-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IDygCCIfib1vyGGlrsG6sT25QnPQyPz0IIH3U+9d5Xld89AiEOipKYmv9J5gePNf ls1A/enVaLlvCzhZL8nP4g== 0000950135-98-004757.txt : 19980817 0000950135-98-004757.hdr.sgml : 19980817 ACCESSION NUMBER: 0000950135-98-004757 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFINIUM SOFTWARE INC CENTRAL INDEX KEY: 0001002044 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 042734036 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27030 FILM NUMBER: 98687961 BUSINESS ADDRESS: STREET 1: 25 COMMUNICATIONS WAY STREET 2: DRAWER 6000 CITY: HYANNIS STATE: MA ZIP: 02601 BUSINESS PHONE: 5087782000 FORMER COMPANY: FORMER CONFORMED NAME: SOFTWARE 2000 INC /MA/ DATE OF NAME CHANGE: 19960322 FORMER COMPANY: FORMER CONFORMED NAME: SOFTWARE 2000 INC /MA/ DATE OF NAME CHANGE: 19951012 10-Q 1 INFINIUM SOFTWARE, INC. 1 - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from _______to______ Commission File Number 0-27030 INFINIUM SOFTWARE, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2734036 ------------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 25 Communications Way, Hyannis, MA 02601 (Address of principal executive offices, including Zip Code) (508) 778-2000 (Registrant's telephone number, including area code) ---------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- The number of shares outstanding of the registrant's Common Stock on June 30, 1998 was 12,511,371. - ------------------------------------------------------------------------------- 2 INFINIUM SOFTWARE, INC. INDEX
PAGE PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed Consolidated Balance Sheet at September 30, 1997 and June 30, 1998......................................................................... 3 Condensed Consolidated Statement of Operations for the three and nine months ended June 30, 1997 and 1998................................................... 4 Condensed Consolidated Statement of Cash Flows for the nine months ended June 30, 1997 and 1998.......................................................... 5 Notes to Condensed Consolidated Financial Statements................................... 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................................. 10 PART II - OTHER INFORMATION ITEMS 1.-5. Not applicable ITEM 6. Exhibits and Reports on Form 8-K....................................................... 19 .............................. SIGNATURES............................................................................................ 20 EXHIBIT INDEX......................................................................................... 21 EXHIBITS.............................................................................................. 22
2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INFINIUM SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SEPTEMBER 30, JUNE 30, 1997 1998 ---- ---- (UNAUDITED) ASSETS Current assets: Cash, cash equivalents and marketable securities .................. $ 48,319 $ 43,638 Accounts receivable, less allowance for doubtful accounts of $1,569 and $1,415 at September 30, 1997 and June 30, 1998, respectively 18,930 23,827 Deferred income taxes ............................................. 1,167 1,154 Prepaid expenses and other current assets ......................... 4,946 6,769 -------- -------- Total current assets ...................................... 73,362 75,388 Property and equipment, net ......................................... 6,901 7,240 Capitalized software, net ........................................... 6,962 8,914 Goodwill and other intangible assets, net ........................... 1,640 2,363 Deferred income taxes ............................................... 471 439 Other assets ........................................................ 1,971 3,102 -------- -------- Total assets .............................................. $ 91,307 $ 97,446 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable .................................................. $ 5,221 $ 7,244 Accrued expenses .................................................. 9,763 15,530 Income taxes payable .............................................. 2,394 -- Deferred revenue .................................................. 31,990 34,235 -------- -------- Total current liabilities ................................. 49,368 57,009 -------- -------- Common stock, $.01 par value; authorized 40,000 shares, issued and outstanding 12,162 and 12,596 shares at September 30, 1997 and June 30, 1998, respectively ..................................... 122 126 Additional paid-in capital ........................................ 33,325 35,947 Retained earnings ................................................. 8,502 5,967 Cumulative translation adjustment ................................. (10) (186) -------- -------- 41,939 41,854 Less: treasury stock at cost, none and 85 shares at September 30, 1997 and June 30, 1998, respectively ............................ -- (1,417) -------- -------- Total stockholders' equity ................................ 41,939 40,437 -------- -------- Total liabilities and stockholders' equity ................ $ 91,307 $ 97,446 ======== ========
The accompanying notes are an integral part of the condensed consolidated financial statements. 3 4 INFINIUM SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED ----------------------- ------------------------ JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1997 1998 1997 1998 ---- ---- ---- ---- Revenue: Software license fees .................... $ 7,508 $ 11,409 $ 18,501 $ 28,005 Service revenue .......................... 14,686 19,062 41,783 52,818 ------- -------- -------- -------- Total revenue .................... 22,194 30,471 60,284 80,823 ------- -------- -------- -------- Operating costs and expenses: Cost of software license fees ............ 1,396 2,014 3,435 5,050 Cost of services ......................... 5,864 8,144 16,041 22,939 Research and development ................. 4,748 5,302 12,418 13,812 Sales and marketing ...................... 7,961 9,582 21,069 26,396 General and administrative ............... 1,741 2,019 5,292 6,476 Write-off of in-process research and development acquired .................. -- 7,796 6,846 7,796 Write-off of acquired technology ......... -- 3,400 -- 3,400 ------- -------- -------- -------- Total operating costs and expenses 21,710 38,257 65,101 85,869 ------- -------- -------- -------- Income (loss) from operations .............. 484 (7,786) (4,817) (5,046) Other income, net .......................... 529 472 1,524 1,317 ------- -------- -------- -------- Income (loss) before provision (benefit) for income taxes ......................... 1,013 (7,314) (3,293) (3,729) Provision (benefit) for income taxes ....... 355 (2,341) (1,151) (1,194) ------- -------- -------- -------- Net income (loss) .......................... $ 658 $ (4,973) $ (2,142) $ (2,535) ======= ======== ======== ======== Basic earnings (loss) per share ............ $ 0.05 $ (0.40) $ (0.18) $ (0.21) ======= ======== ======== ======== Diluted earnings (loss) per share .......... $ 0.05 $ (0.40) $ (0.18) $ (0.21) ======= ======== ======== ========
The accompanying notes are an integral part of the condensed consolidated financial statements. 4 5 INFINIUM SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
