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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): AUGUST 27, 1998
NETMANAGE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-15067 77-0252226
(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
</TABLE>
10725 NORTH DE ANZA BOULEVARD
CUPERTINO, CALIFORNIA 95014
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (408) 973-7171
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NetManage, Inc., a Delaware corporation ("NetManage"), hereby amends Item
1, "Acquisition or Disposition of Assets," and Item 7, "Financial Statements,
Pro Forma Financial Information and Exhibits," of the Company's Current Report
on Form 8-K dated August 27, 1998, as previously amended by the Company's
Current Report on Form 8-K/A filed with the Securities and Exchange Commission
(the "Commission") on October 30, 1998, in full to read as follows:
ITEM 1. ACQUISITION OR DISPOSITION OF ASSETS.
On August 27, 1998, the Registrant, NetManage, Inc., a Delaware
corporation ("NetManage" or the "Company"), acquired FTP Software, Inc., a
Massachusetts corporation ("FTP"), through the merger of Amanda Acquisition
Corp., a Massachusetts corporation and a wholly-owned subsidiary of NetManage
("Merger Sub"), with and into FTP (the "Merger"), which survived the Merger as a
wholly-owned subsidiary of NetManage, pursuant to the Agreement and Plan of
Reorganization dated as of June 15, 1998, as amended as of June 30 and July 14,
1998 (the "Reorganization Agreement"), among FTP, NetManage and Merger Sub.
Pursuant to the Merger, each outstanding share of the Common Stock, par
value $0.01 per share, of FTP ("FTP Common Stock") and each associated right
granted under the Rights Agreement dated as of December 1, 1995 between FTP and
State Street Bank and Trust Company, as Rights Agent, as amended as of November
7, 1996, February 27, 1998 and June 15, 1998, was converted into the right to
receive 0.72767 of a share of the Common Stock, par value $0.01 per share, of
NetManage ("NetManage Common Stock"). As a result, the 34,035,463 shares of FTP
Common Stock outstanding immediately prior to the Merger were converted into
approximately 24,766,440 registered shares of NetManage Common Stock. In
addition, options to acquire approximately 5,587,528 shares of FTP Common Stock
outstanding under FTP's stock option plans for its employees and its
non-employee directors were assumed by NetManage and converted into options to
purchase approximately 4,065,351 shares of NetManage Common Stock. A
Registration Statement on Form S-8 with respect to the shares of NetManage
Common Stock underlying such options was filed by the Company on August 31,
1998.
In addition, immediately following the Merger, the Company began to effect
a reorganization plan for the combined company. In connection with this
reorganization, the Company incurred a one time pre-tax charge of approximately
$7.0 million in the third quarter of 1998, relating primarily to a reduction in
NetManage's worldwide workforce and the closing of certain NetManage facilities.
The reorganization plan is expected to be substantially completed by the end of
1998 and to result in a reduction in the combined company's worldwide workforce
involving approximately 200 employees in total by the end of 1998.
As described in the accompanying pro forma financial information, the
aggregate purchase price for the Merger of approximately $78.3 million consists
of NetManage Common Stock valued at $74.0 million, options assumed valued at
approximately $1.1 million, and direct acquisition costs of approximately $3.2
million. The Company has allocated the purchase price to the assets acquired and
liabilities assumed, acquired software ($1.8 million, to be amortized over a
period of five years), acquired intangible assets ($16.8 million, to be
amortized over a period of seven years) and acquired in process research and
development that had not reached technological feasibility and, in management's
opinion, had no probable alternative future use ($9.5 million, to be reflected
as a one-time charge to operations in the third quarter of 1998) based on an
independent valuation of the acquired net assets. Liabilities assumed includes
approximately $9.7 million of costs relating to a reduction in FTP's worldwide
workforce and the consolidation of certain FTP worldwide sales facilities.
The summary of the provisions of the Reorganization Agreement set forth
above is qualified in its entirety by reference to the Reorganization Agreement,
which is incorporated herein by reference to
2
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Annex A to the Registration Statement on Form S-4 of NetManage filed with the
Commission on July 15, 1998. Certain statements contained above constitute
forward-looking statements, in particular the amount of the restructuring charge
referred to above, the expected date of completion of the restructuring plan and
the expected reduction in the Company's worldwide workforce, and are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements involve risks and
uncertainties, including risks associated with the integration of the operations
of NetManage and FTP, such as the Company's ability to integrate the operations
of FTP in a timely, efficient and cost-effective manner, the Company's ability
to retain and attract qualified employees following the integration of the
operations of FTP and the restructuring described above, the rate and amount at
which the Company is able to terminate leases on or sublease excess office
space, and the accuracy of management's estimates regarding lease termination or
sublease and other restructuring costs.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS
The consolidated financial statements of FTP Software, Inc. as of and for
the six months ended June 30, 1998 and as of December 31, 1997 and 1996 and for
the years ended December 31, 1997, 1996 and 1995 are filed as an exhibit hereto
and incorporated herein by reference.
