Page one of ten pages.
Exhibit Index is on page four.
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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): July 14, 1999
Commission File Number 0-15323
NETWORK EQUIPMENT TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2904044
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6500 Paseo Padre Parkway
Fremont, California 94555
(510) 713-7300
(Address of principal executive offices, including zip code,
area code, and telephone number)
[Not Applicable]
----------------
(Former Name or Former Address, if Changed Since Last Report.)
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<PAGE>
Item 5. Other Events
On July 14, 1999, Network Equipment Technologies, Inc. (the "Company")
announced plans for a reorganization of the Company. Attached hereto as
Exhibit 99.1 is the Company's press release dated July 14, 1999 regarding
this announcement.
On July 16, 1999, the Company announced a streamlined organizational
structure, the first step in its reorganization announced on July 14, 1999.
Attached hereto as Exhibit 99.2 is the Company's press release dated July
16, 1999 regarding this announcement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Network Equipment Technologies, Inc. Press Release
dated July 14, 1999.
99.2 Network Equipment Technologies, Inc. Press Release
dated July 16, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: July 23, 1999 NETWORK EQUIPMENT TECHNOLOGIES, INC.
By: /s/ Hubert A.J. Whyte
----------------------------------
Name: Hubert A.J. Whyte
Title: President and Chief
Executive Officer
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EXHIBIT INDEX
Page No.
in Sequentially
Exhibit No. Description Numbered Current Report
- ----------- ----------- -----------------------
99.1 Network Equipment Technologies, Inc.
Press Release dated July 14, 1999. 5
99.2 Network Equipment Technologies, Inc.
Press Release dated July 16, 1999. 9
4
EXHIBIT 99.1
P R E S S R E L E A S E
[N.E.T. LOGO] N.E.T.
6500 PASEO PADRE PARKWAY
FREMONT, CA 94555
TEL: 510-574-2476
FAX: 510-574-4011
For Immediate Release
CONTACTS: For Financial Analysts: For Press and Consultants:
----------------------- --------------------------
Billie Fagenstrom Paul Morrison
N.E.T. Investor Relations N.E.T. Corporate Communications
(510) 574-2529 (510) 574-2476
N.E.T. ANNOUNCES RESULTS FOR FIRST QUARTER
FISCAL YEAR 2000 AND PLANS FOR A REORGANIZATION
FREMONT, Calif., July 14, 1999 -- N.E.T. (NYSE:NWK) today reported for its
first quarter of fiscal year 2000 revenue of $62.6 million and net income of
$3.5 million, or 16 cents per share. If a gain of $7.5 million or 26 cents per
share from the sale of an equity investment is excluded, the net loss for the
quarter would have been $2.2 million or 10 cents loss per share. In the
comparable period last year, the company reported revenue of $71.4 million and
net income of $2.9 million, or 13 cents per share. In the fourth quarter of
fiscal year 1999, the company reported revenue of $51.1 million and a net loss
of $12.7 million, or 59 cents per share.
During the quarter, N.E.T. announced the appointment of Hubert "Bert" Whyte
as president and CEO, effective June 1, 1999. "N.E.T. is fortunate to have
recruited someone of Bert's experience in the networking industry and proven
record of success," said Hans A. Wolf, Chairman of N.E.T. "In his first 30
working days, Bert completed a comprehensive assessment of the company, and made
recommendations to return N.E.T. to a position of sustained profitability and
long-term growth. He has the full support of the N.E.T. Board as he begins
implementation of those changes today."
"As a newcomer to N.E.T., I am pleased to join the company while being
keenly aware of the business opportunities and competitive issues that N.E.T.
faces," said Bert Whyte, president and CEO, N.E.T. "I am optimistic about the
future of the company. During the past 30 days, we have revised the company's
direction and product strategy, and reviewed the size and structure of the
organization and our forward looking financial model. The new strategy is
focused, realistic and affords N.E.T. the opportunity to succeed in certain high
growth areas of the networking
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industry. I am pleased that the Board has given me approval to implement and
fine tune the plan for the company.
"The organization plan involves reductions both in senior management and
throughout the company in order to bring expenses in line with our near term
revenue expectations. I am mindful of the need to maintain a stable sales and
marketing organization. However, at this stage I am unable to supply details of
the extent of this reorganization or the cost. This information will be supplied
in due course. The financial plan is reasonable given the challenges N.E.T.
faces this year and is intended to lead us to profitability by the end of the
current fiscal year.
"These are difficult times for N.E.T. I am proud that our people realize
the need for change and have been extremely professional during this transition
period. I appreciate their efforts toward the completion of the plan. As with
any plan, its success will be determined by its execution. I believe we are off
to a good start," Bert Whyte concluded.
Also during the quarter, N.E.T. announced a number of enhancements to its
Promina family of products including additional voice compression options,
better IP packet handling capabilities and new network management features.
N.E.T. announced orders from network service providers around the world for
products ranging from the compact Promina(R) 100 Multiservice Access Platform to
the Promina 4000 ATM switch. Additionally, Dataquest, a leading market research
firm, placed N.E.T. second in the ATM access market, based on the success of the
company's CellXpress(TM) ATM access module for the Promina 800 Series
Multiservice Access Platforms.
Network Equipment Technologies, Inc. (N.E.T.), headquartered in Fremont,
Calif., is a leading worldwide supplier of multiservice wide area networks used
by enterprises, government organizations and carriers in more than 75 countries.