NINE MONTHS ENDED ------------------------ JUNE 30, JUNE 30, 1997 1998 ---- ---- Cash flows from operating activities: Net loss .................................................................. $ (2,142) $ (2,535) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization .......................................... 4,345 4,995 Allowance for doubtful accounts ........................................ 229 514 Deferred income taxes .................................................. (1,759) 45 Write-off of in-process research and development acquired .............. 6,846 7,796 Changes in operating assets and liabilities, net of effects from the corporate acquisitions of Time (Open Systems) Limited in 1997 and Cort Directions, Inc. in 1998: Accounts receivable ................................................ (7,244) (5,158) Prepaid expenses and other current assets .......................... (760) (1,795) Other assets ....................................................... (136) (322) Accounts payable ................................................... (146) 1,936 Accrued expenses ................................................... 1,271 2,557 Income taxes payable ............................................... 633 (2,047) Deferred revenue ................................................... 2,340 1,716 -------- -------- Net cash provided by operating activities ........................ 3,477 7,702 -------- -------- Cash flows from investing activities: Purchase of property and equipment ........................................ (2,157) (2,532) Capitalized software ...................................................... (2,713) (3,808) Corporate acquisitions, net of cash acquired .............................. (3,443) (5,971) Investment in unaffiliated entities ...................................... -- (850) -------- -------- Net cash used in investing activities ............................. (8,313) (13,161) -------- -------- Cash flows from financing activities: Proceeds from exercise of stock options and employee stock purchase plan ........................................................... 621 2,297 Purchase of treasury stock ................................................ -- (1,417) -------- -------- Net cash provided by financing activities ......................... 621 880 -------- -------- Effect of foreign exchange rate changes on cash ............................. 17 (102) -------- -------- Net decrease in cash, cash equivalents and marketable securities ............ (4,198) (4,681) Cash, cash equivalents and marketable securities, beginning of period ....... 43,337 48,319 -------- -------- Cash, cash equivalents and marketable securities, end of period ............. $ 39,139 $ 43,638 ======== ========
The accompanying notes are an integral part of the condensed consolidated financial statements. 5 6 INFINIUM SOFTWARE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) 1. BASIS OF PRESENTATION The information at June 30, 1997 and 1998 and for the three and nine month periods then ended is unaudited, but includes all adjustments (consisting only of normal recurring entries) which the Company's management believes to be necessary for the fair presentation of the financial position, results of operations, and changes in cash flows for the periods presented. The accompanying interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1997. Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the Securities and Exchange Commission rules and regulations. Interim results of operations for the three and nine month periods ended June 30, 1998 are not necessarily indicative of operating results for the full fiscal year. Certain amounts in the condensed consolidated balance sheet have been reclassed to conform with the current period's presentation. 2. FOREIGN CURRENCY TRANSLATION The Company changed the functional currency of the Canadian branch to that of the local currency effective April 1, 1998. Accordingly, assets and liabilities are translated at current exchange rates. Income and expense items are translated using average rates during the year. Translation adjustments are not included in determining consolidated net income but rather are accumulated and reported as a separate component of stockholders' equity. 3. STOCK REPURCHASE PROGRAM In February 1998, the Company announced that it would be initiating a stock repurchase program of up to $6,000 of common stock effective immediately. No minimum number or value of shares to be repurchased has been fixed nor has a time limit as to the duration of the program been established. The Company repurchased 25 shares at a cost of $400 during the quarter ended March 31, 1998 and an additional 60 shares at a cost of $1,017 during the quarter ended June 30, 1998. No shares were repurchased in fiscal year 1997. The Company expects to use the repurchased stock to meet requirements of its employee stock option and stock purchase plans. 4. RECENTLY ISSUED ACCOUNTING STANDARDS On June 15, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133). FAS 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999 (October 1, 1999 for the Company). FAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Management of the Company anticipates that, due to its limited use of derivative instruments, the adoption of FAS 133 will not have a significant effect on the Company's results of operations or its financial position. 6 7 INFINIUM SOFTWARE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share data) (Unaudited) 5. CAPITALIZED SOFTWARE In accordance with the provisions of Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, the Company capitalizes certain internally developed software costs upon reaching technological feasibility. The Company also capitalizes certain software acquired from third parties if the acquired product has reached technological feasibility. Amortization of capitalized software is provided upon commercial release of the products at the greater of the ratio of current product revenue to the total of current and anticipated product revenue or on a straight-line basis over the estimated economic life of the software, which the Company has determined to be three to five years. The following schedule summarizes capitalized software: September 30, June 30, 1997 1998 ---- ---- Capitalized Software: Internally developed $18,746 $21,804 Acquired software 312 1,628 ------- ------- 19,058 23,432 Less: accumulated amortization 12,096 14,518 ======= ======= $ 6,962 $ 8,914 ======= ======= In addition to the acquired software obtained in connection with the acquisition of Cort Directions, Inc. discussed in Note 8 below, the Company also acquired two software products from third parties for $500 and $250, respectively, during the current fiscal year. 6. OTHER INCOME, NET Other income, net consists of the following: Three Months Ended Nine Months Ended ------------------- -------------------- June 30, June 30, June 30, June 30, 1997 1998 1997 1998 ---- ---- ---- ---- Interest income ............. $ 549 $ 490 $ 1,587 $ 1,473 Foreign exchange loss ....... (20) (18) (63) (156) ----- ------- ------- ------- $ 529 $ 472 $ 1,524 $ 1,317 ===== ======= ======= ======= 7. NET INCOME PER SHARE In February, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS 128), Earnings per Share. This Statement, which the Company adopted with the quarter ended December 31, 1997, establishes and simplifies standards for computing and presenting earnings per share. SFAS 128 requires restatement of all previously reported earnings per share data that are presented. 7 8 INFINIUM SOFTWARE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share data) (Unaudited) 7. Net Income Per Share, continued Basic earnings per share is determined by dividing net income applicable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by dividing net income applicable to common stockholders by the weighted average number of common shares and common share equivalents outstanding during the period. Common share equivalents are included in the diluted earnings per share calculation when dilutive. Common share equivalents consisting of common stock issuable upon exercise of outstanding common stock options are computed using the treasury stock method. For the three and nine months ended June 30, 1998, potential common shares of 1,357 and 1,470, respectively, issuable upon the exercise of stock options are antidilutive as a result of the net loss for the periods and have been excluded from the respective diluted earnings per share computations. For the nine months ended June 30, 1997 potential common shares of 589 has also been excluded from the respective diluted earnings per share computation as a result of being antidilutive. The computation of basic and diluted earnings per share for the three and nine months ended June 30, 1997 and 1998 is as follows:
