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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): February 22, 2000
NETRIX CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 0-20512 54-1345159
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
13595 Dulles Technology Drive, Herndon, Virginia 20171
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (703) 742-6000
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Item 5. Other Events.
The Registrant has released its Earnings Release for the quarter
and year ended December 31, 1999, filed herewith as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
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Not applicable.
(b) Pro Forma Financial Information.
--------------------------------
Not applicable.
(c) Exhibits.
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The following exhibit is included as part of this Report:
99.1 Press release of Netrix Corporation, dated
February 22, 2000.
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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.
NETRIX CORPORATION
Date: February 22, 2000 By: /s/ Peter J. Kendrick
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Name: Peter J. Kendrick
Title: Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release of Netrix Corporation, dated
February 22, 2000.
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COMPANY CONTACTS: INVESTOR RELATIONS:
Tony Morris or Dick Sterry Steve Chizzik
Nx Networks Equity Communications
703-742-6000 888-530-7051
[email protected] [email protected]
- ---------------------- ---------------
or [email protected]
NX NETWORKS REPORTS RESULTS FOR FOURTH QUARTER AND YEAR ENDED DECEMBER
31, 1999 SALES UP 21% - REVENUES FROM NEW PRODUCT LINE UP 31% -
BACKLOG UP 500%
HERNDON, VA -FEBRUARY 22, 2000, Nx Networks (NASDAQ: NTRX), a leader in Internet
Telephony (IT) and Voice Over IP (VoIP) and Virtual Private Networking (VPN)
solutions, today announced financial results for the quarter and year ended
December 31, 1999.
Revenues for the fourth quarter of 1999 were $9.8 million. On a consecutive
quarter basis, revenues increased by 21 percent, or $1.7 million, over 1999
third quarter revenues of $8.1 million. Nx Networks Internet Telephony products
generated record revenues of over $5.0 million - an increase of over 31 percent
from last quarter. Backlog increased 500% over the third quarter to $2.5
million.
Steven T. Francesco, Nx Networks Chairman and Chief Executive Officer, said,
"The continued sales increase of our award winning Netrix 2200 Series product
line shows it to be a proven performer which will serve as a springboard for our
new Nx 3000 Series and soon to be announced next-generation platforms. Year-end
demand for our products created an unprecedented backlog which combined with our
new IT solutions and customer initiatives will ensure a strong start for the
first quarter of 2000. In addition, we continue to take appropriate cost
reductions in order to increase efficiency and profitability."
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For the year ended December 31, 1999, revenues were $31.2 million, compared to
$31.5 million for the year ended December 31, 1998. The operating loss for the
year was $24.5 million or $2.03 per share compared to $6.5 million or $.60 per
share for the prior year. However, 1999 results include an $18.8 million
non-cash charge for stock compensation expenses. Adjusting for this non-cash
charge, the operating loss for the year would be $5.8 million or $.47 per share.
"It is important to note that even with an increase in expenses associated with
merging companies, we were able to reduce our operating loss for the year
compared to 1998 after adjusting for the $18.8 million non-cash compensation
charge." stated Peter Kendrick, Nx Networks Vice President and CFO. He also
noted that, "Much of the increase associated with merging the companies occurred
in the fourth quarter. Adjusting for merger expenses (including non-cash
compensation, amortization of goodwill and other expenses) would dramatically
reduce the loss for the quarter." He added, "The sales force did an excellent
job of increasing 1999 product sales and increasing product gross profit
margins, which reflects the Company's ability to maintain pricing in the
marketplace."
ABOUT NX NETWORKS
Nx Networks is a worldwide provider of secure Internet Telephony and data
networking products. Nx Networks' customers include service providers,
multinational corporations, and government agencies in over 60 countries
worldwide. Nx recently announced the acquisition of AetherWorks, a privately
held provider of innovative Internet Telephony solutions, including softswitch
technology. The company's corporate headquarters are located in Herndon,
Virginia. Additional information can be found on the company's web site at
www.nxnetworks.com
SAFE HARBOR STATEMENT
This press release contains forward-looking statements that involve a number of
risks and uncertainties, including references to the success of new products and
the transition between the sale of old products and the sale of new products.
