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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 1, 1997
Date of Report (Date of earliest event reported)
NETSCAPE COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-26310 94-3200270
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Incorporation) Identification No.)
501 East Middlefield Road
Mountain View, CA 94043
(Address of principal executive offices, including zip code)
(650) 254-1900
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
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This Amendment No. 1 to the Registrant's Current Report on Form 8-K dated
December 1, 1997 (the "Report"), relates to the Registrant's completion of
the acquisition of KIVA Software Corporation, a corporation organized and
existing under the laws of the State of California ("KIVA"), by means of a
merger (the "Merger") of Knife Acquisition Corporation, a corporation
organized and existing under the laws of the State of Delaware and a wholly
owned subsidiary of the Registrant ("Merger Sub"), with and into KIVA,
pursuant to the Agreement and Plan of Reorganization, dated as of November
24, 1997 (the "Reorganization Agreement"), among the Registrant, Merger Sub
and KIVA. The purpose of this Amendment is to amend Item 7(b) to provide for
informational purposes only certain pro forma financial information relating
to the business combination between the Registrant and KIVA on December 1,
1997, which information was impracticable to provide at the time the
Registrant filed this Report.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following unaudited pro forma combined condensed consolidated financial
statements are provided for informational purposes only and assume a business
combination between Netscape Communications Corporation ("Netscape") and KIVA
Software Corporation ("KIVA") accounted for on a pooling of interests basis.
The pro forma combined condensed consolidated financial statements are based
on the historical financial statements and the notes thereto of Netscape
included in the quarterly report on Form 10-Q for the quarter ended September
30, 1997, the annual report on Form 10-K for the year ended December 31,
1996, and the historical condensed financial statements of KIVA. The
Netscape and the KIVA historical financial statement data for the nine months
ended September 30, 1997 and 1996 and the year ended December 31, 1996 has
been prepared on the same basis as the audited financial statements of
Netscape and, in the opinion of management, contain all adjustments necessary
for the fair presentation of the results of operations for such periods. The
results of operations for 1995 for KIVA were immaterial.
The pro forma combined condensed consolidated balance sheet combines
Netscape's September 30, 1997 condensed consolidated balance sheet with
KIVA's September 30, 1997 condensed balance sheet, giving effect to the
Merger as if it had occurred on September 30, 1997. The pro forma combined
condensed consolidated statements of operations combine Netscape's historical
condensed consolidated statements of operations for the unaudited nine months
ended September 30, 1997 and 1996 and the year ended December 31, 1996 with
the corresponding KIVA condensed statements of operations for the nine months
ended September 30, 1997 and 1996 and the year ended December 31, 1996.
The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position
that would have occurred if the Merger had been consummated at the beginning
of the periods presented, nor is it necessarily indicative of future
operating results or financial position. The unaudited pro forma combined
condensed consolidated financial statements do not incorporate any benefits
from cost savings or synergies of operations of the combined company.
Netscape and KIVA estimate that they will incur direct transaction costs of
approximately $5.8 million ($5.2 million net of an income tax benefit of
$600,000) associated with the Merger which will be charged to operations
during the quarter ending December 31, 1997 and have not been reflected as an
adjustment in the pro forma combined condensed consolidated statement of
operations. There can be no assurance that Netscape will not incur additional
charges in the quarter ending December 31, 1997 or in subsequent quarters to
reflect costs associated with the Merger or that management will be
successful in their efforts to integrate the operations of the two companies.
These pro forma combined condensed consolidated financial statements should
be read in conjunction with the historical consolidated financial statements
and the related notes thereto of Netscape.