Three months ended ------------------ June 30, 1997 June 30, 1998 ------------- ------------- Income Per Income Per (Loss) Shares Share (Loss) Shares Share ------ ------ ----- ------ ------ ----- Basic Earnings per Share: Income (loss) available to Common stockholders $658 11,984 $0.05 $(4,973) 12,509 $(0.40) ==== ===== ======= ====== Effect of Dilutive Securities: Stock options 556 n/a ------ ------ Diluted Earnings per Share: Income (loss) available to Common stockholders $658 12,540 $0.05 $(4,973) 12,509 $(0.40) ==== ====== ===== ======= ====== =====
Nine months ended ----------------- June 30, 1997 June 30, 1998 ------------- ------------- Income Per Income Per (Loss) Shares Share (Loss) Shares Share ------ ------ ----- ------ ------ ----- Basic Earnings per Share: Income (loss) available to common stockholders $(2,142) 11,667 $ (0.18) $ (2,535) 12,361 $(0.21) ======= ======== ======== ====== Effect of Dilutive Securities: Stock options n/a n/a Diluted Earnings per Share: ------ ------- Income (loss) available to common stockholders $(2,142) 11,667 $ (0.18) $ (2,535) 12,361 $(0.21) ======= ====== ======== ======== ====== ======
8 9 INFINIUM SOFTWARE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share data) 8. Acquisition On June 11, 1998, the Company acquired all of the outstanding capital stock of Cort Directions, Inc., ("Cort"), a privately held software concern which primarily developed and marketed a payroll application for the Microsoft NT platform. The transaction was consummated for $7,857 in cash of which $5,953 was paid upon closing, $952 to be paid February 1, 1999 and $952 on June 11, 1999, as well as $375 of acquisition costs. The acquisition was accounted for as a purchase. Accordingly, the results of operations of Cort and the fair market values of the acquired assets and assumed liabilities were included in the Company's financial statements as of the date of the acquisition. The preliminary purchase price has been allocated to the acquired assets and assumed liabilities as follows: Accounts receivable $ 184 Other current assets 23 Property and equipment 109 In-process research and development 7,796 Acquired software 566 Goodwill 1,022 Current liabilities (1,468) ======= $ 8,232 ======= The preliminary amount allocated to in-process research and development was determined by an independent appraiser and represented technology which had not reached technological feasibility and had no alternative future use. Accordingly, this amount of $7,796 was charged to operations at the acquisition date. The preliminary amounts allocated to acquired software and goodwill are being amortized on a straight-line basis over the expected useful lives of three and five years, respectively. Pro forma statements of operations are not shown, as they would not differ materially from reported results. 9. WRITE-OFF OF ACQUIRED TECHNOLOGY In March 1998, the Company entered into a product purchase agreement with a third party to deliver an enhanced framework in the form of software code that will support and enable operation of transaction-based functionality specific to Microsoft NT server-based applications (the "technology"). The Company took delivery of the technology in June 1998 and determined that the deliverable had not met technological feasibility as defined by Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. Accordingly, the acquisition of the technology for $3,400 was immediately expensed upon delivery and is shown as a separate item within the Company's condensed consolidated statement of operations. As of June 30, 1998, the Company had paid $1,800 and $1,600 is included in accrued expenses. 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All statements contained herein that are not historical facts, including but not limited to, statements regarding anticipated future revenue and expense levels and capital requirements, the Company's future product development and marketing plans, the Company's ability to generate cash from operations, and the Company's ability to attract and retain employees, are based on current expectations. These statements are forward looking in nature, involve a number of risks and uncertainties, as more fully described under "Factors Affecting Future Performance" and are made pursuant to the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those described in the forward-looking statements. RESULTS OF OPERATIONS Founded in 1981, Infinium Software develops, markets and supports enterprise-level business software applications for mid-sized organizations (typically companies with revenues of $50 million to $5 billion). The Company has two primary product lines. One product line, designed for AS/400 computers, automates the financial management, human resource management and materials management functions of organizations in a broad range of industries worldwide. The Company also offers a specialized AS/400 manufacturing system designed to manage process-manufacturing operations. The Company's second product line is designed for use by customers using Microsoft Windows NT servers. These products automate the financial management and human resource management operations of mid-sized organizations. Additional NT applications are under development. In January 1997, the Company acquired all of the outstanding capital stock of Time (Open Systems) Ltd. ("Time"), a UK-based privately held software concern which developed and marketed a suite of client/server financial management application software products. Since the acquisition of Time, the Company continues to invest in the development and marketing of these products for the Microsoft NT server platform. The Company released Infinium Financials for Microsoft Windows NT servers for general availability in September 1997. The Company announced the general availability of Infinium Human Resources for Microsoft NT servers during this third quarter of fiscal 1998. In addition, the Company acquired Cort Directions, Inc., ("Cort") in June 1998, which primarily develops and markets a payroll application for Microsoft Windows NT servers. These products are Infinium's suite of human resource management products for Microsoft NT servers. The Company continues to investment in these products. The Company continues to develop a new suite of materials management applications which will complement existing financial and human resource management applications for the Microsoft Windows NT environment. These products are scheduled for release in the first half of calendar year 1999. During the quarter ended June 30, 1998, the Company derived 16% of software license fees from NT products. The Company's revenue is derived from two sources: software license fees and service revenue. Software license fees includes revenue from noncancelable software license agreements entered into between the Company and its customers with respect to both the Company's products and third party products distributed by the Company. Software license fee revenue is recognized upon shipment of the software and when all significant contractual obligations have been satisfied. The Company's service revenue is comprised of software maintenance fees and fees for consulting services. Maintenance fees are billed separately and are recognized ratably over the period of the maintenance agreement, which is typically one year. Consulting service revenue, which is not essential to the functionality of the software products, is recognized as the services are performed. 10 11 The following table sets forth for the periods indicated the Company's condensed consolidated statement of income data expressed as a percentage of total revenue and the percentage of dollar increase period over period for the three and nine months ended June 30, 1997 and 1998.
