax benefit of $598,000 for the three months ended June 30, 1999
related to our taxable loss from operations and a tax provision of $363,000 for
the three months ended June 30, 2000 related to our taxable income from
operations.
Net Income (Loss)
As a result of the above, we recorded a profit of $1.17 million for the three
months ended June 30, 2000 compared to a loss of $2.20 million for the three
months ended June 30, 1999. This increase is primarily attributable to the
growth in net revenues.
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Six Months Ended June 30, 2000 Compared to
Six Months Ended June 30, 1999
Net Revenues
Our net revenues increased approximately 34.5%, or $16.53 million from $47.87
million for the six months ended June 30, 1999 to $64.40 million for the six
months ended June 30, 2000. Our revenues are subject to a number of risks and
uncertainties, including but not limited to, the level of demand for our
products; the volume and timing of customer orders, many of which come at the
end of a quarter; product and price competition; our ability to maintain and
expand our domestic and international sales and marketing organizations; our
ability to develop new and enhanced products; the availability of personnel and
our ability to attract and retain key personnel; the mix of distribution
channels through which our products are sold; the extent to which unauthorized
access and use of online information is perceived as a threat to information
security; customer budgets and priorities; seasonal trends in customer
purchasing; foreign currency exchange rates; general economic factors; and risks
associated with the rapid change in technology. In addition, the value of
individual transactions as a percentage of our actual or anticipated quarterly
revenues can be substantial and the failure to close such transactions may have
a material adverse impact on our operating results.
Our net revenues from product licenses increased approximately 27.8%, or $9.10
million, from $32.73 million for the six months ended June 30, 1999 to $41.83
million for the six months ended June 30, 2000. For those six-month periods
ended June 30, 1999 and 2000, net revenues from product licenses represented
68.4% and 64.9%, respectively, of total net revenues. The increase in product
licenses is primarily attributable to the increase in the number and size of
transactions, multiple product transactions and growth in our strategic product
areas (vulnerability assessment, intrusion detection and firewalls).
Our net revenues from services increased approximately 49.1%, or $7.43 million,
from $15.14 million for the six months ended June 30, 1999 to $22.57 million for
the six months ended June 30, 2000, representing 31.6% and 35.1% of total net
revenues for the six months ended June 30, 1999 and 2000, respectively. The
increase in services revenues is primarily attributable to the increases in
consulting services, customer training courses and customers under maintenance
contracts.
Revenues derived from North American and international operations as a percent
of total revenues were 72% and 28%, respectively for the six months ended June
30, 2000 and 1999.
Cost of Net Revenues
Cost of net revenues increased approximately 46.9%, or $3.22 million, from $6.86
million for the six months ended June 30, 1999 to $10.08 million for the six
months ended June 30, 2000, representing 14.3% and 15.7% of net revenues for the
six months ended June 30, 1999 and 2000, respectively. The increase in the cost
of net revenues is primarily attributable to the increase in staff of our
customer support and consulting services operations necessary to support a
larger installed customer base as well as additional products offered by our
company. The increase in the cost of net revenues as a percentage of revenues is
primarily attributable to the increased costs associated with supporting a
larger customer base and the increased percentage of net revenues derived from
consulting services, which typically have lower margins. Cost of net revenues,
as a percentage of revenues, may fluctuate from period to period due, among
other things, to a change in the mix of license revenues and consulting service
revenues, a change in the number or size of transactions recorded in a quarter,
integration of acquired operations or products, or an increase or decrease in
licenses of royalty-bearing products.
Sales and Marketing
Sales and marketing expenses increased 8.4%, or $2.47 million, from $29.32
million for the six months ended June 30, 1999 to $31.79 million for the six
months ended June 30, 2000, representing 61.2% and 49.2% of total net revenues
for 1999 and 2000, respectively. The increase in dollar amount is due to an
increase in staff and marketing programs to support our sales and marketing
activities. The decrease in sales and marketing as a percentage of total net
revenues is primarily due to a greater increase in the growth of total net
revenues in the first six months of 2000. We currently anticipate that the
dollar amount of sales and marketing expenses will increase as we continue to
hire necessary staff and expand our sales and marketing activities to promote
expansion of our business.
