<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/x/ Preliminary proxy statement / / Confidential, For Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Advanced Fibre Communications, Inc.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
(5) Total fee paid:
- ------------------------------------------------------------------------------
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
/ / (1) Amount previously paid:
- ------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- ------------------------------------------------------------------------------
(3) Filing Party:
- ------------------------------------------------------------------------------
(4) Date Filed:
- ------------------------------------------------------------------------------
<PAGE>
PRELIMINARY COPIES
[ADVANCED FIBRE COMMUNICATIONS LOGO]
ADVANCED FIBRE COMMUNICATIONS, INC.
1 WILLOW BROOK COURT
PETALUMA, CALIFORNIA 94954
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 22, 1997
To Our Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders of
ADVANCED FIBRE COMMUNICATIONS, INC. (the "Company"), which will be held at
the offices of the Company, 9 Willow Brook Court, Petaluma, California 94954
at 9:00 a.m. on September 22, 1997 (the "Special Meeting"). The purpose of
the Special Meeting is to consider and take action upon a proposal
recommended by the Board of Directors to amend the Corporation's Fourth
Restated Certificate of Incorporation to increase the Corporation's
authorized Common Stock, from One Hundred Million (100,000,000) shares to Two
Hundred Million (200,000,000) shares. This matter is more fully described in
the Proxy Statement accompanying this Notice.
The Board of Directors has fixed the close of business on August 12, 1997
as the record date for determining those stockholders who will be entitled to
vote at the Special Meeting or any adjournment or postponement thereof. A
list of stockholders entitled to vote at the Special Meeting will be
available for inspection ten days prior to the Special Meeting at the
principal offices of the Company, 1 Willow Brook Court, Petaluma, California,
94954. The stock transfer books will not be closed between the record date
and the date of the Special Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
Your proxy may be revoked at any time prior to the time it is voted.
Please read the proxy material carefully. Your vote is important and the
Company appreciates your cooperation in considering and acting on the matter
presented.
Sincerely yours,
Donald Green
CHAIRMAN OF THE BOARD
August 20, 1997
Petaluma, California
<PAGE>
PRELIMINARY COPIES
STOCKHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT
CAREFULLY PRIOR TO RETURNING THEIR PROXIES
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
OF
ADVANCED FIBRE COMMUNICATIONS, INC.
TO BE HELD ON SEPTEMBER 22, 1997
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of ADVANCED FIBRE COMMUNICATIONS, INC. ("AFC" or the
"Company") of proxies to be voted at the Special Meeting of Stockholders (the
"Special Meeting") which will be held at the offices of the Company, 9 Willow
Brook Court, Petaluma, California 94954 on September 22, 1997 at 9:00 a.m.,
or at any adjournments or postponements thereof, for the purposes set forth
in the accompanying Notice of Special Meeting of Stockholders. This Proxy
Statement and the proxy card were first mailed to stockholders on or about
August 20, 1997.
VOTING RIGHTS AND SOLICITATION
The close of business on August 12, 1997 was the record date for
stockholders entitled to notice of and to vote at the Special Meeting. As of
that date, the Company had 35,866,758 shares of Common Stock issued and
outstanding. All of the shares of the Company's Common Stock outstanding on
the record date are entitled to vote at the Special Meeting, and stockholders
of record entitled to vote at the Special Meeting will have one vote for each
share of Common Stock so held with regard to each matter to be voted upon.
Representation of at least a majority of all outstanding shares of Common
Stock of the Company is required to constitute a quorum. Accordingly, it is
important that your shares be represented at the Special Meeting.
Shares of the Company's Common Stock represented by proxies in the
accompanying form which are properly executed and returned to the Company
will be voted at the Special Meeting in accordance with the stockholders'
instructions contained therein. In the absence of contrary instructions,
shares represented by such proxies will be voted FOR the proposal to approve
the increase in authorized shares of Common Stock. If other matters should
properly come before the Special Meeting, the proxy holders will vote on such
matters in accordance with their best judgment. Management does not know of
any matters to be presented at the Special Meeting other than the matter set
forth in this Proxy Statement and in the Notice accompanying this Proxy
Statement. Any stockholder has the right to revoke his or her proxy at any
time before it is voted at the Special Meeting. The approval of the
amendment of the Company's Fourth Restated Certificate of Incorporation (the
"Restated Certificate of Incorporation") to increase the number of authorized
shares of Common Stock will require the affirmative vote of a majority of the
shares of the Company's outstanding Common Stock. Abstentions and broker
non-votes are each included in the determination of the number of shares
present for quorum purposes. Abstentions are counted in tabulations of the
votes cast on proposals presented to stockholders, whereas broker non-votes
are not counted for purposes of determining whether a proposal has been
approved.
