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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
December 21, 2000
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Date of report (Date of earliest event reported)
Avici Systems Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 000-30865 02-0493372
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(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
101 Billerica Avenue
North Billerica, Massachusetts 01862
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(Address of Principal Executive Offices)
(978) 964-2000
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Registrant's telephone number, including area code
Exhibit Index Located on Page 4
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ITEM 5. OTHER EVENTS.
On December 21, 2000, Avici Systems Inc. (the "Company") entered into a
Procurement Agreement with AT&T Corporation ("AT&T"). The procurement agreement
has a three-year term and enables the purchase of Avici's Terabit Switch Router
(TSR(R)) by AT&T. There is no minimum purchase commitment on the part of AT&T
under the procurement agreement. The Company has begun shipping product under
the procurement agreement in the fourth quarter of 2000.
On December 21, 2000, Avici issued to AT&T a warrant to purchase 850,000
shares of the Company's common stock at an exercise price per share of $27.725,
which represents the average of the closing price of Avici's common stock over
the twenty-day period preceding the date of the warrant issuance. The warrant is
fully exercisable upon issuance, is non-forfeitable and has a term of five
years. AT&T has not committed to exercise the warrant and is not obligated to
purchase any minimum amount of product as a condition to exercising the warrant.
Avici estimates the value of the warrant to approximate $9.8 million,
calculated using the Black-Scholes option valuation method. Although there is no
minimum purchase commitment on the part of AT&T, Avici may recognize significant
revenue over the three year term of the procurement agreement. Due to the
speculative nature of the size of potential revenues over the term of the
procurement agreement, Avici expects to defer and amortize the value of the
warrant as a non-cash discount against revenue in relation to the estimated life
and related estimated revenue value.
Statements contained in this Report on Form 8-K that are not historical
fact may constitute forward-looking statements and are made under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements, including statements regarding the size and timing
of AT&T customer activity, as well as information about Avici's future
expectations, plans, and prospects are subject to risks and uncertainties which
could cause actual results to differ materially from those anticipated. Such
risks and uncertainties include, but are not limited to, market acceptance of
Avici products, services and enhancements, customer purchasing patterns and
commitments, development of the market place, product development and
enhancement, intensity of competition of other vendors, technological changes
and other risks set forth in Avici's filings with the Securities and Exchange
Commission.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The following financial statements and exhibits are filed as part of this
report, where indicated:
(a) Financial statements of the business acquired. Not applicable.
(b) Pro forma financial information. Not applicable.
(c) Exhibits. None.
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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.
Avici Systems Inc.
Date: December 21, 2000 By: /s/ Paul F. Brauneis
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Chief Financial Officer, Vice President
of Finance and Administration and
Principal Accounting Officer
