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Filed Pursuant to Rule 424(b)(3) and Rule 424(c)
Registration No. 333-80851
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 12, 1999)
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PROSPECTUS SUPPLEMENT
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VERITAS SOFTWARE CORPORATION
[VERITAS LOGO]
1,868,480 Shares
COMMON STOCK
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This prospectus supplement relates to the offering of VERITAS Software
Corporation common stock in exchange for exchangeable shares of TeleBackup
Exchangeco, Inc., as described on pages 91 to 93 of the prospectus dated August
12, 1999, and supplemented August 30, 1999 (the "Prospectus"), to which this
prospectus supplement is attached.
This prospectus supplement should be read in conjunction with the
Prospectus, which is to be delivered with this prospectus supplement. This
prospectus supplement is qualified by reference to the Prospectus extent to the
extent that the information in this prospectus supplement supersedes the
information contained in the Prospectus. All capitalized terms used but not
defined in this prospectus supplement have the meanings given to them in the
Prospectus.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SHARES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS OR THIS PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus supplement is October 15, 1999.
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On October 14, 1999, our board of directors declared a three-for-two
stock split of our outstanding common stock. The stock split will be effected in
the form of a stock dividend and will entitle each stockholder of record on
November 2, 1999 to receive one additional share for every two shares held on
the record date. The payment date will be November 19, 1999. As of October 14,
1999, there are approximately 172.3 million shares of our common stock
outstanding, and this number will increase to approximately 258.5 million
following the stock split. To reflect the stock split, the number of shares that
may be offered through the Prospectus will increase to include one and one-half
times the number of shares described in the Prospectus that the selling
stockholders hold on November 19, 1999.
Also on October 14, 1999, we announced financial results for our third
quarter ended September 30, 1999.
On a pro forma basis, we achieved third-quarter revenue of $183.4
million, an increase of 75% over last year's third-quarter revenue of $105.1
million. Pro forma net income, excluding one-time charges and purchase
accounting adjustments, increased to $38.9 million from $17.1 million for the
prior year, a 127% increase. Diluted pro forma net income per share for the
third quarter was $0.21, a 133% increase from $0.09 for the same period last
year. Our pro forma operating margin increased to 32% for the third quarter as
compared with an operating margin of 24% for the same quarter last year.
Our as-reported revenue for the third quarter was $183.4 million,
compared with $56.5 million for the same period last year. For the third
quarter, we reported a net loss of $183.6 million, or $1.07 per share, compared
with net income of $12.6 million, or $0.12 per share on a diluted basis for the
prior year. Included in the current period's net loss is a one-time charge of
$1.1 million for the write-off of in-process research and development related to
the purchase of certain assets of NuView, Inc. Also included was $234.9 million
of purchase accounting amortization.
On a pro forma basis for the nine-month periods ended September 30,
1999 and 1998, we had revenue of $473.9 million and $284.0 million,
respectively, a 67% year-over-year increase. Pro forma net income increased to
$96.0 million from $45.9 million in the prior period, a 109% increase. Pro forma
diluted net income per share was $0.52, compared with $0.25 for the same period
last year, a 108% increase.
Our as-reported revenue for the nine-month period ended September 30,
1999 was $370.0 million, compared with $143.7 million for the same period last
year. For the nine-month period, we reported a net loss of $332.3 million, or
$2.56 per share, compared with net income of $30.2 million, or $0.29 per share
on a diluted basis for the same period in the prior year.
To better facilitate the financial reporting, we added the following
additional financial table to our earnings release: "Pro forma Statements of
Operations." These pro forma statements are intended to present our operating
results excluding purchase accounting adjustments but including the results of
Seagate Software NSMG and TeleBackup Systems assuming the companies had been
combined at the beginning of all periods presented.
VERITAS SOFTWARE CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET REVENUE:
User license fees $ 157,643 $ 91,386 $ 405,719 $ 247,011
Services 25,758 13,692 68,149 36,995
--------- --------- --------- ---------
TOTAL NET REVENUE 183,401 105,078 473,868 284,006
COST OF REVENUE:
User license fees 5,891 5,217 16,311 16,997
Services 10,787 6,314 27,013 17,005
--------- --------- --------- ---------
TOTAL COST OF REVENUE 16,678 11,531 43,324 34,002
--------- --------- --------- ---------
GROSS PROFIT 166,723 93,547 430,544 250,004
OPERATING EXPENSES:
Selling and marketing 67,895 39,732 178,390 105,091
Research and development 28,924 19,930 78,352 52,565
General and administrative 11,020 8,205 30,496 23,668
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES 107,839 67,867 287,238 181,324
--------- --------- --------- ---------
Income from operations 58,884 25,680 143,306 68,680
Interest and other income, net 7,266 2,928 14,840 8,600
Interest expense (5,301) (1,435) (8,148) (4,514)
--------- --------- --------- ---------
Income before income taxes 60,849 27,173 149,998 72,766
Provision for income taxes 21,906 10,054 54,000 26,924
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PRO FORMA NET INCOME $ 38,943 $ 17,119 $ 95,998 $ 45,842
========= ========= ========= =========
PRO FORMA NET INCOME PER SHARE - BASIC (1) $ 0.23 $ 0.10 $ 0.57 $ 0.28
========= ========= ========= =========
PRO FORMA NET INCOME PER SHARE - DILUTED (1) $ 0.21 $ 0.09 $ 0.52 $ 0.25
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATION - BASIC (1) 171,043 166,647 169,273 165,884
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATION - DILUTED (1) 187,570 181,697 185,266 180,481
========= ========= ========= =========
</TABLE>
(1) Share and per share data applicable to prior periods has been restated to
give retroactive effect to a 2-for-1 stock split in the form of a stock
dividend effected in July 1999.
