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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) December 22, 1997.
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STORAGE DIMENSIONS, INC.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 0-22015 77-032-4887
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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1656 McCarthy Blvd., Milpitas, CA 95035
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 954-0710
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
This Current Report on Form 8-K (the "Report") contains or incorporates
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forward-looking statements within the meaning of Section 27A of the Securities
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Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
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as amended. The forward-looking statements contained herein involve risks and
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uncertainties, including those relating to the possible inability to complete
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the merger transaction involving Storage Dimensions, Inc. (the "Company") and
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Artecon, Inc., a California corporation, as scheduled, if at all, and those
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associated with the ability of the combined company to achieve the anticipated
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benefits of the merger. Actual results and developments may differ materially
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from those described or incorporated by reference in this Report.
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On December 22, 1997, the Company entered into an Agreement and Plan of
Merger and Reorganization, dated as of December 22, 1997 (the "Merger
Agreement"), among the Company and Artecon, Inc. The description contained in
this Item 5 of the transactions contemplated by the Merger Agreement is
qualified in its entirety by reference to the full text of the Merger
Agreement.
The Merger Agreement contemplates that, subject to the satisfaction of
certain conditions set forth therein, including without limitation the approval
and adoption of the Merger Agreement by the requisite vote of the Company's
stockholders and the approval of the issuance of the Company's common stock in
the Merger by the Company's stockholders, Storage Acquisition Corp., a wholly
owned subsidiary of the Company, will be merged with and into Artecon (the
"Merger"). As a result of the Merger, Artecon will become a wholly-owned
subsidiary of the Company. Under the terms of the Merger Agreement,
approximately 12.9 million newly issued shares of the Company's common stock
will be exchanged for all outstanding shares of Artecon common stock. In
addition, the Company will issue preferred stock in exchange for Artecon
outstanding preferred stock which is convertible into the Company's common stock
at the option of the Company or the Holder in certain circumstances. The new
preferred stock will be convertible at the option of the Holder into no more
than 840,000 shares of common stock. The Merger is intended to qualify as a tax-
free reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and is intended to be treated as a
purchase.
On December 22, 1997 the Company and Artecon issued a joint press release
relating to the execution of the Merger Agreement. A copy of the press release
is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In connection with the execution of the Merger Agreement, certain holders
of Artecon and the Company who collectively and beneficially own more than 50%
of the outstanding shares of common stock of Artecon and the Company, entered
into Voting Agreements pursuant to which each such holder agreed to vote its
shares in favor of the Merger. The description contained in this Item 5 of the
transactions contemplated by the Voting Agreements is qualified in its entirety
by reference to the full text of the Voting Agreement.
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A proxy statement relating to the Merger has not yet been filed by the
Company with the SEC. This report shall not constitute the solicitation of any
vote with respect to the Merger.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS.
2.1 Agreement and Plan of Merger and Reorganization dated December
22, 1997.*
99.1 Joint Press Release.
99.2 Form of Voting Agreement.*
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* Incorporated by reference from exhibit to Schedule 13D filed with the
Securities and Exchange Commission by Artecon, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STORAGE DIMENSIONS, INC.
/s/ David A. Eeg
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David A. Eeg, Chairman, President and Chief
Executive Officer
Date: December 23, 1997
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STORAGE DIMENSIONS, INC.
CURRENT REPORT ON FORM 8-K
INDEX TO EXHIBITS
Exhibit No. Description
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2.1 Agreement and Plan of Merger and Reorganization dated
December 22, 1997.*
99.1 Joint Press Release.
99.2 Form of Voting Agreement.*
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* Incorporated by reference from exhibit to Schedule 13D filed with the
Securities and Exchange Commission by Artecon, Inc.
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AT STORAGE DIMENSIONS:
Gene E. Bowles
Executive Vice President
408-894-1404
Criss Marshall
VP, Corporate Communications
408-894-1401
AT ARTECON:
James Lambert
President and Chief Executive Officer
760-931-5500
AT FRB SAN FRANCISCO:
Hannah Bruce (General Info.)