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PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------------------------------------------
PRO FORMA
NETSCAPE KIVA ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 86,195 $ 6,523 $ - $ 92,718
Short-term investments 103,962 - - 103,962
Accounts receivable, net 160,819 2,089 - 162,908
Deferred tax assets 34,654 - 34,654
Other current assets 21,423 46 - 21,469
----------- ----------- ----------- -----------
Total current assets 407,053 8,658 - 415,711
Property and equipment, net 131,524 714 - 132,238
Long-term investments 109,843 - - 109,843
Other assets 11,072 142 2,515 (2) 13,729
----------- ----------- ----------- -----------
$ 659,492 $ 9,514 $ 2,515 $ 671,521
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
LIABILITIES, MANDATORILY REDEEMABLE
CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 43,396 $ 280 $ - $ 43,676
Accrued compensation and related
liabilities 19,344 182 19,526
Other accrued liabilities 20,215 873 5,800 (3) 26,888
Income taxes payable 18,175 - (600)(3) 17,575
Deferred revenues 106,913 663 - 107,576
Current portion of long-term
obligations and installment notes payable 673 70 - 743
----------- ----------- ----------- -----------
Total current liabilities 208,716 2,068 5,200 215,984
Deferred taxes and other long-term obligations 3,919 175 - 4,094
Mandatorily redeemable convertible
preferred stock - 14,168 (14,168)(1) -
Stockholders' equity:
Preferred stock, common stock
and additional paid-in capital 472,085 177 14,168 (1) 486,430
Deferred compensation (4,285) - - (4,285)
Accumulated deficit (26,312) (7,074) (2,685)(2)(3) (36,071)
Other 5,369 - - 5,369
----------- ----------- ----------- -----------
Total stockholders' equity 446,857 7,271 (2,685) 451,443
----------- ----------- ----------- -----------
$ 659,492 $ 9,514 $ 2,515 $ 671,521
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying Notes to Pro Forma Combined Condensed
Consolidated Financial Statements.
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PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1997
---------------------------------------------------
PRO FORMA
NETSCAPE KIVA ADJUSTMENTS COMBINED
---------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Product revenues $296,152 $ 2,097 - $298,249
Service revenues 109,354 968 - 110,322
-------- ------- ------- --------
Total revenues 405,506 3,065 - 408,571
Cost of revenues:
Cost of product revenues 34,893 59 - 34,952
Cost of service revenues 20,132 881 - 21,013
-------- ------- ------- --------
Total cost of revenues 55,025 940 - 55,965
-------- ------- ------- --------
Gross profit 350,481 2,125 - 352,606
Operating expenses:
Research and development 91,954 2,056 - 94,010
Sales and marketing 185,835 4,062 - 189,897
General and administrative 31,383 908 - 32,291
Purchased in-process research and development
and merger related charges 52,587 - - 52,587
-------- ------- ------- --------
Total operating expenses 361,759 7,026 - 368,785
Operating loss (11,278) (4,901) - (16,179)
Interest income, net 6,801 89 - 6,890
Equity in net losses of joint ventures (4,239) - - (4,239)
-------- ------- ------- --------
Interest and other income, net 2,562 89 - 2,651
Loss before income taxes (8,716) (4,812) - (13,528)
Provision (benefit) for income taxes 15,369 - (1,733)(2) 13,636
-------- ------- ------- --------
Net loss $(24,085) $(4,812) $ 1,733 $(27,164)
-------- ------- ------- --------
-------- ------- ------- --------
Net loss applicable to common stock $(24,085) $(4,812) $ 1,733 $(27,164)
-------- ------- ------- --------
-------- ------- ------- --------
Net loss per common share $ (0.27) $ (0.95) - $ (0.29)
-------- ------- ------- --------
-------- ------- ------- --------
Shares used in computing net loss per common share 89,084 5,067 - 93,187
-------- ------- ------- --------
-------- ------- ------- --------
</TABLE>
See accompanying Notes to Pro Forma Combined Condensed
Consolidated Financial Statements.
