<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): APRIL 26, 1999
FORE SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-24156 25-1628117
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1000 FORE DRIVE, WARRENDALE, PA 15086-7502
(Address of Principal Executive Offices) (Zip Code)
(724) 742-4444
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On April 26, 1999, FORE Systems, Inc. ("FORE"), a Delaware
corporation, and The General Electric Company, p.l.c., ("GEC, p.l.c."), a public
limited company organized under the laws of England and Wales (not affiliated
with the U.S. based corporation with a similar name), jointly announced that GEC
Incorporated ("Parent"), a Delaware corporation and a wholly-owned subsidiary of
GEC, p.l.c., GEC Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Acquisition Sub") and FORE entered into an Agreement and
Plan of Merger, dated as of April 26, 1999 (the "Merger Agreement"), pursuant to
which Acquisition Sub would acquire all of the outstanding shares of common
stock of FORE at a price of $35.00 per share in cash (the "Offer Price"). The
total consideration for the acquisition of FORE is approximately $4.5 billion.
Pursuant to the terms of the Merger Agreement, it is currently anticipated that
Acquisition Sub will commence a tender offer (the "Offer") for all of the
outstanding shares of FORE's common stock and, following the completion of the
Offer, upon the terms and subject to the conditions set forth in the Merger
Agreement, will merge (the "Merger") with and into FORE, with FORE surviving the
Merger and becoming a wholly-owned subsidiary of Parent. The Merger Agreement
provides that FORE will pay a termination fee to Parent in the event that the
Merger Agreement is terminated under certain circumstances. FORE and Acquisition
Sub also entered into a stock option agreement pursuant to which FORE has
granted an option to Acquisition Sub to purchase up to 19.9% of FORE's common
stock at the Offer Price which shall be exercisable in most cases when the
termination fee is payable and in certain other limited circumstances. Certain
stockholders of FORE, owning approximately 4.2% of the outstanding shares,
entered into an agreement with Parent and Acquisition Sub pursuant to which they
have agreed to sell their shares to Acquisition Sub at the price per share paid
by Acquisition Sub in the Offer as promptly as practicable following the
expiration of the Offer, to tender their shares in the Offer if so directed and
grant, in certain circumstances, to Acquisition Sub an option to purchase their
shares. Consummation of the Offer is conditioned upon, among other things, the
valid tender of a majority of FORE's outstanding shares of common stock on a
fully-diluted basis and the expiration of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) The following exhibit is filed with this Current Report on
Form 8-K:
99.1 Press Release dated April 26, 1999.
3
<PAGE> 4
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.
FORE Systems, Inc.
Date: April 29, 1999 By: /s/ Bruce E. Haney
-----------------------------------
Bruce E. Haney
Senior Vice President and
Chief Financial Officer
4
<PAGE> 5
EXHIBIT INDEX
99.1 Press Release dated April 26, 1999.
<PAGE> 1
EXHIBIT 99.1
GEC Agrees to Acquire FORE Systems, Inc. for $35 Per Share In Cash Transaction
Valued in Excess of $4 Billion
LONDON and PITTSBURGH, April 26 /PRNewswire/ -- The General Electric Company,
p.l.c. ("GEC") and FORE Systems, Inc. ("FORE Systems") (Nasdaq: FORE - news)
today announced that they have entered into an agreement for the acquisition of
FORE Systems for total consideration of $4.5 billion (2.8 billion pounds
sterling) ($4.2 billion, net of cash) at an agreed price of $35 per share in
cash. This represents a premium of 43% to the FORE Systems closing price on
Friday 23 April 1999. The definitive merger agreement provides for an affiliate
of GEC to commence a cash tender offer for all of FORE Systems' shares at $35
per share on or before 30 April 1999. Upon completion of the Offer, GEC will
effect a merger between this affiliate and FORE Systems, following which FORE
Systems will become a wholly owned subsidiary of GEC.