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30, -------------------------------- --------------------------- % OF TOTAL % OF $ % OF TOTAL % OF $ REVENUE INCREASE REVENUE INCREASE ------- -------- ------- -------- 1997 1998 97 TO 98 1997 1998 97 TO 98 ---- ---- -------- ---- ---- -------- Revenue: Software license fees .......... 34% 37% 52% 31% 35% 51% Service revenue ................ 66 63 30 69 65 26 --- --- --- --- Total revenue ............... 100 100 37 100 100 34 --- --- --- --- Operating costs and expenses: Cost of software license fees .. 6 7 44 6 6 47 Cost of services ............... 26 27 39 27 28 43 Research and development ....... 21 17 12 20 17 11 Sales and marketing ............ 36 31 20 35 33 25 General and administrative ..... 8 7 16 9 8 22 Write-off of in-process research and development acquired ..... -- 26 -- 11 10 14 Write-off of acquired technology -- 11 -- -- 4 -- --- --- --- --- 97 126 76 108 106 32 --- --- --- --- Income (loss) from operations .... 3 (26) -- (8) (6) 5 --- --- --- --- Other income, net ................ 2 2 (11) 3 1 (14) --- --- --- --- Income (loss) before provision (benefit) for income taxes ..... 5 (24) -- (5) (5) 13 Provision (benefit) for income taxes .......................... 2 (8) -- (2) (2) 4 --- --- --- --- Net income (loss) ............... 3% (16)% -- (3)% (3)% 18 === === === ===
Included in operating costs and expenses are charges of $6.8 million and $7.8 million for the nine months ended June 30, 1997 and for the three and nine months ended June 30, 1998, respectively, as a result of the write-off of in-process research and development acquired in connection with corporate acquisitions. Also included in operating costs and expenses for the three and nine months ended June 30, 1998 is a charge of $3.4 million as a result of the write-off of acquired technology. On a pro forma basis, exclusive of the write-off of in-process research and development acquired and the write-off of acquired technology, results of operations would be comparatively reported as follows (in thousands except per share and percentage data):
THREE MONTHS ENDED % OF TOTAL % OF $ JUNE 30, REVENUE INCREASE -------- 1997 1998 1997 1998 97 TO 98 ---- ---- ---- ---- -------- Total revenue ................................ $22,194 $30,471 100% 100% 37% Operating costs and expenses ................. 21,710 27,061 98 89 25 ------- ------- --- --- Income from operations ..................... 484 3,410 2 11 605 ------- ------- --- --- Other income, net ............................. 529 472 3 2 (11) ------- ------- --- --- Income before provision for income taxes .... 1,013 3,882 5 13 283 Provision for income taxes .................... 355 1,242 2 4 250 ------- ------- --- --- Net income .................................. $ 658 $ 2,640 3% 9% 301 ======= ======= === === Earnings per share - basic .................... $ 0.05 $ 0.21 -- -- 320 ======= ======= Weighted average shares outstanding - basic ... 11,984 12,509 -- -- 4 ======= ======= Earnings per share - diluted .................. $ 0.05 $ 0.19 -- -- 280 ======= ======= Weighted average shares outstanding - diluted . 12,540 13,866 -- -- 11% ======= =======
11 12
NINE MONTHS ENDED % OF TOTAL % OF $ JUNE 30, REVENUE INCREASE -------- 1997 1998 1997 1998 97 TO 98 ---- ---- ---- ---- -------- Total revenue ................................ $60,284 $80,823 100% 100% 34% Operating costs and expenses ................. 58,255 74,673 97 92 28 ------- ------- --- --- Income from operations ..................... 2,029 6,150 3 8 203 ------- ------- --- --- Other income, net ............................ 1,524 1,317 3 1 (14) ------- ------- --- --- Income before provision for income taxes ... 3,553 7,467 6 9 110 Provision for income taxes ................... 1,244 2,389 2 3 92 ------- ------- --- --- Net income ................................. $ 2,309 $ 5,078 4% 6% 120 ======= ======= === === Earnings per share - basic ................... $ 0.20 $ 0.41 105 ======= ======= Weighted average shares outstanding - basic .. 11,667 12,361 6 ======= ======= Earnings per share - diluted ................. $ 0.19 $ 0.37 95 ======= ======= Weighted average shares outstanding - diluted 12,256 13,831 13% ======= =======
QUARTER ENDED JUNE 30, 1998 COMPARED TO QUARTER ENDED JUNE 30, 1997 REVENUE. Total revenue increased 37%, from $22.2 million for the quarter ended June 30, 1997 to $30.5 million for the quarter ended June 30, 1998. The increase was due to a greater overall market acceptance of the company's products and the addition of revenue from Windows NT products, resulting in increased software license fees. The Company further attributes this growth to the increased demand for the Company's application software solutions to help solve year 2000 issues. In addition, with each license agreement entered into, consulting services and maintenance are typically also contracted resulting in an increase in service revenue as the contracted services are delivered. Revenue in North America (United States and Canada) increased 41%, from $20.0 million for the quarter ended June 30, 1997 to $28.3 million for the quarter ended June 30, 1998. This is representative of 90% of total revenue for the third quarter of fiscal year 1997 compared to 93% for the third quarter of fiscal year 1998. EMEA (Europe, Middle East and Africa) revenue remained constant at $1.6 million for the quarters ending June 30, 1997 and 1998. Other international regions, including Asia-Pacific and Latin America, contributed 2% of total revenue for both the third quarter of fiscal year 1997 and 1998. Revenue derived from the IBM AS/400 platform represented 92% of total revenue while revenue derived from the Windows NT platform represented 8% for the third quarter ended June 30, 1998 compared to 99% and 1%, respectively, for the third quarter ended June 30, 1997. Software license fee revenue increased 52%, from $7.5 million for the quarter ended June 30, 1997 to $11.4 million for the quarter ended June 30, 1998. The growth was due primarily to continued acceptance of the Company's products enhanced by increased demand of businesses requiring application software solutions that will be functionally operative in the year 2000. For the third quarter of fiscal year 1998, software license fee revenue derived from Windows NT products was $1.8 million compared to $0.2 million from the third quarter of fiscal year 1997. All other software license fee revenue was derived from IBM AS/400 hardware platform transactions. Service revenue increased 30%, from $14.7 million for the quarter ended June 30, 1997 to $19.1 million for the quarter ended June 30, 1998. The increase was primarily attributable to an increase in the installed base of customers resulting in an increase in both maintenance and consulting services revenue. Also contributing to the increase in consulting services revenue was an increase in larger consulting service engagements as well as increased service offerings. 