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<PAGE>
Research and Development
Research and development expenses increased 4.6%, or $608,000, from $13.22
million for the six months ended June 30, 1999 to $13.82 million for the six
months ended June 30, 2000, representing 27.6% and 21.5% of total net revenues
for the six months ended June 30, 1999 and 2000, respectively. The increase in
dollar amount resulted from the addition of staff, the addition of costs
associated with the acquired operations of Internet Tools and PassGo, and use of
outside consultants needed to develop, maintain and enhance our software
products. The decrease in research and development as a percentage of total net
revenues is primarily due to a greater increase in the growth of total net
revenues in the first six months of 2000. We currently anticipate that the
dollar amount of research and development expenses will increase as we continue
to commit substantial resources to research and development in future periods.
General and Administrative
General and administrative expenses increased 27.8%, or $1.49 million, from
$5.37 million for the six months ended June 30, 1999 to $6.86 million for the
six months ended June 30, 2000, representing 11.2% and 10.7% of total net
revenues for 1999 and 2000, respectively. The increase in dollar amount is
primarily a result of additional staff and investments in corporate
infrastructure and information systems needed to support our operations. The
decrease in the percentage of net revenues is primarily due to a greater
increase in the growth of total net revenues in the first six months of 2000. We
currently anticipate that the dollar amount of general and administrative
expenses will increase as we continue to invest in the corporate infrastructure.
Amortization of Acquired Intangible Assets
Amortization of intangible assets expenses increased $1.49 million, from $1.46
million for the six months ended June 30, 1999 to $2.95 million for the six
months ended June 30, 2000. The increase in dollar amount is primarily due to
the amortization of goodwill and intangibles resulting from the acquisition of
PassGo as well as the amortization of technology purchased from Compaq Computer
Corporation in the third quarter of 1999, which are being amortized ratably over
six to seven years.
Acquisition-Related Charges
For the six months ended June 30, 1999, we incurred charges of approximately
$1.75 million for severance, investment banking, legal and accounting fees, and
other costs related to the merger with Internet Tools, and approximately $2.0
million of in-process research and development expense in connection with the
acquisition of PassGo.
Loss from Continuing Operations before Interest and Taxes
Loss from continuing operations before interest and taxes was $1.11 million and
$12.10 million for the six months ended June 30, 2000 and 1999, respectively.
The loss in the six months ended June 30, 2000 is primarily attributable to
amortization charges of $2.95 million offset by the growth in net revenues,
while the loss in the six months ended June 30, 1999 was primarily attributable
to a decrease in license revenues (compared to the increase in operating
expenses), amortization charges of $1.46 million and acquisition-related charges
of $3.75 million.
Interest Income
Interest income increased 28.5%, or $603,000, from $2.12 million for the six
months ended June 30, 1999 to $2.72 million for the six months ended June 30,
2000. The increase in interest income is primarily due to the increase in cash
and cash equivalents and our investments are yielding a higher return due to an
increase in interest rates. It is currently our policy to hold securities until
they mature. Interest income and other may fluctuate from period to period due
to changes in investment mix, varying cash balances and fluctuations in interest
rates.
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Income Taxes
We account for income taxes under SFAS 109. Under SFAS 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the carrying amounts of existing assets and liabilities for
financial statement purposes and their respective tax basis. The Company records
a valuation allowance for deferred tax assets when in management's judgment it
is more likely than not that all or a portion of the deferred asset will not be
realized.
We recorded a tax benefit of $1.72 million for the six months ended June 30,
1999 related to our taxable loss from operations and a tax provision of $406,000
for the six months ended June 30, 2000 related to our taxable income from
operations.
Net Income (Loss)
As a result of the above, we recorded a profit of $1.20 million for the six
months ended June 30, 2000 compared to a loss of $8.27 million for the six
months ended June 30, 1999. This increase is primarily attributable to the
growth in net revenues.