FORE Systems, with revenues of $632 million in the year ended 31 March 1999, is
a leading global supplier of high performance, Internet switching equipment
based on a "best in class" portfolio of products featuring Asynchronous Transfer
Mode ("ATM"), Internet Protocol ("IP"), Gigabit Ethernet, and Firewall switching
technologies. These systems are used in the backbone of some of the largest
enterprise and Internet service provider networks in the world. FORE Systems'
award-winning solutions are recognized in the industry for their ability to
handle the stringent and dramatic capacity, scaling, and resiliency requirements
of today's rapidly growing Internet. This is why a major portion of the global
Internet traffic is switched by FORE Systems equipment. In addition, FORE
Systems' products support the advanced Quality Of Service (QoS) and traffic
management necessary to deliver a scalable multiservice switching solution for
the emerging New Public Network.
The combination of ATM and IP switching from FORE Systems and GEC's MARCONI
Communications' call control (SS7) and Intelligent Networking provides the "best
in class" switching foundation for the New Public Network. Along with MARCONI
Communications' leading optical networking solutions and next generation access
products (recently acquired with Reltec), GEC is positioned at the forefront of
the rapidly growing global communications infrastructure market. This
acquisition strengthens the GEC Group's presence in the United States, which is
the world's largest market for telecommunications equipment. In addition, this
transaction provides GEC with access to the high growth enterprise networking
market, which is becoming increasingly integrated with the carrier market. The
combined company will be able to bring a broader range of products and
technology with greater strength and scale to address enterprise businesses
world-wide. As a result, FORE Systems will enhance its ability to experience
significant growth rates that outpace the overall industry average.
George Simpson, Chief Executive of GEC, said: "This acquisition reinforces our
position as a leading supplier of voice and data networking technology. The
purchase of FORE Systems provides us with access to new markets and new
customers and extends our product portfolio into the increasingly important ATM
and IP switching sector. This is also a big boost to
<PAGE> 2
MARCONI Communications' already considerable technology base. We will now be in
a position to capture the full benefits of the impact of the explosive growth of
Internet and other data traffic on the demand for communications equipment and
systems."
Thomas J. Gill, President and Chief Executive Officer of FORE Systems, said:
"The combination of FORE Systems, Reltec, and MARCONI Communications will create
one of the world's foremost global telecommunications and networking equipment
companies. Together we can provide our customers with a comprehensive range of
integrated solutions to accommodate the rapid growth of high-speed data, voice
and video services on a global basis. Joining forces with GEC will provide
further new and exciting opportunities for FORE Systems employees throughout the
world, and allow us to accelerate the growth of our business. We are committed
to driving FORE Systems to achieve its full potential within the GEC Group."
FORE Systems - A leader in ATM and IP switching
FORE Systems, based in Pittsburgh, Pennsylvania is a leading designer and
producer of high performance networking products based on ATM and IP
technologies. FORE Systems has approximately 2,000 employees, of whom
approximately 1,450 are based in the United States.
FORE Systems' range of products includes ATM and Ethernet switches, adapter
cards, multiplexing products, internetworking software, network management
software and video products.
FORE Systems is a leader in the enterprise and private networks market, where
its key customers and partners include numerous departments of the US
Government, several universities, and commercial enterprises such as Delta
Airlines, Donaldson Lufkin & Jenrette, Disney Animation, Chrysler, Intel, Lloyds
TSB, Microsoft, Prudential Insurance, Shell Oil and Unisys. FORE Systems also
has a strong and rapidly growing presence in the carrier market, where its key
customers include Cable & Wireless USA, GTE, Level 3, MCI WorldCom and UUNet.
FORE Systems reported sales of $632 million for the year to 31 March 1999 (an
increase of 35 percent over $467 million for 1998). Operating income before
interest, taxes and non-recurring items was $55.4 million in 1999 (up 48 percent
from $37.5 million in 1998).
As of 31 March 1999, FORE Systems had net assets of $680 million including cash
and short term investments of $361 million.
