<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): JUNE 30, 1997
---------------
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)
1
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements of Cascade Communications Corp. ("Cascade")
which are required pursuant to Rule 3-05 of Regulation S-X were previously
reported in Cascade's Annual Report on Form 10-K, as filed with the Securities
and Exchange Commission (the "SEC") on March 14, 1997 and Cascade's Quarterly
Report on Form 10-Q, as filed with the SEC on April 25, 1997, and pursuant to
General Instruction B.3. of Form 8-K, are incorporated herein by reference.
The pro forma financial statements and pro forma information of Sahara
Networks, Inc. were previously reported in Ascend Communications, Inc.
("Ascend" or the "Company") Registration Statement on Form S-4 filed with the
SEC on April 16, 1997 and pursuant to general instruction B.3. of Form 8-K,
are incorporated herein by reference.
(b) Financial Information.
i) Restated
The unaudited condensed consolidated financial statements of Ascend as
of June 30, 1997 and for the six month periods ended June 30, 1997 and 1996
appear as Exhibit 99.1 to this Current Report on Form 8-K/A and are
incorporated herein by this reference.
ii) Pro Forma
The unaudited pro forma condensed consolidated statements of income for
each of the three years in the period ended December 31, 1996 appear as Exhibit
99.2 to this Current Report on Form 8-K/A and are incorporated herein by this
reference.
iii) Historical
The financial statements of Ascend, previously reported in Ascend's
Registration Statement on Form S-4 as filed with the SEC on April 16, 1997, and
Ascend's Quarterly Report on Form 10-Q, as filed with the SEC on April 25, 1997,
are incorporated herein by this reference.
(c) Exhibits.
Exhibit No. Description
- ----------- -----------
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Independent Accountants.
23.3 Consent of Ernst & Young LLP, Independent Auditors.
99.1 Unaudited Condensed Consolidated Financial Statements.
99.2 Unaudited Pro Forma Condensed Consolidated Financial
Statements.
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has caused this report to be signed on it behalf by the
undersigned hereunto duly authorized.
ASCEND COMMUNICATIONS, INC.
July 30, 1997 By: /s/ Michael J. Johnson
----------------------
Chief Accounting Officer
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Independent Accountants.
23.3 Consent of Ernst & Young LLP, Independent Auditors.
99.1 Unaudited Condensed Consolidated Financial Statements.
99.2 Unaudited Pro Forma Condensed Consolidated Financial
Statements.
<PAGE>
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Form 8-K/A of Ascend
Communications, Inc. dated July 30, 1997, of our report dated January 24,
1997, except Note 10 as to which the date is April 1, 1997, with respect to
the consolidated financial statements of Ascend Communications, Inc. included in
the Registration Statement (Form S-4, No. 333-25287) of Ascend Communications,
Inc. for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Walnut Creek, California
July 25, 1997
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Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this form 8-K/A of Ascend
Communications, Inc. of our report dated January 22, 1997, except for note M as
to which the date is March 30, 1997, on our audits of the consolidated financial
statements and our report dated January 22, 1997 on our audits of the
consolidated financial statement schedule of Cascade Communications Corp. as of
December 31, 1996 and 1995, and for the three years ended December 31, 1996.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
July 25, 1997
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Exhibit 23.3
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Form 8-K/A of Ascend
Communications, Inc. dated July 30, 1997, of our report dated March 11, 1997
with respect to the financial statements of Sahara Networks, Inc. included in
the Registration Statement (Form S-4, No. 333-25287) of Ascend Communications,
Inc., filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Hartford, Connecticut
July 25, 1997
<PAGE>
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements as of June 30, 1997
and for the six month periods ended June 30, 1997 and 1996 reflect the
consolidated financial results of Ascend and Cascade as the merger was
consummated on a pooling of interests basis on June 30, 1997.
ASCEND COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
ASSETS
Current assets:
Cash, cash equivalents and short term investments........... $ 562,167
Account receivable, net..................................... 237,185
Inventories................................................. 96,939
Other current assets........................................ 75,364
----------
Total current assets...................................... 971,655
Investments................................................... 54,203
Furniture, fixtures and equipment, net........................ 89,546
Other assets.................................................. 16,666
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Total assets................................................ $1,132,070
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................... $ 298,985
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Total current liabilities................................. 298,985
Commitments and contingencies
Stockholders' equity:
Common stock................................................ 188
Additional paid-in capital.................................. 829,989
Retained earnings........................................... 2,908
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Total stockholders' equity................................ 833,085
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Total liabilities and stockholders' equity................ $1,132,070
==========
</TABLE>
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See accompanying notes to Unaudited Condensed Consolidated Financial Statements.