Certain Risks and Uncertainties
-------------------------------
Year 2000
We approached Year 2000 compliance by preparing an inventory of all business
disruption problems that we regarded as reasonably possible, prioritizing those
possible problems to allocate appropriate resources to the most critical areas,
remediating or replacing systems and equipment to solve or mitigate Year 2000
problems and, if necessary, developing contingency plans. We have assessed the
impact of Year 2000 compliance on the current and prior versions of our
products, internal information systems, other internal computer systems and
equipment containing embedded systems, and we have implemented corrective
actions where appropriate. Although we have not yet received any complaints from
our customers about the Year 2000 readiness of our products, our products may
contain undetected errors or defects associated with Year 2000 date functions.
Such errors could result in delay or loss of revenue, diversion of development
resources and possible litigation, which might materially adversely affect our
business, financial condition or results of operations.
We believe that the current version of each of our products is Year 2000
compliant, assuming no error after 1999 in the operating system or other
management software products operating on the same computer system as our
product. Information on the Year 2000 compliance of our products is available on
our Web site.
We believe we have tested our equipment and systems, and remediated or replaced
equipment or systems that may not have been Year 2000 compliant. To date, we
have not experienced any significant problems due to non-Year 2000 ready
equipment or software.
Costs we incurred in Year 2000 testing and remediation or replacement of
noncompliant systems are not material to our financial condition or results of
operations. The cost of continued testing of our products will be included in
our research and development expenses, and testing of internal equipment,
hardware and software systems generally is included in general and
administrative expense. In the case of prior product releases that are not Year
2000 ready, if any, we expect to devote internal engineering and customer
support resources to resolving any issues for existing customers of those
products.
We have made representations and warranties, both in contracts and in written
communications, to certain of our customers regarding the Year 2000 readiness of
our products such warranties are generally contingent. With respect to any
contractual representation we made regarding Year 2000 readiness that was not
accurate, we will seek to upgrade the affected customer to our current Year 2000
compliant version of the product being used by the customer. If we have made a
materially inaccurate statement regarding the Year 2000 readiness of our
products and the customer chooses not to upgrade to a Year 2000 compliant
version of the product, we may face the risk of one or more lawsuits from
customers alleging breach of representation upon Year 2000 compliance of
operating systems and programming liabilities and customers' use of the most
current version of the product as provided under maintenance and support
subscriptions.
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The foregoing shall be considered a Year 2000 readiness disclosure to the
maximum extent allowed under the Year 2000 Information and Readiness Disclosure
Act.
Euro Currency
The European Union's adoption of the Euro currency raises a variety of issues
associated with our European operations. Although the transition from national
currencies to the Euro will be phased in over several years, the Euro became the
single currency for most European countries on January 1, 1999. We have assessed
Euro issues related to our treasury operations, product pricing, contracts and
accounting systems. We believe that our existing or planned hardware and
software systems have and will accommodate the transition to the Euro and any
future required operating changes will not have a material effect on future
results of operations or financial condition.
Financial Condition-Liquidity and Capital Resources
---------------------------------------------------
Our overall cash and cash equivalents were $56.75 million at June 30, 2000, a
decrease of approximately $4.78 million from $61.53 million at December 31,
1999. Marketable securities increased $17.23 to $64.56 million at June 30, 2000
from $47.33 million at December 31, 1999. During the six month periods ended
June 30, 2000 and 1999, respectively, we financed our operations primarily
through cash reserves and available working capital. Our operating activities
provided cash of $6.68 million for the six month period ended June 30, 2000 and
used cash of $2.02 million for the six month period ended June 30, 1999,
respectively. Net cash provided by operating activities in the six months ended
June 30, 2000, consisted primarily of net income, net of depreciation and
amortization of intangible assets.
We made capital expenditures of approximately $3.73 million and $3.14 million
for the six month periods ended June 30, 2000 and 1999, respectively. These
purchases have generally consisted of computer workstations, networking
equipment, office equipment, office furniture and equipment and leasehold
improvements. We had no material firm commitments for capital expenditures at
June 30, 2000.
During the six month period ended June 30, 2000, our financial position was also
affected by the following: 1) we received proceeds of $10.26 million from the
issuance of common stock for stock option exercises and employee stock purchase
plan; 2) we purchased $187.32 million of marketable securities; 3) we received
$171.07 million from the maturity of marketable securities; 4) we paid off
$827,000 of mortgage debt; 5) we paid $506,000 for the PassGo acquisition-
related expenses and 6) we had cash outlays of approximately $184,000 for
transaction costs associated with the acquisition of ITI.