The entire cost of soliciting proxies will be borne by the Company.
Proxies will be solicited principally through the use of the mails, but, if
deemed desirable, may be solicited personally or by telephone, telegraph or
special letter by officers and regular employees of the Company for no
additional compensation. Arrangements may be made with brokerage houses and
other custodians, nominees and fiduciaries to send proxies and proxy material
to the beneficial owners of the Company's Common Stock, and such persons may
be reimbursed for their expenses.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of July 31, 1997 by:
(i) each person (or group of affiliated persons) who is known by the Company
to own beneficially more than five percent of the outstanding shares of the
Common Stock of the Company; (ii) each director of the Company; (iii) each
executive officer of the Company; and (iv) all directors and executive
officers of the Company as a group.
SHARES BENEFICIALLY
OWNED AS OF
JULY 31, 1997 (1)
------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE
- ------------------------ --------- ----------
Tellabs, Inc.(2) 3,381,027 9.4%
4951 Indiana Avenue
Lisle, IL 60532
B.J. Cassin(3) 1,117,085 3.1%
Donald Green(4) 1,826,701 5.0%
Carl Grivner(5) 342,755 1.0%
Clifford H. Higgerson(6) 830,221 2.3%
Brian Jackman(7) 3,401,993 9.4%
Dan Rasdal(8) 69,000 *
Peter Darbee(9) 152,484 *
Karen Godfrey(10) 100,079 *
Glenn Lillich(11) 244,307 *
All executive officers and directors
as a group (9 persons)(12) 8,084,625 21.5%
- -----------------------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options and warrants currently exercisable within 60 days
are deemed to be outstanding for computing the percentage of the
person holding such options or warrants but are not deemed outstanding
for computing the percentage of any other person. Except as indicated
by footnote, and subject to community property laws where applicable,
the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially
owned by them.
(2) Includes 300,000 shares which may be acquired upon exercise of a
warrant.
(3) Includes 137,053 shares held in trust by the Robert S. Cassin
Charitable Trust, 75,000 shares held in trust by The Cassin Foundation
and 75,000 shares held in trust by the Cassin 1997 Charitable Trust
UTA dated 1/28/97. The remaining shares are held in trust by B.J.
Cassin and Isabel B. Cassin, Trustees of the Cassin Family Trust
U/D/T, dated January 31, 1996.
(4) Includes 321,502 shares issuable upon exercise of options held by Mr.
Green, 199,180 of which shares will be vested as of 60 days from July
31, 1997. Also includes 294,044 shares which may be acquired by Mr.
Green
2
<PAGE>
upon exercise of warrants. Excludes shares held by Mr. Green's
adult children.
(5) Includes 316,489 shares issuable upon exercise of options held by Mr.
Grivner, 57,086 of which shares will be vested as of 60 days from July
31, 1997.
(6) Includes 696,797 shares held by Vanguard IV, L.P. Mr. Higgerson is a
general partner of Vanguard Venture Partners, L.P., which is the
general partner of Vanguard IV, L.P. and may be deemed to be the
beneficial owner of such shares owned by Vanguard IV, L.P. Mr.
Higgerson disclaims beneficial ownership of such shares.
(7) Includes 3,381,027 shares held by Tellabs, Inc., 300,000 of which
shares may be acquired upon exercise of a warrant. Mr. Jackman is the
Executive Vice President of Tellabs, Inc. and the President of
Tellabs Operations, Inc. and may be deemed to be the beneficial owner
of such shares owned by Tellabs, Inc. Mr. Jackman disclaims
beneficial ownership of such shares. Also includes 10,000 shares
which may be acquired by Mr. Jackman upon exercise of a warrant.
