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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): JUNE 30, 1997
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ASCEND COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-23774 94-3092033
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer)
incorporation or organization) Identification No.)
ONE ASCEND PLAZA
1701 HARBOR BAY PARKWAY 94502
ALAMEDA, CALIFORNIA
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 769-6001
Not applicable.
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 30, 1997, Ascend Communications, Inc. (the "Company") completed its
merger (the "Merger") with Cascade Communications Corp. ("Cascade"). To effect
the Merger, a wholly-owned subsidiary of the Company was merged with and into
Cascade, with Cascade as the surviving corporation in the Merger. Upon
consummation of the Merger, Cascade became a wholly-owned subsidiary of the
Company. The Merger will be recorded as a pooling of interests for accounting
purposes.
In the Merger, each outstanding share of Common Stock of Cascade ("Cascade
Common Stock") was converted into the right to receive 0.7 of a share of the
Common Stock of the Company ("Company Common Stock"). Outstanding options to
acquire Cascade Common Stock were assumed by the Company and will be exercisable
for shares of Company Common Stock at the same conversion ratio. The Company
will issue approximately 66,346,000 shares of Company Common Stock in exchange
for all outstanding shares of Cascade Common Stock. Such shares have an
aggregate market value of approximately $2,612,373,750 based on the closing
price of Company Common Stock on June 30, 1997 as reported on the Nasdaq
National Market. In addition, the Company has reserved for issuance and
registered 8,454,933 additional shares of Company Common Stock for issuance upon
the exercise of stock options to purchase Cascade Common Stock assumed by the
Company in the Merger.
ITEM 7. EXHIBITS.
(a) Financial statements of business acquired. To be filed by
amendment.
(b) Pro forma financial information. To be filed by amendment.
(c) Exhibits.
Exhibit No. Description
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2.1* Agreement and Plan of Reorganization, dated as of March 30, 1997,
among the Company, Catskill Merger Corporation, a Delaware
corporation and wholly-owned subsidiary of the Company and
Cascade.
99 Press release announcing completion of the Merger.
_____________________________
* Filed as an exhibit to the Company's Registration Statement on Form S-4
(File No. 333-25287) filed with the Securities and Exchange Commission on
April 16, 1997 and incorporated herein by reference.
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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.
Ascend Communications, Inc.
July 11, 1997 By: /s/ Robert K. Dahl
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Robert K. Dahl,
Vice President, Finance and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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2.1* Agreement and Plan of Reorganization, dated as of March 30, 1997,
among the Company, Sub and Cascade.
99 Press release announcing completion of the Merger.
______________________________________
* Filed as an exhibit to the Company's Registration Statement on Form S-4
(File No. 333-25287) filed with the Securities and Exchange Commission on
April 16, 1997 and incorporated herein by reference.
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ASCEND COMMUNICATIONS, INC. COMPLETES ACQUISTION OF
CASCADE COMMUNICATIONS CORP.
ALAMEDA, Calif. -- (BUSINESS WIRE)--June 30, 1997--Ascend Communications, Inc.
(NASDAQ:ASND) today announced the completion of its acquistion of Cascade
Communications Corp. Under the terms of the merger agreement, first announced on
March 30, 1997, stockholders of Cascade received 0.7 of a share of Ascend Common
Stock for each share of Cascade Common Stock they held. The transaction will be
accounted for as a pooling of interests. Cascade will operate as a wholly-owned
subsidiary of Ascend. At 5:00 p.m., Eastern Daylight Time, today, Cascade's
Common Stock will no longer be quoted on the Nasdaq National Market.
As previously announced, Mory Ejabat remains as Ascend's president and chief
executive officer, and Bob Dahl continues to serve as chief financial officer of
the combined company. Dan Smith, formerly president and chief executive officer
of Cascade has joined Ascend as executive vice president and general manager of
the Core Switching Systems group, and Gururaj "Desh" Deshpande, formerly
executive vice president and chairman of the board of Cascade, has joined Ascend
as executive vice president, responsible for strategic planning. Both Dan and
Desh have joined Ascend's Board of Directors, as has Paul Ferri, formerly a
member of Cascade's Board of Directors, bringing the total number of Ascend
board members to ten. In other personnel changes, Robert Machlin, formerly vice
president of marketing for Cascade, has joined Ascend as vice president of
marketing. Machlin replaces Maureen Lawrence, who has left Ascend to pursue
other interests. Paul Blondin, chief financial officer of Cascade, Michael
Champa, vice president of worldwide sales for Cascade, and James Dolce, vice
president of remote access for Cascade, will not remain with the combined
company. The reorganization plan includes a reduction in force of approximately
250 employees.
