-----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, FZsotJeKMUtMj7kiI4psnK5JtZMoqv1GmmA5I5mWmXrduvnWbCsaTiva0ePtPudx n0AffzEjDMq4bkAlepSzxw== 0000950135-96-001043.txt : 19960604 0000950135-96-001043.hdr.sgml : 19960604 ACCESSION NUMBER: 0000950135-96-001043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMRS INC CENTRAL INDEX KEY: 0000878594 STANDARD INDUSTRIAL CLASSIFICATION: 7372 IRS NUMBER: 133360138 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19538 FILM NUMBER: 96519897 BUSINESS ADDRESS: STREET 1: 777 LONG RIDGE RD CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033213500 MAIL ADDRESS: STREET 1: 777 LONG RIDGE ROAD CITY: STAMFORD STATE: CT ZIP: 06902 10-Q 1 HYPERION SOFTWARE CORPORATION 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 10-Q checkmark QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) --------- OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995 OR 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 0-19538 HYPERION SOFTWARE CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 06-1326879 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 900 LONG RIDGE ROAD, STAMFORD, CONNECTICUT 06902 (Address of principal executive offices, including zip code) (203) 703-3000 (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 13 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 checkmark NO ------------- --------- As of January 31, 1996, there were 16,733,746 shares of the Registrant's common stock, $.01 par value, outstanding. ================================================================================ 2 Hyperion Software Corporation and Subsidiaries Form 10-Q CONTENTS
PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheet -- December 31, 1995 and June 30, 1995......................................... 2 Condensed Consolidated Statement of Income -- Three Months Ended December 31, 1995 and 1994; Six Months Ended December 31, 1995 and 1994........................................... 3 Condensed Consolidated Statement of Cash Flows -- Six Months Ended December 31, 1995 and 1994....................................................................... 4 Notes to Condensed Consolidated Financial Statements -- December 31, 1995........................................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................... 7 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders............................................................ 12 Item 6. Exhibits and Reports on Form 8-K............................................................................... 13 SIGNATURES............................................................................................................. 14
Hyperion, Financial Intelligence, Executive Forum, IMRS, Micro Control and OnRequest are registered trademarks and Hyperion Financials, Hyperion Enterprise, Hyperion Pillar, Hyperion Analyst, Hyperion OLAP, Hyperion Connect, Hyperion Retrieve, Hyperion Reporting, Hyperion Forms, Hyperion OnTrack, Hyperion Ledger, Hyperion Payables, Hyperion Admin, Hyperion Tools, Hyperion Purchasing, Hyperion Receivables, Hyperion Assets, Hyperion Software, Conversion Catalyst and LedgerLink are trademarks of the company. FYPlan and Pillar are registered trademarks and FYControl is a trademark of Hyperion Software, Pillar Group Inc., a wholly-owned subsidiary of the company. All other trademarks and company names mentioned are the property of their respective owners. For further information, refer to the IMRS Inc. (d/b/a Hyperion Software) annual report on Form 10-K for the year ended June 30, 1995, as well as the company's registration statement on Form S-3 declared effective January 18, 1995. 3 Hyperion Software Corporation and Subsidiaries Condensed Consolidated Balance Sheet (In thousands, except for share data)
DECEMBER 31, JUNE 30, 1995 1995 ---------------------- ASSETS (Unaudited) (Note) Current assets: Cash and cash equivalents $ 32,441 $ 45,494 Accounts receivable--net of allowances of $2,800 and $2,500 41,495 48,006 Prepaid expenses and other current assets 3,536 4,124 Deferred income taxes 1,710 2,059 ---------------------- TOTAL CURRENT ASSETS 79,182 99,683 Property and equipment--at cost, less accumulated depreciation and amortization of $17,537 and $13,570 47,694 32,093 Product development costs--at cost, less accumulated amortization of $6,159 and $4,604 10,743 9,401 Goodwill and other intangible assets--at cost, less accumulated amortization of $4,819 and $4,337 5,333 3,007 Deposits and other assets 1,766 1,974 ====================== Total assets $ 144,718 $ 146,158 ====================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 14,271 $ 13,050 Accrued employee compensation and benefits 9,057 14,879 Income taxes payable 305 3,108 Deferred revenue 27,422 30,599 Notes payable 678 741 ---------------------- TOTAL CURRENT LIABILITIES 51,733 62,377 Mortgage payable 8,691 8,910 Deferred income taxes 2,709 3,165 Stockholders' equity: Preferred stock--$.01 par value; authorized--1,000,000 shares; none issued Common stock--$.01 par value; authorized--100,000,000 shares; issued--21,063,176 and 20,378,066 shares 211 204 Additional paid-in capital 70,727 64,262 Retained earnings 24,396 20,659 Currency translation adjustments (516) (386) Treasury stock, at cost--4,329,464 and 4,320,840 shares (13,233) (13,033) ---------------------- TOTAL STOCKHOLDERS' EQUITY 81,585 71,706 ---------------------- Total liabilities and stockholders' equity $ 144,718 $ 146,158 ======================