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PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------------------
PRO FORMA
NETSCAPE KIVA ADJUSTMENTS COMBINED
----------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Product revenues $ 195,108 $ - - $ 195,108
Service revenues 36,035 - - 36,035
----------- --------- ----- -----------
Total revenues 231,143 - - 231,143
Cost of revenues:
Cost of product revenues 27,414 - - 27,414
Cost of service revenues 7,802 4 - 7,806
----------- --------- ----- -----------
Total cost of revenues 35,216 4 - 35,220
----------- --------- ----- -----------
Gross profit 195,927 (4) - 195,923
Operating expenses:
Research and development 56,163 498 - 56,661
Sales and marketing 102,176 518 - 102,694
General and administrative 19,510 248 - 19,758
Purchased in-process research and development and merger
related charges 6,100 - - 6,100
----------- --------- ----- -----------
Total operating expenses 183,949 1,264 - 185,213
Operating income (loss) 11,978 (1,268) - 10,710
Interest income, net 6,487 30 - 6,517
Equity in net losses of joint ventures (1,002) - - (1,002)
----------- --------- ----- -----------
Interest and other income, net 5,485 30 - 5,515
Income (loss) before income taxes 17,463 (1,238) - 16,225
Provision (benefit) for income taxes 5,311 - (446)(2) 4,865
----------- --------- ----- -----------
Net income (loss) $ 12,152 $ (1,238) $ 446 $ 11,360
----------- --------- ----- -----------
----------- --------- ----- -----------
Net income (loss) applicable to common stock $ 12,152 $ (1,238) $ 446 $ 11,360
----------- --------- ----- -----------
----------- --------- ----- -----------
Net income (loss) per common share $ 0.14 $ (0.31) - $ 0.13
----------- --------- ----- -----------
----------- --------- ----- -----------
Shares used in computing net income (loss) per common share 86,941 4,055 - 89,502
----------- --------- ----- -----------
----------- --------- ----- -----------
</TABLE>
See accompanying Notes to Pro Forma Combined Condensed
Consolidated Financial Statements.
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PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------
PRO FORMA
NETSCAPE KIVA ADJUSTMENTS COMBINED
----------- --------- -------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Product revenues $ 291,103 $ 80 - $ 291,183
Service revenues 55,092 19 - 55,111
----------- --------- ----- -----------
Total revenues 346,195 99 - 346,294
Cost of revenues:
Cost of product revenues 36,941 2 - 36,943
Cost of service revenues 13,024 100 - 13,124
----------- --------- ----- -----------
Total cost of revenues 49,965 102 - 50,067
----------- --------- ----- -----------
Gross profit 296,230 (3) - 296,227
Operating expenses:
Research and development 82,995 868 - 83,863
Sales and marketing 153,586 958 - 154,544
General and administrative 30,584 397 - 30,981
Property rights agreement and related charges 250 - - 250
Purchased in-process research and development and merger
related charges 6,100 - - 6,100
----------- --------- ----- -----------
Total operating expenses 273,515 2,223 - 275,738
Operating income (loss) 22,715 (2,226) - 20,489
Interest income, net 8,666 54 - 8,720
Equity in net losses of joint ventures (1,928) - - (1,928)
----------- --------- ----- -----------
Interest and other income, net 6,738 54 - 6,792
Income (loss) before income taxes 29,453 (2,172) - 27,281
Provision (benefit) for income taxes 8,545 - (782)(2) 7,763
----------- --------- ----- -----------
Net income (loss) $ 20,908 $ (2,172) $ 782 $ 19,518
----------- --------- ----- -----------
----------- --------- ----- -----------
Net income (loss) applicable to common stock $ 20,908 $ (2,172) $ 782 $ 19,518
----------- --------- ----- -----------
----------- --------- ----- -----------
Net income (loss) per common share $ 0.24 $ 0.52 - $ 0.21
----------- --------- ----- -----------
----------- --------- ----- -----------
Shares used in computing net income (loss) per common share 87,861 4,216 - 90,840
----------- --------- ----- -----------
----------- --------- ----- -----------
</TABLE>
See accompanying Notes to Pro Forma Combined Condensed
Consolidated Financial Statements.