12 13 The table below summarizes the composition and growth in the Company's service revenue. THREE MONTHS ENDED JUNE 30, --------------------------------- (in thousands) % INCREASE ---------- 1997 1998 97 TO 98 ------- ------- -------- Maintenance fee revenue $ 8,483 $10,049 18% Consulting services revenue 6,203 9,013 45 ------- ------- Total service revenue $14,686 $19,062 30% ======= ======= COST OF SOFTWARE LICENSE FEES. Cost of software license fees consists primarily of royalties on the sale of third party products, amortization expense related to capitalized software and the cost of product media, manuals and shipping. Cost of software license fees increased 44%, from $1.4 million for the quarter ended June 30, 1997 to $2.0 million for the quarter ended June 30, 1998. Cost of software license fees as a percentage of software license fee revenue decreased from 19% for the quarter ended June 30, 1997 to 18% for the quarter ended June 30, 1998. The increase in the dollar amount is attributed to an increase in software license fees as well as royalties of third party product software sales and to an increase in amortization of capitalized software. COST OF SERVICES. Cost of services consists of costs to provide product and technical support, consulting services and training services to licensees of Infinium Software products. Cost of services increased 39%, from $5.9 million for the quarter ended June 30, 1997 to $8.1 million for the quarter ended June 30, 1998. Cost of services as a percentage of service revenue increased from 40% for the quarter ended June 30, 1997 to 43% for the quarter ended June 30, 1998. The increase in the cost of services as a percentage of service revenue is attributed to the relative increase in the amount of consulting services versus maintenance at a lower gross margin. The increase in dollar amount of such costs resulted primarily from increased staffing in the consulting and support organizations in response to increased demand for consulting services, a continued growth in the customer base and an increase in the use of third party contractors. RESEARCH AND DEVELOPMENT. Research and development expenses consist primarily of engineering personnel, related facilities and computer and communications overhead, and third party contractor costs reduced by capitalized software development costs and, when applicable, research funding. Research and development expenses increased 12% from $4.7 million for the quarter ended June 30, 1997 to $5.3 million for the quarter ended June 30, 1998. Research and development expense as a percentage of total revenue was 21% and 17% for the third quarter of fiscal year 1997 and fiscal year 1998, respectively. The increase in research and development expenses was due primarily to increased NT platform development initiatives during the period. In addition to AS/400 platform development efforts, the Company continues to invest in the development of its human resource management product line designed exclusively for the Microsoft NT server market. The Company also continues to invest in the enhancement of its Microsoft NT server financial management applications. The Company capitalized $1.0 million of internally developed software costs for the quarter ended June 30, 1997 compared to $1.2 million of internally developed software costs for the quarter ended June 30, 1998. There were no research funding offsets during the quarters ending June 30, 1997 and 1998. SALES AND MARKETING. Sales and marketing expenses consist primarily of salaries, commissions, travel, promotional expenses, facilities, and computers and communications costs for direct sales offices. Sales and marketing expenses increased 20% from $8.0 million for the quarter ended June 30, 1997 to $9.6 million for the quarter ended June 30, 1998. The increase was attributable to increased staffing in the direct sales force as well as an increase in commission expense associated with higher revenue. Sales and marketing expense as a percentage of total revenue was 36% and 31% for the third quarter of fiscal year 1997 and fiscal year 1998, respectively. GENERAL AND ADMINISTRATIVE. General and administrative expenses consist primarily of salaries of executive and administrative personnel and related facilities and computers and communication overhead, as well as provisions for doubtful accounts, insurance, investor relations and outside professional fees. 13 14 General and administrative expenses increased 16% from $1.7 million for the quarter ended June 30, 1997 to $2.0 million for the quarter ended June 30, 1998. General and administrative expense as a percentage of total revenue was 8% and 7% for the third quarter of fiscal year 1997 and fiscal year 1998, respectively. The increase in dollar amount was primarily due to an increase in the provision for doubtful accounts and in increase in facilities and computers and communications overhead. WRITE-OFF OF IN-PROCESS RESEARCH AND DEVELOPMENT ACQUIRED. In connection with the acquisition of Cort in June 1998, the Company recorded a charge to operations of $7.8 million for the write-off of in-process research and development acquired as described in Note 8 to the condensed consolidated financial statements. WRITE-OFF OF ACQUIRED TECHNOLOGY. In March 1998, the Company entered into a product purchase agreement with a third party to develop and deliver certain software applications to be included in its Microsoft NT product offerings. During the quarter ended June 30, 1998, the agreement with the third party was amended. Under the amended agreement, the Company received certain technology in the form of software code that will support and enable operation of transaction-based functionality specific to Microsoft NT server-based applications (the "technology"). The technology as received had not met technological feasibility as defined by Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. Accordingly, the acquisition of the technology for $3,400 was expensed upon delivery. The Company intends to utilize the acquired technology as the framework for additional products under development. Costs of such development will be accounted for as research and development and expensed as incurred until such a time that technological feasibility is reached with respect to the product being developed. Upon the attainment of technological feasibility, the Company will commence capitalization of software development costs of the product under development. PROVISION (BENEFIT) FOR INCOME TAXES. The provision (benefit) for federal, state and foreign income taxes was $0.4 million on an effective income tax rate of 35% for the quarter ended June 30, 1997 compared to $(2.3) million on an effective income tax rate