-----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, Vy1fm2yrK/m+PrisAWCkqeP/WUkvyOoAWKjhNGd6uNy48yCwpOOzLCHARUNL7WhQ cvbAHtV8/12Qos8Mn73Rqw== 0000929624-99-000895.txt : 19990517 0000929624-99-000895.hdr.sgml : 19990517 ACCESSION NUMBER: 0000929624-99-000895 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WALKER INTERACTIVE SYSTEMS INC CENTRAL INDEX KEY: 0000883983 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 952862954 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19872 FILM NUMBER: 99621274 BUSINESS ADDRESS: STREET 1: MARATHON PLZ THREE NORTH STREET 2: 303 SECOND ST CITY: SAN FRANCISCO STATE: CA ZIP: 94107 BUSINESS PHONE: 4144958811 MAIL ADDRESS: STREET 1: MARATHON PLAZA THREE NORTH STREET 2: 303 SECOND STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94107 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-19872 WALKER INTERACTIVE SYSTEMS, INC. -------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 95-2862954 -------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 303 SECOND STREET, SAN FRANCISCO, CA 94107 ------------------------------------------ (Address of principal executive offices including zip code) (415) 495-8811 -------------- (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 report) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ ----- There were 13,949,833 Shares of $.001 Par Value Common Stock outstanding as of May 11, 1999. WALKER INTERACTIVE SYSTEMS, INC. FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION Page ---- ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998.................................................... 3 Consolidated Statements of Operations for the three months ended March 31, 1999 and 1998............................... 4 Consolidated Statements of Cash Flows for the three months ended March 31, 1999 and 1998............................... 5 Notes to Consolidated Financial Statements.................... 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................... 8 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.... 15 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............................. 16 SIGNATURES.............................................................. 17
2 PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS WALKER INTERACTIVE SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)
MARCH DECEMBER ASSETS 31, 1999 31, 1998 ----------- ---------- (unaudited) Current assets: Cash and cash equivalents $ 7,539 $ 15,556 Short-term investments 3,843 5,135 Accounts receivable, net 32,560 30,457 Prepaid expenses 4,463 2,347 ----------- ---------- Total current assets 48,405 53,495 Long-term investments 2,714 1,906 Property and equipment, net 4,889 4,962 Capitalized software, net 18,800 18,186 Deferred tax assets, net 13,138 12,501 Other assets 2,595 4,047 ----------- ---------- TOTAL ASSETS $ 90,541 $ 95,097 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 17,056 $ 18,496 Deferred revenue 14,030 14,819 ----------- ---------- Total current liabilities 31,086 33,315 Deferred revenue 1,949 1,600 Accrued rent 980 954 Other long-term obligations 1,530 2,177 ----------- ---------- Total liabilities 35,545 38,046 ----------- ---------- Commitments and Contingencies - - Stockholders' equity: Common stock, $.001 par value: 50,000,000 shares authorized; issued 14,184,685 shares - March 31, 1999; 14,184,685 shares - December 31, 1998 14 14 Additional paid-in capital 74,719 74,719 Accumulated other comprehensive income 121 232 Accumulated deficit (18,700) (17,662) Treasury stock at cost (234,852 shares - March 31, 1999; 49,207 shares - December 31, 1998) (1,158) (252) ----------- ---------- Total stockholders' equity 54,996 57,051 ----------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 90,541 $ 95,097 =========== ==========
See notes to consolidated financial statements 3 WALKER INTERACTIVE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts)
THREE MONTHS ENDED MARCH 31, 1999 1998 ---------- ---------- REVENUES: License $ 3,390 $ 6,407 Maintenance 7,909 7,725 Consulting 12,608 9,530 ---------- ---------- Total revenues 23,907 23,662 OPERATING EXPENSES: Costs of revenues: Costs of licenses, maintenance and consulting 11,444 9,736 Amortization of capitalized software 1,489 1,033 Sales and marketing 5,936 5,639 Product development 3,350 3,201 General and administrative 3,601 2,723 ---------- ---------- Total operating expenses 25,820 22,332 Operating income (loss) (1,913) 1,330 Interest income, net 239 308 ---------- ---------- Income (loss) before income taxes (1,674) 1,638 Income tax expense (benefit) (636) 589 ---------- ---------- NET INCOME (LOSS) ($1,038) $ 1,049 ========== ========== BASIC NET INCOME (LOSS) PER SHARE ($0.07) $ 0.08 ========== ========== Shares used in computing basic net income (loss) per share 14,081 13,974 ========== ========== DILUTED NET INCOME (LOSS) PER SHARE ($0.07) $ 0.07 ========== ========== Shares used in computing diluted net income (loss) per share 14,081 15,100 ========== ==========
See notes to consolidated financial statements 4 WALKER INTERACTIVE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
THREE MONTHS ENDED MARCH 31, 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ($1,038) $ 1,049 Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 2,389 1,628 Tax benefit of nonqualified stock options - 76 Changes in operating assets and liabilities: Accounts receivable, net (2,068) (2,094) Prepaids & other assets (876) (199) Accounts payable & accrued liabilities (2,029) (1,397) Deferred tax asset (637) 589 Deferred revenue (477) (1,059) Other (70) 216 -------- -------- Net cash used by operations (4,806) (1,191) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from employee stock purchase plan issuances and stock options exercised - 218 Treasury stock acquired (906) (823) Capital lease payments (32) (18) Repayment of borrowings - (1,422) -------- -------- Net cash used by financing activities (938) (2,045) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of short- and long-term investments (3,287) (2,513) Maturities of short-term investments 2,250 5,650 Sales of short-term investments 1,508 642 Purchases of property (636) (438) Additions to capitalized software (2,098) (1,935) Other (10) 2 -------- -------- Net cash provided (used) by investing activities (2,273) 1,408 -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS (8,017) (1,828) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 15,556 7,646 -------- -------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 7,539 $ 5,818 ======== ========
See notes to consolidated financial statements WALKER INTERACTIVE SYSTEMS, INC. 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES ------------------------------- BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and include all adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for those periods. Results for the interim periods are not necessarily indicative of the results for the entire year. These consolidated financial statements and any notes thereto, should be read in conjunction with the audited consolidated financial statements included in the Walker Interactive Systems, Inc. Annual Report on Form 10-K for the year ended December 31, 1998. RECLASSIFICATIONS Certain previously reported amounts have been reclassified to confirm with the current presentation format. 2. EARNINGS PER SHARE ------------------ The Company calculates basic earnings per share ("EPS") and diluted EPS in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". Basic EPS is computed by dividing net income (loss) by the weighted average number of common shares outstanding for that period. Diluted EPS takes into account the effect of dilutive instruments, such as stock options, and uses the average share price for the period in determining the number of incremental shares that are to be added to the weighted average number of shares outstanding. The following is a summary of the calculation of the number of shares used in calculating basic and diluted EPS (in thousands): THREE MONTHS ENDED MARCH 31, 1999 1998 --------- ---------- Shares used to compute basic EPS 14,081 13,974 Add: effect of dilutive securities - 1,126 --------- ---------- Shares used to compute diluted EPS 14,081 15,100 ========= ========== 6 3. COMPREHENSIVE INCOME -------------------- SFAS No. 130 requires disclosure of total non-stockholder changes in equity, which include unrealized gains and losses on securities classified as available-for-sale under SFAS No. 115, foreign currency translation adjustments accounted for under SFAS No. 52, and minimum pension liability adjustments made pursuant to SFAS No. 87. The reconciliation of net income (loss) to comprehensive income (loss) for the three months ended March 31, 1999 and 1998 is as follows (in thousands): THREE MONTHS ENDED MARCH 31, 1999 1998 ---------- ---------- Net income (loss) ($1,038) $1,049 Other comprehensive income (loss) (111) 3 ---------- ---------- Total comprehensive income (loss) ($1,149) $1,052 ========== ========== 7 WALKER INTERACTIVE SYSTEMS, INC. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The report on this Form 10-Q contains forward-looking statements, including statements related to working capital requirements and Year 2000 related issues. Discussions containing such forward-looking statements may be found in the material set forth in this section, generally and specifically herein under the captions "Liquidity and Capital Resources", "Year 2000 Readiness" and "Additional Risk Factors." Actual events or results may differ materially from those discussed herein. The Company disclaims any obligation to update these forward-looking statements as a result of subsequent events. The risk factors on pages 11 through 15, among others, should be considered in evaluating the Company's prospects and future financial performance. Walker Interactive Systems, Inc. (hereinafter "Walker" or the "Company") was incorporated in California in 1973 and reincorporated in Delaware in March 1992. Walker designs, develops, markets and supports, on a worldwide basis, a family of client-server/network computing-enabled enterprise financial, operational and analytic application software products that enable large and medium-sized organizations, higher education institutions, and federal, state and government agencies to accelerate time-to-benefit, lower cost of ownership and reduce information systems risks stemming from changes in information technology and/or business processes or structure. Walker designs its software products specifically for the client/server and network computing models and believes that its architecture is among the most scalable and adaptable available for enterprise-level financial applications software. The Company's strategy is to offer enterprise financial, operational and analytical application software solutions to a variety of industries with best-of-breed software products utilized in a wide variety of cross-industry solutions. The Walker applications support and enhance enterprise-wide financial, operational and analytic processes, including planning, budgeting, forecasting, consolidation, financial, performance, work, materials and procurement management. The Company's software products utilize the Microsoft Windows operating systems on the desktop, NT, UNIX and OS/390 operating systems on the server and industry-leading On Line Analytical Processing ("OLAP"), Relational Database Management Systems ("RDBMS") including Hyperion Solutions Essbase, IBM's DB2, Oracle Express and Microsoft SQL/Server. The Tamaris product line represents the Company's core suite of business and financial solutions utilizing the power of the enterprise server, while the Aptos suite of financial applications runs on UNIX and Windows NT servers. The Company also develops and markets Horizon best-of-breed analytic applications which provide financial reporting, budgeting and financial consolidation solutions for large and mid-sized organizations. The Horizon analytic applications products integrate with Tamaris and Aptos solutions and also work standalone with leading Enterprise Resource Planning ("ERP") applications. In addition, Walker's IMMPOWER product line provides best-of-breed Enterprise Asset Management solutions for capital intensive industries. The Company's software products include productivity tools that allow the Company's applications to be customized to fit the customer's particular requirements. The Company complements its software products by providing specialized professional consulting services to assist customers with customization and implementation of financial, analytical and operational solutions to fuel business advantage. The Company derives its revenues primarily from software licenses, software maintenance and professional consulting services. The Company's products and services are marketed primarily to Fortune 1000 companies and similarly-sized business and governmental organizations utilizing direct sales forces located in the Company's three geographic regions of North America, Europe and Asia Pacific. RESULTS OF OPERATIONS - --------------------- REVENUES. The Company recorded total revenues of $23.9 million and $23.7 million for the three months ended March 31, 1999 and 1998, respectively. Although total revenues were relatively unchanged from 1998 to 1999, the Company's revenue mix had increases in consulting revenues offset by a decrease in license revenues. Maintenance revenues have remained relatively flat in 1999 from 1998. License revenues in the first quarter of 1999 decreased $3.0 million or 47 percent from the three months ended March 31, 1998 primarily as a result of a decrease in license revenues generated from North American operations. Further 8 contributing to the change were slight decreases in license revenues generated in Europe and the Asia Pacific region. The Company believes that the decrease in license revenues is primarily attributable to a general softness in the enterprise financial application software industry as a whole. The Company believes that potential customers are utilizing resources to ensure that current software applications are Year 2000 compatible instead of immediately purchasing and implementing new software applications. The ongoing downturn in the Asia Pacific economy continues to negatively impact license revenues generated in that region. Consulting revenues of $12.6 million for the three months ended March 31, 1999 increased $3.1 million or 32 percent compared to $9.5 million for the comparable prior year period. Consulting revenues are generated from new and existing customers for services related to training, implementation, customization, migration, enhancement, Year 2000 readiness engagements, best practice consulting engagements and other special projects. The Company generates a majority of its consulting revenues from implementation-related projects. The increase in consulting revenues during the first quarter of 1999 is attributable to revenues generated from Year 2000 readiness engagements, best practice consulting engagements, and implementation-related projects associated with the Company's Tamaris, Aptos and Horizon product lines. COSTS OF LICENSES, MAINTENANCE AND CONSULTING. Costs of licenses, maintenance and consulting represented 48 percent and 41 percent of total revenues for the three months ended March 31, 1999 and 1998, respectively. The increase is partly attributable to a decrease in license revenue which has a lower cost of revenue than consulting revenue. Further contributing to the increase in 1999 were lower profit margins in Europe associated with fixed-fee consulting engagements, partially offset by relatively higher profit margins recognized on Year 2000 readiness and best practice consulting engagements. AMORTIZATION OF CAPITALIZED SOFTWARE. Amortization of capitalized software increased $0.5 million or 44 percent in 1999 compared to the same period in 1998. The increase is due to additional amortization associated with the Company's ongoing practice of evaluating the lives of capitalized software products and additional amortization resulting from recent product releases. SALES AND MARKETING. In absolute dollars, sales and marketing expenses of $5.9 million for the three months ended March 31, 1999 increased $0.3 million or 5 percent compared to $5.6 million for the comparable prior year period. The increase is attributable to higher sales and marketing expenses in Europe and the Asia Pacific region as the Company opened sales offices during the first quarter of 1999. Partially offsetting the increase in international expenses was a reduction in sales and marketing expenses in North America as the Company reduced marketing and promotions in 1999 compared to 1998. As a percent of total revenues, sales and marketing expense increased to 25 percent in 1999 from 24 percent in 1998. The increase is attributable to higher sales and marketing expenses for 1999 coupled with relatively unchanged total revenues in 1999 when compared to the prior year. PRODUCT DEVELOPMENT. Product development-related expenses, excluding amortization of capitalized software, are detailed as follows (in thousands):
THREE MONTHS ENDED MARCH 31, 1999 1998 ------------ ------------ Product development costs including additions to capitalized software (gross) $ 5,448 $ 5,136 Less: additions to capitalized software 2,098 1,935 ------------ ------------ Product development expenses $ 3,350 $ 3,201 ============ ============
During the first quarter of 1999, the Company acquired $0.2 million in software technology which complemented internally developed products and related technology. Excluding the acquired software, gross product development expenses remained relatively unchanged. The decrease in additions to capitalized software in absolute dollars and as a percentage of gross product development costs is attributable to product development resources which were allocated to non- capitalizable projects. Historical additions to capitalized software, in absolute dollars and as a percentage of gross product development costs, are not a reliable indicator of additions to capitalized software that will be incurred in the future. 9 GENERAL AND ADMINISTRATIVE. General and administrative expenses were $3.6 million and $2.7 million for the three months ended March 31, 1999 and 1998, respectively. The increase of $0.9 million or 32 percent is attributable to increased usage of outside contractors and increased labor and facility expenses. INCOME TAX EXPENSE (BENEFIT). Income tax expense (benefit) is recorded each quarter based on the Company's estimated effective income tax rate for the year. The Company estimates that the 1999 effective income tax rate will be 38 percent. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's operating activities used cash of $4.8 million in the first quarter of 1999 and $1.2 million during the comparable 1998 period. The Company's net loss of $1.0 million in the first quarter of 1999 compared to net income of $1.0 million in the same period of 1998 was the primary reason for the increase. Financing activities used $0.9 million in cash during the first quarter of 1999 and $2.0 million during the same period in 1998. There were no proceeds from employee stock purchase plan issuances and stock options exercises in the first quarter of 1999 compared to $0.2 million in the same 1998 period. The Company used $0.9 million in cash in the first quarter of 1999 and $0.8 million in cash in the same 1998 period for the acquisition of common stock from the open market. All stock repurchases were made pursuant to resolutions of the Company's Board of Directors authorizing the repurchase of the Company's outstanding shares of common stock, which in aggregate is not to exceed a total cost of $17.5 million. As of March 31, 1999, the Company had acquired 1,007,000 shares of its common stock at a cost of $10.9 million. As of March 31, 1999, the Company had reissued 803,000 of the repurchased shares in connection with the Company's employee stock purchase plan, one of its employee stock option plans and the December 1997 acquisition of Revere. In connection with the acquisition of Revere, the Company assumed a line of credit with an outstanding balance of $1.5 million. The outstanding balance on the assumed line of credit was subsequently paid in full in January 1998. The Company has a line of credit in the amount of $6.0 million, secured by marketable securities. The line of credit expires on August 1, 1999. The Company has never borrowed against this line of credit. Investing activities used cash of $2.3 million in the first quarter of 1999 compared to providing cash of $1.4 million for the same period in 1998. The increase in cash used is primarily attributable to a decrease in short-term maturities and an increase of investment purchases in 1999. As of March 31, 1999, the Company's principal sources of liquidity included cash, cash equivalents and short- and long-term investments aggregating $14.1 million. The following sentence is a forward looking statement. The Company believes that its principal sources of liquidity, together with funds expected to be generated from operations, will satisfy the Company's currently anticipated working capital and capital expenditure requirements for at least the next twelve months. YEAR 2000 READINESS - ------------------- The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. The Company's computer equipment and software and devices with imbedded technology that are time- sensitive may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices or engage in normal business activities. The Company has completed an assessment to determine the effect that the Year 2000 issue will have on it. The Company believes that its current commercial application software products generally offered for license by the Company to end-user customers are Year 2000 ready. However, certain versions of these products currently installed at customers' sites will require upgrading or other modifications to become Year 2000 ready. The Company has identified those affected customers who are on the Company's warranty maintenance program, has contacted those customers and is assisting those customers to assess their readiness. The Company is making available to those customers a Year 2000 ready release of its software and will assist such customers to become Year 2000 ready. The following sentence is a forward-looking statement. The Company believes that the costs associated with making 10 certain versions of the Company's products Year 2000 ready will not be material to the Company's business, results of operations or financial condition. The Company has completed an assessment of its computer equipment and software, including information technology systems, such as accounting, data processing and telephone/PBX systems, and non-information technology systems, such as fax machines and alarm systems, to determine if they are Year 2000 ready. The following three sentences are forward-looking statements. The Company believes that certain of its non-critical computer equipment and software will require replacement or modification, at a total cost which is not material to the Company's results of operations or financial condition. The Company believes that even if such replacements or modifications were not completed, the Year 2000 issue would not have a material adverse effect on the Company's business, results of operations or financial condition. In addition, even if the Company's vendors or suppliers fail to become Year 2000 ready in a timely manner, the Company believes that such failure would not have a material adverse effect on the Company's business, results of operations or financial condition. The costs and impact of the Year 2000 issue are based upon management's best estimates, which were derived using numerous assumptions regarding future events, including the continued availability of certain resources, the functioning of its products in accordance with specifications and other factors. There can be no assurance that these estimates will prove to be accurate and actual results could differ from those currently anticipated. Specific factors that could cause such material differences include, but are not limited to, the availability and cost of personnel trained in Year 2000 issues and the functioning of the Company's products in accordance with specifications. In addition, variability of definitions of "Year 2000 ready" and the number of products that the Company has sold, may lead to claims for which the impact on the Company is not currently estimable. No assurance can be given that the aggregate cost of defending and resolving such claims, if any, would not materially adversely affect the Company's business, results of operations or financial condition. ADDITIONAL RISK FACTORS - ----------------------- The Company operates in a rapidly changing environment that involves numerous risks and uncertainties which could have a material adverse effect on the Company. The following discussion details some, but not all, of these risks and uncertainties. LIQUIDITY AND CAPITAL RESOURCES. There can be no assurance that the Company will not need to raise substantial additional capital to fund its operations in the future. There can be no assurance that additional financing will be available on acceptable terms or will be available at all. FLUCTUATION IN OPERATING RESULTS. The Company's operating results fluctuate as a result of a variety of factors including: (i) the execution of new license agreements; (ii) the shipment of software products; (iii) customer acceptance criteria for services performed; (iv) completion of milestone or other significant development requirements pursuant to the Company's license agreements; (v) the financial terms of consulting agreements and the inclusion of fixed as opposed to variable pricing; (vi) third-party royalty payments for licensed software; (vii) the demand for the Company's products and services; (viii) changes in the Company's product mix; (ix) the development and launch of new products, and the life cycles of the Company's existing products; (x) research and development expenditures required to update and expand the Company's product portfolio and related third-party consulting costs; (xi) sales and marketing expenses generally related to the entry into new markets with new or existing products and maintenance of market share in existing markets; (xii) acquisitions and the integration and development of acquired entities or products; (xiii) competitive conditions in the industry; and (xiv) general economic conditions. 11 As a result, the Company believes that period-to-period comparisons of its operating results are not necessarily meaningful and should not be relied upon as indications of future performance. The Company's quarterly operating results are particularly dependent on the number of license agreement bookings executed in each quarter. The amount of quarterly bookings has varied substantially from quarter to quarter due to a variety of reasons including: (i) a high proportion of license agreements are negotiated during the latter part of each quarter and may not be completed before the quarter end; (ii) the sales cycles for some of the Company's products are relatively long due to the Company's focus on "enterprise solutions" as opposed to individual products, which adds complexity to the customer's selection, negotiation and approval process; (iii) the amount related to each booking may vary significantly due to the need for different solutions for different customers; (iv) procurement procedures may vary from customer to customer, which may affect the timing of the bookings; (v) customers may continue to forego or delay software purchases due to increased attention and spending on Year 2000 related projects; (vi) the period for a customer to complete product evaluations and to complete any subsequent purchase approval may be delayed due to resource limitations; and (vii) economic, political and industrial conditions can adversely affect business opportunities without notice. In addition, bookings that are executed during a particular quarter may not be recognized as revenue during such quarter because such bookings may not have met the Company's revenue recognition criteria. No assurance can be given that the Company will be able to effect new bookings in accordance with historical results or management's expectations, and the inability of the Company to do so could have a material adverse effect on the Company's operating results. The Company believes that Year 2000 pressures have caused customers to forego or delay the licensing of new software as they utilize resources to ensure that their existing software products are Year 2000 ready. Continuation of this trend will have an adverse impact on Company revenues and results of operations. There can be no assurance that revenues will return to historical levels or obtain historical growth rates in the Year 2000 or beyond. While the Company typically sells its software under a standard license agreement, license agreements associated with large enterprise solutions often require the negotiation of terms and conditions that differ substantially from the Company's standard license agreement terms. The negotiation of these agreements may extend the sales cycle. The Company may not always obtain terms and conditions that permit the recognition of revenue upon shipment of the licensed product or under the percentage of completion method of contract accounting rules. Accordingly, revenue may not be recognized after shipment of a product because specified milestones have not been met or because applicable services have not been completed or cash is secured. The Company has and expects to enter into fixed-price consulting agreements, particularly in response to increased competition in the industry. The Company has recognized lower profit margins on certain fixed-price service agreements when compared to variable agreements. No assurance can be given that the Company will be able to conclude fixed-price agreements on terms that will allow the Company to retain its