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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO
_________
Commission file number: 0-21432
AUSPEX SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0963760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5200 Great America Parkway,
Santa Clara, California 95054
(Address of principal executive offices)
Registrant's telephone number, including area code:
(408) 986-2000/Web Site (www.Auspex.com)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Common Share Purchase Rights
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
YES [ ] NO [X]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant was approximately $223,846,788 as of September 10, 1997, based
upon the closing sale price on The Nasdaq National Market reported for such
date. Shares of Common Stock held by each officer and director and by each
person who owns 5% of more of the outstanding Common Stock have been excluded
because such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily conclusive for other purposes.
The number of shares of Registrant's Common Stock outstanding as of
September 10, 1997 was 25,067,084.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the definitive
proxy statement for the Annual Meeting of Stockholders scheduled to be held on
November 20, 1997.
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TABLE OF CONTENTS
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PAGE
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PART I ....................................................................... 4
ITEM 1. BUSINESS.................................................... 4
The Company................................................. 4
Products.................................................... 5
Markets and Customers....................................... 7
Distribution................................................ 7
Customer Service and Support................................ 8
Manufacturing............................................... 9
Research and Development.................................... 9
Competition................................................. 10
Intellectual Property and Licenses.......................... 11
Employees................................................... 11
Executive Officers of the Company........................... 12
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<TABLE>
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PART IV ...................................................................... 14
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K................................................ 14
(A) 3. EXHIBITS............................................... 15
SIGNATURES...................................................................... 18
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INTRODUCTORY STATEMENT
References made in this Annual Report on Form 10-K to "Auspex," the
"Company" or the "Registrant" refer to Auspex Systems, Inc. and its wholly owned
subsidiaries. AUSPEX, NS 5000, FUNCTIONAL MULTI-PROCESSING, FMP, FMK, FUNCTIONAL
MULTI-PROCESSOR, FUNCTIONAL MULTI-PROCESSOR, and the Auspex logo design are
registered trademarks of the Company. FUNCTIONAL MULTIPROCESSING KERNEL,
FUNCTIONAL MULTIPROCESSING, NETSERVER, NS 7000, NS 6000, NS 5500, NS 3000,
DataGuard, ServerGuard, DriveGuard and FastBackup are trademarks of the Company.
PART I
ITEM 1. BUSINESS
THE COMPANY
Auspex develops, manufactures, distributes and supports a line of UNIX
multi-protocol (NFS(1), FTP(2)) network file/data servers, known as
"NetServers," that enhance the performance of large, multivendor client/server
networks. As client/server computing has become increasingly widespread, the
inherent limitations of data servers based upon general-purpose computer
architectures have come to be recognized as a serious impediment to overall
network performance and availability.
The network performance limitations which the NetServer was designed to
overcome are the direct result of applying traditional, general purpose computer
servers to the ever increasing challenge of storing, managing and delivering
network data. These performance limitations have become more acute as the volume
of network data has increased from the downsizing and offloading of mainframe
data, the consolidation of local area network data and the emergence of network
data-intensive applications such as the Internet. As the amount of data and
users on a network increase, data servers based on conventional workstation or
minicomputer architectures must support considerably more file/data, network and
disk traffic than they were originally designed to handle. The result is a
serious deterioration in network performance. The traditional solution has been
to subdivide the network into multiple subnetworks, each with its own data
server, duplicate data files and associated administrative costs.
In contrast to conventional architectures, the Company's proprietary
Functional Multi-processing ("FMP") architecture, of which key aspects have been
patented by the Company, has been designed specifically to overcome these
limitations by optimizing the tasks which a network data server most commonly
executes - file/data transfer and disk operation. The performance advantages of
Auspex's FMP architecture enable a single NetServer to support large networks at
high data throughput rates. The NetServer's scalability permits customers to add
workstation clients to multiple data servers.
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(1) NFS denotes the Network File System protocol, first promulgated by Sun
Microsystems, Inc. ("Sun Microsystems"), and since widely adopted by the
workstation market as a de facto standard for network file transfers.
(2) FTP (File Transfer Protocol) is a standard protocol commonly used to
retrieve or store files on network file servers. FTP is supported on Unix,
Windows, VMS, Macintosh and other popular desktop computers.