Note: the balance sheet at June 30, 1995 has been derived from the audited financial statements at that date. See accompanying notes. 2 4 Hyperion Software Corporation and Subsidiaries Condensed Consolidated Statement of Income (Unaudited) (In thousands, except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 1995 1994 1995 1994 -------------------- -------------------- REVENUES Software licenses $ 21,146 $ 16,080 $ 39,180 $ 29,671 License renewals and services 19,579 13,975 38,178 26,712 -------------------- -------------------- Total revenues 40,725 30,055 77,358 56,383 COSTS AND EXPENSES Cost of revenues: Software licenses 1,168 721 2,185 1,471 License renewals and services 12,712 8,341 24,129 15,995 Sales and marketing 11,919 9,763 23,798 18,099 Product development 6,843 4,799 12,369 9,135 Purchased research and development 2,000 2,000 General and administrative 4,051 2,422 7,663 4,854 Merger and integration 1,000 1,000 -------------------- -------------------- 38,693 27,046 72,144 50,554 -------------------- -------------------- OPERATING INCOME 2,032 3,009 5,214 5,829 Interest income 419 405 867 754 Interest expense (20) (33) (44) (61) -------------------- -------------------- INCOME BEFORE INCOME TAXES 2,431 3,381 6,037 6,522 Provision for income taxes 910 1,370 2,300 2,640 -------------------- -------------------- NET INCOME $ 1,521 $ 2,011 $ 3,737 $ 3,882 ==================== ==================== EARNINGS PER SHARE Primary $ .08 $ .12 $ .21 $ .23 Fully diluted $ .08 $ .12 $ .21 $ .23 AVERAGE NUMBER OF SHARES OUTSTANDING Primary 17,930 17,240 17,910 17,102 Fully diluted 17,930 17,294 17,943 17,248
See accompanying notes. 3 5 Hyperion Software Corporation and Subsidiaries Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands)
SIX MONTHS ENDED DECEMBER 31, 1995 1994 -------------------- CASH PROVIDED BY OPERATING ACTIVITIES $ 9,227 $ 11,655 INVESTING ACTIVITIES Office facilities in progress (12,246) Leasehold improvements and purchases of furniture, equipment and software (7,402) (6,170) Product development costs (2,898) (2,431) Deposits and intangible assets (159) (1,530) Business acquisitions (2,394) -------------------- Cash used by investing activities (25,099) (10,131) FINANCING ACTIVITIES Principal payments on notes payable (282) (50) Exercise of stock options by employees 3,231 1,708 -------------------- Cash provided by financing activities 2,949 1,658 Effect of exchange rate changes (130) (6) -------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (13,053) 3,176 Cash and cash equivalents at beginning of period 45,494 37,913 -------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 32,441 $ 41,089 ==================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Income taxes $ 2,378 $ 1,816 Interest ($266 capitalized in 1995) 294 35
See accompanying notes. 4 6 Hyperion Software Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) December 31, 1995 A. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation have been included in the accompanying unaudited financial statements. Operating results for the three and six-month periods ended December 31, 1995 are not necessarily indicative of the results that may be expected for the full year ending June 30, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the company's annual report on Form 10-K for the year ended June 30, 1995. Earnings per share ("EPS") are calculated by dividing net income by the weighted average number of common and common equivalent shares outstanding during the period. For primary EPS, common equivalent shares are shares which would be issuable upon the exercise of outstanding stock options, reduced by the number of shares assumed to be purchased by the company with the proceeds obtained therefrom at the average market price during the period. For the fully diluted EPS calculation, shares are assumed to be purchased by the company at the higher of the average or period-end market price and, therefore, this calculation may include additional equivalent shares. All share and per share data have been retroactively adjusted to reflect a 2-for-1 stock split effected in the form of a 100% stock dividend paid in December 1995. The stock dividend resulted in a retroactively applied transfer of approximately $.1 million (par value of $.01 per share) from additional paid-in capital to common stock. B. ACQUISITIONS In the quarter, the company concluded two strategic acquisitions involving application technologies and an important European client