PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424(b)(3)
TO PROSPECTUS DATED FEBRUARY 12, 2002 REGISTRATION NO. 333-73112
$12,200,000 OF NETWORKS ASSOCIATES, INC.
5.25% CONVERTIBLE SUBORDINATED NOTES DUE 2006 AND THE
COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
This Prospectus Supplement, together with the Prospectus listed above, is
to be used by certain holders of the above-referenced securities or by their
transferees, pledges, donees or their successors in connection with the offer
and sale of the above-referenced securities.
The table captioned "Selling Securityholders" commencing on page 49 and the
"Plan of Distribution" section commencing on page 52 of the Prospectus are
hereby amended to reflect the following additions and changes.
SELLING SECURITYHOLDERS
We originally issued the notes in a private placement to Lehman Brothers
Inc. in August 2001 pursuant to Section 4(2) of the Securities Act of 1933. The
notes were sold by Lehman Brothers Inc. to purchasers that are qualified
institutional buyers pursuant to Rule 144A. Those purchasers may have made
subsequent transfers of the notes pursuant to Rule 144A. We have no knowledge
whether the holders listed below received the notes on the initial distribution
or through subsequent transfers after the close of the initial private
placement. Selling securityholders may offer and sell the notes and the
underlying common stock pursuant to this prospectus.
The following table contains information, as of March 27, 2002, with
respect to the selling securityholders and the principal amount of notes and the
underlying common stock beneficially owned by each selling securityholder that
may be offered using this prospectus.
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
NOTES SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT MAY NOTES THAT MAY BE COMMON STOCK
NAME BE SOLD OUTSTANDING SOLD(1) OUTSTANDING (2)
--------------------------------------------- ---------------- -------------- -------------- ---------------
Alexandra Global Investment Fund I, LP (3).... $ 5,000,000 1.4% 276,702 *
Canaccord Capital Corporation................. 200,000 * 11,068 *
Goldman Sachs and Company..................... 3,000,000 * 166,021 *
WPG Convertible Arbitrage Overseas Master Fund,
LP............................................ 2,000,000 * 110,681 *
Zurich Institutional Benchmarks Master Fund (3) 2,000,000 * 110,681 *
* Less than 1%.
(1) Assumes conversion of all of the holder's notes at a conversion price of
$18.07 per share of common stock. However, this conversion price will be
subject to adjustment as described under "Description of Notes --
Conversion of Notes." As a result, the amount of common stock issuable upon
conversion of the notes may increase or decrease in the future.
(2) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using 140,598,822
shares of common stock outstanding as of December 31, 2001. In calculating
this amount, we treated as outstanding the number of shares of common stock
issuable upon conversion of all of that particular holder's notes. However,
we did not assume the conversion of any other holder's notes.
(3) Alexandra Investment Management, Ltd. has investment control over the
securities beneficially owned by these securityholders.
We prepared this table based on the information supplied to us by the
selling securityholders named in the table.
The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their notes since the date on which the
information in the above table is presented. Information about the selling
securityholders may change from over time.
Because the selling securityholders may offer all or some of their notes or
the underlying common stock from time to time, we cannot estimate the amount of
the notes or underlying common stock that will be held by the selling
securityholders upon the termination of any particular offering. See "Plan of
Distribution."
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the notes and the
underlying common stock offered by this prospectus. The notes and the underlying
common stock may be sold from time to time to purchasers:
- directly by the selling securityholders; or
- through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or commissions from
the selling securityholders or the purchasers of the notes and the
underlying common stock.
The selling securityholders and any such broker-dealers or agents who
participate in the distribution of the notes and the underlying common stock may
be deemed to be "underwriters." As a result, any profits on the sale of the
notes and underlying common stock by selling securityholders and any discounts,
commissions or concessions received by any such broker-dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
If the selling securityholders were to deemed underwriters, the selling
securityholders may be subject to certain statutory liabilities of, including,
but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.
To our knowledge, Lehman Brothers Inc., BNP Paribas Brokerage Services,
Inc., CIBC World Markets, Deutsche Banc Alex Brown Inc, Goldman Sachs and
Company, Morgan Stanley, and SG Cowen Securities Corporation are the only other
selling securityholders who are registered broker-dealers. As such, they are
underwriters of the notes. We do not have a material relationship with any of
these broker-dealers and none of these broker-dealers has the right to designate
or nominate a member or members of our board of directors. These securityholders
purchased their notes in the open market, not directly from us, and we are not
aware of any underwriting plan or agreement, underwriters' or dealers'
compensation, or passive market-making or stabilizing transactions involving the
purchase or distribution of these securities by these securityholders.
If the notes and underlying common stock are sold through underwriters or
broker-dealers, the selling securityholders will be responsible for underwriting
discounts or commissions or agent's commissions.
The notes and underlying common stock may be sold in one or more
transactions at:
- fixed prices;
- prevailing market prices at the time of sale;
- varying prices determined at the time of sale; or
- negotiated prices.
These sales may be effected in transactions:
- on any national securities exchange or quotation service on which the
underlying common stock may be listed or quoted at the time of the
sale, including the New York Stock Exchange, in the case of the common
stock;
- in the over-the-counter market;
- in transactions otherwise than on such exchanges or services or in the
over-the-counter market; or
- through the writing of options.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the notes and underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
notes and underlying common stock in the course of hedging their positions. The
selling securityholders may also sell the notes and underlying common stock
short and deliver notes and underlying common stock to close out short
positions, or loan or pledge notes and underlying common stock to broker-dealers
that in turn may sell the notes and underlying common stock.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the notes and the underlying common
stock by the selling securityholders. Selling securityholders may not sell any
or all of the notes and the underlying common stock offered by them pursuant to
this prospectus. In addition, we cannot assure you that any such selling
securityholder will not transfer, devise or gift the notes and the underlying
common stock by other means not described in this prospectus.
Our common stock trades on the New York Stock Exchange (NYSE) under the
symbol "NET." We do not intend to apply for listing of the notes on any
securities exchange or for quotation through NYSE. Accordingly, no assurance can
be given as to the development of liquidity or any trading market for the notes.
There can be no assurance that any selling securityholder will sell any or
all of the notes or underlying common stock pursuant to this prospectus. In
addition, any notes or underlying common stock covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be
sold under Rule 144 or Rule 144A rather than pursuant to this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the notes and the underlying common stock by the
selling securityholders and any other such person. In addition, Regulation M of
the Exchange Act may restrict the ability of any person engaged in the
distribution of the notes and the underlying common stock to engage in
market-making activities with respect to the particular notes and the underlying
common stock being distributed for a period of up to five business days prior to
the commencement of such distribution. This may affect the marketability of the
notes and the underlying common stock and the ability of any person or entity to
engage in market-making activities with respect to the notes and the underlying
common stock.
Pursuant to the registration rights agreement filed as an exhibit to this
registration statement, we and the selling securityholders will be indemnified
by the other against certain liabilities, including certain liabilities under
the Securities Act or will be entitled to contribution in connection with these
liabilities.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the notes and underlying common stock to the
public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.
The date of this Prospectus Supplement is March 27, 2002.