(b) PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma condensed combined balance sheet of NetManage,
Inc. and FTP Software, Inc. at June 30, 1998 and the related unaudited pro forma
condensed combined statements of operations for the six months ended June 30,
1998 and year ended December 31, 1997 are filed as an exhibit hereto and
incorporated herein by reference.
(c) EXHIBITS
3 Form of Certificate of Amendment of Certificate of Incorporation
of NetManage(1)
10 Composite Agreement and Plan of Reorganization dated as of June 15,
1998, as amended as of June 30 and July 14, 1998, among FTP
Software, Inc., NetManage, Inc. and Amanda Acquisition Corp.(2)
23 Consent of PricewaterhouseCoopers LLP.
99.1 Financial statements of FTP Software, Inc.(3)
99.2 Pro forma financial statements of NetManage, Inc.
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(1) Incorporated by reference to Exhibit 3.2 to NetManage's Registration
Statement on Form S-4, Registration No. 333-59101, filed with the
Commission on July 15, 1998 (the "Form S-4").
(2) Incorporated by reference to Annex A to the Form S-4.
(3) The financial statements of FTP Software, Inc. as of and for the six
months ended June 30, 1998 are included in, and are incorporated by
reference to, FTP Software, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998. The financial statements of FTP Software,
Inc. as of December 31, 1997 and 1996 and for the years ended December 31,
1997, 1996 and 1995 are included in, and are incorporated by reference to,
the Form S-4.
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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.
NETMANAGE, INC.
Date: November 10, 1998 By: /s/ Gary R. Anderson
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Gary R. Anderson,
Chief Financial Officer and
Senior Vice President, Finance
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EXHIBIT INDEX
EXHIBIT NO. TITLE
3 Form of Certificate of Amendment of Certificate of Incorporation
of NetManage.(1)
10 Composite Agreement and Plan of Reorganization dated as of June
15, 1998, as amended as of June 30 and July 14, 1998, among FTP
Software, Inc., NetManage, Inc. and Amanda Acquisition Corp.(2)
23 Consent of PricewaterhouseCoopers LLP.
99.1 Financial statements of FTP Software, Inc.(3)
99.2 Pro forma financial statements of NetManage, Inc.
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(1) Incorporated by reference to Exhibit 3.2 to NetManage's Registration
Statement on Form S-4, Registration No. 333-59101, filed with the
Securities and Exchange Commission on July 15, 1998 (the "Form S-4").
(2) Incorporated by reference to Annex A to the Form S-4.
(3) The financial statements of FTP Software, Inc. as of and for the six
months ended June 30, 1998 are included in, and are incorporated by
reference to, FTP Software, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998. The financial statements of FTP Software,
Inc. as of December 31, 1997 and 1996 and for the years ended December 31,
1997, 1996 and 1995 are included in, and are incorporated by reference to,
the Form S-4.
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Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in NetManage, Inc.'s Form 8-K/A,
amending NetManage, Inc.'s Form 8-K dated August 27, 1998 as previously amended
by NetManage, Inc.'s Form 8-K/A filed with the Securities and Exchange
Commission on October 30, 1998, of our reports dated January 27, 1998, on our
audits of the financial statements and financial statement schedule of FTP
Software, Inc. as of December 31, 1997 and 1996 and for the years ended December
31, 1997, 1996 and 1995, appearing in the registration statement on Form S-4
(Registration No. 333-59101) of NetManage, Inc., filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933.
PRICEWATERHOUSECOOPERS LLP
Boston, MA
November 10, 1998
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Exhibit 99.2
NETMANAGE, INC. AND FTP SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On August 27, 1998, NetManage, Inc. ("NetManage" or the "Company") acquired
FTP Software, Inc. ("FTP") through the merger of Amanda Acquisition Corp., a
wholly-owned subsidiary of NetManage ("Merger Sub"), with and into FTP (the
"Merger"), which survived the Merger as a wholly-owned subsidiary of NetManage,
pursuant to the Agreement and Plan of Reorganization dated as of June 15, 1998,
as amended (the "Reorganization Agreement"), among FTP, NetManage and Merger
Sub.