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The Company believes that the importance of these benefits to large-scale
client/server systems is demonstrated by the fact that over 80% of Auspex's
installed base of approximately 2,100 data servers supports networks with 50-400
users.
Auspex's FMP design offers an architectural solution to the network
performance gap through distribution of all performance-limiting Network File
System ("NFS") functions to a specialized input/output ("I/O") subsystem of
dedicated file/data, network and disk processors. By isolating the host central
processing unit ("CPU") and UNIX operating system from the data server's
principal activity, the NetServer bypasses the internal bottleneck which slows
the throughput of general-purpose computer architectures performing similar
tasks. In addition, the isolation of the UNIX operating system and application
software from the data delivery function of the server significantly increases
the reliability of the systems. More processors and disk capacity may be added
to meet increasing user demand as networks expand.
Auspex believes that the benefits of its FMP architecture - high
availability, scalability and performance may be applied to industry standard
protocols such as Hyper Text Transfer Protocol ("HTTP") and Common Internet File
System/Server Message Block ("CIFS/SMB"), opening new market opportunities in
the future.
In fiscal 1997, the Company extended its business focus beyond the
manufacture, sale and support of high-performance, UNIX-based network file
servers to offering its customer base a more comprehensive set of solutions for
network data management. On June 30, 1997, the Company acquired Alphatronix,
Inc. ("Alphatronix") as part of its ongoing strategic initiatives in this area.
The Company's strategy is to develop innovative solutions for enterprise data
management and, specifically, products that will provide customers with
continuous and transparent access to their data. The Alphatronix Inspire(R)
suite of object-oriented software and graphical user interface libraries is
intent to provide the basic enabling technologies required to implement these
new products. Product offerings based on merging the acquired technology are
expected to be introduced by the Company on a rolling basis beginning 12-18
months following the acquisition.
PRODUCTS
The Company develops, markets and supports a line of NFS network data
servers known as NetServers. The Company's newest NetServers, the NS 7000
NetServer Family, were introduced in fiscal 1996. In the second quarter of
fiscal 1997, the Company introduced a new high-end server, the NS 7000/700,
which superseded the model 650. The NS 7000/150 NetServer is designed for small
workgroups of up to 40 workstations; the NS 7000/250 NetServer is designed for
departments supporting 40 to 150 workstations, while the NS 7000/700 NetServer
meets the needs of large enterprise environments with up to 800 workstations.
All members of the NS 7000 Family can simultaneously support applications such
as high-speed, on-line system backup as well as NFS I/O operations without one
activity impairing the performance of the other. NS 5000, NS 5500 and NS 6000
NetServers, predecessors of the NS 7000 Family, can be upgraded on-site to an NS
7000. A significant portion of the Company's revenues is derived from product
upgrades, which consist primarily of additional processors (or upgrades of
existing processors) and memory and disk and tape drives. The Company's strategy
is to introduce new products and offer upgrades to existing products
periodically on an ongoing basis. It is possible that some customers could
cancel orders for existing products or delay orders in anticipation of new
product availability; should this occur, the Company's revenues and operating
results could be adversely affected.
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A base NS 7000 NetServer configuration includes one network processor,
one storage processor and one host processor (CPU), along with I/O cache memory
and a rack for the first seven Small Computer Serial Interface ("SCSI") disk
drives, typically of 4.29 or 9.1 gigabyte capacity each. The NetServer can be
scaled by the addition of function-specific processors, allowing customers to
expand the product to support their future requirements. The basic elements of
the architecture's hardware organization are described below:
Network processor. The network processor performs three
functions. The first is the processing of network protocols up to and
including the Open Network Computing/NFS ("ONC/NFS") level. The second
is the processing of NFS file requests, using a UNIX file system which
has been extracted from the UNIX operating system kernel. In this way,
NFS operations bypass the host processor entirely. In addition, a very
large disk buffer cache (I/O cache memory) is implemented on the
network processor. No processor instructions are stored in or retrieved
from this memory; the entire memory and enhanced backplane bandwith of
110 megabytes per second ("MB/s") is devoted to I/O. Cache memory can
be added to a maximum of 256 MB per network processor. Each network
processor provides up to six 10 BaseT or two 100 BaseT Ethernet
connections, up to two Fibre Distributed Data Interface/MLT3
("FDDI/MLT3") connections or two Asynchronous Transfer Mode ("ATM")
(OC-3) connections.