base. The acquisitions, which amounted to $3.6 million, were accounted for as purchase transactions and, accordingly, $2 million was allocated to purchased research and development and $1.6 million was allocated to identifiable intangible assets based on their estimated fair values. The purchased research and development is reflected as a one-time charge in the company's operating results. The charge had the effect of reducing net income by approximately $1.3 million or $.07 per share. Specifically, in December 1995, the company acquired certain assets and application technologies, and assumed certain obligations of Trust Consult s.a., a Brussels-based financial solutions provider. Along with over 130 customers, Hyperion gained significant European statutory consolidation and reporting expertise and technology. Hyperion is using this unique applications expertise in the development of Hyperion Enterprise XA, the company's next generation financial reporting solution. Enterprise XA, currently being tested by clients worldwide, is targeted for commercial release by mid-calendar year. The net operating results of the acquired business from the date of purchase are included in the accompanying statement of income. Pro forma statement of income data as if the acquisition had occurred on July 1, 1994 is not shown, as it would not differ significantly from reported results. In November 1995, the company acquired certain rights from Sinper Corporation to its powerful database engine, TM/1, technology. The company is using the new technology in the development of Hyperion OLAP (On-Line Analytical Processing), a solution for customers' most complex and high volume multidimensional analysis needs, such as product profitability and sales analysis. Hyperion OLAP, also undergoing external testing, is scheduled to be commercially available in the second quarter of calendar 1996. 5 7 Hyperion Software Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (continued) December 31, 1995 C. STOCKHOLDER RIGHTS PLAN In November 1995, the company adopted a stockholder rights plan (the "Rights Plan") in which preferred stock rights were distributed as a rights dividend at the rate of one right for each share of common stock held as of the close of business on December 1, 1995. The Rights Plan is designed to deter coercive or unfair takeover tactics and to prevent an acquirer from gaining control of Hyperion without offering a fair price to all of the company's stockholders. The plan was not adopted by the board of directors in response to any specific offer or threat, but rather is intended to protect the interests of stockholders in the event the company is confronted in the future with coercive or unfair takeover tactics. Each right will entitle holders of Hyperion common stock to buy one share of Series A Junior Participating Preferred Stock of the company at an exercise price of $150. The rights will be exercisable only if a person or group acquires more than 15% of the common stock, or announces a tender or exchange offer which would result in its ownership of 15% or more of the common stock, or a person owning 10% or more of the common stock is determined by the board to be an Adverse Person, as defined in the Rights Plan. If any person or group becomes the beneficial owner of 20% or more of the common stock except pursuant to a tender offer for all shares at a price that a majority of the independent directors determines to be fair; a more-than-15% stockholder engages in a merger with the company in which the company survives and its common stock remains outstanding and unchanged; certain other self-dealing events involving the company and a more-than-15% stockholder occur; or, under certain circumstances, the board determines a 10% or more stockholder to be an Adverse Person (collectively "Flip-In Events"), each right not owned by such person or related parties will entitle its holder to purchase, at the then current exercise price of the right, common stock of Hyperion Software having a value of twice the right's exercise price (or, in certain circumstances, a combination of cash, property, common stock or other securities or a reduction in the exercise price having an aggregate value equal to the value of the common stock otherwise purchasable). After the occurrence of a Flip-In Event and before any person or affiliated group becomes the owner of 50% or more of the then outstanding common stock, the company may also exchange one share of common stock for each right outstanding. In addition, if the company is involved in a merger or other business combination transaction with another person in which its common stock is changed or converted, or sells or transfers more than 50% of its assets or earning power to another person, each right that has not previously been exercised will entitle its holder to purchase, at the then current exercise price of the right, shares of common stock of such other person having a value of twice the right's exercise price. The company can, in certain circumstances, redeem the rights at $.01 per right. The rights will expire on November 17, 2005, unless earlier redeemed or exchanged. D. CONTINGENCIES From time to time, in the normal course of business, various claims are made against the company. At this time, in the opinion of management, there are no pending claims the outcome of which is expected to result in a material adverse effect on the financial position of the company. 