Catherine Roberts (Inv. Contact)
180 Montgomery Street
San Francisco, CA 94104
415-986-1591
FOR IMMEDIATE RELEASE
STORAGE DIMENSIONS AND ARTECON ANNOUNCE AGREEMENT TO MERGE--
COMBINATION CREATES OPEN SYSTEMS STORAGE LEADER FOR
PC-LAN AND UNIX NETWORK MARKETS
STORAGE DIMENSIONS PREVIEWS FOURTH QUARTER RESULTS
Milpitas, CA, December 23, 1997 -- Storage Dimensions, Inc. (Nasdaq: STDM), the
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leading independent vendor of high-availability RAID storage systems for the PC-
LAN market, and Artecon, Inc., a leading independent supplier of enterprise
storage solutions for the UNIX market, today announced a definitive merger
agreement. The merger will create one of the largest third-party storage
companies worldwide serving the combined PC-LAN and UNIX open systems network
computing markets.
The combination of Storage Dimensions and Artecon will enable one company
to provide server-independent disk and tape storage solutions enterprisewide,
from the smallest PC-server workgroup to the largest UNIX super servers in the
data center. The merger is expected to create an open systems storage leader
with annual revenues of approximately $170 million based on recent revenue run
rates.
Under the terms of the merger agreement, approximately 12.9 million newly
issued shares of Storage Dimensions common stock will be exchanged for all
outstanding shares of Artecon common
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STORAGE DIMENSIONS AND ARTECON TO COMBINE CREATING OPEN SYSTEMS STORAGE LEADER,
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stock. In addition, Storage Dimensions will issue preferred stock in exchange
for Artecon outstanding preferred stock which is convertible into Storage
Dimensions common stock at the option of the Company or the Holder in certain
circumstances. The new preferred stock will be convertible at the option of the
Holder into no more than 840,000 shares of common stock. As of September 30,
1997, Storage Dimensions had approximately 8.2 million fully diluted shares
outstanding. The transaction will be accounted for on a purchase basis and is
expected to be accretive to Storage Dimensions earnings in fiscal 1998. Based on
the closing price of Storage Dimensions stock of $4.625 on Monday, December 22,
the stock to be issued to Artecon shareholders is valued at approximately $60
million. Subject to regulatory approvals and approval of both company's
shareholders, the transaction is expected to close by March 31, 1998. Holders of
a majority of the voting shares of both companies have already agreed to vote in
favor of the merger. There will be a one-time charge against earnings during the
quarter in which the deal closes for expenses incurred as a result of the
merger.
"The merger of Storage Dimensions and Artecon represents a unique
opportunity to combine two market leaders with a common vision," said David Eeg,
president and chief executive officer of Storage Dimensions. "The companies
bring complementary products, markets, and customers, with minimal overlap in
any of these areas. The combined company should be able to offer a greatly
expanded product line both to existing customers in our large, combined customer
base and to the market as a whole. This, in turn, should build long-term value
for our shareholders."
"After the merger, we will have over 70 sales people across the United
States, as well as a strong international presence," said James Lambert,
president and chief executive officer of Artecon. "By leveraging the talents of
both organizations, we should be able to offer the broadest line of open systems
networking storage solutions available through any source. Customers of the
combined company will benefit because they will now have a single-source
supplier for their PC-LAN and UNIX disk and tape storage requirements. We will
also be able to provide improved product development, as well as enhanced
service and support on a worldwide basis to meet our current and future
customers' business-critical needs."
In addition to the competitive advantages that the merger offers in the
marketplace, there are synergies and economies of scale that are expected to be
achieved by applying the talents, innovations, and achievements of each
organization across a larger enterprise.
. Storage Dimensions' extensive family of tape backup solutions will be
immediately available to support Artecon's product offerings and UNIX
customer base.
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STORAGE DIMENSIONS AND ARTECON TO COMBINE CREATING OPEN SYSTEMS STORAGE LEADER,
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. Artecon's network-attached storage solutions will now be available to
Storage Dimensions' customer base.
. Artecon's Fibre Channel interface development is expected to be ported to
Storage Dimensions' products resulting in improved performance and
functional benefits.
. Storage Dimensions' RAIDScape(TM) storage management software is expected
to be expanded to support Artecon's products, embracing the combined
Company's comprehensive product line.