Storage processor. The NetServer storage processor operates up
to six parallel SCSI I/O channels simultaneously. These are attached to
disk arrays, containing up to 42 9.1 gigabyte disks, for a total
storage of 382 gigabytes. The storage processor is responsible for
virtual partition management on the storage devices, write
acceleration, channel management, disk and tape control and data
transfers to I/O cache memory.
Host processor. The host processor used in the NetServer is
based on the Sun SPARC architecture, which is compliant with the SunOS
UNIX operating system and its application binary interface.
NetServer prices range from approximately $45,000 to more than
$500,000, depending on the configuration. While system price varies considerably
according to the configuration purchased, the average sales price per system in
fiscal year 1997 for North American direct sales was approximately $280,000, and
for distributor and international sales, approximately $131,000. Lower average
sales prices per system for international distributor sales are attributable to
the fact that most servers sold through these channels are sold in smaller
configurations and at higher discounts.
In 1995, Auspex commenced shipment of its first software product,
DataGuard, that allows users to continuously access their data in the event of a
disruption associated with the UNIX host operating system. In March 1996, the
Company began shipping its second software product, ServerGuard. ServerGuard
operates between multiple Auspex servers providing the industry's first local
and wide area network-based fail-over and disaster recovery system for
uninterrupted service. In fiscal 1997, the Company introduced FastBackup, a
software product that enables a customer to achieve DLT-based backup and restore
throughput of up to 100 gigabytes per hour cost-effectively. The Company also
introduced DriveGuard, an embedded RAID 5 solution for high-availability data
protection. DriveGuard provides mission-critical data security, at a
significantly lower cost than that of mirrored configurations. Revenues from
software licenses represented approximately six percent of Company's revenues in
fiscal 1997.
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MARKETS AND CUSTOMERS
The majority of the Company's sales are currently made to customers in
the scientific, technical and engineering fields, in which UNIX workstation and
NFS-based network penetration is the greatest and the need for high-performance
data/file servers is the most critical. In addition to this large and expanding
multivendor, technical computing market, commercial applications for UNIX-based
systems are also increasing (e.g. financial services, and internet service
provider and corporate intranets). The Company believes that its NetServer
architecture is adaptable to commercial computing environments and intends to
pursue opportunities in these markets as they develop. There can be no
assurance, however, that the Company will be able to adapt its NetServers to
commercial computing market, or that it will be able to penetrate such markets.
As of June 30, 1997, approximately 2,100 NetServers have been installed
for over 450 customers worldwide. Reflecting the NetServer's particular
suitability to the performance requirements of large-scale client/server
systems, networks supporting more than 50 users account for more than 80% of
Auspex's installed base. NetServers are used most commonly for the following
types of applications: software development, electronic computer-aided design
("ECAD") and electronic computer aided engineering ("ECAE"), scientific and
academic research, mechanical computer-aided design ("MCAD"), technical
publishing and financial services. Other applications are also increasing, such
as Internet service providers, on-line content providers, seismic and
geophysical modeling, inventory control and multimedia applications. Prior to
fiscal 1994, 1995 and 1996, Auspex focused its marketing efforts primarily on
North America through its direct sales force and on the Pacific Rim through its
relationships with Fuji Xerox Co., Ltd. ("Fuji Xerox") and Nissho Electronics
Corporation ("Nissho"). During fiscal 1994, the Company established direct sales
and support operations in the United Kingdom, France and Germany, and
strengthened its distribution network in selected other European markets.
Sales of products and services to the following customers accounted for
10% or more of total revenues in the periods indicated: fiscal year 1995 - Intel
Corporation ("Intel") (15%); fiscal year 1996 - Intel (10%) and Fuji Xerox
(13%); and fiscal year 1997 - Intel (10%) and America Online ("AOL") (15%). In
addition to direct purchases from the Company, Intel or its affiliates have from
time to time made significant purchases of the Company's products through
indirect channels. Intel, AOL and Fuji Xerox are not obligated to purchase any
minimum level of products from the Company. Accordingly, there can be no
assurance that sales of products and services to these customers will not
decline, either in absolute dollar amounts or as a percentage of total revenues,
in future periods and that any such declines will not have a material adverse
effect on the Company's results of operations.