Pursuant to the Merger, each outstanding share of the Common Stock, par
value $0.01 per share, of FTP ("FTP Common Stock") and each associated right
granted under the Rights Agreement dated as of December 1, 1995 between FTP and
State Street Bank and Trust Company, as Rights Agent, as amended, was converted
into the right to receive 0.72767 of a share of the Common Stock, par value
$0.01 per share, of NetManage ("NetManage Common Stock"). As a result, the
34,035,463 shares of FTP Common Stock outstanding immediately prior to the
Merger were converted into approximately 24,766,440 registered shares of
NetManage Common Stock. In addition, options to acquire approximately 5,587,528
shares of FTP Common Stock outstanding under FTP's stock option plans for its
employees and its non-employee directors were assumed by NetManage and converted
into options to purchase approximately 4,065,351 shares of NetManage Common
Stock. The aggregate purchase price of approximately $78.3 million, which
consists of NetManage Common Stock valued at $74.0 million, options assumed
valued at approximately $1.1 million, and direct acquisition costs of
approximately $3.2 million, was allocated to the assets acquired and liabilities
assumed, acquired software ($1.8 million, to be amortized over a period of five
years), acquired intangible assets ($16.8 million, to be amortized over a period
of seven years) and acquired research and development in process ($9.5 million)
based on an independent valuation of the acquired net assets.
The following unaudited pro forma condensed combined consolidated financial
statements give effect to the Merger. The unaudited pro forma condensed combined
balance sheet has been prepared as if the Merger, which has been accounted for
as a purchase, was consummated on June 30, 1998. The unaudited pro forma
condensed combined balance sheet combines NetManage's balance sheet as of June
30, 1998 and FTP's balance sheet as of June 30, 1998.
The unaudited pro forma condensed combined consolidated statement of
operations for the six months ended June 30, 1998 gives effect to the Merger as
if the Merger had been completed on January 1, 1998 and combines NetManage's
statement of operations for the six months ended June 30, 1998 with FTP's
statement of operations for the six months ended June 30, 1998. The unaudited
pro forma condensed combined statement of operations for the year ended December
31, 1997 gives effect to the Merger as if the Merger had been completed on
January 1, 1997 and combines NetManage's statement of operations for the year
ended December 31, 1997 with FTP's statement of operations for the year ended
December 31, 1997.
This method of combining historical financial statements for the
preparation of the pro forma condensed combined consolidated financial
statements is for presentation purposes only. Actual statements of operations of
the companies will be combined from the closing date of the Merger with no
retroactive restatements. The unaudited pro forma condensed combined
consolidated financial statements are provided for illustrative purposes only
and are not necessarily indicative of the combined financial position or
combined results of operations that would have been reported had the Merger
occurred on the dates indicated, nor do they represent a forecast of the
combined financial position or results of operations for any future period. The
unaudited pro forma condensed combined consolidated financial statements should
be read in conjunction with the historical financial statements and accompanying
notes for each of NetManage and FTP included in its respective Annual Report on
Form 10-K for the year ended December 31, 1997 and its respective Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998 and the historical
financial statements and accompanying notes of FTP incorporated by reference
herein.