6 8 Hyperion Software Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) OVERVIEW - - -------------------------------------------------------------------------------- Hyperion Software, incorporated in 1981, develops, markets and supports complete financial management and accounting solutions for enterprise client/server environments. The company's software addresses the diverse accounting, financial consolidation, management reporting, budgeting, analysis, and information access needs of large corporations worldwide. The company designs products specifically for network implementation, providing fast, multi-user access to centrally controlled and secure corporate data. The company derives revenues from licensing its software products and providing related product installation, support and training services. Customers are billed an initial fee for the software upon delivery. A license renewal fee entitling customers to routine support and product updates is billed annually. Hyperion Software licenses its products throughout the world primarily through a direct sales force. In certain territories outside of North America, products are licensed through independent distributors, including major accounting firms. The company includes in revenues its net share of revenues generated by distributors. The company operates with a minimal software licensing backlog. Therefore, quarterly revenues and operating results are quite dependent on the volume and timing of the signing of licensing agreements and product deliveries during the quarter, which are difficult to forecast. The company's future operating results may fluctuate due to these and other factors, such as customer buying patterns, the deferral and/or realization of deferred software license revenues according to contract terms, the timing of new product introductions and product upgrade releases, the company's hiring plans, the scheduling of sales and marketing programs, and new product development by the company or its competitors. A significant portion of the company's quarterly software licensing agreements is concluded in the last month of the fiscal quarter, generally with a concentration of such revenues earned in the final ten business days of that month. The company generally has realized lower revenues in its first (September) and third (March) fiscal quarters than in the immediately following quarters. Total revenues and net income were $40,725 and $1,521 (includes one-time charges relating to purchases of research and development, which had the effect of reducing net income by approximately $1,250), respectively, for the second quarter of fiscal 1996, and $36,633 and $2,216, respectively, for the first quarter of fiscal 1996. The company believes that these revenue fluctuations are caused by customer buying patterns, including traditionally slow purchase activity in the summer months and low purchase activity in the corporate financial applications market during the March quarter, as many potential customers are busy with their year-end closing and financial reporting. In any case, due to the relatively fixed nature of certain costs, including personnel and facilities expenses, a decline or shortfall in quarterly and/or annual revenues typically results in lower profitability or may result in losses. For further information, refer to the IMRS Inc. (d/b/a Hyperion Software) annual report on Form 10-K for the year ended June 30, 1995, as well as the company's registration statement on Form S-3 declared effective January 18, 1995. 7 9 Hyperion Software Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) (dollars in thousands) RESULTS OF OPERATIONS - - -------------------------------------------------------------------------------- REVENUES
Second Quarter Ended Six Months Ended December 31, 1995 CHANGE 1994 1995 CHANGE 1994 - - ----------------------------------------- --------------------------------------- --------------------------------------- Software licenses $21,146 31.5% $16,080 $39,180 32.0% $29,671 Percentage of total revenues 51.9% 53.5% 50.6% 52.6% - - ----------------------------------------- --------------------------------------- --------------------------------------- License renewals and services $19,579 40.1% $13,975 $38,178 42.9% $26,712 Percentage of total revenues 48.1% 46.5% 49.4% 47.4% - - ----------------------------------------- --------------------------------------- ---------------------------------------