DISTRIBUTION
The Company employs a multi-tiered distribution strategy which in
fiscal 1997 has focused on product sales to end users in North America through a
direct sales force and to the Pacific Rim (primarily Japan) through a master
value added reseller and a non-exclusive master reseller. The Company has a
direct sales force in the United Kingdom, France and Germany, and employs
distributors in other selected European markets.
Because the success of the Company's direct sales efforts in North
America is dependent in part upon a sophisticated analysis of the customer's
networking requirements, the Company's system engineers work closely with the
Company's sales representatives.
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The Company's Pacific Rim distribution strategy includes original
equipment manufacturer ("OEM") and distribution agreements with Fuji Xerox and
Nissho, respectively, in Japan. In fiscal 1997, the Company realigned its
channel distribution strategy in Japan. The Company signed a Master Value Added
Distributor Agreement ("MVAD") with Fuji Xerox, and redefined its relationship
with Nissho. Under the new MVAD contract, Fuji Xerox, formerly the Company's OEM
partner in Japan will act as a non-exclusive supplier of the Company's products
to resellers in Japan. The Company's line of network file servers and
high-availability software will also be sold under the Auspex name for the first
time by Fuji Xerox. The Company's relationship with Nissho, previously the
exclusive distributor of Auspex labeled products, will continue on a
non-exclusive basis as a master reseller. The purchase prices of products
purchased by Fuji Xerox under the agreement are subject to certain discounts.
While Fuji Xerox is not subject to any minimum purchase requirements, in the
event that it fails to reach the purchase targets mutually agreed upon each
year, Auspex has the right to make additional OEM appointments in Japan. Both
Nissho and Fuji Xerox have the right to sell products of the Company's
competitors.
Auspex believes that the large installed base of UNIX systems in Europe
represents a significant opportunity for future NetServer sales. To address this
opportunity, the Company has direct sales and support facilities in the United
Kingdom, France and Germany. The Company has also entered into agreements with
distributors covering selected other markets in Europe. The Company has
continued to invest in sales and marketing efforts in Europe. The increased
export activity in Europe has resulted in profitable European operations in
fiscal 1997.
CUSTOMER SERVICE AND SUPPORT
Auspex's corporate policies are based on a commitment to customer
satisfaction and product quality. Revenue on system sales to end users is not
recognized until the system has been shipped and installed and the customer has
indicated a level of satisfaction with the product's performance that meets or
exceeds predefined Company standards.
The Company provides customer training and installs, maintains and
supports systems sold directly in North America and Europe. End user customers
purchasing through indirect channels are generally serviced by the Company's
distributors or OEMs. In all cases, however, customers have direct access to
Auspex service and support through a toll-free telephone hotline available to
customers, distributors and service partners. All customer service call
management and software support is handled directly by Auspex through its
technical support centers twenty-four (24) hours a day, three hundred sixty-five
(365) days a year, by highly trained and experienced technical support
engineers.
In addition to the technical support center located in Santa Clara,
California, the Company has established a second U.S. support center in Cary,
North Carolina and European technical support centers in France and the United
Kingdom to handle service calls from its European customers. To supplement
direct service and support and to ensure the highest quality service while
containing costs, Auspex has entered into strategic service agreements with
Digital Equipment Corporation and NCR for on-site hardware support. The
Company's contracts provide end users with a warranty for parts and labor on its
products, generally for ninety (90) days. The Company's warranty policy for
product sales other than to end users depends on the requirements of the
particular distribution channel. The Company offers its customers service
agreements of varying duration. Service revenue is recognized ratably over the
contractual period as service is provided.
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MANUFACTURING
Auspex's manufacturing operations, located in Santa Clara, California,
consist of product assurance, quality control and final product assembly and
test. The Company relies principally on Solectron Corporation, a contract
manufacturer, for subassembly and testing of certain key NetServer components.
Solectron Corporation has continued to operate under the terms of its business
relationship on a month-to-month basis. The Company's manufacturing strategy has
been to develop close relationships with its suppliers, exchanging critical
information and implementing joint quality training programs. This manufacturing
strategy minimizes capital investment and overhead expenditures and creates
flexibility by providing the capacity for rapid expansion. Although the Company
to date has not experienced any production difficulties resulting from its
reliance on Solectron, it is possible that production difficulties, including
capacity constraints and quality control issues, could arise in the future,
which could materially and adversely affect the Company's results of operations.