<PAGE>
ASCEND COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1997 JUNE 30, 1996
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<S> <C>
Net sales...................................................... $604,433 $353,646
Cost of sales.................................................. 211,064 125,207
-------- --------
Gross profit................................................. 393,369 228,439
Operating expenses:
Research and development..................................... 74,889 38,747
Sales and marketing.......................................... 113,117 63,156
General and administrative................................... 18,544 13,853
Purchased research and development........................... 231,100 -
Costs of Merger.............................................. 150,271 -
-------- --------
Total operating expenses................................... 587,921 115,756
Operating income (loss)........................................ (194,552) 112,683
Interest income, net........................................... 11,578 7,949
-------- --------
Income (loss) before income taxes.............................. (182,974) 120,632
Provision for income taxes..................................... 29,104 46,387
-------- --------
Net income (loss).............................................. ($212,078) 74,245
======== ========
Net income (loss) per share.................................... $ (1.13) $ 0.38
======== ========
Number of shares used in per share calculation................. 187,099 194,557
======== ========
</TABLE>
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See accompanying notes to Unaudited Condensed Consolidated Financial Statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On June 30, 1997, Ascend completed its merger (the "Merger") with Cascade. The
Merger was recorded as a pooling of interests. In the Merger, each outstanding
share of common stock of Cascade was converted into the right to receive 0.7 of
a share of the common stock of the Company. The Company issued approximately
66,346,000 shares of common stock in exchange for all outstanding shares of
Cascade common stock.
The condensed consolidated financial information at June 30, 1997 and for the
six month periods ended June 30, 1997 and 1996 is unaudited, but includes all
adjustments that the Company considers necessary for a fair presentation of the
financial information set forth therein, in accordance with generally accepted
accounting principles. The results for the six month periods ended June 30, 1997
and 1996 should not be considered indicative of the results to be expected for a
future period or for the entire year ended December 31, 1997.
Separate results of operations for the three-month period ended March 31,
1997 are as follows:
Net Sales: Ascend $ 202,412
Cascade 90,328
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Total $ 292,740
=========
Net Income (Loss): Ascend $ 35,093
Cascade (198,334)
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Total $(163,241)
=========
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statements of income combine
Ascend's and Cascade's historical consolidated statements of income for each
of the three years in the period ended December 31, 1996 giving effect to the
Merger on a pooling of interests basis as if it had occurred at the beginning
of each period presented and to the purchase of Sahara for the year ended
December 31, 1996, which is being accounted for as a purchase transaction, at
the beginning of 1996. The historical financial information of Ascend and
Cascade has been derived from the audited consolidated financial statements
for each of the three years in the period ended December 31, 1996 and of
Sahara for the year ended December 31, 1996 which are incorporated by
reference herein and should be read in conjunction with such financial
statements and the notes thereto. The pro forma information is not necessarily
indicative of the combined consolidated operating results that would have
occurred had the Merger and the purchase transaction been consummated at the
beginning of the periods presented, nor is it indicative of future combined
operating results or financial position.
ASCEND, CASCADE AND SAHARA
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------
ASCEND CASCADE SAHARA COMBINED
-------- --------- ------- --------
<S> <C> <C> <C> <C>
Net sales............................ $549,297 $ 340,976 $ -- $890,273
Cost of sales........................ 192,226 119,519 -- 311,745
-------- --------- ------- --------
Gross profit....................... 357,071 221,457 -- 578,528
Operating expenses:
Research and development........... 40,291 53,378 4,908 98,577
Sales and marketing................ 111,599 44,687 1,101 157,387
General and administrative......... 16,745 13,110 1,415 31,270
Costs of Merger.................... 13,900 -- -- 13,900
-------- --------- ------- --------
Total operating expenses......... 182,535 111,175 7,424 301,134
-------- --------- ------- --------
Operating income (loss).............. 174,536 110,282 (7,424) 277,394
Interest income, net................. 11,879 5,307 92 17,278
-------- --------- ------- --------
Income (loss) before income taxes.... 186,415 115,589 (7,332) 294,672
Provision for income taxes........... 73,304 44,810 -- 118,114
-------- --------- ------- --------
Net income (loss).................... $113,111 $ 70,779 $(7,332) $176,558
======== ========= ======= ========
Net income (loss) per share.......... $ 0.89 $ 0.72 $ (0.57) $ 0.89
======== ========= ======= ========
