<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K/A
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 5, 1998
-----------------------------
NETOPIA, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 0-28450 94-3033136
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2470 Mariner Square Loop, Alameda, California 94501
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (510) 814-5100
-----------------------------
Same
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(Former name or Former Address, if Changed Since Last Report.)
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ITEM 7. PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated
balance sheet at June 30, 1998 and the unaudited pro forma condensed
consolidated statements of operations data for the nine months ended
June 30, 1998 and the fisca year ended September 30, 1997, give pro
forma effect to the estimated financial impact of the sale of the
Registrant's Farallon LAN Division (the "LAN Division") to Farallon
Networking Corporation (the "Buyer"), an affiliate of Gores
Technology Group, on August 5, 1998. The pro forma condensed
consolidated balance sheet at June 30, 1998 gives pro forma effect to
the sale of the LAN Division as if the transaction was consummated on
June 30, 1998. The pro forma condensed consolidated statements of
operations data for the nine months ended June 30, 1998 and the
fiscal year ended September 30, 1997, give pro forma effect to the
sale of the LAN Division as if the transaction was consummated as of
the beginning of the respective periods presented.
The unaudited pro forma condensed consolidated financial
statements are based on the historical consolidated financial
statements of the Company giving effect to the assumptions and
adjustments set forth in the following notes. The overall assumption
has been made that the effect of the sale of the LAN Division would
have been to transfer the LAN Division's products, operating
activities and associated revenues, assets (excluding cash and tax
benefits) and liabilities as well as the related operating expenses,
from the Registrant to the Buyer. The Registrant would have retained
products, operating activities and associated revenues, assets and
liabilities, as well as any operating expenses, related to its
Netopia Internet Connectivity hardware products and its Timbuktu Pro
and Netopia Virtual Office software products (the "Internet
Division").
The unaudited pro forma condensed financial data have been
prepared by Company management for informational purposes only and
are not necessarily indicative of how the Company's balance sheet and
operating results would have been presented had the transaction as
set forth in the Agreement of Purchase and Sale of Assets, dated
August 5, 1998 (the "Agreement"), by and between the Registrant and
Farallon Networking Corporation, been consummated on the assumed
dates, nor are they necessarily indicative of the presentation of the
Company's balance sheet and statement of operations for any future
period.
(c) Exhibits.
Exhibit
Number Description
------ -----------
99.1(a) Unaudited Pro Forma Condensed Consolidated Balance Sheet at
June 30, 1998
99.1(b) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Nine Months Ended June 30, 1998
99.1(c) Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Fiscal Year Ended September 30, 1997
Page 2
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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 hereunto duly authorized.
NETOPIA, INC.
Date: October 19, 1998 By: /s/ James A. Clark
--------------------------------------------
James A. Clark
Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
Page 3
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
99.1(a) Unaudited Pro Forma Condensed Consolidated Balance Sheet at June 30,
1998
99.1(b) Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the Nine Months Ended June 30, 1998
99.1(c) Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the Fiscal Year Ended September 30, 1997
Page 4
<PAGE>
EXHIBIT 99.1(a)
NETOPIA, INC. and SUBSIDIARY
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMPANY PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS BALANCES
-------------- ------------------ ----------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 20,373 $ 2,000 (a) $ 22,373
Short-term investments................................... 19,928 -- 19,928
Trade accounts receivable, net........................... 7,457 (2,464) (b) 4,993
Inventories, net......................................... 4,363 (3,447) (b) 916
Deferred tax asset....................................... 1,463 (1,463) (c) --
Prepaid expenses and other current assets................ 1,077 (306) (b) 771
-------------- ------------------ ----------------
Total current assets................................. 54,661 (5,680) 48,981
Note receivable............................................ -- 888 (a) 888
Royalties receivable....................................... -- 1,782 (a) 1,782
Furniture, fixtures, and equipment, net.................... 2,203 (359) (d) 1,844
Deferred tax assets, long-term............................. 1,406 (1,406) (c) --
Deposits and other assets.................................. 2,745 175 (a) 2,920
-------------- ------------------ ----------------
Total assets......................................... $ 61,015 $ (4,600) $ 56,415
============== ================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities................. $ 4,579 $ 1,781 (e) $ 6,360
Accrued compensation..................................... 1,646 (302) (f) 1,344
Deferred revenue......................................... 875 (1) (f) 874
Other current liabilities................................ 326 (202) (f) 124
-------------- ------------------ ----------------
Total current liabilities............................ 7,426 1,276 8,702
Other long-term liabilities................................ 279 (7) (f) 272
-------------- ------------------ ----------------
Total liabilities.................................... 7,705 1,269 8,974
-------------- ------------------ ----------------
Commitments and contingencies
Stockholders' equity:
Preferred stock.......................................... -- -- --
Common stock............................................. 12 -- 12
Additional paid-in capital............................... 51,282 -- 51,282
Deferred compensation.................................... (41) -- (41)
Retained earnings (deficit).............................. 2,057 (5,869) (g) (3,812)
-------------- ------------------ ----------------
Total stockholders' equity........................... 53,310 (5,869) 47,441
-------------- ------------------ ----------------
Total liabilities and stockholders' equity........... $ 61,015 $ (4,600) $ 56,415
============== ================== ================
</TABLE>
(a) The Company will receive consideration of $3.0 million on the Closing Date.