Although the Company generally uses standard parts and components for
its products, a number of key components used in the Company's NetServer
products are currently available or purchased from sole or single sources. These
components include disk and tape drives, microprocessors, connectors, printed
circuit boards, cable assemblies, power supplies and ASICs. Some of the
suppliers of these components have divisions which compete with the Company. See
"Business--Competition." The Company generally has agreements with its sole
source suppliers with terms ranging from one to five years and believes that
alternative sources of supply and assembly for most of its sole-source
components could be obtained within a commercially practicable period. As a
precaution, the Company carries extra inventory of some of its sole-source
components to provide additional time to develop an alternate supply source or
redesign the component. The lack of sufficient quantities of sole or single
source components, or the inability to develop alternative sources for these
items, could result in delays or reductions in product shipments which would
materially and adversely affect the Company's results of operations.
RESEARCH AND DEVELOPMENT
The market for high-performance network data servers has been
characterized by rapid technological advances in both hardware and software
development. The Company believes that the speed of technological advancement in
its industry requires it to invest significant amounts in research and
development, and that in order to maintain its competitive position, the Company
must continue to enhance and improve its existing products as well as to develop
and successfully introduce new products. During fiscal 1997, the Company
introduced the new NetServer NS7000/700, which is an enterprise-class network
data server that nearly doubles the number of network connections and increases
NFS throughput versus previous models. Additionally, the Company introduced a
major new software release, which includes DriveGuard, a new RAID 5 high
availability solution for protecting and managing disk-based data, NFS v3
protocol support for enhanced network performance, and the integration of
NetBackup and FastBackup software for backup to DLT tape. Also during the year,
the Company introduced an additional high-performance networking offering;
including full duplex 100BaseT. While continuing to introduce major new product
features, the Company believes that it has maintained its leadership position in
network data server reliability. However, there can be no assurance that these
new products will continue to be successful commercially. Furthermore, there can
be no assurance that the Company will be able to develop or introduce other new
products in the future in a timely manner, or that such products will be a
commercial success. The Company intends to
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continue to invest substantially in product development. Current research and
development efforts are directed at additional optional software products and at
extending the NetServer architecture, hardware designs and software designs to
increase functionality, client protocol support, performance, capacity,
scalability and availability.
As of June 30, 1997, 144 employees were engaged in research and
development activities. The Company's research and development expenses during
fiscal years 1995, 1996 and 1997 were approximately $14.6 million, $17.8 million
and $24.4 million, respectively. The Company anticipates that research and
development expenses will increase in absolute amounts and may increase as a
percentage of total revenues from current levels in future periods.
COMPETITION
The data/file server market is intensely competitive. Within the
NFS-compatible, UNIX data server market segment, manufacturers of general
purpose multiprocessor servers represent the Company's primary source of
competition. These manufacturers include Sun Microsystems, Hewlett-Packard
Company, Silicon Graphics, Inc., and IBM. Also, EMC Corporation has recently
introduced proprietary products to provide network attached storage. Sun
Microsystems represents the Company's principal source of competition. All of
these competitors possess substantially greater financial, technical and
marketing resources than Auspex, as well as substantially larger product
installed bases. In addition to existing competitors, certain manufacturers of
PC-based file servers such as Network Appliance, Inc. have introduced products
at the low end of the Company's target markets. While the Company believes that
the price/performance characteristics of its products are competitive, increased
competition could create pricing pressures which could materially and adversely
affect the Company's results of operations.
The Company derives a significant portion of its revenues from sales of
product upgrades to its installed base, including additional processors (or
upgrades to existing processors), memory, disk and tape drives, and software.
Although the Company has to date experienced limited competition in the sale of
upgrades, increased competition against these products may occur in the future
which could materially and adversely affect the Company's revenues and operating
results.
Auspex believes that an important competitive factor is network data
server performance, measured in terms of overall system throughput and expressed
as a function of NFS input/output operations per second. Other important factors
include product reliability, availability, scalability, upgradeability, price,
overall cost of ownership and technical service and support. The Company's
ability to maintain its competitive position will depend, in addition to these
factors, upon its success in anticipating industry trends, investing in product
research and development and effectively managing the introduction of new
products into targeted markets.