Mr. Tom Gill will continue as FORE Systems' CEO and President, and will report
directly to George Simpson, Chief Executive of GEC. FORE Systems will operate as
a wholly owned subsidiary of GEC and will continue to run its business
accordingly, while continuing to use the name of FORE Systems. In addition, FORE
Systems will work aggressively with MARCONI Communications to exploit the
natural synergies between both units to take a leadership position in delivering
a new generation of public network solutions.
<PAGE> 3
Strategic rationale for the acquisition:
The dramatic growth of the Internet has resulted in data traffic becoming a
rapidly growing percentage of total network traffic, with Internet data traffic
expected to exceed voice traffic in total volume this year. In addition, the
telecom service industry is becoming increasingly competitive due to
deregulation and the emergence of new telecom service providers. The pressure on
carriers to reduce costs and increase the flexibility of their networks has
become intense. The combination of these factors has meant that telecom service
providers have increasingly focused on new data networking technologies, which
are efficient at handling large volumes of data. This is referred to in the
industry as "The New Public Network". This is driving the rapid growth in demand
for ATM and IP switching systems and optical transmission networks equipment,
software and systems. FORE Systems is a leading supplier of ATM and IP
solutions, and MARCONI Communications is a leading supplier of optical
networking solutions.
FORE Systems represents an attractive acquisition for the following reasons:
- Strong technology: The acquisition will provide MARCONI
Communications with industry leading technology in ATM and IP
switching, the technology that is critical for building next
generation telecommunications networks. Combining this with
MARCONI Communications' broad portfolio of telecommunications
products will enable MARCONI Communications to establish a
leadership position in defining and building out New Public
Network infrastructures and solutions and to service more
effectively its existing customers.
- Enhanced penetration of the carrier market: The acquisition
will substantially expand MARCONI Communications' customer
presence in the United States. In particular, the acquisition
will provide access to the fastest growing telecom carriers in
the U.S. including Internet Service Providers and new
Competitive Local Exchange Carriers, which will provide
significant opportunities for cross selling.
- Entry into the enterprise market: The acquisition provides GEC
with a significant presence in the enterprise data networking
market, opening additional channels for sales for other
products to corporations and access to new technologies.
- Enhanced development capabilities: The acquisition brings to
MARCONI Communications "state of the art" development
capability in rapidly evolving technological fields, for
example ASIC based IP packet processing and switch fabric
design. These development resources will enable MARCONI
Communications to respond quickly to new market opportunities
and service customers' future needs more effectively.
In summary, the FORE Systems acquisition provides GEC with technology and market
positions in a key and very rapidly growing area of the telecoms equipment and
systems market and provides a complementary product range, which will provide
substantial opportunities for increased sales.
<PAGE> 4
Financial impact on GEC:
It is expected that the acquisition will be broadly neutral to proforma new GEC
earnings per share before goodwill (assuming that the demerger of MARCONI
Electronic Systems and associated transactions are completed) in the year to 31
March 2000 and thereafter it is expected to be earnings enhancing. GEC will
finance the acquisition from cash resources and from drawings under its Euro 6
billion group bank facilities.
Further details of the transaction structure:
GEC Incorporated and FORE Systems have entered into a definitive merger
agreement (the "Merger Agreement") under which a US subsidiary of GEC
("Acquisition Corp.") will commence a cash tender offer (the "Offer") on or
before 30 April 1999 for all of FORE Systems' shares at $35 per share. Following
the completion of the Offer, GEC and FORE Systems have agreed to effect a merger
between Acquisition Corp. and FORE Systems (the "Merger"), in which the
remaining shareholders of FORE Systems will receive the same price per share
paid in the Offer. Upon completion of this Merger, FORE Systems will be a wholly
owned subsidiary of GEC.
The Merger Agreement provides that FORE Systems will pay a termination fee to
GEC in the event that the Merger Agreement is terminated under certain
circumstances.
In addition, GEC and FORE Systems have entered into a Stock Option Agreement
(the "Stock Option Agreement") whereby FORE Systems has granted an option to
Acquisition Corp. to purchase up to 19.9% of the shares of FORE Systems at the
offer price, which shall be exercisable in most cases when the termination fee
is payable and in certain other limited circumstances.