The consideration will be in the form of $2.0 million in cash and a
Promissory Note for $1.0 million payable on July 31, 2000 bearing interest
at 8% per annum. The value of the note has been present valued at a rate of
15%, the assumed fair market rate of interest for a similar financial
instrument. Additionally, the Company will receive royalties based upon the
LAN Division's annual revenues over each of the next five fiscal years
ending on July 31, 2003. The royalties
<PAGE>
to be received are based on the following schedule:
LAN REVENUE ROYALTY RATE
------------------ ------------------
(in thousands)
$0 - $15,000 0.0%
$15,001 - $16,000 1.5%
$16,001 - $17,000 2.5%
greater than $17,000 5.0%
The value of the royalties accrued at the close of the transaction is based
upon the present value of the Company's assumptions as to the projected
future revenue of the LAN Division. Royalties accrued; however, have not
been recorded to the extent that total consideration on the transaction
exceeds the net asset value of the LAN Division assets being sold.
These pro forma calculations assume that the transaction was consummated on
June 30, 1998, and therefore the purchase price would have been reduced
based upon the difference between the net book value of the LAN Division at
that time and $4.9 million, which represents the estimated net book value
of the LAN Division on March 31, 1998. As stipulated by the Agreement, the
adjustment to the purchase price is made to the cash payment on a dollar
for dollar basis (see note (e)).
As stipulated in the agreement, the Company received and valued warrants to
purchase up to 5% of the equity of the Buyer as of the closing of the
transaction.
(b) As stipulated in the Agreement, the Buyer will purchase all of the
Company's current assets related to the LAN Division with the exception of
cash, tax assets, assets related to the Internet Division and certain
corporate assets. This adjustment represents the net value of those assets
which would have been transferred to the Buyer.
(c) This adjustment represents the estimated valuation allowance which would
have been recorded against the Company's deferred tax assets. As a result
of the sale of the LAN Division, certain tax planning strategies and other
tax attributes no longer support the full valuation of the Company's
deferred tax assets.
(d) As stipulated in the agreement, the Buyer will purchase all of the
furniture, fixtures and equipment and other assets associated with the LAN
Division. This adjustment represents the net value of those assets which
would have been transferred to the Buyer.
(e) As stipulated in the Agreement, the Buyer will assume all of the Company's
Accounts Payable related to its LAN Division. This adjustment represents a
reduction for the value of the accrued and other portions of those payables
which would have been assumed by the Buyer net of an adjustment of $3.0
million for estimated expenses related to the sale transaction and an
estimated amount payable to the Buyer of $165,000, which represents the
difference between the book value of the LAN Division on the transaction
date and the estimated book value of the LAN Division at March 31, 1998
(see note (a)).
(f) As stipulated in the Agreement, the Buyer will assume all of the Company's
liabilities related to its LAN Division employees and other associated
liabilities. This adjustment represents the net value of the accrued and
other portions of those liabilities which would have been assumed by the
Buyer.
(g) This adjustment represents the loss on the sale of the LAN Division,
including the valuation allowance which would have been recorded against
the Company's deferred tax assets. The actual amount of loss will not be
determined until after the actual Closing date and will be accounted for in
the Company's fiscal fourth quarter.
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EXHIBIT 99.1(b)
NETOPIA, INC. and SUBSIDIARY
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS BALANCES
----------------- ----------------- ----------------
<S> <C> <C> <C>
Revenues:
Internet/Intranet products........................ $ 18,481 $ 18,481
LAN products...................................... 15,115 (15,115) (a) --
----------------- ----------------
Total revenues................................. 33,596 18,481
Cost of revenues:
Internet/Intranet products........................ 5,563 5,563
LAN products...................................... 10,080 (10,080) (a) --
----------------- ----------------
Total cost of revenues......................... 15,643 5,563
----------------- ----------------
Gross profit................................... 17,953 (5,035) (a) 12,918
Operating expenses:
Research and development......................... 6,404 (1,143) (a) 5,261
Selling and marketing............................ 12,672 (2,665) (a) 10,007
General and administrative....................... 2,686 (267) (a) 2,419
----------------- ----------------- ----------------
Total operating expenses....................... 21,762 (4,075) 17,687
----------------- ----------------- ----------------
Operating income (loss)........................ (3,809) 960 (4,769)
Other income, net................................... 1,663 1,663
----------------- ----------------
Income (loss) from continuing operations
before income taxes............................ (2,146) 960 (3,106)
Income tax (benefit) provision...................... (752) 1,721 (b) 969
----------------- ----------------- ----------------
Income (loss) from continuing operations....... (1,394) 2,681 (4,075)
Discontinued operations............................. -- (3,188) (c) (3,188)
----------------- ----------------- ----------------
Net loss......................................... $ (1,394) $ (5,869) $ (7,263)
================= ================= ================
Basic net loss per share, continuing operations..... $ (0.12) $ (0.35)
================= ================
Diluted net loss per share, continuing operations... $ (0.12) $ (0.35)
================= ================
Basic net loss per share, discontinued operations... $ -- $ (0.27)
================= ================
Diluted net loss per share, discontinued operations. $ -- $ (0.27)
================= ================
Basic net loss per share............................ $ (0.12) $ (0.63)
================= ================
Diluted net loss per share.......................... $ (0.12) $ (0.63)
================= ================
Common shares used in the calculations
of basic net loss per share....................... 11,617 11,617
================= ================
Common and common equivalent shares used in the
calculations of diluted net loss per share......... 11,617 11,617
================= ================
</TABLE>
(a) This adjustment represents the LAN Division's revenues, cost of revenues and
associated operating expenses.