historical operating margins. The Company has historically generated a majority of its consulting revenue from pre- and post-implementation services. Recently, the Company has provided services which include, but are not limited to, Year 2000 readiness engagements, best practice solution engagements and other hardware and software solutions. The Company intends to continue its pursuit of consulting engagements for which the Company believes it is qualified. There can be no assurances that these engagements will result in profit margins equal to or greater than those engagements that are specific to a customer's product implementation. Also, there can be no assurances that consulting revenue generated from non- implementation-related projects will continue in the future. Employee- and facility-related expenditures comprise a significant portion of the Company's operating costs and expenses, and are therefore relatively fixed over the short term. In addition, the Company's expense levels are based, in significant part, on the Company's forecasted revenue. If revenue levels fall below expectations, net income is likely to be adversely affected. There can be no assurance that the Company will be profitable on a quarterly or annual basis in the future. Any of the foregoing factors could cause the Company's future operating results to fall 12 below the expectations of public securities market analysts, which could have an adverse effect on the trading price of the Company's common stock. See "Volatility of Stock Price." RELIANCE ON THIRD PARTY TECHNOLOGY. The Company generates revenue from internally developed software products, some of which utilize technology licensed from third parties. The Company expects to continue utilizing third party technology and may enter into agreements with additional business partners. If sales of software utilizing third party technology increase disproportionately, gross margins may be below historical levels due to third party royalty obligations. There can be no assurances that the third parties will renew existing agreements with the Company or will not require financial conditions which are unfavorable to the Company. In addition, there can be no assurances that existing third party agreements will not be terminated. INDUSTRY. Certain software companies, including the Company, have experienced significant economic downturns as a result of technological shifts, competitive pressures and uncertainties caused by the Year 2000 transition. These downturns are characterized by decreased product demand, price erosion, work slowdowns and layoffs. The Company's operations may, in the future, experience substantial fluctuations from period to period because of such industry patterns and general economic and political conditions which could affect the timing of orders from customers. There can be no assurance that such factors will not have a materially adverse effect on the Company's business, operating results or financial condition. INTERNATIONAL. The Company plans to increase its presence in international markets by marketing its product lines in additional countries. Risks associated with such pursuits include, but are not limited to, the following: (i) changing market demands, (ii) economic and political conditions in foreign markets, (iii) foreign exchange fluctuations, longer collections cycles, (iv) difficulty in managing a geographically dispersed organization and (v) changes in international tax laws. The downturn in the Asia Pacific business climate has had and may continue to have an adverse effect on some market opportunities. Operating results are likely to be adversely affected if the Company's expansion into international markets is not successful. COMPETITION. The business and financial applications software market for large complex organizations is intensely competitive. The Company's principal competitors with Tamaris solutions are SAP AG, Oracle Corporation and PeopleSoft, Inc. With Aptos solutions, the Company principally competes with Oracle Corporation, Lawson Software, Inc., Platinum Software, Inc., Systems Union Group Ltd and Agresso AS. With the Horizon suite of products, the Company principally competes with Hyperion Solutions Corporation, Oracle Corporation and Comshare, Inc. With the IMMPOWER suite of products, the Company principally competes with Datastream/SQL, Indus International, Marcam, Mincom, PSDI and SAP AG. The Company also competes to a lesser extent with other independent software application vendors. Some of the Company's current and potential competitors have substantially greater financial, technical, marketing and sales resources than the Company. Some of these competitors also offer business application products not offered by the Company, primarily in the areas of human resources and manufacturing. However, Walker remains one of the few companies committed to providing and enhancing applications for the mainframe environment. Most of the competitors listed above compete with Walker by offering UNIX-based applications. The Company encounters competition from a broader range of firms in the market for professional services. Principal competitors include Andersen Consulting, IBM Global Services and the consulting divisions of the major accounting firms. These competitors possess greater resources than the Company. Niche consulting firms which specialize in the Company's products also compete with the Company primarily on the basis of price. The principal competitive factors in the market for business and financial applications software and services include: (i) product functionality, (ii) flexibility, (iii) portability, 13 (iv) integration, (v) reliability, (vi) performance, (vii) product availability, (viii) speed of implementation, (ix) quality of customer support and user documentation, (x) vendor reputation, (xi) experience, (xii) financial stability, (xiii) cost effectiveness and (xiv) price. The Company believes that it competes favorably with respect to these factors. There can be no assurance, however, that the Company will be able to compete successfully in the future. RAPID TECHNOLOGICAL CHANGE. The software industry is characterized by rapid technological change. The pace of change has accelerated due to advances in mainframe and client/server technology and the growth in Internet, Intranet and extranet utilization. The Company expects to evaluate potential opportunities and may invest in those which are compatible with the Company's strategic direction. However, there can be no assurance that any such investments will be profitable. The Company's products are also designed primarily for use with certain mainframe and client/server systems. The introduction of products embodying new technologies and the emergence of new industry standards can render existing products obsolete. Accordingly, the Company's future success depends in part upon its ability to continue to enhance its current products and to develop and introduce new products that respond to evolving customer requirements and keep pace with technological development and emerging industry standards, such as new operating systems, hardware platforms, interfaces and third party applications software. There can be no assurances that: (i) the Company will be successful in developing and marketing product enhancements or new products that respond to technological change, changes in customer requirements or emerging industry standards; (ii) the Company will not experience difficulties that could delay or prevent the successful development, introduction and marketing of such products and enhancements; or (iii) any new products or enhancements that it may introduce will achieve market acceptance. PRODUCT DEVELOPMENT. The Company's continued success is dependent on its continued ability to introduce, develop and market new and enhanced versions of its software products, although there can be no assurance that such ability can be maintained. The Company plans to continue its investment in product development in future periods. However, there can be no assurance that revenues will be sufficient to support the future product development which is required for the Company to be competitive. Although the Company may be able to release new products in addition to enhancements to existing products, there can be no assurance that the Company's new or upgraded products will be accepted, will not be delayed or canceled, or will not contain errors or "bugs" that could affect the performance of the product or cause damage to users' data. PROPRIETARY RIGHTS. The Company regards its products as proprietary. Through its license agreements with customers and its internal security systems, confidentiality procedures and employee agreements, the Company has taken steps to maintain the trade secrecy of its products. However, there can be no assurances that misappropriation will not occur. In addition, the laws of some countries do not protect the Company's proprietary rights to the same extent as do the laws of the United States. There can be no assurance that the confidentiality of any proprietary information will provide any meaningful competitive advantage. The Company has no patents relating to its products. The Company believes that, because of the rapid pace of technological change in the computer software industry, that patents and copyrights are less significant than factors such as the knowledge, ability and experience of the Company's employees, frequent product enhancements and the timeliness and quality of support services. There can be no assurance that the Company's current efforts to retain its products as proprietary will be adequate. Although the Company believes that its products do not infringe upon the proprietary rights of third parties, there can be no assurance that third parties will not assert infringement claims against the Company in the future with respect to current or future products or that any such assertions will not require the Company to enter into royalty arrangements or result in costly litigation. 