Software license revenues rose primarily as a result of an increase in the number of licenses sold (unit volume) versus, for example, price increases. In particular, revenue growth was led by demand for the company's enterprise financial management and planning products, which continues to be strong. The increase in license renewal and service revenue is mainly attributable to the year-to-year growth of the company's installed customer base. Revenues generated from markets outside the United States for the first half of fiscal 1996 and 1995 were $26,312 and $16,025, or 34.0% and 28.4% of total revenues, respectively. Revenue growth was particularly strong in certain territories of Asia, Canada and in Europe, most notably in France and the Netherlands. COST OF REVENUES
Second Quarter Ended Six Months Ended December 31, 1995 CHANGE 1994 1995 CHANGE 1994 - - ----------------------------------------- ---------------------------------------- --------------------------------------- Software licenses $ 1,168 62.0% $ 721 $ 2,185 48.5% $ 1,471 Gross profit percentage 94.5% 95.5% 94.4% 95.0% - - ----------------------------------------- ---------------------------------------- --------------------------------------- License renewals and services $12,712 52.4% $8,341 $24,129 50.9% $15,995 Gross profit percentage 35.1% 40.3% 36.8% 40.1% - - ----------------------------------------- ---------------------------------------- ---------------------------------------
Cost of software license revenues consists primarily of the cost of product packaging and documentation materials, amortization of capitalized software costs, amortization of certain intangible assets related to business acquisitions, and royalty expenses. The increase in the cost of software license revenues principally reflects the associated increase in the amortization of capitalized costs related to new products and product enhancements. The amortization of capitalized software costs commences upon the general release of the software to customers. The increase in the cost of license renewal and service revenues was due primarily to additional staffing expense for both installation and ongoing support services. The professional services staff includes new members dedicated to the company's newly released (March 1995) set of accounting products, Hyperion Financials. 8 10 Hyperion Software Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) (dollars in thousands) OPERATING EXPENSES
Second Quarter Ended Six Months Ended December 31, 1995 CHANGE 1994 1995 CHANGE 1994 - - ------------------------------------------- ---------------------------------------- --------------------------------------- Sales and marketing $11,919 22.1% $9,763 $23,798 31.5% $18,099 Percentage of total revenues 29.3% 32.5% 30.8% 32.1% - - ------------------------------------------- ---------------------------------------- --------------------------------------- Product development $ 6,843 42.6% $4,799 $12,369 35.4% $ 9,135 Percentage of total revenues 16.8% 16.0% 16.0% 16.2% - - ------------------------------------------- ---------------------------------------- --------------------------------------- General and administrative $ 4,051 67.3% $2,422 $ 7,663 57.9% $ 4,854 Percentage of total revenues 9.9% 8.1% 9.9% 8.6% - - ------------------------------------------- ---------------------------------------- ---------------------------------------
The increase in sales and marketing expenses is primarily due to a net increase in sales-marketing personnel, an increase in commission costs directly associated with the increase in software license revenues and, to a lesser extent, greater overall marketing initiatives. The increase in product development expenses reflects additional personnel and third-party development costs associated with expanded research and development activities. In the first half of fiscal 1996 and 1995, the company capitalized $2,898 and $2,431 of software development costs, respectively, in accordance with Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed." The amounts capitalized by the company primarily relate to the company's development of enterprise-wide financial management and accounting solutions for client/server environments and represented 19.0% and 21.0% of total product development expenditures. Capitalized software costs are amortized over the estimated economic life of the product, but generally not more than four years. In the second quarter of fiscal 1996, the company concluded two strategic acquisitions involving application technologies and an important European client base. The acquisitions, which amounted to $3,600, were accounted for as purchase transactions and, accordingly, $2,000 was allocated to purchased research and development and $1,600 was allocated to identifiable intangible assets based on their estimated fair values. The purchased research and development is reflected as a one-time charge in the company's operating results. The charge had the effect of reducing net income for the quarter and six months ended December 31, 1995 by approximately $1,250 or $.07 per share. For further details of the acquisitions, see Note B of the accompanying financial statements. The increase in general and administrative expenses resulted from increases in personnel and professional services costs incurred to support the growth of the company's overall operations. In November 1994, the company completed a merger with Pillar Corporation. Pillar, based in California, develops, markets and supports client/server corporate budgeting and planning solutions. In connection with the acquisition, which was accounted for as a pooling of interests, the company charged $1,000 to operations in the second quarter of fiscal 1995 for nonrecurring merger and integration costs incurred. 