Simultaneously, on entering into the Merger Agreement, certain members of the
management and board of FORE Systems have entered into a stockholder agreement
(the "Stockholders Agreement") whereby they have agreed to sell their shares in
FORE Systems to Acquisition Corp. and to vote in favor of the merger. The senior
management group has also entered into new employment agreements.
The Merger Agreement and the Stock Option Agreement have been approved by the
Boards of Directors of GEC and FORE Systems and the Stockholders Agreement has
been approved by the Board of Directors of GEC. The Offer and the Merger are
conditional upon, inter alia, receipt of the required regulatory approvals and
clearances. Assuming regulatory approvals and clearances are received, it is
anticipated that the acquisition of FORE Systems will be completed in June 1999.
Enquiries: Alasdair Jeffrey, +44 171 306 1330, or Martin Sixsmith, +44 171 306
1383, both of GEC; Donal Byrne, +1 724 742 6672, or Bruce Haney, +1 724 742
7809, both of FORE SYSTEMS; Chris Brodie, +44 171 568 2929, or Aidan Clegg, +44
171 568 2295, both of Warburg Dillon Read; or Matthew G. L'Heureux, +1 650 234
3620, or Gregg Lemkau, +1 212 902 5293, both of Goldman Sachs; or Susan
Gilchrist of Brunswick, +44 171 404 5959.
<PAGE> 5
Notes to Editors
Supplementary Information
1. GEC
GEC is a major high technology company, focused on defense electronics,
communications and technology applied to medical and commercial systems. In
January 1999, GEC announced an agreement in principle to separate and merge its
defense electronics business with British Aerospace.
MARCONI Communications, a subsidiary of GEC, is a major supplier of
transmission and access products outside the United States. On 9 April 1999 GEC
announced the completion of its tender offer for Reltec, a provider of a broad
range of systems, products and services to wireline and wireless service
providers and telecommunications OEMs in North America and around the globe.
Reltec has approximately 6,600 employees world-wide, with approximately 4,700
located in the US. In addition, GEC has other operations in the US including
Gilbarco, Picker International and Videojet which together employ around 10,000
personnel in the US.
The Group is headquartered in London and has a market capitalization of
15.5 billion pounds ($25.1 billion). For the year ended 31 March 1998, the Group
reported revenues of 11.1 billion pounds ($18.0 billion) and profits before
exceptional items and tax of 1.1 billion pounds ($1.8 billion).
GEC is not affiliated with the similarly named company, which is based
in the United States.
2. FORE Systems
FORE Systems is a leading global supplier of integrated multiservice
networking solutions specializing in providing scalable, reliable, and high-
capacity ATM and IP/Ethernet switching solutions to meet the demands of large
enterprise businesses and service providers. FORE Systems is leveraging the
explosive growth of the Internet with its high performance switching equipment
to deliver network solutions to top tier and emerging service providers who are
focused on building out the next generation Internet and new public network
facilities. FORE Systems products and solutions are used by modern enterprise
businesses that are leveraging the power of networking technology to compete in
the age of the Internet economy.
FORE Systems is a leader in ATM switching solutions for the enterprise
and an emerging leader in providing ATM core backbones for Internet service
providers. FORE Systems' product line includes a broad range of ATM switches,
Ethernet switches, Customer Premise access equipment and ATM NIC cards. In
September 1998, FORE Systems significantly enhanced its solution offering with
the acquisition of Berkeley Networks, which delivered new generation Gigabit
Ethernet and IP routing switch products. In addition, the acquisition delivered
innovative technology and products in the areas of Firewall Switching, Directory
Enabled Networking, Policy Based Network Management, and Web based management.
