SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) March 7, 1995
STORAGE TECHNOLOGY CORPORATION
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(Exact Name of Registrant As Specified In Its Charter)
Delaware 1-7534 84-0593263
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(State or other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
2270 South 88th Street, Louisville, Colorado 80028-4309
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (303) 673-5151
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
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On March 7, 1995, StorageTek Eagle Corporation, a Delaware
corporation ("Sub"), which was a wholly owned subsidiary of the
Registrant, Storage Technology Corporation ("StorageTek"), was merged
(the "Merger") with and into Network Systems Corporation, a Delaware
corporation ("Network Systems"). As a result of the Merger, Network
Systems is now a wholly owned subsidiary of StorageTek. The Merger was
consummated pursuant to the terms and conditions of the Restated
Agreement and Plan of Merger, dated as of November 15, 1994 (the
"Merger Agreement"), as amended on February 8, 1995, among StorageTek,
Sub and Network Systems.
Pursuant to the Merger Agreement, Network Systems and Sub merged
and Network Systems became the surviving corporation. At the effective
time of the Merger, each outstanding share of Network Systems Common
Stock, $.02 par value per share, was converted into 0.2618 shares of
StorageTek Common Stock, .$10 par value per share (the "Exchange
Ratio"), and cash in lieu of the issuance of fractional shares based
upon a price for a share of StorageTek Common Stock of $21.00.
StorageTek will issue, in the aggregate, approximately 7,956,671 shares
of Common Stock to the holders of Network Systems stock. Immediately
prior to the Merger, Network Systems redeemed all preferred stock
purchase rights outstanding under the Network Systems Amended and
Restated Rights Agreement and, upon the effectiveness of the Merger,
holders of Network Systems stock became entitled to receive from
Network Systems an additional $.05 per share in cash (the "Rights
Payment"). The exchange of certificates representing Network Systems
stock for certificates representing shares of StorageTek Common Stock,
as well as the payment of cash in lieu of fractional shares and the
Rights Payment, will be made upon surrender of the Network Systems
stock certificates to the exchange agent. All cash payments to be made
by StorageTek in lieu of the issuance of fractional shares will be
financed with internally generated funds.
At the effective time of the Merger, StorageTek also assumed all
obligations of Network Systems under outstanding employee stock options
and the Network Systems employee stock purchase plan. Each stock
option assumed by StorageTek will be deemed to be an option to purchase
shares of StorageTek Common Stock and the participants in the employee
stock purchase plan will be entitled to purchase shares of StorageTek
Common Stock. The number of shares previously subject to each Network
Systems stock option and the exercise price per share, and the shares
to be issued pursuant to the employee stock purchase plan, have been
adjusted to reflect the Exchange Ratio. The stock options and the
obligations under
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the employee stock purchase plan represent the right to purchase
approximately 515,330 shares of StorageTek Common Stock.
In determining the Exchange Ratio the Boards of Directors of
StorageTek and Network Systems considered various factors, including
the relation of book value, market value and earnings per share of the
Common Stock of Network Systems and the Common Stock of StorageTek.
The Boards also considered certain valuation data related to selected
publicly traded companies and prior merger and acquisition transactions
involving comparable companies. In addition, the Board of Directors of
Network Systems also considered the opinion provided by its financial
advisor, Needham & Company, Inc., that the terms of the Merger were
fair, from a financial point of view, to the stockholders of Network
Systems. The Board of Directors of StorageTek considered the opinion
rendered by its financial advisor, Salomon Brothers Inc, that the
Exchange Ratio was fair, from a financial point of view, to the
stockholders of StorageTek.
Certain "affiliates" (as that term is defined for purposes of Rule
144 of the Securities Act of 1933) of Network Systems have entered into
agreements restricting the sale or disposition of the shares of
StorageTek Common Stock received by them in connection with the Merger
so as to comply with the requirements of securities laws, tax laws and
pooling-of-interests accounting. Descriptions of any material
relationships between Network Systems and StorageTek and any director
or officer of StorageTek are contained under the caption "The Merger --
Management of Network Systems after the Merger; Interests of Certain
Persons in the Merger," and "The Merger -- Transactions Between
StorageTek and Network Systems" in the Proxy Statement/Prospectus of
StorageTek and Network Systems dated January 9, 1995 (the "Proxy
Statement"), included within the Registration Statement on Form S-4
(File No. 33-55343) previously filed by StorageTek with the Securities
and Exchange Commission. Such descriptions are incorporated herein by
reference.