9 11 Hyperion Software Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) (dollars in thousands) PROVISION FOR INCOME TAXES The company's effective income tax rate decreased from 40.5% to approximately 38%, as a result of operating profits in certain jurisdictions where, for the same periods of the prior year, the company had losses without recognizable tax benefits. The rate for the current six-month period reflects the company's expectations for the full year ending June 30, 1996. NET INCOME As a result of the above factors (including the nonrecurring charges), net income for the three and six-month periods ended December 31, 1995 decreased to $1,521 or by 24.4% from $2,011 and $3,737 or by 3.7% from $3,882, respectively, for the corresponding periods of 1994. To date, the overall impact of inflation on the company has not been material. 10 12 Hyperion Software Corporation and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) (dollars in thousands) LIQUIDITY AND CAPITAL RESOURCES - - -------------------------------------------------------------------------------- To date, the company has financed its business principally through positive cash flow from operations, long-term and short-term borrowings and sales of its common stock. For fiscal years 1993, 1994 and 1995, and for the six months ended December 31, 1995, the company generated positive cash flow from operations of $6,626, $19,707, $28,936 and $9,227, respectively. Cash used by investing activities amounted to $25,099 for the first half of fiscal 1996, including $12,246 for office facilities in progress, $7,402 for leasehold improvements and purchases of equipment and software, $2,898 for product development costs, $159 for deposits and intangible assets and $2,394 for business acquisitions as described above, and to reacquire company product distribution and service rights for Scandinavia. Such exclusive rights were held by a Sweden-based distributor since 1989. Financing activities in the first half of fiscal 1996, including stock options exercised by employees and payment of indebtedness, generated cash of $2,949. In connection with the stock options exercised by certain of its employees (for a total of 685,110 common shares), the company recognized (as a credit to additional paid-in capital) an income tax benefit of $2,832 for the six months ended December 31, 1995. As of December 31, 1995, the company had cash and cash equivalents of $32,441 and working capital of $27,449, no long-term debt other than the mortgage loan (currently 3.06%) for the Stamford, Connecticut office facility, and its ratio of current assets to current liabilities was 1.5 to 1. Cash equivalents are comprised primarily of investment grade U.S. state and political subdivision obligations with varying terms of three months or less. The company has long-term credit availability of $25,000 under a revolving credit facility. The company anticipates capital expenditures of approximately $12,000 for the remainder of its 1996 fiscal year, including $4,000 to complete the office facilities and $3,000 of capitalized product development costs. The company intends to continue to review potential acquisitions that it believes would enhance the company's growth and profitability. From time to time, in the normal course of business, various claims are made against the company. At this time, in the opinion of management, there are no pending claims the outcome of which is expected to result in a material adverse effect on the financial position of the company. The company believes that funds generated from operations, existing cash balances and its available credit facility will be sufficient to finance the company's operations for at least the next two years. 11 13 Hyperion Software Corporation and Subsidiaries Part II. Other Information ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (NOTE: ALL SHARE AND PER SHARE DATA HAVE BEEN RETROACTIVELY ADJUSTED TO REFLECT A 2-FOR-1 STOCK SPLIT EFFECTED IN THE FORM OF A 100% STOCK DIVIDEND PAID IN DECEMBER 1995.) At the company's Annual Meeting of Stockholders held on November 15, 1995, the following proposals were adopted by the margins indicated: 1. To elect two members to the board of directors to serve for a three-year term as Class III directors.