These pro forma historical financial statements contain certain immaterial
reclassifications. The reclassifications have no impact on previously reported
total net revenue or income from operations. On a year-to-date basis, pro forma
user license fees and services revenue have been adjusted to reflect a
reclassification between the two categories. This reclassification represents
the NSMG services revenue, and was previously classified as pro forma user
license fees. A corresponding reclassification was made to cost of services
revenue, which was previously classified as user license fees cost of revenue.
Reclassifications have also been made within the various pro forma operating
expense categories to reflect the operating expenses of the acquired companies
in a consistent manner with the historical VERITAS presentation.
The pro forma statement of operations is intended to present our operating
results excluding purchase accounting adjustments but including the results of
NSMG and TeleBackup assuming the companies had been combined at the beginning of
the three and nine month period end September 30, 1999 and 1998, respectively.
Such purchase accounting adjustments would include amortization of developed
technology, amortization of goodwill and intangibles, restructuring and other
merger costs, in-process research and development costs, and related adjustments
for income tax provision.
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VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET REVENUE:
User license fees $ 157,643 $ 45,807 $ 306,725 $ 114,833
Services 25,758 10,738 63,228 28,907
--------- --------- --------- ---------
TOTAL NET REVENUE 183,401 56,545 369,953 143,740
COST OF REVENUE:
User license fees 5,891 2,516 10,673 7,612
Services 10,787 5,327 25,568 14,619
Amortization of developed technology 15,258 - 20,264 -
--------- --------- --------- ---------
TOTAL COST OF REVENUE 31,936 7,843 56,505 22,231
--------- --------- --------- ---------
GROSS PROFIT 151,465 48,702 313,448 121,509
OPERATING EXPENSES:
Selling and marketing 67,895 20,406 139,290 50,415
Research and development 28,924 10,859 63,290 27,356
General and administrative 11,020 2,663 21,431 7,075
Amortization of goodwill and other intangibles 219,626 - 291,183 -
In-process research and development 1,100 - 104,200 2,250
Merger and restructuring costs - - 11,000 -
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES 328,565 33,928 630,394 87,096
--------- --------- --------- ---------
Income (loss) from operations (177,100) 14,774 (316,946) 34,413
Interest and other income, net 7,266 3,001 13,445 8,552
Interest expense (5,301) (1,420) (8,143) (4,268)
--------- --------- --------- ---------
Income (loss) before income taxes (175,135) 16,355 (311,644) 38,697
Provision for income taxes 8,441 3,762 20,678 8,508
--------- --------- --------- ---------
NET INCOME (LOSS) $(183,576) $ 12,593 $(332,322) $ 30,189
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE - BASIC (1) $ (1.07) $ 0.13 $ (2.56) $ 0.32
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE - DILUTED (1) $ (1.07) $ 0.12 $ (2.56) $ 0.29
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATION - BASIC (1) 171,043 94,458 129,829 93,695
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATION - DILUTED (1) 171,043 104,652 129,829 103,099
========= ========= ========= =========
</TABLE>
(1) Share and per share data applicable to prior periods has been restated to
give retroactive effect to a 2-for-1 stock split in the form of a stock
dividend effected in July 1999.
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VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
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(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term investments $ 643,391 $ 211,126
Accounts receivable, net 73,030 52,697
Deferred income taxes 18,362 4,272
Other current assets 16,523 9,237
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TOTAL CURRENT ASSETS 751,306 277,332
Long-term investments 65,036 31,925
Property and equipment 60,681 26,518
Goodwill and other intangibles 3,458,512 4,005
Deferred income taxes - 7,928
Other assets 1,625 1,409
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TOTAL ASSETS $4,337,160 $ 349,117
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 12,231 $ 4,958
Accrued compensation and benefits 36,780 11,267
Accrued acquisition and restructuring costs 25,213 478
Other accrued liabilities 43,769 10,718
Income taxes payable 4,265 13,424
Customer advances 9,946 -
Deferred revenue 67,619 37,645
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TOTAL CURRENT LIABILITIES 199,823 78,490
NON-CURRENT LIABILITIES:
Convertible subordinated notes 447,531 100,000
Deferred income taxes 171,230 -
Other non-current liabilities 657 773
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TOTAL NON-CURRENT LIABILITIES 619,418 100,773
Stockholders' equity 3,517,919 169,854
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,337,160 $ 349,117
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</TABLE>