Number of shares used in per share
calculation......................... 127,809 97,767 12,752 198,626
======== ========= ======= ========
</TABLE>
- --------
See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
<PAGE>
ASCEND AND CASCADE
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------
ASCEND CASCADE COMBINED
--------- --------- ----------
<S> <C> <C> <C>
Net sales........................................ $ 152,604 $ 134,834 $ 287,438
Cost of sales.................................... 53,296 48,563 101,859
--------- --------- ---------
Gross profit................................... 99,308 86,271 185,579
Operating expenses:
Research and development....................... 12,400 20,651 33,051
Sales and marketing............................ 35,447 20,587 56,034
General and administrative..................... 9,129 6,955 16,084
Purchased research and development............. 3,032 -- 3,032
--------- --------- ---------
Total operating expenses..................... 60,008 48,193 108,201
--------- --------- ---------
Operating income................................. 39,300 38,078 77,378
Interest income, net............................. 5,122 3,238 8,360
--------- --------- ---------
Income before income taxes....................... 44,422 41,316 85,738
Provision for income taxes....................... 16,887 15,906 32,793
--------- --------- ---------
Net income....................................... $ 27,535 $ 25,410 $ 52,945
========= ========= =========
Net income per share............................. $ 0.25 $ 0.28 $ 0.30
========= ========= =========
Number of shares used in per share calculation... 111,362 91,220 175,216
========= ========= =========
</TABLE>
- --------
See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
<PAGE>
ASCEND AND CASCADE
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-------------------------------
ASCEND CASCADE COMBINED
--------- --------- ----------
<S> <C> <C> <C>
Net sales..................................... $ 39,655 $ 50,060 $ 89,715
Cost of sales................................. 13,387 19,113 32,500
--------- --------- ----------
Gross profit................................ 26,268 30,947 57,215
Operating expenses:
Research and development.................... 6,139 7,384 13,523
Sales and marketing......................... 11,409 10,547 21,956
General and administrative.................. 3,569 2,699 6,268
--------- --------- ----------
Total operating expenses.................. 21,117 20,630 41,747
--------- --------- ----------
Operating income.............................. 5,151 10,317 15,468
Interest income, net.......................... 969 781 1,750
--------- --------- ----------
Income before income taxes.................... 6,120 11,098 17,218
Provision (benefit) for income taxes.......... (430) 1,832 1,402
--------- --------- ----------
Net income.................................... $ 6,550 $ 9,266 $ 15,816
========= ========= ==========
Net income per share.......................... $ 0.07 $ 0.11 $ 0.10
========= ========= ==========
Number of shares used in per share
calculation.................................. 94,583 81,074 151,335
========= ========= ==========
</TABLE>
- --------
See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On June 30, 1997, Ascend completed its merger (the "Merger") with Cascade. The
Merger was recorded as a pooling of interests. In the Merger, each outstanding
share of common stock of Cascade was converted into the right to receive 0.7 of
a share of the common stock of the Company. The Company issued approximately
66,346,000 shares of common stock in exchange for all outstanding shares of
Cascade common stock.
Cascade issued approximately 3.4 million shares of Cascade Common Stock in
exchange for all the outstanding shares of Sahara. In addition, Cascade assumed
all outstanding Sahara stock options to purchase approximately 400,000 shares of
Cascade Common Stock. The acquisition was accounted for under the purchase
method of accounting. Accordingly, the purchase price of approximately $219
million was allocated to the net assets acquired based upon their estimated fair
market values. The estimated fair value of the tangible net assets acquired was
approximately $5 million. In addition, approximately $214 million of the
purchase price was allocated to in-process research and development that has not
reached technological feasibility and that has no alternative future use.
The pro forma combined per share amounts in the unaudited pro forma
condensed consolidated statements of income are based upon the historical
weighted average number of shares of common stock and dilutive common stock
equivalents of Ascend outstanding during each period presented. In addition,
the shares of Ascend Common Stock to be issued in connection with the Merger,
based on the equivalent weighted average shares and the dilutive common share
equivalents of Cascade outstanding during each period presented, are treated
as outstanding during each such period and the shares issued by Cascade to
purchase Sahara, adjusted to the equivalent shares of Ascend, are treated as
outstanding for the year ended December 31, 1996.
The consolidated results of operations for 1997 include certain immaterial
adjustments to conform the accounting policies of Cascade to those followed by
Ascend. Certain financial statement balances of Cascade and Sahara have been
reclassified to conform with the Ascend financial statement presentation.
There were no intercompany translations between Ascend and Cascade.