Readers are cautioned that all forward-looking statements are subject to risks
and uncertainties, including, without limitation, the timing of new
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announcements or introductions by the Company and its competitors, the hiring
and retention of key employees, competitive pricing pressures, the manufacturing
of products, the need for capital, dependence on third parties for
manufacturing, components and products, general economic conditions in the
United States and international markets, and the risk factors detailed from time
to time in the Company's periodic reports and registration statements filed with
the Securities and Exchange Commission. Readers are cautioned not to place undue
reliance on these forward-looking statements that speak only as of the date
hereof. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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NX NETWORKS
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Year Ended
December 31
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1999 1998
ASSETS (unaudited)
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Current assets:
Cash and cash equivalents $ 5,930 $ 2,488
Accounts receivable, net 9,697 7,499
Inventories 4,304 5,265
Other current assets 756 472
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Total current assets 20,687 15,724
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Property and equipment, net 4,560 3,823
Goodwill and intangibles, net 60,046 529
Deposits and other assets 108 165
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TOTAL ASSETS $ 85,401 $ 20,241
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 1,059 $ 2,167
Accounts payable 6,703 3,011
Accrued liabilities 4,680 2,946
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Total current liabilities 12,442 8,124
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Long-term liabilities 352 -
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TOTAL LIABILITIES 12,794 8,124
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Stockholders' equity:
Common stock 1,462 575
Additional paid-in capital 151,655 57,679
Accumulated deficit (82,255) (46,274)
Warrants 2,041 257
Accumulated other comprehensive loss (296) (120)
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Total stockholders' equity 72,607 12,117
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 85,401 $ 20,241
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NX NETWORKS
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31 December 31
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1999 1998 1999 1998
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues
Product $ 24,505 $ 21,840 $ 8,426 $ 5,568
Service and other 6,690 9,642 1,381 2,530
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Total revenues 31,195 31,482 9,807 8,098
Cost of revenues
Product 11,765 10,939 4,253 3,395
Service and other 4,777 5,155 1,139 1,131
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Total cost of revenues 16,542 16,094 5,392 4,526
Gross profit 14,653 15,388 4,415 3,572
Operating expenses
Sales and marketing 6,908 10,781 2,287 3,007
General and administrative 5,573 4,324 1,890 1,244
Research and development 7,043 6,771 1,706 1,832
Stock compensation expense 18,778 0 18,015 0
Restructuring reserve 900 0 0 0
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Total operating expenses 39,202 21,876 23,898 6,083
Loss from operations (24,549) (6,488) (19,483) (2,511)
Interest and other income, net (179) (29) 40 (96)
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Net loss before preferred dividends (24,728) (6,517) (19,443) (2,607)
Dividends on preferred stock (1,399) - (826) -
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Net loss attributable to common
stockholders $(26,127) $ (6,517) $(20,269) $ (2,607)
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Basic and diluted loss per common share $ (2.16) $ (.60) $ (1.47) $ (.23)
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Weighted average common shares outstanding 12,074 10,891 13,760 11,452
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EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
ABC CORP.
The undersigned hereby certifies that he is _________________________
of ABC Corp. (the "Corporation"), that the Corporation is a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "Law") and that, pursuant to authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Amended
and Restated Certificate of Incorporation of the Corporation, as amended, the
following resolution was duly adopted by the Board of Directors of the
Corporation as required by Section 151 of the Law at a meeting duly called and
held on December 6, 1999:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of the Corporation in
accordance with the provisions of the Amended and Restated
Certificate of Incorporation of the Corporation, as amended,
the Board of Directors of the Corporation hereby creates a
series of Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Corporation and hereby states the
designation and number of shares, and fixes the voting and
other powers, preferences and relative, participating,
optional or other rights thereof and the qualifications,
limitations and restrictions thereon, as follows:
Section I. DESIGNATION AND AMOUNT. There shall be a series of
Preferred Stock designated as "Series A Junior Participating Preferred Stock"
(the "Series A Preferred Stock") and the number of shares constituting the
Series A Preferred Stock shall be 250. Such number of shares may be increased or
decreased by resolution of the Board of Directors; PROVIDED, HOWEVER, that no
decrease shall reduce the number of shares to a number less than the number of
shares then outstanding plus the number of shares then reserved for issuance
upon the exercise of outstanding options, rights or warrants or upon the
conversion or exchange of outstanding securities issued by the Corporation
convertible into or exchangeable for Series A Preferred Stock.
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Section II. DIVIDENDS AND DISTRIBUTIONS.
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A. Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of Common
Stock, par value $.01 per share, of the Corporation (the "Common Stock") shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in cash
on the 15th day of April, July, October and January in each year (each such date
being called as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $42,000 or (b) the Adjustment Number
(as defined below) times the aggregate per share amount of all cash dividends,
plus the fair value, as determined by the Board of Directors upon the advice of
a nationally recognized investment banking firm selected in good faith by the
Board of Directors, of all non-cash dividends and other distributions (other
than dividends payable in shares of Common Stock) declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. The "Adjustment
Number" shall initially be 200,000. In the event the Corporation shall at any
time after December 6, 1999 (the "Rights Declaration Date"): (i) declare and pay
any dividend on Common Stock payable in shares of Common Stock; (ii) subdivide
the outstanding Common Stock; or (iii) combine the outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. (References herein to the
Adjustment Amount shall mean the Adjustment Amount as in effect at the relevant
time.
B. The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section II
immediately after it declares a dividend or distribution on Common Stock (other
than a dividend payable in shares of Common Stock); PROVIDED, that, in the event
no dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $42,000 per share on the Series A
Preferred Stock shall nevertheless be declared for payment on such subsequent
Quarterly Dividend Payment Date.
C. Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of first issuance of any shares of Series A Preferred Stock,
unless the date of issuance of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on shares of
Series A Preferred Stock shall begin to accrue from the date of issuance
thereof, or unless the date of issuance of such shares is a Quarterly Dividend
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Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which cases
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section III. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
A. Subject to the provision for adjustment set forth herein, each
share of Series A Preferred Stock shall entitle the holder thereof to a number
of votes equal to the Adjustment Number (as then adjusted) on all matters
submitted to a vote of the holders of Common Stock.
B. Except as otherwise provided herein or required by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of holders
of Common Stock.
C. Except as otherwise set forth herein or required by law, the
holders of Series A Preferred Stock shall have no voting or approval rights
separate or apart from their right to vote with holders of shares of Common
Stock as set forth herein.
Section IV. CERTAIN RESTRICTIONS.
--------------------
A. Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section II are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on the Series A Preferred Stock shall
have been paid in full, the Corporation shall not:
1. declare or pay dividends, or make any other
distributions, on any shares of Common Stock or other stock ranking
junior (either as to dividends or upon liquidation or dissolution) to
the Series A Preferred Stock;
2. declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as
to dividends or upon liquidation or dissolution) with the Series A
Preferred Stock, except dividends paid ratably on Series A Preferred
Stock and shares of such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;
3. redeem, purchase or otherwise acquire shares of any
Common Stock or other stock ranking junior (either as to dividends or
upon liquidation or dissolution) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for
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shares of any other stock of the Corporation ranking junior (both as
to dividends and upon dissolution or liquidation) to the Series A
Preferred Stock; or
4. redeem, purchase or otherwise acquire any shares of
Series A Preferred Stock or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a
purchase offer made to the holders of all such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
B. The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire any shares of stock of the Corporation unless
the Corporation could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section V. REACQUIRED SHARES. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation or any subsidiary
of the Corporation in any manner shall be promptly retired. All such shares
shall upon their retirement become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock created in
accordance with the Amended and Restated Certificate of Incorporation, as
amended, and the Law.
Section VI. LIQUIDATION OR DISSOLUTION.
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(A) Upon any liquidation or dissolution of the Corporation (which
terms include a winding up of the Corporation, voluntary or otherwise), no
distribution shall be made on any shares of stock ranking junior (either as to
dividends or upon liquidation or dissolution) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received an amount per share (the "Series A Liquidation Preference") equal
to the greater of (i) $42,000,000 plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment or (ii) the Adjustment Number times the per share amount of all
cash and other property to be distributed on the Common Stock upon such
liquidation or dissolution.
(B) If there are not sufficient assets available to permit payment in
full of the Series A Liquidation Preference and the liquidation preferences of
all other classes and series of stock of the Corporation that rank on a parity
with the Series A Preferred Stock in respect thereof, then the assets available
for such distribution shall be distributed ratably to the holders of the Series
A Preferred Stock and the holders of such parity stock in proportion to their
respective liquidation preferences.
(C) Neither the merger or consolidation of the Corporation into or
with another corporation (or other entity) nor the merger or consolidation of
another corporation (or other entity) into or with the Corporation shall be
deemed to be a liquidation or dissolution of the Corporation within the meaning
of this Section VI.
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Section VII. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
shares of Common Stock are exchanged for or changed into other stock,
securities, cash and/or other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share equal to the Adjustment Number times the
aggregate amount of stock, securities, cash and/or other property, as the case
may be, into which or for which each share of Common Stock is changed or
exchanged.
Section VIII. NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable.
Section IX. RANKING. The Series A Preferred Stock shall, with respect
to payments of dividends and rights upon liquidation or dissolution, rank: (a)
senior and prior to (i) the Common Stock and (ii) any series of preferred stock
of the Corporation which is stated to be junior to the Series A Preferred Stock;
(b) PARI PASSU with (i) any series of preferred stock of the Corporation which
is not stated to be senior to or junior to the Series A Preferred Stock; and (c)
junior and subordinate to any series of preferred stock of the Corporation which
is stated to be senior to the Series A Preferred Stock. Determination as to
whether any such statements has shall be made by reference to the Certificate of
Incorporation of the Corporation, as then in effect.
Section X. AMENDMENT. At any time that shares of Series A Preferred
Stock are outstanding, the Certificate of Incorporation of the Corporation as
then in effect shall not be amended in any manner which would materially alter
or change the powers, preferences or rights of the Series A Preferred Stock so
as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
Section XI. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
Section XII. MISCELLANEOUS. The rights of holders of Series A
Preferred Stock shall, to the extent not inconsistent with this resolution, be
the same as those of holders of Common Stock.
IN WITNESS WHEREOF, this Certificate of Designations has been executed
on this 6th day of December, 1999.
By:
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Name:
Title:
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