of 32% for the quarter ended June 30, 1998. The decrease in the effective income tax rate for the third quarter of fiscal year 1997 to the third quarter of fiscal year 1998 is primarily due to incremental income tax credits available to the Company. NINE MONTHS ENDED JUNE 30, 1998 COMPARED TO NINE MONTHS ENDED JUNE 30, 1997 REVENUE. Total revenue increased 34%, from $60.3 million for the nine months ended June 30, 1997 to $80.8 million for the nine months ended June 30, 1998. Software license fee revenue increased 51%, from $18.5 million for the nine months ended June 30, 1997 to $28.0 million for the nine months ended June 30, 1998. The software license fee growth reflects a continued market acceptance of the products and the addition of revenue from Windows NT products, as well as increased demand of for the Company's application software solutions to help solve year 2000 issues. Service revenue increased 26%, from $41.8 million for the nine months ended June 30, 1997 to $52.8 million for the nine months ended June 30, 1998. The increase was primarily attributable to an increase in the installed base of customers resulting in an increase in both maintenance revenue and consulting service revenue. The following table sets forth a comparative breakout of the components of service revenue. NINE MONTHS ENDED JUNE 30, -------------------------- (In thousands) % OF $ --------- INCREASE -------- 1997 1998 97 TO 98 ------- ------- -------- Maintenance fee revenue $25,015 $28,314 13% Consulting services revenue 16,768 24,504 46 ------- ------- Total service revenue $41,783 $52,818 26% ======= ======= 14 15 COST OF SOFTWARE LICENSE FEES. Cost of software license fees increased 47%, from $3.4 million for the nine months ended June 30, 1997 to $5.1 million for the nine months ended June 30, 1998. Cost of software license fees as a percentage of software license fee revenue decreased from 19% for the nine months ended June 30, 1997 to 18% for the nine months ended June 30, 1998. The increase in the dollar amount is primarily attributed to an increase in software license fees as well as an increase in royalties of third party product software sales. COST OF SERVICES. Cost of services increased 43%, from $16.0 million for the nine months ended June 30, 1997 to $22.9 million for the nine months ended June 30, 1998. Cost of services as a percentage of service revenue increased from 38% for the nine months ended June 30, 1997 to 43% for the nine months ended June 30, 1998. The increase in both the dollar and as a percentage of service revenue resulted primarily from an increase in the use of third party consultants for delivery of consulting services into the customer base in response to continued growth and to the continued demand for consulting services. RESEARCH AND DEVELOPMENT. Research and development expenses increased 11%, from $12.4 million for the nine months ended June 30, 1997 to $13.8 million for the nine months ended June 30, 1998. The increase in research and development expense was due primarily to increased NT platform development initiatives during the current fiscal year. Internally developed capitalized software costs and research funding totaled $2.9 million for the nine months ended June 30, 1997 compared to $3.1 million for the nine months ended June 30, 1998. SALES AND MARKETING. Sales and marketing expenses increased 25%, from $21.1 million for the nine months ended June 30, 1997 to $26.4 million for the nine months ended June 30, 1998. The increase was attributable to increased staffing in the direct sales force as well as an increase in commission expense associated with higher revenue. Sales and marketing expense as a percentage of total revenue was 36% and 33% for the first nine months of fiscal year 1997 and fiscal year 1998, respectively. GENERAL AND ADMINISTRATIVE. General and administrative expenses increased 22%, from $5.3 million for the nine months ended June 30, 1997 to $6.5 million for the nine months ended June 30, 1998. General and administrative expenses as a percentage of total revenue were 9% for the nine months ended June 30, 1997 compared to 8% for the nine months ended June 30, 1998. The increase in the dollar amount was primarily due to an increase in facilities and computers and communication overhead costs. WRITE-OFF OF RESEARCH AND DEVELOPMENT ACQUIRED. In connection with the acquisition of Time in January 1997 and Cort in June 1998, the Company recorded charges to operations of $6.8 million and $7.8 million, respectively, for the write-off of in-process research and development acquired during the nine months ended June 30, 1997 and 1998, respectively. WRITE-OFF OF ACQUIRED TECHNOLOGY. In March 1998, the Company entered into a product purchase agreement with a third party to develop and deliver certain software applications to be included in its Microsoft NT product offerings. During the quarter ended June 30, 1998, the agreement with the third party was amended. Under the amended agreement, the Company received certain technology in the form of software code that will support and enable operation of transaction-based functionality specific to Microsoft NT server-based applications (the "technology"). The technology as received had not met technological feasibility, and accordingly, the acquisition of the technology for $3,400 was immediately expensed upon delivery. PROVISION (BENEFIT) FOR INCOME TAXES. The provision (benefit) for federal, state and foreign income taxes was ($1.2) million for both the nine months ended June 30, 1997 and 1998. The effective tax rates were 35% for the nine months ended June 30, 1997 compared to 32% for the nine months ended June 30, 1998. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1998, the Company had cash, cash equivalents and marketable securities of $43.6 million resulting in a net use of cash, cash equivalents and marketable securities of $4.7 million during the 15 16 first nine months of fiscal year 1998. Operating and financing activities provided $8.6 million while $3.8 million was used to fund capitalized software, $2.5 million for purchases of computers and equipment, and $0.9 million invested in unaffiliated entities generating a net $1.4 million cash inflow before the $6.0 million used in connection with the acquisition of Cort. Included in financing activities was the use of $2.3 million to repurchase common shares under a stock repurchase program which allows up to $6.0 million to be repurchased. Days sales outstanding ("DSO") increased to 70 days at June 30, 1998 compared to 64 days at September 30, 1997. The Company calculates DSO by dividing the ending accounts receivable balance, net of allowance for doubtful accounts, by the annualized revenue for the quarter, multiplied by 360. The Company believes that this method of deriving DSO is indicative of actual results due to