14 PRODUCT LIABILITY. The Company's license agreements with its customers contain provisions designed to limit the Company's exposure to potential product liability claims. It is possible, however, that the limitation of liability provisions contained in such license agreements may not be enforced as a result of international, federal, state and local laws or ordinances or unfavorable judicial decisions. The license and support of the Company's software for use in mission critical applications creates the risk of product liability claims against the Company. Damage liability or injunctive relief resulting from such a claim could cause a materially adverse impact on the Company's business, operating results and financial condition. EMPLOYEES. The Company believes that its continued success will depend in large part upon its ability to attract, train and retain highly-skilled technical, sales, marketing and managerial personnel. Because of a high level of demand, competition for such personnel is intense and the Company sometimes experiences difficulty in locating candidates with appropriate qualifications or within desired geographic locations. Revenue growth is dependent on the Company's ability to attract, train, retain and productively manage such personnel. ACQUISITION-RELATED RISKS. The Company has acquired and may continue to acquire complimentary businesses, products or technology. The process of integrating an acquired company's business into the Company's operations may result in unforeseen operating difficulties and expenditures and may require significant management attention that would otherwise be available for the ongoing development of the Company's business. There can be no assurance that any anticipated benefits of an acquisition will be realized. Future acquisitions by the Company could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and amortization related to goodwill and other intangible assets, which could materially affect the Company's operating results and financial condition. Acquisitions involve numerous risks, including difficulties in the assimilation of operations, technologies and products of the acquired company, risks associated with entering markets in which the Company has no or limited direct prior experience and the potential loss of key employees of the acquired company. VOLATILITY OF STOCK PRICE. High technology companies, including the Company, frequently experience volatility in their common stock prices. Factors such as quarterly fluctuations in results of operations, announcements of technological innovations by the Company or its competitors or the introduction of new products by the Company or its competitors and macroeconomic conditions in the computer hardware and software industries generally may have a significant adverse impact on the market price of the Company's stock. If revenues or earnings in any quarter fail to meet the expectations of the investment community, there could be an immediate impact on the Company's stock price. In addition, the Company has issued shares and stock options which if sold directly or exercised and sold on the open market in large concentrations, could cause the Company's stock price to decline in the short term. Furthermore, the stock market has from time to time experienced extreme price and volume fluctuations which have particularly affected the market price for many high technology companies, in some cases unrelated to the operating performance of those companies. These broad market fluctuations may materially adversely affect the market price of the stock of the Company. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has U.S. dollar interest-bearing investments that are subject to interest rate risk. The Company analyzed its investments at year-end to determine the sensitivity to interest rate changes. The fair values of these instruments were determined by net present values. The Company's sensitivity analysis used the same change in interest rates for all maturities. All other factors were held constant. If interest rates increased by 10 percent the expected effect on net income related to the Company's investments would be immaterial. The majority of the Company's revenues are denominated in the U.S. dollar. The Company does not engage in interest rate swaps or enter in foreign currency forward contracts. No material changes have occurred since December 31, 1998. 15 PART II. OTHER INFORMATION - --------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.2 1992 Employee Stock Purchase Plan, as amended to date 10.9 1993 Non-Employee Directors' Stock Option Plan, as amended to date 10.14 1995 Non-Statutory Stock Option Plan for Non-Officer Employees , as amended to date 10.18 Separation Agreement between Barbara M. Hubbard and the Registrant. 27.1 Financial Data Schedule (electronic filing only) (b) Reports on Form 8-K The Company filed no reports on Form 8-K during the quarter ended March 31, 1999. 16 WALKER INTERACTIVE SYSTEMS, INC. FORM 10-Q 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. WALKER INTERACTIVE SYSTEMS, INC. -------------------------------- (REGISTRANT) Date: May 14, 1999 By: /s/ Michael B. Shahbazian ------------ -------------------------- Michael B. Shahbazian Senior Vice President and Chief Financial Officer (Principal Financial Officer) 17 WALKER INTERACTIVE SYSTEMS, INC. FORM 10-Q INDEX TO EXHIBITS 10.2 1992 Employee Stock Purchase Plan, as amended to date (1) 10.9 1993 Non-Employee Directors' Stock Option Plan, as amended to date (1) 10.14 1995 Non-Statutory Stock Option Plan for Non-Officer Employees, as amended to date 10.18 Separation Agreement between Barbara M. Hubbard and the Registrant 27.1 Financial Data Schedule (electronic filing only) (1) Incorporated by reference to the attachment to the Company's 1999 Proxy Statement. 18 EX-10.14 2 1995 NON-STATUTORY STOCK OPTION PLAN EXHIBIT 10.14 WALKER INTERACTIVE SYSTEMS, INC. 1995 NONSTATUTORY STOCK OPTION PLAN FOR NON-OFFICER EMPLOYEES ADOPTED AUGUST 28, 1995 RATIFIED AND AMENDED SEPTEMBER 20, 1995 AMENDED MAY 9, 1996, OCTOBER 20, 1997, AUGUST 5, 1998, NOVEMBER 9, 1998 AND APRIL 12, 1999 1. PURPOSES. (a) The purpose of the Plan is to provide a means by which selected Employees of the Company, and its Affiliates, may be given an opportunity to purchase stock of the Company. (b) The Company, by means of the Plan, seeks to retain the services of persons who are now non-officer Employees of the Company or its Affiliates, to secure and retain the services of new Employees in such positions, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. (c) The Company intends that the Options issued under the Plan shall be only Nonstatutory Stock Options. 2. DEFINITIONS. (a) "AFFILIATE" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code. (b) "BOARD" means the Board of Directors of the Company. (c) "CAUSE" means termination of an Employee's employment with the Company for any of the following reasons as determined in good faith by the Company: (i) an intentional act which materially injures the Company; (ii) an intentional refusal or failure to follow lawful and reasonable directions of the Board or the individual to whom the Employee reports; (iii) a willful and habitual neglect of duties; or (iv) a conviction of a felony involving moral turpitude which is reasonably likely to inflict or has inflicted material injury on the Company. (d) "CHANGE IN CONTROL" means: (i) a dissolution, liquidation or sale of substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation; or (iii) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise. (e) "CODE" means the Internal Revenue Code of 1986, as amended. (f) "COMMITTEE" means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan. (g) "COMPANY" means Walker Interactive Systems, Inc., a Delaware corporation. (h) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the employment relationship, or service as a member of the Board or Consultant, is not interrupted or terminated. The Board, in its sole discretion, may determine whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by the Board, including sick leave, military leave, or any other personal leave; or (ii) transfers between locations of the Company or between the Company, Affiliates or their successors. (i) "DIRECTOR" means a member of the Board. (j) "DISINTERESTED PERSON" means a Director who either (i) was not during the one year prior to service as an administrator of the Plan granted or awarded equity securities pursuant to the Plan or any other plan of the Company or any Affiliate entitling the participants therein to acquire equity securities of the Company or any Affiliate except as permitted by Rule 16b-3(c)(2)(i); or (ii) is otherwise considered to be a "disinterested person" in accordance with Rule 16b- 3(c)(2)(i), or any other applicable rules, regulations or interpretations of the Securities and Exchange Commission. (k) "EMPLOYEE" means any person employed by the Company or any Affiliate of the Company. (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (m) "FAIR MARKET VALUE" means, as of any date, the value of the common stock of the Company determined as follows: (1) If the common stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market, the Fair Market Value of a share of common stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in common stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable; (2) If the common stock is quoted on the Nasdaq System (but not on the Nasdaq National Market) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of common stock shall be the mean between the bid and asked prices for the common stock on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable; (3) In the absence of an established market for the common stock, the Fair Market Value shall be determined in good faith by the Board. (m) "INVOLUNTARY TERMINATION WITHOUT CAUSE" means an Employee's dismissal or discharge other than for Cause. The termination of an Employee's employment as a result of the Employee's death or disability will not be deemed to be an Involuntary Termination Without