(8) Includes 69,000 shares issuable upon exercise of options held by Mr.
Rasdal, 48,000 of which shares will be vested as of 60 days from July
31, 1997.
(9) Includes 2,484 shares subject to a right of repurchase by the Company.
Includes 150,000 shares issuable upon exercise of options held by Mr.
Darbee, 30,000 of which shares will be vested as of 60 days from July
31, 1997.
(10) Includes 64,515 shares issuable upon exercise of options held by Ms.
Godfrey, 36,492 of which shares will be vested as of 60 days from July
31, 1997.
(11) Includes 224,225 shares issuable upon exercise of options held by Mr.
Lillich, 164,714 of which shares will be vested as of 60 days from
July 31, 1997.
(12) Includes 2,484 shares subject to a right of repurchase by the Company.
Includes 1,145,731 shares issuable upon exercise of options, 535,472
of which shares will be vested as of 60 days from July 31, 1997, and
604,044 shares which may be acquired upon exercise of warrants.
3
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
INTRODUCTION
The Company's Restated Certificate of Incorporation currently authorizes
the issuance of One Hundred Million (100,000,000) shares of Common Stock, par
value $0.01 per share, and Five Million (5,000,000) shares of Preferred
Stock, par value $0.01 per share. In July 1997, the Board of Directors of
the Company adopted a resolution proposing that the Restated Certificate of
Incorporation be amended to increase the authorized number of shares of
Common Stock to Two Hundred Million (200,000,000), subject to stockholder
approval of the amendment.
PROPOSED STOCK SPLIT
At the same time that it adopted the resolution, the Board of Directors
declared a two-for-one stock split of the Company's Common Stock which would
be effected as a special distribution of one additional share of Common Stock
for each share of Common Stock outstanding (the "Stock Split"). Stockholders
are not being asked to vote on the Stock Split, but the Stock Split will not
take place unless the authorized number of shares of Common Stock is
increased as described in this Proposal. Readers should note that none of
the share-related data in this Proxy Statement is adjusted to take into
account the proposed Stock Split.
CURRENT USE OF SHARES
As of July 31, 1997, the Company had approximately 36 million shares of
Common Stock outstanding and approximately 8.2 million shares reserved for
future issuance under the Company's employee stock plans, of which,
currently, approximately 4.1 million are covered by outstanding options and
approximately 4.1 million are available for grant or purchase, In addition,
the Company has approximately 750,000 shares of Common Stock reserved for
issuance upon the exercise of outstanding warrants. Based upon the foregoing
number of outstanding and reserved shares of Common Stock, the Company
currently has approximately 55 million shares remaining available for other
purposes.
PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has adopted resolutions setting forth (i) the
proposed amendment to paragraph (a) of Article FOURTH of the Company's
Restated Certificate of Incorporation (the "Amendment"); (ii) the
advisability of the Amendment; and (iii) a call for submission of the
Amendment for approval by the Company's stockholders at the Meeting.
The following is the text of paragraph (a) of Article FOURTH of the
Restated Certificate of Incorporation of the Company, as proposed to be
amended:
FOURTH. (a) The Corporation is authorized to issue Two Hundred
Five Million (205,000,000) shares of capital stock, $0.01 par value. The
shares shall be divided into two classes, designated as follows:
DESIGNATION OF CLASS NUMBER OF SHARES PAR VALUE
-------------------- ---------------- ---------
Common Stock 200,000,000 $0.01
Preferred Stock 5,000,000 $0.01
PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT
The Board of Directors believes that it is in the Company's best interest
to increase the number of shares of Common Stock that AFC is authorized to
issue in order to give the Company additional flexibility to maintain a
4
<PAGE>
reasonable stock price with future stock splits and stock dividends. As
noted above, the Board of Directors has approved a Stock Split subject to the
approval of the Amendment.
The Board of Directors also believes that the availability of additional
authorized but unissued shares will provide the Company with the flexibility
to issue Common Stock for other proper corporate purposes which may be
identified in the future, such as to raise equity capital, to adopt
additional employee benefit plans or reserve additional shares for issuance
under such plans, and to make acquisitions through the use of stock. Other
than with respect to the foregoing Stock Split and as permitted or required
under the Company's employee benefit plans and under outstanding options,
warrants, and other securities convertible into Common Stock, the Board of
Directors has no immediate plans, understandings, agreements, or commitments
to issue additional Common Stock for any purposes.