We believe that our working capital at June 30, 2000 and cash generated from
operations will be sufficient to meet our capital expenditures, working capital
and other cash requirements both for the next twelve months and for the
foreseeable future.
Certain Factors Affecting Future Performance
--------------------------------------------
Factors Affecting Our Business and Prospects
Although we have experienced significant growth in revenues from our software
products and consulting services, we do not believe current or prior growth
rates are necessarily indicative of future operating results. In addition, we
expect increased competition and intend to invest significantly in development
of products and services methodologies. As a result, there can be no assurance
that we will be profitable on a quarterly or annual basis. Due to our relatively
limited operating history with respect to many of our software products and
consulting services, predictions as to future operating results are difficult.
Future operating results may fluctuate due to factors such as: demand for our
products and consulting services; the volume, size and timing of customer
orders; the number of competitors and the breadth and functionality of their
product offerings and services; the introduction by us or our competitors of new
products, product enhancements and services offerings; the budgeting cycle of
customers; changes in the proportion of revenues attributable to license fees
and consulting services; the availability of services personnel to demonstrate,
install, configure and implement products and perform vulnerability assessments
and managed services offerings; changes in the level of operating expenses;
competitive conditions in the industry; and changes in technologies affecting
computing, networking, communications, systems and applications management
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<PAGE>
and data security. Our future operating results also may be affected if we fail
to recognize the anticipated benefits of any future or potential mergers on the
timetable we project; those benefits include, among others, integration of
product and services offerings and coordination of their sales, marketing and
research, development and services teams without disruption or unanticipated
expense. Our future results of operations may also be adversely affected if the
anticipated integration of operations of merged companies produces unexpected
expenses, delays, inefficiencies, loss of key personnel, loss of resellers or
distributors or loss of consultants or if it leads to adverse effects on
customer purchasing decisions.
The market for our software products is highly competitive, and one could
reasonably expect increasing pricing pressures from current competitors and new
market entrants. As a result of increasing consolidation in the information
security industry, we expect that the market will become subject to increased
competition, which may negatively impact existing collaborative, marketing,
reselling, distribution or marketing agreements or relationships and thereby
materially adversely affect our financial condition and results of operations.
Any material reduction in the price of our software products and services
offerings would negatively affect gross margins and could have a material
adverse effect on our financial condition and results of operations.
The licensing of many of our software products generally involve significant
testing by, and education of, prospective customers as well as a commitment of
resources by both parties. For these and other reasons, the sales cycle
associated with the enterprise-wide licensing of our security software products
is typically long and subject to a number of significant risks over which we
have little or no control and, as a result, may expend significant resources
pursuing potential sales that will not be consummated.
Factors Affecting International Operations
We anticipate that international sales will continue to represent a significant
percentage of revenue in the foreseeable future. International sales are subject
to a number of risks, including unexpected changes in regulatory requirements,
export limitations on encryption technologies, import restrictions, tariffs and
other trade barriers, providing consulting services and customer support across
time zones and in different languages, political and economic instability in
foreign markets, difficulty in the staffing, management and integration of
foreign operations, longer payment cycles, greater difficulty in accounts
receivable collection, currency fluctuations and potentially adverse tax
consequences. The uncertainty of the monetary exchange values has caused, and
may in the future cause, some foreign customers to delay new orders or delay
payment for existing orders. These factors may, in the future, contribute to
fluctuations in our financial condition and results of operations. Based upon
our overall currency rate exposure at June 30, 2000, a 10% change in foreign
exchange rates would have had an immaterial effect on our financial position,
results of operations and cash flows. On January 1, 1999 the Euro was introduced
as a common currency for members of the European Monetary Union. We have not
determined what impact, if any, the Euro will have on our foreign exchange
exposure. To date, we have not hedged the risks associated with foreign exchange
exposure. Although our results of operations have not been materially adversely
affected to date as a result of currency fluctuations, the long-term impact of
currency fluctuations, including any possible effect on the business outlook in
other developing countries, cannot be predicted. To date, our foreign currency
gains and losses have been immaterial.