Cause. (n) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an Incentive Stock Option. (o) "OFFICER" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (p) "OPTION" means a stock option granted pursuant to the Plan. (q) "OPTION AGREEMENT" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. (r) "OPTIONEE" means an Employee who holds an outstanding Option. (s) "PLAN" means this Walker Interactive Systems, Inc. 1995 Nonstatutory Stock Option Plan for Non-Officer Employees. (t) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 3. ADMINISTRATION. (a) The Plan shall be administered by Compensation Committee of the Board unless and until the Compensation Committee or the Board delegates administration to a Committee, as provided in subsection 3(c). (b) The Compensation Committee shall have the power, subject to, and within the limitations of, the express provisions of the Plan: (1) To determine from time to time which of the persons eligible under the Plan shall be granted Options; when and how each Option shall be granted; the provisions of each Option granted (which need not be identical), including the time or times such Option may be exercised in whole or in part; and the number of shares for which an Option shall be granted to each such person. (2) To construe and interpret the Plan and Options granted under it, and to establish, amend and revoke rules and regulations for its administration. The Compensation Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Option Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (3) To amend the Plan or an Option as provided in Section 11 of the Plan. (4) Generally, to exercise such powers and to perform such acts as the Compensation Committee deems necessary or expedient to promote the best interests of the Company. (c) The Board may delegate administration of the Plan to a committee composed of not fewer than two (2) members (the "Committee"), all of the members of which Committee shall be Disinterested Persons. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Compensation Committee (and references in this Plan to the Compensation Committee shall thereafter be to the Committee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Compensation Committee. The Compensation Committee may abolish the Committee at any time and revest in the Compensation Committee the administration of the Plan. Notwithstanding anything in this Section 3 to the contrary, the Board or the Compensation Committee may delegate to a committee of one or more members of the Board the authority to grant Options to persons eligible to receive Options as provided in Section 5 of the Plan. (d) Any requirement that an administrator of the Plan be a Disinterested Person shall not apply if the Board or the Compensation Committee expressly declares that such requirement shall not apply. Any Disinterested Person shall otherwise comply with the requirements of Rule 16b-3. (e) The Board shall at all times have the authority to arrogate to itself any or all of the powers and responsibilities allocated to the Compensation Committee or to the Committee under the Plan. 4. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of Section 10 relating to adjustments upon changes in stock, the stock that may be sold pursuant to Options shall not exceed in the aggregate two million five hundred thousand (2,500,000) shares of the Company's common stock. If any Option shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not purchased under such Option shall revert to and again become available for issuance under the Plan. (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 5. ELIGIBILITY. Nonstatutory Stock Options may be granted under the Plan only to Employees who (i) hold positions below the level of Officer, and (ii) are not then subject to Section 16 of the Exchange Act. 6. OPTION PROVISIONS. Each Option shall be in such form and shall contain such terms and conditions as the Compensation Committee shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions: (a) TERM. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted. (b) PRICE. The exercise price of each Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. (c) CONSIDERATION. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, in one or more of the following forms: (i) in cash at the time the Option is exercised, (ii) at the discretion of the Compensation Committee or the Committee, by delivery to the Company of other common stock of the Company, or (iii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which results in the receipt of cash (or check) by the Company prior to the issuance of the stock. (d) TRANSFERABILITY. A Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order satisfying the requirements of Rule 16b-3 and the rules thereunder (a "QDRO"), and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person or any transferee pursuant to a QDRO. The person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option. (e) VESTING. The total number of shares of stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised. (f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee, or any person to whom an Option is transferred under subsection 6(d), as a condition of exercising any such Option, (1) to give written assurances satisfactory to the Company as to the Optionee's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option for such person's own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the Option has been registered under a then currently effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock. (g) TERMINATION OF SERVICE. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months after the termination of the Optionee's Continuous Status as an Employee, Director or Consultant or such longer or shorter period specified in the Option Agreement, or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee's disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (i) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or within a period specified in the Option after the termination of, the Optionee's Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option at the date of death) by the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee's death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. (j) EARLY EXERCISE. The Option may, but need not, include a provision whereby the Optionee may elect at any time while an Employee, Director or Consultant to exercise the Option as to any part or all of the shares subject to the Option prior to the full vesting of the Option. Any unvested shares so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate. (k) WITHHOLDING. To the extent provided by the terms of an Option Agreement, the Optionee may satisfy any federal, state, local or foreign tax withholding obligation relating to the exercise of such Option by any of the following means or by a combination of such means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the participant as a result of the exercise of the Option; or (3) delivering to the Company owned and unencumbered shares of the common stock of the Company. 7. COVENANTS OF THE COMPANY. (a) During the terms of the Options, the Company shall keep available at all times the number of shares of stock required to satisfy such Options. (b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the Options; provided, however, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any Option or any stock issued or issuable pursuant to any such Option. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Options unless and until such authority is obtained. 8. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of stock pursuant to Options shall constitute general funds of the Company. 9. MISCELLANEOUS. (a) The Compensation Committee shall have the power to accelerate the time at which an Option may first be exercised or the time during which an Option or any part thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in the Option stating the time at which it may first be exercised or the time during which it will vest. (b) Neither an Optionee nor any person to whom an Option is transferred under subsection 6(d) shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Option unless and until such person has satisfied all requirements for exercise of the Option pursuant to its terms. (c) Nothing in the Plan or any instrument executed or Option granted pursuant thereto shall confer upon any Employee any right to continue in the employ of the Company or any Affiliate, or to continue to serve as a member of the Board or as a consultant, or shall affect the right of the Company or any Affiliate to terminate the employment relationship of any Employee with or without cause, to remove a member of the Board pursuant to the terms of the Company's Bylaws, or to terminate a consultant in accordance with the terms of this agreement with the Company or Affiliate. (d) The Compensation Committee shall have the authority to effect, at any time and from time to time (i) the repricing of any outstanding Options under the Plan and/or (ii) with the consent of the affected holders of Options, the cancellation of any outstanding Options and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of Common Stock, but having an exercise price per share not less than eighty- five percent (85%) of the Fair Market Value per share of Common Stock on the new grant date. 10. ADJUSTMENTS UPON CHANGES IN STOCK. (a) If any change is made in the stock subject to the Plan, or subject to any Option (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or otherwise), the Plan will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan pursuant to subsection 4(a) and the outstanding Options will be appropriately adjusted in the class(es) and number of shares and price per share of stock subject to such outstanding Options. (b) In the event of a Change in Control, then, to the extent permitted by applicable law: (i) any surviving corporation shall assume any Options outstanding under the Plan or shall substitute similar Options for those outstanding under the Plan; or (ii) such Options shall continue in full force and effect. In the event any surviving corporation refuses to assume or continue such options, or to substitute similar options for those outstanding under the Plan, then, with respect to options held by persons then performing services as employees, consultants or directors for the Company, the time during which such Options become vested or may be exercised shall be accelerated and any outstanding unexercised rights under any Options terminated if not exercised prior to such event. (c) In the event an Employee's employment is terminated due to an Involuntary Termination Without Cause within twenty-four (24) months after the effective date of a Change in Control, then all Options issued and outstanding under the Plan and held by the Employee shall accelerate and become immediately vested and exercisable. Notwithstanding the foregoing, if the Change in Control was a transaction that was accounted for as a pooling of interests for financial reporting purposes, then the unvested portion of such stock options shall not accelerate unless the Company receives reasonable assurances from the Company's independent public accountants (and from the acquiring party's independent public accountants) that in their good faith judgment such acceleration will not adversely affect the pooling of interests accounting treatment of such Change in Control transaction. 