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INTELLECTUAL PROPERTY AND LICENSES
The Company relies on a combination of patent, copyright, trademark and
trade secret laws, employee and third-party non-disclosure agreements and other
intellectual property protection methods to protect its proprietary hardware,
software and technological expertise. The Company believes, however, that its
continued success will depend principally on continuing innovation,
technological expertise, product pricing and distribution strength and to a
lesser extent on its ability to protect its proprietary technology. Furthermore,
there can be no assurance that the Company's current or future competitors will
not independently develop technologies that are substantially equivalent or
superior to the Company's technology.
Auspex currently holds four United States patents for certain
fundamental aspects of FMP data server architecture, and two additional related
patents. The Company has also filed additional patent applications for other
proprietary Auspex technologies, one of which has been issued by the patent
office.
The Company's NetServer's host processors and network processors
operate in conjunction with software licensed to the Company by Sun
Microsystems. These licenses are subject to periodic renewal and are coming up
for renewal in September 1998. There can be no assurance that the Company will
be able to enter into such license renewals with Sun Microsystems on favorable
terms, or at all.
EMPLOYEES
As of June 30, 1997, the Company employed 619 people, including 170 in
sales, 27 in marketing, 144 in research and development, 93 in customer
satisfaction, 115 in manufacturing and 70 in finance and administration. The
recruitment of experienced, highly skilled individuals is a top priority in an
exceptionally competitive recruiting environment. Equally important in this
environment is the retention of key talent. The Company has significantly
increased its recruiting activities and is reviewing all employee programs to
ensure the retention and continued development of its employees. The Company has
in the past encountered some difficulties in fulfilling its hiring needs and
retaining key employees in the San Francisco Bay Area employment market, and
there can be no assurance that the Company will be successful in hiring and
retaining qualified employees in the future. None of the Company's employees are
represented by a labor union. The Company believes that its relations with its
employees are good.
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EXECUTIVE OFFICERS OF THE COMPANY
The following sets forth certain information with respect to the
executive officers of the Company as of September 15, 1997:
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Bruce N. Moore(1) 46 Chief Executive Officer, President and Director
Joseph G. Brown 47 Vice President of Worldwide Field Operations
Paul R. Gifford 45 Vice President of Product Development
Russell M. Lait 35 Vice President of Operations
Kent L. Robertson 56 Vice President of Finance and Chief Financial Officer
R. Stephen Cheheyl(2) 51 Director
W. Frank King(2)(3) 57 Director
David F. Marquardt(3) 48 Director
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(1) Member of the Stock Option Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Mr. Bruce N. Moore joined the Company in June 1995 as President, Chief
Operating Officer and a member of the Board of Directors. In January 1996, Mr.
Moore assumed the additional role of Chief Executive Officer. Mr. Moore joined
Auspex from Diasonics Ultrasound, Inc., a provider of diagnostic ultrasound
equipment, where he held the position of President and Chief Executive Officer.
His eleven-year career at Diasonics included various senior management positions
in marketing and business development. Mr. Moore started his career as a sales
representative in IBM's Data Processing Division in 1976.
Mr. Joseph G. Brown joined the Company in January 1994 as Vice
President of Marketing. He assumed the additional responsibility of Vice
President of International Sales in September 1994. In November 1995, Mr. Brown
was promoted to Vice President of Worldwide Strategic Business Development.
Currently, Mr. Borwn is the Vice President of Worldwide Field Operations.
Previous to joining the Company, Mr. Brown was Vice President of Marketing for
the UNIX Systems Group at Unisys Corporation from February 1992 to January 1994.
Prior to Unisys, Mr. Brown was Managing Director of Marketing at Interactive
Systems Corporation from September 1989 to December 1991.
Mr. Paul R. Gifford joined the Company in October 1996. From March 1996
through September 1996, Mr. Gifford served as Vice President of Engineering for
Tencor Instruments. Prior to joining Tencor, Mr. Gifford was employed by Sequent
Computer Systems from December 1985 through October 1995 and held several key
positions including General Manager, NT Business Unit, Vice President of Product
Development, and Vice President and Chief Systems Architect.
Mr. Russell M. Lait joined the Company in March 1988 as a member of the
Company's first design team. During his nine-year tenure with Auspex, Mr. Lait
has held various positions, including Director of Production and Test. He was
appointed Vice President of Operations in August 1996.