The Board of Directors believes that the proposed increase in the
authorized Common Stock will make available sufficient shares for use, taking
into account the Stock Split, should the Company decide to use its shares for
one or more of such previously mentioned purposes or otherwise. No
additional action or authorization by the Company's stockholders would be
necessary prior to the issuance of such additional shares, unless required by
applicable law or the rules of any stock exchange or national securities
association trading system on which the Common Stock is then listed or
quoted. The Company reserves the right to seek a further increase in
authorized shares from time to time in the future as considered appropriate
by the Board of Directors.
Under the Company's Restated Certificate of Incorporation, the Company's
stockholders do not have preemptive rights with respect to Common Stock.
Thus, should the Board of Directors elect to issue additional shares of
Common Stock, existing stockholders would not have any preferential rights to
purchase such shares. In addition, if the Board of Directors elects to issue
additional shares of Common Stock, such issuance could have a dilutive effect
on the earnings per share, voting power, and shareholdings of current
stockholders.
The proposed Amendment to increase the authorized number of shares of
Common Stock could, under certain circumstances, have an anti-takeover
effect, although this is not the intention of this proposal. For example, in
the event of a hostile attempt to take over control of the Company, it may be
possible for the Company to endeavor to impede the attempt by issuing shares
of the Common Stock, thereby diluting the voting power of the other
outstanding shares and increasing the potential cost to acquire control of
the Company. The Amendment therefore may have the effect of discouraging
unsolicited takeover attempts. By potentially discouraging initiation of any
such unsolicited takeover attempt, the proposed Amendment may limit the
opportunity for the Company's stockholders to dispose of their shares at the
higher price generally available in takeover attempts or that may be
available under a merger proposal. The proposed Amendment may have the
effect of permitting the Company's current management, including the current
Board of Directors, to retain its position, and place it in a better position
to resist changes that stockholders may wish to make if they are dissatisfied
with the conduct of the Company's business. However, the Board of Directors
is not aware of any attempt to take control of the Company and the Board of
Directors has not presented this proposal with the intent that it be utilized
as a type of anti-takeover device.
EFFECT OF THE STOCK SPLIT
No change in total stockholders' equity will result from the Stock Split.
The aggregate amount of capital represented by the outstanding shares of
Common Stock will be increased by $0.01 for each share issued to effect the
Stock Split and the Company's capital in excess of par value account will be
reduced by the same amount. After the Stock Split, purchases and sales of
Common Stock by an individual stockholder may be subject to higher brokerage
charges and applicable stock transfer taxes than on a pre-split transaction
of equivalent market value, due to the greater number of shares of Common
Stock involved after the Stock Split. In addition, the Company will incur
certain expenses in connection with the Stock Split, such as the cost of
preparing and delivering to stockholders new certificates representing
additional shares.
In accordance with the terms of the Company's stock option and employee
benefit plans and the Warrants, appropriate adjustments will be made upon the
effectiveness of the Stock Split to the number of shares reserved for
issuance under such plans and the exercise prices and number of shares
covered by outstanding options and Warrants.
5
<PAGE>
The Company has been advised that, based on current tax law, the Stock
Split should not result in any gain or loss for Federal income tax purposes.
The tax basis of every share held before the Stock Split will be allocated
between the two shares held as a result of the distribution, and the holding
period of the new shares will include the holding period of the shares with
respect to which they were issued. The laws of jurisdictions other than the
United States may impose income taxes on the issuance of the additional
shares and stockholders subject to such laws are urged to consult their tax
advisers.
As noted above, the Stock Split is contingent on stockholder approval of
the Amendment, but stockholders are not being asked to vote on the Stock
Split.
VOTE NECESSARY TO APPROVE THE AMENDMENT
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Special Meeting, assuming a
quorum is present, is necessary for approval of the Amendment. Therefore,
abstentions and broker non-votes (which may occur if a beneficial owner of
stock where shares are held in a brokerage or bank account fails to provide
the broker or the bank voting instructions as to such shares) effectively
count as votes against the Amendment.