Factors Affecting Marketable Securities
The fair value of our investments in marketable securities at June 30, 2000 was
$64.56 million. Our investment policy is to manage our marketable securities
portfolio to preserve principal and liquidity while maximizing the return on the
investment portfolio through the full investment of available funds. We
diversify the marketable securities portfolio by investing in multiple types of
investment-grade securities. Our marketable securities portfolio is primarily
invested in short-term securities with at least an investment grade rating to
minimize interest rate and credit risk as well as to provide for an immediate
source of funds. If market interest rates were to increase immediately and
uniformly by 10% from the levels at June 30, 2000, the fair market value of the
portfolio would decline by an immaterial amount. We have the ability to hold our
fixed income investments until maturity, and therefore we do not expect our
operating results or cash flows to be materially affected by a sudden change in
market interest rates on our investment portfolio. Although changes in interest
rates may affect the fair value of the marketable securities portfolio and cause
unrealized gains or losses, such gains or losses would not be realized unless
the investments are sold.
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Item 3.
------
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Response to this item is included in "Item 2 - Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Certain Factors
Affecting Future Performance" above.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
------ -----------------
As reported previously in our Form 10-Q for the first quarter of 1999 and in our
Form 10-K for 1999, a venture capital entity and a small former stockholder
owning less than a majority share of CKS Limited, which AXENT acquired in March
1999, commenced an action in the Suffolk County Superior Court in Boston,
Massachusetts against AXENT and its directors in May 1999. The action alleges
violations of the Massachusetts Uniform Securities Act, negligent
misrepresentations, and unfair trade practices. AXENT believes the claims are
without merit and intends to vigorously defend the action.
We are subject to legal proceedings and claims that arise in the ordinary course
of our business. In the opinion of management, the amount of ultimate liability
with respect to these actions will not materially effect our financial position
or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
------- ----------------------------------------------------
At the 2000 annual meeting of our stockholders on June 6, 2000, stockholders of
record at the close of business on April 26, 2000 re-elected John C. Becker and
John F. Burton as directors to serve until the annual meeting of stockholders in
2003. There were 24,046,909 shares voted at the meeting; for Mr. Becker
23,164,582 shares (96.33% of the shares voted) were voted for re-election and
882,327 shares were voted against; for Mr. Burton, 23,437,498 shares (97.47% of
the shares voted) were voted for election and 609,411 shares were voted against;
there were no abstentions or broker non-votes with respect to either candidate.
Messrs. Becker and Burton join Gabriel A. Battista, Timothy A. Davenport,
Richard A. Lefebvre and Kevin A. McNerney, whose terms as directors of AXENT
continued after the 2000 annual meeting.
At that meeting, our stockholders also approved an amendment to our 1999
Incentive Stock Plan (the "Option Plan") and the reservation of an additional
1,400,000 shares of AXENT common stock for issuance thereunder. Of the
24,046,909 shares voted at the meeting, 18,803,685 shares voted to approve the
amendment to the Option Plan, 5,142,370 shares voted against approval, and
100,854 shares abstained; there were no "broker non-votes" on that matter. The
amendment to the Option Plan was approved by 78.20% of the shares voting at the
meeting and 65.31% of the shares outstanding on the record date of the meeting.
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Item 6. Exhibits and Reports on Form 8-K.
------ --------------------------------
(a) The following exhibits are filed or incorporated by reference, as stated
below:
Exhibit
Number Description
------------- ----------------------------------------------------------------
3.1(1) Amended and Restated Certificate of Incorporation of AXENT.
3.2(2) Amended and Restated Bylaws of AXENT.
4.1(1) Specimen stock certificate for shares of Common Stock of AXENT.
10.1(1) AXENT's 1991 Amended and Restated Stock Option Plan.
10.2(3) AXENT's 1996 Amended and Restated Stock Option Plan.
10.3(3) AXENT's 1996 Amended and Restated Directors' Stock Option Plan.
10.9(1) Form of Indemnification Agreement between AXENT and its
directors and executive officers.
10.11(1) Lease Agreement dated as of September 6, 1995, by and between
Research Grove Associates and AXENT.
10.11A(6) Second Amendment dated September 18, 1998 to Lease Agreement
by and between Research Grove Associates and AXENT.