In February 1999, FORE Systems acquired
<PAGE> 6
Euristix Ltd., a telecommunications software company based in Dublin, Ireland
delivering service provider network management solutions and Intelligent
Networking software expertise.
a) FORE Systems: Summary financial record
<TABLE>
<CAPTION>
- ------------------------- ---------------- ------------------ ----------------- ----------------- ------------------
YEARS ENDED GROSS INCOME FROM
MARCH 31 REVENUES PROFIT OPERATIONS NET INCOME DILUTED EPS
- ------------------------- ---------------- ------------------ ----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
1997 ($m) 402.1 229.6 64.3 49.1 0.48
- ------------------------- ---------------- ------------------ ----------------- ----------------- ------------------
1998 ($m) 467.3 259.2 37.5 36.0 0.34
- ------------------------- ---------------- ------------------ ----------------- ----------------- ------------------
1999 ($m) 632.4 345.7 55.4 50.9 0.44
- ------------------------- ---------------- ------------------ ----------------- ----------------- ------------------
</TABLE>
The above table includes Euristix, Ltd., results for all years presented.
Excluded are purchased research and development and restructuring charges
related to the acquisition of Berkeley Networks, Inc., compensation and
restructuring charges related to the acquisition of Euristix Ltd., and a
nonrecurring charge for the disposition of inventory and related fixed assets
and costs incurred in fulfilling certain fourth quarter and future commitments
related to the phase-out of the PowerHub product line. Year ended 31 March 1997
excludes merger related expenses and litigation settlement charges.
b) Sales and employees by region:
At 31 March 1999, FORE Systems employed 2,006 individuals on a
full-time basis. Of these, 563 were involved in engineering, 1001 in sales,
marketing and customer support, 200 in manufacturing and the remaining 242 in
executive management, administration, finance and strategic planning.
FORE Systems delivers networking solutions to thousands of customers,
including Fortune 500 companies, telecommunications service providers,
government agencies, research institutions and universities. The Company markets
its products internationally, and sales outside the United States accounted for
approximately 28% of FORE Systems' revenue for the year ended 31 March 1999.
c) Key business locations:
FORE Systems is headquartered in Pittsburgh, Pennsylvania. FORE Systems
leases facilities in various parts of the United States and in foreign
countries, including San Jose, California; Vienna, Virginia; New York, New York;
Watford, England; Hong Kong, China; and Tokyo, Japan. FORE Systems opened its
first international manufacturing facility in Dublin, Ireland in May 1997.
Following the recent acquisition of Euristix, Ltd., FORE Systems also has an R&D
facility located in Dublin.
<PAGE> 7
d) Key product offerings:
FORE Systems is a leader in the design, development, manufacture and
sale of high-performance networking products based on ATM, IP, and Ethernet
switching technology. FORE Systems offers a most comprehensive switching product
line, including the ASX family of ATM switches for the backbone of large
networks, and the ESX family of integrated Ethernet and ATM Layer-2 and
Layer-3/4 routing switches for the edge of the network. In addition the ES-
2810/3810 and 4810 Ethernet switches with ATM connectivity provide low cost,
high density Ethernet desktop switching ForeRunner ATM adapter cards, CellPath
(TM) wide area network ("WAN") multiplexing products, ForeThought (R)
internetworking software, ForeView (R) network management software and
StreamRunner (TM) ATM video products.
