| Visual Networks, Inc. | |||
| Ticker: | VNWK | 2092 Gaither Road | |
| Exchange: | NASDAQ-National Market | Rockville, MD 20850 | |
| Industry: | High-Tech (SIC Code 3577) | (301) 296-2300 | |
| # of Employees: | 113 | ||
| Type of Shares: | Common Shares | Filing Date: | 12/4/97 | |
| U.S. Shares: | 3,500,000 | Offer Date: | 2/5/98 | |
| Non-U.S. Shares: | 0 | Filing Range: | $9.00 - $11.00 | |
| Primary Shares: | 3,500,000 | Offer Price: | $12.50 | |
| Secondary Shares: | 0 | Gross Spread: | $0.88 | |
| Offering Amount: | $35,000,000 | Selling: | $0.50 | |
| Expenses: | $750,000 | Reallowance: | $0.10 | |
| Shares Out After: | 17,061,439 |
| Manager | Tier | Phone |
| Goldman, Sachs & Co. | Lead Manager | (212) 902-5959 |
| Deutsche Morgan Grenfell | Co-manager | (212) 469-5600 |
| Wessels, Arnold & Henderson | Co-manager | (612) 373-6105 |
| Issuer's Law Firm: | Piper & Marbury |
| Bank's Law Firm: | Hale and Dorr |
| Auditor: | Arthur Andersen |
| Registrar/Transfer Agent: | Boston Equiserve Limited Partnership |
Dollar amounts in U.S. millions except for per share data | |||||
| 9 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 9/30/97 | 9/30/96 | 9/30/97 | ||
| Revenue: | $6.34 | $15.52 | $3.94 | Assets: | $9.43 |
| Net Income: | -$6.98 | -$0.84 | -$4.79 | Curr Assets: | $8.16 |
| EPS: | -$0.53 | -$0.06 | -$0.38 | Liabilities: | $6.85 |
| Prior EPS: | $1.83 | -$4.59 | Curr Liabilities: | $6.54 | |
| Cash Flow/Oper: | -$6.57 | $0.83 | $9.73 | Equity: | $2.58 |
| Cash Flow/Fin: | $9.80 | -$0.27 | -$0.52 | Cash: | $4.14 |
| Cash Flow/Inv: | -$0.83 | -$0.27 | Working Cap: | $1.63 | |
| Business Description |
| The company designs, manufactures and sells "wide-area-network" service level management systems for statistically multiplexed technologies such as Frame Relay and IP/Internet. The Company's Visual UpTime system combines WAN access functionality with innovative software for performance monitoring, troubleshooting and network planning. Visual UpTime provides instrumentation for network performance measurement and analysis that allows WAN service providers ("providers") to achieve the service levels required by their customers ("subscribers") and to lower operating costs associated with statistically multiplexed services. The availability of performance monitoring and troubleshooting instrumentation also allows subscribers to verify the service levels being supplied by their WAN provider and monitor traffic traversing the WAN, a requirement for many subscribers wishing to use statistically multiplexed services to carry mission-critical data traffic. The Company believes Visual UpTime systems are deployed in configurations managing as few as 3 circuits and as many as 1,000 circuits. The system is designed to scale up to 3,000 circuits on a single managed network. |
| Competition |
| The WAN equipment market is highly competitive. The Company faces competition from participants in three distinct market segments: the WAN access equipment market, the network test and analysis market and the market for telecommunications support systems. Companies participating in these market segments which compete or can be expected to compete with the Company include ADC Telecommunications, Inc. ("ADC"), Adtran, Inc. ("Adtran"), Digital Link Corp. ("Digital Link"), NetScout Systems, Inc. ("NetScout"), Network General Corporation ("Network General"), Paradyne Corporation ("Paradyne"), Sync Research, Inc. ("Sync"), Hewlett-Packard Company ("HP") and Concord Communications, Inc. ("Concord"). The Company expects that it may experience price competition from products and services that provide a portion of the functionality provided by Visual UpTime. In particular, as prices for network equipment components such as data service units/channel service units ("DSU/CSUs") decrease, customers may decide to purchase these less expensive products even though they lack certain features offered by the Company's products. The Company expects that, in some cases, participants with strong capabilities in these various segments may partner with each other to offer products that supply functionality approaching that provided by Visual UpTime. The Company is aware of such an arrangement between Digital Link and NetScout, who jointly offer a WAN service level product. Many of the Company's current and possible competitors have greater financial, technical, marketing and other resources than the Company, and some have well established relationships with current and potential customers of the Company. As a result, these competitors may be able to respond to new or emerging technologies and changes in customer requirements more effectively than the Company, or devote greater resources than the Company to the development, promotion and sale of products. Increased competition may result in price reductions, reduced profitability and loss of market share, any of which would have a material adverse effect on the Company's business, financial condition and results of operations. |
| Business Plan |
| The Company's strategy is to maintain and build upon its market leadership in the deployment of WAN service level management systems for statistically multiplexed WAN services. Key elements of the Company's strategy include: (I) Embed Service Level Management Functionality Into Network Infrastructure, (ii) Deploy Visual Uptime As Part of Provider Networks, (iii) Extend Technology Leadership, (iv) Achieve Cost Leadership, (v) Expand Sales and Support Functions Globally and (vi) Leverage Outsourced Manufacturing Model. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for general corporate purposes. |
| Name of Shareholder | % Owned Before | % Owned After |
| NEPA Venture Fund II, L.P. | 16.00% | 12.70% |
| Venrock Entities | 15.90% | 12.60% |
| Edison Venture Fund III, L.P. | 12.20% | 9.70% |
| William J. Smith | 11.00% | 8.80% |
| William R.T. and Carol B. Oakes | 5.80% | 4.60% |
| Maryland Department of Business and Economic Development | 5.60% | 4.40% |
| Tritech Partners, L.P. | 5.10% | 4.00% |
| Officer Name | Title | Age |
| Scott E. Stouffer | Chairman of the Board of Directors, President and Chief Executive Officer | 37 |
| Peter J. Minihane | Executive Vice President, Chief Financial and Treasurer | 49 |
| Robert C. Troutman | Senior Vice President, Advance Planning | 41 |
| Henry A. Cheli | Senior Vice President, Market Operations | 47 |
| Greogry J. Langford | Senior Vice President, Product Operations | 47 |
| Patricia L. Cotter | Vice President, Manufacturing Operations | 39 |