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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 9, 2000
ADVANCED FIBRE COMMUNICATIONS, INC.
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A Delaware Commission File I.R.S. Employer
Corporation Number: 0-28734 Identification No.
68-0277743
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One Willow Brook Court
Petaluma, California 94954
Telephone: (707) 794-7700
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ITEM 5. OTHER EVENTS.
On February 9, 2000, Advanced Fibre Communications, Inc. (AFC) issued a press
release with respect to a hedging transaction involving shares of Cisco Systems,
Inc. common stock owned by AFC. This press release is attached hereto as Exhibit
99.1 and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Exhibits.
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Exhibit No. Description
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99.1 Press release, dated February 9, 2000.
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SIGNATURE
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.
ADVANCED FIBRE COMMUNICATIONS, INC.
Date: February 11, 2000 By: /s/ Keith E. Pratt
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Name: Keith E. Pratt
Title: Vice President, Chief
Financial Officer
(Duly Authorized Signatory)
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EXHIBIT INDEX
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Exhibit No. Description
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99.1 Press release, dated February 9, 2000.
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EXHIBIT 99.1
Contact: Jeff Finn
Advanced Fibre Communications, Inc.
Investor Relations
www.afc.com
(707) 794-7555
FOR IMMEDIATE RELEASE
ADVANCED FIBRE COMMUNICATIONS, INC. ANNOUNCES
HEDGING TRANSACTION TO PROTECT THE VALUE OF ITS CISCO STOCK HOLDING
February 9, 2000 (Petaluma, CA), Advanced Fibre Communications, Inc. (Nasdaq:
AFCI) ("AFC") announced today that it has entered into a hedging transaction
with respect to approximately 5.0 million shares of common stock of Cisco
Systems, Inc. ("Cisco") held by AFC. AFC acquired these shares as a result of
its investment in Cerent Corporation, which was acquired by Cisco on November 1,
1999. The hedging transaction, which is structured as a "costless collar" with a
term of approximately three years, provides AFC with a floor value of
approximately $650 million for the hedged shares while allowing AFC to
participate in up to approximately $350 million of any further appreciation in
the shares above the floor value. AFC will also have the flexibility to borrow
against the value of a portion of the hedged stock, which it has pledged to
secure its obligations under the hedging arrangement. Approximately 260,000
additional shares of Cisco common stock will be released to AFC in April 2000,
unless Cisco makes claims against such shares under the terms of the Cerent
acquisition. AFC plans to subject any such shares to a similar hedging
arrangement.
John Schofield, AFC's President and CEO, said, "We view this transaction as
a prudent reduction of risk. Given the substantial appreciation we have realized
on our initial investment in Cerent, we believe that it is appropriate to take
steps to lock in the value of this significant asset."
Share numbers in this press release do not give effect to the two-for-one stock
split declared by Cisco Systems, Inc. to stockholders of record as of February
22, 2000. Except for historical information contained in this press release, the
foregoing contains forward-looking statements that involve risks and
uncertainties. Actual results may differ materially from those indicated by such
forward-looking statements based on a variety of risks and uncertainties,
including risks and uncertainties relating to fluctuations in the value of the
securities held by AFC, potential changes in accounting standards and the risk
that additional escrowed shares of Cisco stock will not be released to AFC.
Information about potential factors that could affect AFC's financial results is
included in AFC's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q,
which have been filed with the Securities and Exchange Commission.
AFC is a leading manufacturer of telecommunications systems for the "local loop"
between telephone service users and public telephone networks worldwide. AFC has
pioneered a single platform that supports any network, any transport, and any
service. AFC's flagship product, the UMC1000(TM) provides any service from POTS
to xDSL over copper, fiber, and wireless transport media.
AFC, the AFC logo, Universal Modular Carrier, and UMC1000, are registered
trademarks of Advanced Fibre Communications, Inc. Copyright 1999-2000 Advanced
Fibre Communications, Inc. All rights reserved.
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