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Mr. Kent L. Robertson joined the Company in April 1996. From June 1995
through April 1996, he was Executive Vice President, Chief Financial Officer and
Secretary for Genus, Inc. Prior to Genus, he spent two different periods as
Senior Vice President, Chief Financial Officer and Secretary of Pyramid
Technology Corporation. He first joined Pyramid in February 1987 and returned
again in January 1994. From March 1992 through December 1993, he was Executive
Vice President, Chief Financial Officer and Secretary for RasterOps Corporation.
Mr. R. Stephen Cheheyl has served as a Director of the Company since
April 1995. From October 1994 until he retired in December 1995, Mr. Cheheyl
served as an Executive Vice President of Bay Networks, Inc. which was formed
through the merger of Wellfleet Communications, Inc. ("Wellfleet") and Synoptics
Communications Inc. From December 1990 to October 1994, Mr. Cheheyl served as
Senior Vice President of Finance and Administration at Wellfleet. He also serves
as a director of Infinium Software, Inc., ON Technology Corporation and Sapient
Corporation
Dr. W. Frank King has served as a Director of the Company since October
1994. Dr. King has served as President, Chief Executive Officer and a Director
of PSW Technologies, Inc., a software services firm that provides high value
solutions to technology vendors and business end-users by mastering and applying
critical emerging technologies, since October 1996. From 1992 to October 1996,
Dr. King served as President of Pencom Software, a division of Pencom Systems,
Inc. From 1988 to 1992, Dr. King was Senior Vice President of the Software
Business group of Lotus, a software publishing company. Prior to joining Lotus,
Dr. King was with IBM, a technology company, for 19 years, where his last
position was Vice President of Development for the Personal Computing Division.
Dr. King earned a doctorate in electrical engineering from Princeton University,
a master's degree in electrical engineering from Stanford University, and a
bachelor's degree in electrical engineering from the University of Florida. He
serves on the Boards of Directors of State of the Art, Inc., Excalibur
Technologies Corporation, SystemSoft, and Natural Microsystems, Inc.
Mr. David F. Marquardt has served as a Director of the Company since
April 1989. Since August 1995, Mr. Marquardt has been a general partner at
August Capital which is a private venture capital partnership. Since August
1980, Mr. Marquardt has been a general partner of various Technology Venture
Investors entities which are private venture capital limited partnerships. Mr.
Marquardt is also a Director of Microsoft Corporation, Farallon Communication,
Inc., Visioneer, Inc., and several privately held companies.
13
<PAGE> 14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
14
<PAGE> 15
3. EXHIBITS
The following exhibits are included in this Annual Report on
Form 10-K (numbered in accordance with Item 601 of Regulation
S-K):
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
3.1(1) Certificate of Incorporation of Registrant as
amended and restated to date.
3.21 By-laws of Registrant as amended to date.
10.1(1.2) 1988 Stock Option Plan and forms of Incentive
Stock Option Agreements and Nonstatutory Stock
Option Agreements, as amended to date.
10.2(1.2) 1993 Directors' Stock Option Plan and forms of
Option Agreements.
10.3(1.2) 1993 Employee Stock Purchase Plan and forms of
Agreements.
10.4(1.2) 401(k) Plan, as amended to date.
10.5(1.2) Summary of Executive Bonus Program.
10.6(1.2) Form of Directors' and Officers' Indemnification
Agreement.
10.7(1) Registration and Information Rights Agreement
dated January 31, 1992.
10.8(1) Lease Agreement between the Registrant and The
Prudential Insurance Company of America dated
October 20, 1992.
10.9(1.3) OEM Agreement dated March 9, 1993 between the
Registrant and Fuji Xerox Company, Ltd.
10.10(1.3) Distributor Agreement dated June 6, 1990 between
the Registrant and Nissho Electronics
Corporation.
10.11(1.3) Agreement between the Registrant and Solectron
Corporation dated May 20, 1991, as amended on
November 18, 1992.
10.12(1) U.S. OEM Discount Agreement between the
Registrant and Sun Microsystems, Inc. effective
as of August 18, 1988, as amended by Addendum
dated September 8, 1988 and Addendum dated
September 14, 1989.