Ascend is now organized into four business units: Multimedia Access Products,
Remote Products, Access and Concentrator Products, and Core Switching Systems.
The Multimedia Access Products business unit will include the Ascend Multiband
product family; the Remote Products business unit will include the Ascend
Pipeline product family; the Core Switching Systems business unit will include
the ATM, frame relay and IP switching products, including Ascend's family of GRF
IP switches; and the Access and Concentrator Products business unit will include
the Ascend MAX product family. The Cascade AX product family will not be
continued.
Combined second quarter earnings for Ascend and Cascade will be announced after
the close of the financial markets on July 15, 1997. It is expected that the
transaction will be non-dilutive to Ascend in the second half of 1997 and will
be accretive in 1998. Ascend will report a one-time charge for the second
quarter related to certain merger costs and related expenses.
The forward-looking statements contained in this press release, which reflect
management's best judgement based on factors currently known, involve risks and
uncertainties, including the successful integration of Ascend Communications,
Inc. and Cascade Communications Corp., variances between actual and estimated
costs and expenses related to the merger, the market acceptance of existing and
new products of the combined company, the potential for fluctuations in
quarterly operating results, and other risks detailed from time to time in the
Company's filings with the Securities and Exchange Commission. Actual results
may vary materially.
Ascend Communications, Inc. develops, manufactures and sells wide area
networking solutions for telecommunications carriers, Internet service providers
and corporate customers worldwide. For more information about Ascend and its
products, please visit the Company's web site at http://www.ascend.com, or email
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[email protected].
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ASCEND COMMUNICATIONS, INC.
COMBINED CONSOLIDATED STATEMENTS OF INCOME
(RESTATED TO REFLECT THE POOLING OF CASCADE COMMUNICATIONS, CORP.)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Q1 '97 1996 Q4 '96
<S> <C> <C> <C>
Net Sales $ 292,740 $890,273 $287,791
Costs of Goods Sold 102,387 311,745 99,609
Gross Profit 190,353 578,528 188,182
Operating Expenses:
Research and Development 34,668 93,669 29,608
Sales and Marketing 53,241 156,286 50,958
General and Administrative 9,089 29,855 8,332
Purchased Research and Development 231,100 -- --
Costs of Merger -- 13,900 --
Total Operating Expenses 328,098 293,710 88,898
Operating Income (137,745) 284,818 99,284
Interest Income, Net 5,276 17,186 4,831
Income Before Income Taxes (132,469) 302,004 104,115
Provision for Income Taxes 30,772 118,114 39,627
Net Income $(163,241) $183,890 $ 64,488
Net Income Per Share $(0.88) $0.94 $0.32
Number of Shares Used in
Per Share Calculation 185,812 196,246 199,120
<CAPTION>
Q3 '96 Q2 '96 Q1 '96
<S> <C> <C> <C>
Net Sales $ 248,836 $205,581 $148,065
Costs of Goods Sold 86,929 72,859 52,348
Gross Profit 161,907 132,722 95,717
Operating Expenses:
Research and Development 25,314 22,808 15,939
Sales and Marketing 42,172 33,965 29,191
General and Administrative 7,670 8,046 5,807
Purchased Research and Development -- -- --
Costs of Merger 13,900 -- --
Total Operating Expenses 89,056 64,819 50,937
Operating Income 72,851 67,903 44,780
Interest Income, Net 4,406 3,973 3,976
Income Before Income Taxes 77,257 71,876 48,756
Provision for Income Taxes 32,100 27,452 18,935
Net Income $ 45,157 $ 44,424 $ 29,821
Net Income Per Share $0.23 $0.23 $0.15
Number of Shares Used in
Per Share Calculation 196,502 196,227 192,887
</TABLE>
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<TABLE>
<CAPTION>
1995
<S> <C>
Net Sales $287,438
Cost of Goods Sold 101,859
Gross Profit 185,579
Operating Expenses:
Research and Development 33,052
Sales and Marketing 56,033
General and Administrative 16,084
Purchased Research and Development 3,032
Costs of Merger --
Total Operating Expenses 108,201
Operating Income 77,378
Interest Income, Net 8,360
Income Before Income Taxes 85,738
Provision for Income Taxes 32,793
Net Income $ 52,945
Net Income Per Share $0.30
Number of Shares Used in
Per Share Calculation 175,216
</TABLE>