11. AMENDMENT OF THE PLAN AND OPTIONS. (a) The Board or the Compensation Committee at any time, and from time to time, may amend the Plan. (b) The Compensation Committee may, in its sole discretion, submit the Plan or any amendment to the Plan for stockholder approval. (c) It is expressly contemplated that the Board or the Compensation Committee may amend the Plan in any respect the Board or the Compensation Committee deems necessary or advisable to provide Optionees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder. (d) Rights and obligations under any Option granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the person to whom the Option was granted and (ii) such person consents in writing. (e) The Board or the Compensation Committee at any time, and from time to time, may amend the terms of any one or more Options; provided, however, that the rights and obligations under any Option shall not be impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Option was granted and (ii) such person consents in writing. 12. TERMINATION OR SUSPENSION OF THE PLAN. (a) The Board or the Compensation Committee may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the date when all the shares of the Company's common stock reserved for issuance under the Plan have been issued. No Options may be granted under the Plan while the Plan is suspended or after it is terminated. (b) Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except with the consent of the person to whom the Option was granted. 13. EFFECTIVE DATE OF PLAN. The Plan shall become effective on August 28, 1995. Adopted by the Compensation Committee on August 28, 1995 with an aggregate share reserve of 140,000 shares. Ratified and amended by the Board of Directors on September 20, 1995 to increase the aggregate share reserve to 600,000 shares. Amended by the Board of Directors on May 9, 1996 to increase the aggregate share reserve to 1,100,000 shares. Amended by the Board of Directors on October 20, 1997 to increase the aggregate share reserve to 1,600,000 shares. Amended by the Board of Directors on August 5, 1998 to remove the discretion of the Board to determine whether acceleration of vesting shall occur in the event of a Change in Control if the successor entity does not assume or continue outstanding options or substitute similar options and to provide for acceleration of vesting upon an employee's Involuntary Termination Without Cause within twenty-four months after a Change in Control. Amended by the Board of Directors on November 9, 1998 to increase the aggregate share reserve to 2,000,000 shares. Amended by the Board of Directors on April 12, 1999 to increase the aggregate share reserve to 2,500,000 shares. EX-10.18 3 SEPARATION AGREEMENT Exhibit 10.18 SEPARATION AGREEMENT BETWEEN BARBARA M. HUBBARD AND WALKER INTERACTIVE SYSTEMS, INC. This Agreement is entered into between Barbara M. Hubbard (the "Executive") and Walker Interactive Systems, Inc. (the "Company") effective February 15, 1999. WITNESSETH WHEREAS, the Executive and the Company have mutually agreed to terminate the Executive's employment as Vice President of Finance and an Officer of the Company, effective May 1, 1999; WHEREAS, the Company believes that Executive has made significant contributions to the Company and its success during her tenure as an employee; WHEREAS, the Company wishes to express its appreciation to Executive for the significant contributions she has made to the Company's success during the three years she served with the Company; NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed by and between the parties hereto: 1. SEPARATION. Executive's employment relationship with the Company will terminate on May 1, 1999 ("Separation Date"). 2. CONSULTING AGREEMENT. In order to facilitate the provision of future services by Executive to the Company, the Executive and the Company agree to enter into a Consulting Services Agreement (the "Consulting Agreement") in the form attached as Exhibit I. 3. SALARY CONTINUATION. If Executive has not obtained new regular, full-time employment as of the Separation Date, Executive will receive, on a month-to- month basis, her regular base salary, paid on the Company's regular payroll dates, subject to standard deductions and withholdings for taxes and social security, for a period of time not to exceed eight (8) months, ending on December 31, 1999. Executive shall certify in writing not less than two weeks prior to the beginning of each month following the Separation Date that she has not obtained regular full-time employment in order to trigger the salary continuation payment. Salary continuation payments shall cease in the month following the date Executive has obtained regular full-time employment. 4. EXERCISE OF OPTIONS. 4.1 The Company shall extend the ability of Executive to exercise the 30,000 options vested as of the Separation Date pursuant to Option Agreement No. 950088, dated April 1, 1996, and to exercise the 2,500 options vested as of the Separation Date pursuant to Option Agreement No. 890814, dated November 13, 1997, (the "Option Agreements"), such that Executive shall have twelve (12) months from the Separation Date to exercise these options and purchase these shares. Thereafter, these options will no longer be exercisable with respect to these 30,000 shares and 2,500 shares. 4.2 If a "change of control event" occurs during the period of time that Executive is able to exercise her vested options, Executive will be covered fully by provisions of Paragraph 11(b) of the Walker Interactive Systems, Inc., 1994 Equity Incentive Plan and Paragraph 10(b) of the Walker Interactive Systems, Inc., 1995 NonStatutory Stock Option Plan for Non-Officer Employees. 4.3 Except as expressly provided in this Agreement (including Exhibit 1, attached) , vesting of all options will cease at the close of business on the Separation Date. 5. CONTINUED HEALTH BENEFITS. The Company will continue to pay Executive's monthly health insurance premiums for her current health insurance through the end of the last month in which Executive receives salary continuation payments, said Company paid health insurance premiums to cease effective December 31, 1999, at the latest. Effective January 1, 2000, to the extent permitted by the federal COBRA law and by the Company's current group health insurance policies, Executive shall be eligible to continue her health insurance benefits at her own expense and, later, to convert to an individual policy if she wishes. 6. BONUSES. Executive shall be eligible to receive the following bonuses, if such are paid to the executive management of Walker: a) The Quarter 2, 1999, bonus, for the period of service from April 1, 1999, through May 1, 1999. 7. NO ADDITIONAL COMPENSATION. Executive acknowledges and agrees that after the Separation Date she will not be entitled to or receive any compensation, bonuses, stock, stock options or other benefits as a consequence of her Employment, except as expressly set forth in this agreement and the Consulting Agreement. 8. TAX CONSEQUENCES. Executive acknowledges that she has been advised by the Company to consult with a tax advisor or attorney with respect to the tax consequences, if any, of these amendments to her stock options grants. 9. LIMITATION ON ACTIVITIES (NON-COMPETE). In consideration for the benefits provided in Paragraphs 2 and 3, above, Executive agrees that, for the twelve month period beginning May 1, 1999, and ending April 30, 2000, she will not directly or indirectly (whether for compensation or without compensation), as an individual proprietor, partner, stockholder, officer, employee, consultant, director, joint venturer, investor, lender, or in any other capacity whatsoever (other than as the holder of not more than one percent (1%) of the total outstanding stock of a publicly held company), engage in any business activity that is directly competitive with the business of the Company, ("Competitive Activity"). For purposes of the Agreement, "Competitive Activity" shall be defined as obtaining employment, performing work or providing services directly and specifically to SAP, PeopleSoft, Oracle, Hyperion, QSP, BAAN, Lawson, CODA (or any related corporation or partnership). These Competitive Activities are in addition to the limitations on Executive's activities set forth in her Proprietary Information Agreement (Exhibit A hereto), and they are considered by the parties to constitute a reasonable restriction for the purpose of protecting the business of the Company. However, if any such limitation is found by a court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable. 10. RELEASE. In exchange for the consideration under this Agreement to which she would not otherwise be entitled: 10.1 Executive hereby forever releases and discharges the Company, its parent corporation, subsidiaries and affiliates, and its and their officers, directors, employees and agents, and all others, of and from any and all claims and demands of every kind and nature, known and unknown, suspected and unsuspected, disclosed and undisclosed, for damages actual and consequential, past, present and future, arising out of or in any way connected with the termination of her Employment, including (without limitation) all claims and demands under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), and other federal and state employment laws, or for breach of contract; provided however, that Executive is not releasing any claims against the Company that may arise from events that occur after she signs this Agreement. 