10.13(1) Source Code License between the Registrant and
Sun Microsystems, Inc. dated August 31, 1988, as
amended on April 30, 1991, February 11, 1992 and
March 18, 1992.
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.14(1) NFS Software Agreement between the Registrant
and Sun Microsystems, Inc. dated September 29,
1988.
10.15(4.5) Software Agreement between the Registrant and
AT&T Information Systems Inc. dated June 2,
1988, as amended by Supplement Number 1,
Supplement Number 2 dated August 5, 1988 and
Supplement Number 3 dated August 10, 1990, as
amended on June 28, 1993.
10.16(4.5) Sublicensing Agreement between the Registrant
and AT&T Information Systems Inc. dated August
30, 1988, as amended on June 28, 1993.
10.17(1) Software Agreement between the Registrant and
UNIX System Laboratories, Inc. dated April 29,
1992.
10.18(1) License Agreement with the Regents of the
University of California dated June 9, 1988, as
amended by Addendum dated October 21, 1988.
10.19(6.7) Intel Corporation Purchase Agreement between
Intel Corporation and the Registrant dated March
22, 1994.
10.20(8) Warranty and Service Provider Agreement between
the Registrant and AT&T Global Information
Systems dated April 15, 1994.
10.21(8) SunSoft Technology License and Distribution
Agreement between the Registrant and SunSoft,
Inc. dated December 17, 1993.
10.22(9) Preferred Shares Rights Agreement between the
Registrant and The First National Bank of Boston
as Rights Agent dated April 19, 1995.
10.23(8) Amendment No. 1 to Lease Agreement between the
Registrant and WHC-SIX Real Estate dated June 8,
1995.
10.24(8) Amendment No. 2 to Lease Agreement between the
Registrant and WHC-SIX Real Estate dated
February 28, 1996.
10.25(8) Interactive SPARC Software and Sublicensing
Agreement between Auspex Systems, Inc. and
Interactive systems Corporation, dated November
15, 1991.
10.26(10) Lease Agreement by and Between South Bay/San
Tomas Associates and Auspex Systems, Inc. dated
January 14, 1997.
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.27(10) Lease Agreement by and Between South Bay/San
Tomas Associates and Auspex Systems, Inc. dated
January 14, 1997.
11.1(10) Calculation of earning per share.
21.1(10) Subsidiaries of Registrant
23.1(10) Consent of Arthur Andersen LLP, Independent
Public Accountants
25.1(10) Power of Attorney (See Page 30).
27.1(10) Financial Data Schedule
</TABLE>
- ----------
(1) Incorporated by reference to exhibits filed in response to Item 16(a),
"Exhibits," of the Registrant's Registration Statement on Form S-1, as
amended (File No. 33-60052), which was declared effective on May 11, 1993.
(2) Designates management contract or compensatory plan arrangements required
to be filed as an exhibit of this Annual Report on Form 10-K pursuant to
Item 14(c).
(3) Confidential treatment granted by order effective May 11, 1993.
(4) Incorporated by reference to identically numbered exhibits filed in
connection with Registrant's Form 10-K for the fiscal year ended June 25,
1993 (File No. 33-60052).
(5) Confidential treatment granted by order effective January 14, 1994.
(6) Incorporated by reference to Exhibit 10.1 filed in connection with
Registrant's Form 10-Q for the quarter ended March 31, 1994 (File No.
0-21432), which was filed on May 16, 1994.
(7) Confidential treatment granted by order effective July 7, 1994.
(8) Incorporated by reference to exhibits filed in connection with the
Registrant's Form 10-K for the fiscal year ended June 30, 1994 (File No.
0-21432), which was filed on September 28, 1994 and confidential treatment
granted by order effective December 5, 1994.
(9) Incorporated by reference to Exhibit 1 filed in connection with the
Registrant's Form 8-A which was filed on April 20, 1995.
(10) Incorporated by reference to exhibits filed in connection with
Registrant's Form 10-K for the fiscal year ended June 30, 1997 (File No.
0-21432), which was filed on September 24, 1997.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized.
AUSPEX SYSTEMS, INC.
Date: September 30 , 1997 By: / s / KENT L. ROBERTSON
---------------------- ----------------------------------
Kent L. Robertson, Vice President
of Finance and Chief Financial
Officer
18