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NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PERIODS COMBINED
The Netscape unaudited condensed consolidated statements of operations for
the nine months ended September 30, 1997 and 1996 and the year ended December
31, 1996 have been combined with the KIVA unaudited condensed statements of
operations for each of the same periods giving effect to the Merger as if it
had occurred at the beginning of the earliest period presented. The results
of operations for 1995 for KIVA were immaterial.
The Netscape unaudited pro forma combined condensed consolidated balance
sheet as of September 30, 1997 has been combined with the KIVA unaudited
condensed balance sheet as of the same date giving effect to the Merger as if
it had occurred on September 30, 1997.
BASIS OF PRESENTATION
PRO FORMA BASIS OF PRESENTATION
The pro forma combined condensed consolidated financial statements reflect
the issuance of 6,044,404 shares of Netscape Common Stock for all of the
outstanding shares of KIVA Common Stock in connection with the Merger which
resulted in an exchange ratio of .3818 shares of Netscape Common Stock
for each share of KIVA Common Stock.
PRO FORMA ADJUSTMENTS
(1) The pro forma combined condensed consolidated financial statements
reflect an adjustment for the conversion of KIVA's Mandatorily
Redeemable Preferred Stock into Common Stock at the historical
conversion rate of one common share for each preferred share.
(2) The pro forma combined condensed consolidated balance sheet reflects an
increase in noncurrent deferred tax assets and a decrease in accumulated
deficit as a result of realization of the income tax benefit related to
KIVA's net operating losses. The pro forma combined condensed
consolidated statements of operations reflects changes to the income
tax provision for the nine months ended September 30, 1997 and 1996 and
the year ended December 31, 1996, as a result of utilization of KIVA's
net operating losses.
(3) The pro forma combined condensed balance sheet reflects merger
transaction costs of approximately $5.8 million ($5.2 million net of an
income tax benefit of $600,000) associated with the Merger as discussed
below.
MERGER TRANSACTION COSTS
Netscape and KIVA estimate direct transaction costs of approximately $5.8
million ($5.2 million net of an income tax benefit of $600,000) associated
with the Merger, consisting of transaction fees for investment bankers,
attorneys, accountants and other related charges. The nonrecurring costs are
reflected in the pro forma condensed balance sheet as an increase to
accumulated deficit and accrued liabilities. The nonrecurring costs will be
charged to operations in the quarter ended December 31, 1997 and have not
been reflected in the pro forma combined condensed consolidated statements of
operations.
PRO FORMA INCOME (LOSS) PER COMMON SHARE
The pro forma combined income (loss) per share is based on the combined
weighted average number of common and dilutive common equivalent shares of
Netscape Common Stock and KIVA Common Stock outstanding for each period,
based on an assumed exchange ratio of .3818 shares of Netscape Common Stock
for each share of KIVA Common Stock and each of the outstanding options to
purchase KIVA Common Stock as of December 1, 1997. Common equivalent shares
consist of the incremental common shares issuable upon the exercise of stock
options (using the treasury stock method). The proforma combined income
(loss) per share includes the effect of the convertible preferred stock
(using the if-converted method) for all periods even if antidilutive. The
historical weighted average shares outstanding related to KIVA include the
historical weighted average common stock outstanding for each respective
period and exclude common stock equivalents as their effect is antidilutive.
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CONFORMING AND PRO FORMA ADJUSTMENTS
There were no adjustments required to conform the accounting policies of
Netscape and KIVA. Certain amounts for KIVA have been reclassified to
conform with Netscape's financial statement presentation. There have been no
significant intercompany transactions.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NETSCAPE COMMUNICATIONS CORPORATION
Date: December 16, 1997 /s/ Peter L.S. Currie
----------------- -------------------------------
Peter L.S. Currie
Executive Vice President and Chief
Administrative Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
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