10.12(1) Lease of Real Property dated as of March 7, 1995, by and
between TNK Associates and AXENT.
10.17(4) Memorandum of Understanding regarding certain compensation and
severance matters relating to Richard A. Lefebvre, dated July 22,
1997.
10.17A(8) First Amendment to Memorandum of Understanding relating to
Richard Lefebvre.
10.29(3) Amended Agreement and Plan of Merger among AXENT, Axquisition,
Inc., and AssureNet Pathways, Inc, dated as of January 6, 1997
and amended February 26, 1997.
10.30(5) AXENT's 1998 Employee Stock Purchase Plan.
10.31(5) AXENT's 1998 Incentive Stock Plan.
10.32(5) AXENT's Exchange Option Plan for Optionees of Raptor Systems,
Inc.
10.33(5) Agreement and Plan of Merger among AXENT, Axquisition Two, Inc.
and Raptor Systems, Inc. dated as of December 1, 1997.
10.34(6) AXENT's Executive Severance General Guidelines.
10.35(6) Lease Agreement dated as of April 23, 1998 by and between
Pracvest and AXENT.
10.36(6) Lease Agreement dated as of May 6, 1997 by and between CC&F
Second Avenue Trust and Raptor Systems, Inc.
10.36A(6) First Amendment to Lease dated as of December 15, 1997 by and
between CC&F Second Avenue Trust and Raptor Systems, Inc.
10.37(7) Share Exchange Agreement dated as of March 29, 1999 by and
during AXENT and the holders of all of the shares of capital
stock, share capital and warranty of CKS Limited.
10.38(8) Software Product Purchase and License Agreement dated as of March
31, 1999 by and between AXENT and Raxco Software, Inc.
10.39(9) AXENT's 1999 Incentive Stock Plan.
10.40(10) AXENT's 1999 PassGo Technologies Exchange Option Plan.
10.41(11) Amendment to AXENT's 1999 Incentive Stock Plan.
10.42(12) AXENT's Internet Tools 1997 Equity Incentive Plan.
10.43(13) AssureNet Pathways, Inc. Restated 1982 Stock Option Plan
Assumed by AXENT.
10.44(14) Agreement and Plan of Merger by and among Symantec Corporation,
Apache Acquisition Corp. and AXENT, dated as of July 26, 2000.
27.1* Financial Data Schedule
--------------------------------------------------------------------------------
(1) Previously filed as an exhibit to AXENT's Registration Statement on Form
S-1 (File No. 333-01368) and incorporated herein by reference.
(2) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 1996.
(3) Previously filed as an exhibit to AXENT's Registration Statement on Form
S-4 (File No. 333-20207) and incorporated herein by reference.
(4) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 1997.
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(5) Previously filed as an exhibit to AXENT's Registration Statement on Form
S-4 (File No. 444-43265) and incorporated herein by reference.
(6) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998 and incorporated herein by
reference.
(7) Previously filed as an exhibit to AXENT's Current Report on Form 8-K
filed in April 1999 and incorporated herein by reference. (8) Previously
filed as an exhibit to AXENT's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999 and incorporated herein by reference.
(9) Previously filed as an appendix to AXENT's definitive proxy statement
dated April 30, 1999 and incorporated herein by reference.
(10) Previously filed as an exhibit to AXENT's Registration Statement on Form
S-8 (File No. 333-83329) and incorporated herein by reference.
(11) Previously filed as an appendix to AXENT's definitive proxy statement
dated May 3, 2000 and incorporated herein by reference.
(12) Previously filed as an exhibit to AXENT's Registration Statement on Form
S-8 (File No. 333-73029) and incorporated herein by reference.
(13) Previously filed as an exhibit to AXENT's Registration Statement on Form
S-8 (File No. 333-40427) and incorporated herein by reference.
(14) Previously filed as an exhibit to AXENT's Current Report on Form 8-K
filed with the Commission on August 3, 2000.
* Filed herewith.
(b) AXENT filed no reports on Form 8-K during the three month period ended June
30, 2000.
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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.
AXENT TECHNOLOGIES, INC.
Date: August 11, 2000 By:________________________
Phillip A. Salopek, Jr.
Vice President of Finance and Treasurer
(Principal Financial and Accounting
Officer)
23