e) FORE Systems: Customers
FORE Systems' customers can be divided among four main groups:
COMMERCIAL SERVICE PROVIDERS
---------- -----------------
Boeing Computer Services Ameritech
Delta Airlines AT&T
DHL Systems Bell Atlantic
Disney Corp. Bellcore
Ford Motor Company Cable & Wireless
Gulfstream Cox Communications
Lloyds TSB Michigan State University
Hewlett-Packard Deutsche Telecom
Microsoft France Telecom
Office Depot GTE
Prudential Insurance Helsinki Telecom
Rockwell Internet MCI
Shell Oil Level 3
Tippett Studios Nippon Telegraph & Telephone
TRW Systems Norwegian Telecom Research
Unisys Southwest Bell
Westinghouse Telkom South Africa
Sprint UUNet
TCI/TCG
Time Warner Cable
UNIVERSITY GOVERNMENT
---------- ----------
Carnegie Mellon University NASA Lewis Research Centre
Columbia University National Weather Service
Cornell University Naval Research Laboratory
<PAGE> 8
Pennsylvania State University Sandia National Laboratories
MIT United States Department of Defense
National University of Singapore United States Department of Energy
United States Department of Justice
Voice of America
World Health Organization
FORE Systems: Senior management team:
Thomas J. Gill has served as a director and President and Chief
Executive Officer of FORE Systems since January 1998. He served as Chief
Operating Officer from January 1997 to January 1998 and Vice President of
Finance, Chief Financial Officer and Treasurer from December 1993 to January
1998. From February 1993 to December 1993 he served as Treasurer and Controller
of the Company. Prior to joining FORE Systems Mr. Gill was employed in various
financial capacities by Cimflex Teknowledge Corporation (a supplier of factory
automation systems and software), most recently as Vice President of Finance and
Treasurer.
Donal M. Byrne is Senior Vice President, Corporate Marketing of FORE
Systems. In that role, he is responsible for corporate positioning and overall
communications for the company. Mr. Byrne joined FORE Systems as a result of the
company's acquisition of Berkeley Networks in 1998 where he was the VP of
Marketing and a co-founder of the company. Mr. Byrne has over 12 years of
experience in the telecommunications and networking industry. Previously he was
a Director at Bay Networks and an engineering manager at Digital Equipment
Corporation.
Michael I. Green is Senior Vice President, Corporate Sales of FORE
Systems. He has more than 18 years of experience in sales and sales management
for high-speed networking companies, including Network Systems Corporation and
Ultra Network Technologies.
Bruce E. Haney is FORE Systems' Senior Vice President and Chief
Financial Officer. Mr. Haney most recently served as President of The Gustine
Company, a privately held Pittsburgh-based real estate development company. Mr.
Haney earned his Bachelor's degree from the Wharton School of Business at the
University of Pennsylvania and his Master's degree from DePaul University.
Ronald E. McKenzie is Senior Vice President and General Manager of FORE
Systems Volume Products Business Unit. He is responsible for coordinating sales
and marketing efforts with the company's partners to capitalize on business
opportunities. Mr. McKenzie has more than 12 years of marketing experience and
formerly held management positions at Hewlett-Packard and Silicon Graphics.
Robert C. Musslewhite is FORE Systems Senior Vice President, Corporate
Development. In that role, he is responsible for M&A, business development, and
strategic planning. Mr. Musslewhite has more than 20 years of experience in
product development, engineering and sales and marketing. He formerly held
management positions with Trillium, Sprint and Tekelec.
<PAGE> 9
Kevin E. Nigh is Senior Vice President, Worldwide Engineering of FORE
Systems. He is responsible for overall product research and development, as well
as worldwide support. Mr. Nigh formerly held positions with Sun Microsystems,
Inc., Cimflex Teknowledge and AT&T Microelectronics.
Robert D. Sansom, Ph.D., is Senior Vice President, Chief Technology
Officer and co-founder of FORE Systems. Currently responsible for FORE Systems
corporate technical strategy, Dr. Sansom was formerly a member of the Computer
Science research faculty at Carnegie Mellon University.
J. Niel Viljoen is Senior Vice President and General Manager, Service
Provider Business Unit of FORE Systems. He has overall responsibility for
product management, business planning and field sales communication for the
service provider market. Since joining FORE Systems in 1996, Mr. Viljoen has
played a key role on the company's product development and engineering teams.
3. Exchange rate
Dollar and Pound Sterling equivalents are based on an exchange rate (at
the close of business on 23 April 1999) of $1.62 per Pound Sterling.
4. Basis of calculation of Offer Value
The total net consideration of $4,533 billion is based on an offer
price of $35 per share applied to 116.5 million shares in issue and the cost of
compensation for holders of FORE Systems' 21.4 million shares under option as at
23 April 1999 expected to amount to some $455 million and FORE Systems' net cash
at 31 March 1999 of $361 million.