. Storage Dimensions' RAIDPro(TM) entry-level server storage product for
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Windows NT and NetWare is expected to be enhanced to support Sun and SGI
environments where a low-end RAID solution does not exist today.
. Combining disk drive purchasing into one entity is expected to yield
additional disk drive cost reductions.
James Lambert will assume the role of president and chief executive officer
of the combined company. David Eeg will take an active role in working with
Lambert to orchestrate a smooth and coordinated combination of the two
companies.
STORAGE DIMENSIONS PREVIEWS FOURTH QUARTER RESULTS
Storage Dimensions expects to post net sales for the fourth quarter ending
December 31, 1997 of approximately $16.5 to $17.5 million and a net loss of
approximately $0.10 to $0.15 per share. These results compare to third quarter
1997 net sales of $16.9 million and a net loss of $.11 per share. Storage
Dimensions expects to announce final fourth quarter results in January, 1998.
As previously reported, Storage Dimensions' third quarter results were
negatively impacted by sales force productivity issues. These issues have
continued to affect overall corporate performance in the fourth quarter.
"The merger of Storage Dimensions and Artecon will address the number one
priority of our organization today -- building a strong, productive sales
organization," said Eeg. "With this merger, we will have a sales force of over
70 people, along with a much stronger international presence. The products
offered by Storage Dimensions and Artecon are complementary. This opens up new
opportunities to sell additional products to each company's existing customer
base, which should have a significant impact on future sales."
"We are confident that the combination of Storage Dimensions and Artecon
should create a strong leader in the open systems network computing market. Not
only will we have the broadest product line with a strong, worldwide sales
force, our critical mass should also drive down costs in
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STORAGE DIMENSIONS AND ARTECON TO COMBINE CREATING OPEN SYSTEMS STORAGE LEADER,
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manufacturing, raw materials, and operations. The combined company will be well
positioned for growth in both the PC-LAN and UNIX enterprise storage markets,"
continued Eeg.
COMPANY PROFILES
Artecon has been an established supplier of open systems enterprise storage
products in the UNIX marketplace since 1984. Since embarking on major
development projects in 1991, its focus has been on world-class enterprise
storage solutions with high-end features, modular architecture, ruggedized
construction, and open systems standards. The Company's EXTREME product line
includes NEBS (Network Equipment Building System)-certified, disaster-tolerant
RAID systems for telco Central Office and Internet applications. For more
information, contact Artecon at 6305 El Camino Real, Carlsbad, CA 92009, 800-
872-2783, or visit http://www.artecon.com.
Founded in 1985, Storage Dimensions designs, manufactures, markets, and
supports a broad family of disk and tape storage systems designed to satisfy the
high-performance, fault-tolerance, and high-availability requirements of the PC-
LAN market. The Company, which focuses on reducing the life-cycle cost of
ownership of network storage, also develops and supports selected products for
the UNIX market. Storage Dimensions' products are sold through its own field
sales force in combination with multi-tiered distribution channels. For more
information, contact Storage Dimensions at 1656 McCarthy Boulevard, Milpitas, CA
95035, 408-954-0710, or visit http://www.storagedimensions.com.
This press release contains forward-looking statements. These forward-looking
statements include statements about expectations relating to the merger of
Storage Dimensions and Artecon and the resulting benefits in improved product
development, service, and support; improved shareholder value; increased size
and worldwide coverage of sales force resulting in incremental sales;
incremental sales resulting from selling an expanded product line to
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STORAGE DIMENSIONS AND ARTECON TO COMBINE CREATING OPEN SYSTEM STORAGE LEADER,
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the existing customer bases; and reduced costs resulting from economies of
scale. Actual results may differ materially due to factors including, but not
limited to: the ability to consummate the combination of Storage Dimensions and
Artecon; the combined company's ability to retain and restructure qualified
sales and other key personnel through the merger; the combined company's ability
to develop and ship products leveraging the developments of the individual
entities; the combined company's ability to negotiate reduced disk drive pricing
due to increased volumes; the impact of competitive products and pricing; and
the fluctuating demand for PC-LAN and UNIX server products in general and
storage systems in particular. These and other risks are described in more
detail in the Company's filings made with the Securities and Exchange Commission
which may be accessed on the World Wide Web at http://www.sec.gov.
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