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NETMANAGE, INC. AND FTP SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
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PRO FORMA PRO FORMA
NETMANAGE FTP ADJUSTMENTS COMBINED
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<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 24,882 $ 38,596 $ 63,478
Short-term investments 26,032 10,564 36,596
Accounts receivable, net 10,492 4,611 15,103
Prepaid expenses and other current assets 12,944 5,086 18,030
-------- -------- --------
Total current assets 74,350 58,857 133,207
Property and equipment, net 6,884 6,253 (667)(b) 12,470
Long-term investments 20,565 14,726 35,291
Goodwill and other intangibles, net 2,231 - 13,326 (c) 15,557
Other assets 9,491 3,115 (1,474)(a) 11,132
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$113,521 $ 82,951 $207,657
======== ======== ========
Current liabilities:
Accounts payable and accrued liabilities $ 4,999 $ 7,831 $ 12,211 (b) $ 25,041
Accrued payroll and payroll-related expenses 3,120 1,760 4,880
Deferred revenue 7,782 5,654 13,436
Income taxes payable 2,402 1,786 4,188
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Total current liabilities 18,303 17,031 47,545
Long-term liabilities 258 - 258
Stockholders' equity
Common stock and additional paid-in capital 93,177 137,163 (62,008)(d) 168,332
Retained earnings (accumulated deficit) 3,823 (71,682) 60,982 (d) (6,877)
Accumulated translation adjustment (2,040) 439 (1,601)
-------- -------- --------
Total stockholders' equity 94,960 65,920 159,854
-------- -------- --------
$113,521 $ 82,951 $207,657
======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
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NETMANAGE, INC. AND FTP SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<CAPTION>
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PRO FORMA PRO FORMA
NETMANAGE FTP ADJUSTMENTS COMBINED
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Net revenues $31,854 $ 19,256 $ (336)(e) $ 50,774
Cost of revenues 1,696 5,161 (692)(e) 6,165
------- -------- --------
Gross margin 30,158 14,095 44,609
Expenses:
Research and development 9,103 7,126 (336)(e) 15,893
Sales and marketing 18,902 12,731 31,633
General and administrative 5,423 5,802 11,225
Amortization of goodwill and other intangibles 957 - 1,378 (f) 2,335
------- -------- --------
Loss from operations (4,227) (11,564) (16,477)
Other income, net 2,070 2,078 4,148
Provision for income taxes 16 150 166
------- -------- --------
Net loss $(2,173) $ (9,636) $(12,495)
======= ======== ========
Basic and diluted net loss per share $ (0.05) $ (0.28) $ (0.18)
Basic and diluted weighted average
common shares and equivalents 43,944 34,024 (9,266)(g) 68,702
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
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NETMANAGE, INC. AND FTP SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
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PRO FORMA PRO FORMA
NETMANAGE FTP ADJUSTMENTS COMBINED
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<S> <C> <C> <C> <C>
Net revenues $ 61,524 $ 67,734 $(1,319)(e) $ 127,939
Cost of revenues 4,093 21,129 (303)(e) 24,919
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Gross margin 57,431 46,605 103,020
Expenses:
Research and development 20,670 27,044 (619)(e) 47,095
Sales and marketing 41,455 45,196 86,651
General and administrative 10,428 16,289 26,717
Write-off of in-process research and development 20,643 - 20,643
Amortization of goodwill and other intangibles 1,137 - 2,756 (f) 3,893
Restructuring charge 5,172 18,330 23,502
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Loss from operations (42,074) (60,254) (105,481)
Other income, net 7,859 3,646 11,505
-------- -------- ---------
Provision (benefit) for income taxes (460) 1,208 748
-------- -------- ---------
Net loss $(33,755) $(57,816) $ (94,724)
======== ======== =========
Net loss per share $ (0.78) $ (1.71) $ (1.39)
Basic and diluted weighted average common shares
and equivalents 43,385 33,842 (9,216)(g) 68,011
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
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NETMANAGE, INC. AND FTP SOFTWARE, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AND STATEMENTS
OF OPERATIONS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma condensed combined consolidated financial
statements included herein have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. However,
the Company believes that the disclosures are adequate to make the information
presented not misleading.
NOTE 2. PRO FORMA ADJUSTMENTS
Certain pro forma adjustments have been made to the accompanying pro forma
condensed combined consolidated balance sheet and statements of operations as
described below.
(a) Reflects elimination of remaining unamortized purchased technology
balances.
(b) Reflects exit and involuntary employee termination costs ($9,054,000),
asset impairment costs ($667,000) and expenses of the Merger ($3,157,000).
(c) Reflects the recording of acquired software and intangible assets from
the acquisition of FTP, to be amortized over a period of five and seven years,
respectively.
(d) Reflects the elimination of FTP's stockholders' equity, the issuance of
24,766,440 shares of NetManage Common Stock valued at $74,000,000 in conjunction
with the acquisition, the value ($1,113,000) of options issued in conjunction
with the acquisition, an adjustment to retained earnings ($1,200,000) related to
remaining unamortized purchased technology and deferred revenue balances related
to intercompany revenues, and an adjustment to retained earnings ($9,500,000)
related to the write-off of acquired in process research and development that
had not reached technological feasibility and, in management's opinion, had no
probable alternative future use.
(e) Reflects the elimination of intercompany revenues and expenses.
(f) Reflects the amortization of acquired intangible assets related to the
acquisition over a period of five to seven years. See note (c) above.
(g) Reflects the conversion of FTP's weighted average common shares
outstanding to NetManage Common Stock at the Merger exchange ratio of 0.72767
and excludes anti-dilutive common stock equivalents.
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