the cyclical nature of software license and service transactions, which are often consummated nearer the end of the quarter, as well as the fluctuation of transactions from one quarter to the next. Deferred revenue increased $2.2 million, from $32.0 million at September 30, 1997 to $34.2 million at June 30, 1998. The increase in deferred revenue was primarily due to an increase in deferred maintenance revenue as a result of continued growth in the customer base. Deferred software license fees and consulting services remained relatively consistent at June 30, 1998 compared to September 30, 1997. The Company is currently contemplating expanding its offering of complementary products and technology via third party software relationships and/or acquisition. In connection with the acquisition of Cort in June 1998, deferred consideration of $1.9 million is scheduled for payment within fiscal 1999. In connection with the acquisition of the technology discussed in Note 9 to the condensed consolidated financial statements, payment of $1.6 million is scheduled during the fourth quarter of this current fiscal year. Consummation of additional agreements may result in the use of cash, cash equivalents and marketable securities for prepaid royalties, development funding, and acquisition. Although there are no current agreements with respect to additional material acquisitions of complementary businesses, such transactions could, if they were to occur, require additional sources of financing. The Company believes that cash, cash equivalents and marketable securities on hand and cash flows from operations will be sufficient to fund its operations at least through fiscal 1999. While operating activities may provide cash in certain periods, to the extent the Company experiences growth in the future, the Company anticipates that its operating and investing activities may use cash, and consequently, such growth may require the Company to obtain additional sources of financing. IMPACT OF THE YEAR 2000 The Year 2000 issue relates primarily to computer software and operating systems in which dates have been abbreviated. Unless corrected, these systems will recognize the date of "January 1, 2000" as "January 1, 1900". As a result, computer software and operating systems used by many companies may need to be upgraded to comply with Year 2000 requirements. The Company's financial management and human resources management internal business information systems are primarily comprised of the same commercial application software products developed and marketed by the Company to end users. Those applications in use by the Company have been tested for Year 2000 compliance and are certified by the Information Technology Association of America (ITAA) as Year 2000 compliant. As result, the Company does not expect any significant Year 2000 compliance issues to arise in connection with those primary internal business information systems. The software systems developed by the Company are designed to be Year 2000 compliant, however, there can be no assurance that such software systems contain all necessary information systems. The Company uses or markets other third party computer software and operating systems, network equipment and telecommunications products which may or may not be compliant. Although the Company is currently taking steps to address the impact, if any, of the Year 2000 issues related to such other products, failure of any such product to operate properly in the Year 2000 may have a material adverse impact on the business operations of the Company or require the Company to incur unanticipated expenses to remedy such problems. FACTORS AFFECTING FUTURE PERFORMANCE The Company's quarterly revenue and operating results have varied significantly in the past and are likely to vary substantially from quarter to quarter in the future. Such fluctuations may result in volatility in the price of the Company's common stock. Quarterly revenue and operating results may fluctuate as a result of a variety of factors, including the Company's lengthy sales cycle, the proportion of revenue attributable to license fees versus service revenue, changes in the level of operating expenses, demand for the Company's products, the introduction of new products and product enhancements by the Company or its competitors, changes in customer budgets, competitive conditions in the industry and general economic conditions. Further, the purchase of the Company's products often involves a significant commitment of capital by its customers with the attendant delays frequently associated with large capital expenditures and authorization procedures within an organization. For these and other reasons, the sales cycles for the Company's products are typically lengthy and subject to a number of significant risks over which the Company has little or no control. The Company historically has operated with little software license backlog because its software products are generally shipped as orders are received. The Company has often recognized a substantial portion of its revenue in the last month of the quarter and often in the last week of that month. As a result, license fees in any quarter are substantially dependent on orders booked and 16 17 shipped in the last month or last week of that quarter. Accordingly, a small variation in the timing of recognition of revenue for specific transactions is likely to adversely and disproportionately affect the Company's operating results for a quarter because the Company establishes its expenditure levels on the basis of its expected future revenue and only a small portion of the Company's expenses vary with its revenue. Accordingly, the Company believes that period to period comparisons of results of operations are not necessarily meaningful and should not be relied upon as indicative of future performance. The Company's business has experienced and is expected to continue to experience significant seasonality. In recent years, the Company has had greater demand for its products in its fourth fiscal quarter and has experienced lower revenue in its succeeding first and second fiscal quarters. The fluctuations are caused primarily by customer purchasing patterns and the Company's sales recognition programs which reward and recognize sales personnel on the basis of achievement of annual performance quotas. Due to the foregoing factors and the factors set forth under "Results of Operations" above, it is likely that in some future quarter the Company's operating results will be below the expectations of the Company and public market analysts and investors. In such event, the price of the Company's common stock would likely be materially adversely affected. The business applications software market is characterized by rapid technological change, frequent new product introductions, evolving