(b) This adjustment represents the estimated valuation allowance which would
have been recorded against the Company's
<PAGE>
Internet Division deferred tax assets. As a result of the sale of the LAN
Division, certain tax planning strategies and other tax attributes no
longer support the full valuation of the existing deferred tax assets.
(c) This adjustment represents the estimated valuation allowance which would
have been recorded against deferred tax assets generated by the LAN
Division, the operating results of the LAN Division, as well as the
estimated gain/loss on the disposal, including transaction expenses incurred
and accrued as a result of the sale of the LAN Division. Such expenses are
directly attributable to the sale transaction and are primarily related to
reserves taken against the lease of the Company's Alameda, California
headquarters, investment advisory, legal and accounting fees and certain
expenses related to employees of the LAN Division.
<PAGE>
EXHIBIT 99.1(C)
NETOPIA, INC. and SUBSIDIARY
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS BALANCES
-------------- ------------- -----------
<S> <C> <C> <C>
Revenues:
Internet/Intranet products........................ $20,170 $20,170
LAN products...................................... 32,023 (32,023) (a) --
-------------- -----------
Total revenues................................. 52,193 20,170
Cost of revenues:
Internet/Intranet products........................ 6,396 6,396
LAN products...................................... 20,810 (20,810) (a) --
-------------- -----------
Total cost of revenues......................... 27,206 6,396
-------------- -----------
Gross profit................................... 24,987 (11,213) (a) 13,774
Operating expenses:
Research and development......................... 8,839 (1,662) (a) 7,177
Selling and marketing............................ 15,540 (4,961) (a) 10,579
General and administrative....................... 3,291 (346) (a) 2,945
-------------- ------------- -----------
Total operating expenses....................... 27,670 (6,969) 20,701
-------------- ------------- -----------
Operating income (loss)........................ (2,683) 4,244 (6,927)
Other income, net................................... 1,869 1,869
-------------- -----------
Income (loss) from continuing operations
before income taxes............................ (814) 4,244 (5,058)
Income tax (benefit) provision...................... (285) 1,721 (b) 1,436
-------------- ------------- -----------
Income (loss) from continuing operations....... (529) 5,965 (6,494)
Discontinued operations............................. -- 96 (c) 96
-------------- ------------- -----------
Net loss......................................... $ (529) $ (5,869) $(6,398)
============== ============= ===========
Basic net loss per share, continuing operations..... $ (0.05) $ (0.57)
============== ===========
Diluted net loss per share, continuing operations... $ (0.05) $ (0.57)
============== ===========
Basic net income per share, discontinued operations. $ -- $ 0.01
============== ===========
Diluted net income per share, discontinued
operations......................................... $ -- $ 0.01
============== ===========
Basic net loss per share............................ $ (0.05) $ (0.56)
============== ===========
Diluted net loss per share.......................... $ (0.05) $ (0.56)
============== ===========
Common shares used in the calculations
of basic net loss per share....................... 11,335 11,335
============== ===========
Common and common equivalent shares used in the
calculations of diluted net loss per share......... 11,335 11,335
============== ===========
</TABLE>
(a) This adjustment represents the LAN Division's revenues, cost of revenues
and associated operating expenses.
(b) This adjustment represents the valuation allowance which would have been
recorded against the Company's Internet Division deferred tax assets. As a
result of the sale of the LAN Division, certain tax planning strategies
<PAGE>
and other tax attributes no longer support the full valuation of the
existing deferred tax assets
(c) This adjustment represents the estimated valuation allowance which would
have been recorded against deferred tax assets generated by the LAN
Division, the operating results of the LAN Division, as well as the
estimated gain/loss on the disposal, including transaction expenses incurred
and accrued as a result of the sale of the LAN Division. Such expenses are
directly attributable to the sale transaction and are primarily related to
reserves taken against the lease of the Company's Alameda, California
headquarters, investment advisory, legal and accounting fees and certain
expenses related to employees of the LAN Division.