Number of Shares For Withheld ----------------------------------- Harry S. Gruner 12,629,274 135,664 Robert W. Thomson 12,629,274 135,664
2. To approve an amendment to the company's Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation") to change the name of the company to Hyperion Software Corporation. For 12,618,530 Against 120,264 Abstain 26,144 3. To approve an amendment to the company's Certificate of Incorporation to increase the number of authorized shares of common stock, $.01 par value per share, from 30,000,000 to 100,000,000 shares. For 9,752,950 Against 2,962,796 Abstain 33,632 4. To consider and act upon an amendment to the company's 1991 Stock Plan to increase the number of shares of common stock authorized for issuance under the plan from 2,400,000 to 4,000,000 shares and to permit grants thereunder to comply with Section 162(m) of the Internal Revenue Code. For 6,792,494 Against 4,658,710 Abstain 73,832 5. To ratify the selection of the firm of Ernst & Young LLP as independent auditors for the fiscal year ending June 30, 1996. For 12,738,966 Against 2,158 Abstain 23,814 12 14 Hyperion Software Corporation and Subsidiaries Part II. Other Information (continued) ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The following exhibit is included herein: (11) Statement Re: Computation of Earnings Per Share. On November 21, 1995, the company filed a report on Form 8-K to disclose the adoption of a stockholder rights plan (see Note C of the financial statements in Item 1 hereof). 13 15 Hyperion Software Corporation and Subsidiaries Form 10-Q for the three-month period ended December 31, 1995 SIGNATURES 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 thereunto duly authorized. Hyperion Software Corporation /s/ Michael A. Manto February 13, 1996 -------------------------------------------------------- Michael A. Manto Date Corporate Controller /s/ Lucy Rae Ricciardi February 13, 1996 -------------------------------------------------------- Lucy Rae Ricciardi Date Senior Vice President and Chief Financial Officer 14 EX-11 2 STATEMENT RE COMPUTATION OF EARNINGS PER SHARE 1 Hyperion Software Corporation and Subsidiaries Exhibit (11) - Statement Re: Computation of Earnings Per Share (Unaudited) (In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 1995 1994 1995 1994 ----------------- ----------------- PRIMARY Weighted average number of common shares outstanding 16,532 15,456 16,379 15,394 Weighted average number of common equivalent shares outstanding 1,398 1,784 1,531 1,708 ----------------- ----------------- 17,930 17,240 17,910 17,102 ================= ================= Net income $ 1,521 $ 2,011 $ 3,737 $ 3,882 ================= ================= Per share amount $ .08 $ .12 $ .21 $ .23 ================= ================= FULLY DILUTED Weighted average number of common shares outstanding 16,532 15,456 16,379 15,394 Weighted average number of common equivalent shares outstanding 1,398 1,838 1,564 1,854 ----------------- ----------------- 17,930 17,294 17,943 17,248 ================= ================= Net income $ 1,521 $ 2,011 $ 3,737 $ 3,882 ================= ================= Per share amount $ .08 $ .12 $ .21 $ .23 ================= =================
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF HYPERION SOFTWARE CORPORATION FOR THE QUARTER ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS JUN-30-1996 OCT-01-1995 DEC-31-1995 1 32,441 0 44,295 2800 0 79,182 65,231 17,537 144,718 51,733 8,691 0 0 211 81,374 144,718 40,725 40,725 13,880 38,693 24,813 0 20 2,431 910 0 0 0 0 1,521 .08 .08
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