industry standards and changes in customer demands. The introduction of products embodying new technologies and the emergence of new industry standards can render existing products obsolete and unmarketable. The Company's future success will depend in part on its ability to enhance products and services and to develop and introduce new products and services to meet changing customer requirements. There can be no assurance that the Company will be successful in developing and marketing product enhancements or new products that respond to technological change or evolving industry standards, that the Company will not experience difficulties that could delay or prevent the successful development, introduction and marketing of these products and enhancements, or that any new products and product enhancements it may introduce will achieve market acceptance. In addition, there can be no assurance that the Company will not encounter product development delays in the future or that, despite testing by the Company, errors will not be found in new products or product enhancements after commencement of commercial shipments, resulting in loss of market share, delay in market acceptance, or warranty claims which could have a material adverse effect upon the Company's business, operating results and financial condition. As the Company's primary current source of revenue comes from customers using IBM mid-range computers, future revenue from licenses of present products and sales of services and recurring maintenance revenue are therefore dependent on continued widespread use of the AS/400 and the continued support of such computers by IBM. In addition, because the Company's current AS/400 product line requires the use of IBM's OS/400 operating system, the Company may be required to adapt its products to any changes made in such operating system in the future. The Company's inability to adapt to future changes in the OS/400 operating system, or delays in doing so, could have a material adverse effect on the Company's business, operating results and financial condition. The Company has recently introduced and is continuing to develop software applications to operate on the Microsoft Windows NT operating system as well as to operate over the Internet and within corporate intranets. The Company's development and implementation of versions of its business software applications to run on Microsoft Windows NT servers involves more intense competition from a larger number of competitors. Although the Company has been successful in generating some revenue from these new products, there can be no assurance that the Company will continue to be able to compete successfully against current or future competitors. The business applications software market is highly competitive and rapidly changing. A number of companies offer products similar to the Company's products and target the same customers as the Company. The Company believes its ability to compete depends upon many factors within and outside its control, including the timely development and introduction of new products and product enhancements, product functionality, performance, price, reliability, customer service and support, sales and marketing efforts and product distribution. The Company believes that competition in its industry is undergoing rapid 17 18 change and that the barriers to competition between market segments that have previously existed are decreasing. Due to the relatively low barriers to entry in the software market, the Company expects additional competition from other established and emerging companies as the client/server business applications software market continues to develop and expand. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which would have a material adverse effect on the Company's business, operating results and financial condition. There can be no assurance that the Company will be able to compete successfully against current or future competitors or that competitive pressures will not have a material adverse effect on the Company's business, operating results and financial condition. Revenue from customers outside North America represented 8.7%, 10.6% and 11.4% of the Company's total revenue in fiscal 1995, 1996 and 1997, respectively. The Company believes that its revenue and future operating results will depend, in part, on its ability to increase sales in international markets. There can be no assurance that the Company will be able to maintain or increase its current level of international revenue. An important part of the Company's strategy is to expand its indirect distribution channels in international markets. There can be no assurance that the Company will be able to attract and retain international distributors and resellers that will be able to market the Company's products effectively and will be qualified to provide timely and cost-effective customer support and service. The inability to attract and retain important resellers could materially and adversely affect the Company's business, operating results and financial condition. Other risks inherent in the Company's international business activities generally include unexpected changes in regulatory requirements, tariffs and other trade barriers, costs and difficulties of localizing products for foreign countries, lack of acceptance of localized products in foreign countries, longer accounts receivable payments cycles, difficulties in managing international operations, potentially adverse tax consequences including restrictions on the repatriation of earnings, the burdens of complying with a wide variety of foreign laws and economic instability. There can be no assurance that such factors would not have a material adverse effect on the Company's future international revenue and, consequently, on the Company's business, operating results and financial condition. 18 19 PART II - OTHER INFORMATION Items 1 - 5. Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 Financial Data Schedule. (b) Reports on Form 8-K None 19 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Infinium Software, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: August 14, 1998 INFINIUM SOFTWARE, INC. by: /s/ DANIEL J. KOSSMANN ---------------------- Daniel J. Kossmann Chief Financial Officer 20 21 INFINIUM SOFTWARE, INC. EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION PAGE - ------ ----------- ---- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998 AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 1998 AS FILED ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q. 1,000 9-MOS SEP-30-1998 OCT-01-1997 JUN-30-1998 43,638 0 25,242 1,415 0 75,388 20,275 13,035 97,446 57,009 0 0 0 126 40,311 97,446 28,005 80,823 5,050 27,989 57,366 514 0 (3,729) (1,194) (2,535) 0 0 0 (2,535) (0.21) (0.21)
-----END PRIVACY-ENHANCED MESSAGE-----