Item 7. Financial Statements and Exhibits
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The following financial statements, pro forma financial information
and exhibits are filed as a part of this report:
(a) Financial statements of businesses acquired.
(1) Incorporated herein by reference from Network Systems' Form 10-K/A
(Commission File No. 0-9691) for the year ended December 31, 1993, are
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Network Systems' Consolidated Balance Sheets as of December 31, 1993,
and December 31, 1992, and its Consolidated Statements of Operations,
Stockholders' Equity, and Cash Flows for each of the three years in the
period ended December 31, 1993 and the notes attached thereto. Also
incorporated herein by reference from Network Systems' Form 10-Q
(Commission File No. 0-9691) for the quarters ended March 31, 1994, and
June 30, 1994, and Form 10-Q/A (Commission File No. 0-9691) for the
quarter ended September 30, 1994, are Network Systems' unaudited
Condensed Consolidated Balance Sheets as of March 31, 1994, June 30,
1994, and September 30, 1994, and its unaudited Condensed Consolidated
Statements of Operations and Cash Flows for the quarters ended March
31, 1994, and March 31, 1993; for the quarters and six months ended
June 30, 1994, and June 30, 1993; and for the quarters and nine months
ended September 30, 1994, and September 30, 1993; and the notes
attached thereto.
(2) The report of Ernst & Young LLP dated January 28, 1994, included in
Network Systems' Form 10-K/A for the year ended December 31, 1993, is
also incorporated herein by reference.
(b) Pro forma financial information.
Incorporated herein by reference from StorageTek's Form S-4, as
amended (Registration No. 33-55343), are the Unaudited Pro Forma
Condensed Combined Balance Sheet as of September 1994 and the Unaudited
Pro Forma Condensed Combined Statements of Operations for the nine
months ended September 1994 and for each of the three years in the
period ended December 1993 and the notes attached thereto. The
unaudited pro forma combined condensed financial statements assume the
combination of StorageTek and Network Systems had occurred on the first
day of the earliest period presented.
These unaudited pro forma combined financial statements should be
read in conjunction with the historical consolidated financial
statements and the related notes thereto of StorageTek and Network
Systems. These unaudited pro forma condensed combined financial
statements are provided for comparative purposes only and do not
purport to be indicative of the results that actually would have been
obtained if the Merger had been effected for the periods indicated, or
of results that may be obtained in the future.
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(c) Exhibits.
2.1 The Restated Agreement and Plan of Merger dated November 15,
1994 among Storage Technology Corporation, StorageTek Eagle
Corporation and Network Systems Corporation is incorporated herein
by reference to Appendix A to the Proxy Statement/Prospectus dated
January 9, 1995 contained in Registrant's Registration Statement
on Form S-4 previously filed with the Securities and Exchange
Commission (File No. 33-55343).
2.2 The Amendment to Restated Agreement and Plan of Merger dated
as of February 8, 1995 among Storage Technology Corporation,
StorageTek Eagle Corporation and Network Systems Corporation is
incorporated herein by reference to the February 10, 1995
Supplement to Proxy Statement/Prospectus filed with the Securities
and Exchange Commission pursuant to Rule 424 (c) of the Securities
Act of 1933, included in the Registrant's Registration on Form S-4
(File No. 33-55343).
23.1 Consent of Ernst & Young LLP.
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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.
Storage Technology Corporation
By: /s/ DAVID E. LACEY
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David E. Lacey
Corporate Vice President
Interim Chief Financial Officer
Date: March 17, 1995
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Form 8-K of Storage
Technology Corporation of our report dated January 28, 1994, included in
the 1993 Form 10-K/A of Network Systems Corporation.
We also consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-19426, 33-32235, 33-32243, 33-37464, 33-
42817, 33-42818, 33-51764, 33-51756, 2-60117, 2-80183, 2-61333, 2-76167, 2-
89417, 33-50777, and 33-52197) of Storage Technology Corporation of our
report dated January 28, 1994, with respect to the consolidated financial
statements and schedules of Network Systems Corporation included in its Form
10-K/A for the year ended December 31, 1993.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 1995