N.E.T. multiservice WANs and ATM products integrate voice, data, and video
traffic with ATM, IP, frame relay, and ISDN capabilities. The company is
certified to the worldwide ISO 9001 standard for design, manufacturing and
service. For additional information, join us at the number one address in
networking: www.net.com.
# # #
N.E.T. and CellXpress are trademarks and Promina and the N.E.T. logo are
registered trademarks of Network Equipment Technologies, Inc.
(Note to editors: Tables follow.)
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NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
Quarter Ended
------------------------
June 27, June 28,
1999 1998
-------- --------
(unaudited)
Revenue:
Product revenue .............................. $ 33,024 $ 45,662
Service and other revenue .................... 29,531 25,764
-------- --------
Total revenue .............................. 62,555 71,426
-------- --------
Cost of sales:
Cost of product revenue ...................... 13,600 18,633
Cost of service and other revenue ............ 19,321 14,846
-------- --------
Total cost of sales ........................ 32,921 33,479
-------- --------
Gross margin ................................... 29,634 37,947
Operating expenses:
Sales and marketing .......................... 19,038 21,608
Research and development ..................... 11,440 10,283
General and administrative ................... 3,076 2,888
-------- --------
Total operating expenses ................... 33,554 34,779
-------- --------
Income (loss) from operations ............ (3,920) 3,168
Other income (expense) ......................... 7,577 (126)
Interest income, net ........................... 976 1,152
-------- --------
Income before income taxes ............... 4,633 4,194
Income tax provision ........................... 1,158 1,246
-------- --------
Net income ..................................... $ 3,475 $ 2,948
======== ========
Earnings per share:
Basic ........................................ $ .16 $ .14
======== ========
Diluted ...................................... $ .16 $ .13
======== ========
Common and common equivalent shares outstanding:
Basic ........................................ 21,388 21,570
======== ========
Diluted ...................................... 21,480 22,433
======== ========
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NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 27, March 31,
1999 1999
----------- ---------
(unaudited)
ASSETS:
Cash and investments ............................... $136,928 $154,563
Accounts receivable, net ........................... 59,253 46,381
Inventories ........................................ 17,933 19,193
Deferred income taxes .............................. 9,009 5,510
Prepaid expenses and other assets .................. 7,050 6,834
-------- --------
Total current assets ............................. 230,173 232,481
Property and equipment, net ........................ 51,864 55,877
Software production costs, net ..................... 6,176 6,129
Deferred income taxes .............................. 9,053 9,053
Other assets ....................................... 9,397 9,572
-------- --------
$306,663 $313,112
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable ................................... $ 14,423 $ 11,755
Other current liabilities .......................... 40,193 43,638
-------- --------
Total current liabilities ........................ 54,616 55,393
7 1/4% convertible subordinated debentures ......... 24,706 24,706
Stockholders' equity ............................... 227,341 233,013
-------- --------
$306,663 $313,112
======== ========
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Exhibit 99.2
P R E S S R E L E A S E
[N.E.T. LOGO] N.E.T.
6500 PASEO PADRE PARKWAY
FREMONT, CA 94555
TEL: 510-574-2476
FAX: 510-574-4011
FOR IMMEDIATE RELEASE: Media Contact:
Brenda Ropoulos
(510) 574-2508
N.E.T. QUICKLY BEGINS REORGANIZATION AND NAMES NEW OFFICERS
Fremont, CA, July 16, 1999 - N.E.T. (NYSE: NWK) today announced the first
step in the reorganization announced this week. The organizational structure has
been streamlined to reflect five internal organizations. The new organization
units include Marketing, Sales and Service, Research and Development,
Manufacturing, and Finance. Previously, there were eight units reporting to the
President. The reduction in business units is intended to increase the speed and
flexibility in the company's decision-making process.
The company also named four officers in accordance with its By-laws. The
four officers of the company are N.E.T. President and CEO Hubert "Bert" Whyte,
General Counsel and Corporate Secretary Mary Ann Moran, Senior Vice President of
Sales and Service Raymond E. Peverell, and acting Chief Financial Officer Robert
P. Bowe. The changes were made as the result of the departure of three officers
of the company: Senior Vice President of Corporate Services Roger A. Barney,
Senior Vice President of Engineering G. Michael Schumacher and Vice President of
Corporate Strategy and Technology David P. Owen.
"Earlier this week, we announced that the company has revised its direction
and that we would be making changes to the organization," said Bert Whyte,
president and CEO, N.E.T. "This organization will strengthen our position with
our current customers and yet provide focus as service providers build their new
generation of packet-based networks. While we are not prepared to announce the
new organization in its entirety at this early stage, the organization changes
announced today represent the first step in the new direction we have laid out
for N.E.T. While some of these changes are difficult, the intent is to create an
energized environment where creative ideas can be quickly transferred into
useful solutions that add value for our customers."
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The details of the extent of the reorganization or the associated costs are
not yet available. This information will be supplied in due course.
Network Equipment Technologies, Inc. (N.E.T.), headquartered in Fremont,
Calif., is a leading worldwide supplier of multiservice wide area networks used
by carriers, government organizations and enterprises in more than 75 countries.
N.E.T. multiservice WANs and ATM products integrate voice, data, and video
traffic with ATM, frame relay, IP and ISDN capabilities. The company is
certified to the worldwide ISO 9001 standard for design, manufacturing and
service. Join us at the first address in networking: http://www.net.com for
further information.
# # #
N.E.T.is a trademark, and the N.E.T. logo is a registered trademark of Network
Equipment Technologies, Inc.
10