RECOMMENDATION OF THE BOARD
The Board of Directors recommends a vote "FOR" the proposal to amend the
Company's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock from One Hundred Million (100,000,000) to
Two Hundred Million (200,000,000). Unless a contrary choice is specified,
proxies solicited by the Board of Directors will be voted FOR approval of the
Amendment.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered at the 1998 Annual
Meeting of Stockholders must be received by the Company no later than
December 8, 1997. The proposal must be mailed to the Company's principal
executive offices, 1 Willow Brook Court, Petaluma, CA 94954, Attention: Peter
Darbee. Such proposals may be included in next year's proxy statement if
they comply with certain rules and regulations promulgated by the Securities
and Exchange Commission.
OTHER MATTERS
Management does not know of any matters to be presented at the Special
Meeting other than those set forth herein and in the Notice accompanying this
Proxy Statement.
It is important that your shares be represented at the Special Meeting,
regardless of the number of shares which you hold. YOU ARE, THEREFORE, URGED
TO EXECUTE PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE WHICH
HAS BEEN ENCLOSED FOR YOUR CONVENIENCE. Stockholders who are present at the
Special Meeting may revoke their proxies and vote in person or, if they
prefer, may abstain from voting in person and allow their proxies to be voted.
By Order of the Board of Directors,
Donald Green
CHAIRMAN OF THE BOARD
August 20, 1997
Petaluma, California
6
<PAGE>
[ADVANCED FIBRE COMMUNICATIONS LOGO]
DETACH HERE
REVOCABLE PROXY
ADVANCED FIBRE COMMUNICATIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Advanced Fibre Communications, Inc. (the
"Corporation") hereby appoints Carl Grivner and Peter Darbee, and each or
P either of them, with full power of substitution in each of them, as proxies
of the undersigned, and hereby authorizes them to represent and to cast all
R votes as designated below, which the undersigned stockholder is entitled to
cast at the Special Meeting of Stockholders to be held at 9:00 a.m. on
O September 22, 1997, at the offices of the Corporation, 9 Willow Brook Court,
Petaluma, California 94954, and at any adjournments thereof, with respect to
X the matters set forth on the reverse side hereof.
Y THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED STOCKHOLDER. THE
BOARD RECOMMENDS A VOTE FOR THE PROPOSAL. THE UNDERSIGNED STOCKHOLDER MAY
REVOKE THIS PROXY AT ANY TIME BEFORE IT IS VOTED BY DELIVERING TO THE
SECRETARY OF THE CORPORATION EITHER A WRITTEN REVOCATION OF THE PROXY OR
A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY APPEARING AT THE SPECIAL
MEETING AND VOTING IN PERSON. THE UNDERSIGNED STOCKHOLDER HEREBY
ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING AND PROXY STATEMENT.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE |SEE REVERSE|
| SIDE |
<PAGE>
Dear Stockholder:
The officers and directors of Advanced Fibre Communications, Inc. ("AFC")
cordially invite you to attend the Special Meeting of Stockholders, Monday,
September 22, 1997 at 9:00 a.m., at the offices of AFC, 9 Willow Brook Court,
Petaluma, California.
Please review the important information enclosed with this Proxy. Your vote
counts, and you are strongly encouraged to exercise your right to vote your
shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
/s/ DONALD GREEN
Donald Green
Chairman of the Board
and Chief Executive Officer
DETACH HERE
/x/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
AFC
ADVANCED FIBRE COMMUNICATIONS, INC.
FOR AGAINST ABSTAIN
1. Proposal to amend the Fourth Restated / / / / / /
Certificate of Incorporation to increase
the number of authorized shares of Common
Stock of the Corporation from 100,000,000
to 200,000,000.
2. In their discretion, the Proxies are authorized to vote upon any other
business that may properly come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Please sign exactly as name appears hereon. Joint owners should each sign.
Executors, administrators, trustees, guardians or other fiduciaries should
give full title as such. If signing for a corporation, please sign in full
corporate name by a duly authorized officer. If signing for a partnership,
please sign in Partnership name by an authorized person.
Signature _______________________________ Date:____________________
Signature _______________________________ Date:____________________