10.2 Executive acknowledges that she is knowingly and voluntarily waiving and releasing any rights she may have under the ADEA. She also acknowledges that the consideration given for the waiver in this Paragraph is in addition to anything of value to which she was already entitled. She further acknowledges that she has been advised by this writing that: (i) her waiver and release do not apply to any claims that may arise after she signs this Agreement; (ii) she has the right to consult with an attorney prior to executing this Agreement; (iii) she has twenty-one (21) days within which to consider this Agreement (although she may choose to voluntarily execute this Agreement earlier); (iv) she has seven (7) days following the execution of this Agreement to revoke the Agreement; and (v) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is executed by her ("Effective Date"). 11. PROPRIETARY INFORMATION OBLIGATIONS. Executive acknowledges her continuing, post-Employment obligations under that certain Proprietary Information and Confidentiality Agreement dated April 5, 1996, between Executive and the Company ("Proprietary Information Agreement"), a copy of which is attached hereto as Exhibit A. 12. MISCELLANEOUS. 12.1 Confidentiality. Executive shall hold the provisions of this Agreement in strictest confidence and not publicize or disclose them in any manner whatsoever; provided, however, that Executive may disclose this Agreement to her immediate family, attorneys, accountants, tax preparers and financial advisers, provided the person to whom she intends to make such disclosure first agrees to be bound by this provision, and she may also disclose this Agreement insofar as such disclosure is required by law. 12.2 Binding Effect; Non-Assignability. The rights and obligations of the parties hereto shall bind and inure to the benefit of their respective successors, assigns, heirs, executors and administrators, as the case may be. 12.3 Complete Understanding; Modification. This Agreement, including Exhibit A, constitutes the complete, final and exclusive embodiment of the entire agreement between the parties hereto with respect to the subject matter hereof. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises and representations. Any modification or amendment of this Agreement shall be effective only if in writing and signed by Executive and an authorized officer of the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. BARBARA M. HUBBARD WALKER INTERACTIVE SYSTEMS, INC. /s/ BARBARA M. HUBBARD By: /s/ WALLACE E. BREITMAN - ------------------------------- ------------------------------------- Date Signed: February 4, 1999 Date Signed: February 4, 1999 ------------------ ------------------------ EXHIBIT I CONSULTING SERVICES AGREEMENT BETWEEN BARBARA HUBBARD AND WALKER INTERACTIVE SYSTEMS, INC. This Consulting Services Agreement is entered into between Barbara Hubbard (the "Executive") and Walker Interactive Systems, Inc. (the "Company") effective February 15, 1999. WITNESSETH WHEREAS, Executive and the Company have mutually agreed that Executive's employment as Vice President of Finance and Officer of the Company will terminate effective May 1, 1999 ("Separation Date"); WHEREAS, the Company believes Executive possesses significant skills and knowledge which can assist the Company in its ongoing business endeavors; WHEREAS, the Company wishes to provide Executive with several benefits in return for Executive's assisting the Company in various business development and customer relationship situations; WHEREAS, Executive wishes to provide Company with such assistance; NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows: 1. CONSULTING ENGAGEMENT. 1.1 Engagement of Services. Executive is hereby engaged by the Company in the capacity of Consultant to the Chief Executive Officer of the Company for a period of six months commencing on the Separation Date ("Consulting Engagement"), unless terminated sooner pursuant to Section 4, below. During the Consulting Engagement, Executive shall render such services in connection with the business of the Company as may reasonably be requested from time to time by the Chief Executive Officer of the Company or his designee and Executive shall utilize her best efforts, skills and talents in the performance of those services; provided, however, that Executive shall have the right reasonably to decline any particular request. Executive shall be available to devote a minimum equivalent of one day per month to performing such services, at such times and locations as shall be mutually convenient to Executive and the Company. 1.2 Limitations On Other Activities. During the Consulting Engagement, Executive agrees to abide fully by the provisions of Paragraph 7, "Limitations on On Other Activities (Non-Compete)," of the Separation Agreement between Barbara Hubbard and Walker Interactive Systems, Inc., dated February 15, 1999. 2. Compensation. 2.1 As compensation for Executive's services as a consultant hereunder for services rendered between May 2, 1999 and October 31, 1999, the Company shall pay Executive a reasonable and mutually agreeable fee for services rendered in excess of one day per month. Executive will provide Company with an invoice for services rendered on a monthly basis. 2.2 In addition to such compensation, the Company will reimburse Executive for travel and other out-of-pocket costs reasonably incurred by her in the course of performing services under this Agreement; provided, however, that the Company shall not be obligated hereunder unless (i) the Company has agreed in advance to reimburse such costs, and (ii) Executive provides the Company with appropriate receipts or other relevant documentation for all such costs as part of any submission by her for reimbursement. 2.3 Executive acknowledges and agrees that she is not entitled to and will not receive any fees or other items of value in connection with either his Consulting Engagement or any of her other obligations under Section 1 of this Agreement, except as expressly set forth above. 3. BENEFITS. Provided this Agreement is not terminated by Company pursuant to Paragraph 4 below prior to October 31, 1999, Executive's option to purchase 2,500 shares of Company stock pursuant to Option Agreement No. 950449, October 23, 1998, will vest and become exercisable. Executive shall have a period of six (6) months after the vesting of such option, through April 30, 1999, to exercise and purchase these 2,500 shares. Thereafter, such option will no longer be exercisable. 4. RIGHT TO TERMINATE. In the event that (a) Executive breaches any of her continuing obligations under the Proprietary Agreement she signed on April 5, 1996, or (b) Executive commences a Competitive Activity in violation of this Agreement, the Company may terminate this Agreement upon written notice to the Consultant. 5. INDEPENDENT CONTRACTOR STATUS. 5.1 It is understood and agreed that Executive is an independent contractor and not an employee, agent, joint venturer or partner of the Company, and Executive agrees not to hold herself out as, or give any person reason to believe that she is, an employee, agent, joint venturer or partner of the Company; 5.2 As an independent contractor, Executive is responsible for paying all required state and federal taxes and insurance. In particular, the Company will not withhold FICA (Medicare and Social Security) from Executive's payments, make state or federal unemployment insurance contributions on behalf of Executive, withhold state and federal income tax from Executive's payments, make disability insurance contributions on behalf of Executive, or obtain workers' compensation insurance on behalf of Executive. Executive will indemnify the Company against any liability for any of the payments or withholdings described in this Paragraph. 5.3 Prohibition Against Use Or Disclosure Of Proprietary And Confidential Information. Executive's Proprietary Information Agreement with the Company (Exhibit A hereto) is hereby incorporated into this Agreement and made a part hereof, and it shall impose the same obligations on Executive, and have the same force and effect, during the Consulting Engagement and thereafter as was the case as a consequence of Executive's Employment with the Company. 5.4 Office Space; Support Services. The Company shall provide Executive with office space and secretarial support if and when Executive is performing services under this Agreement on the Company's premises, should she desire to utilize them. 5.5 Term. Unless previously terminated as set forth above, the Consulting Engagement shall terminate six months from the Separation Date. The Consulting Engagement shall terminate automatically in the event of (i) Executive's death, (ii) a disability that prevents Executive from performing her obligations hereunder, or (iii) Executive's revocation of this Agreement prior to the Effective Date. 6. MISCELLANEOUS. 6.1 Confidentiality. Executive shall hold the provisions of this Agreement in strictest confidence and not publicize or disclose them in any manner whatsoever; provided, however, that Executive may disclose this Agreement to her immediate family, attorneys, accountants, tax preparers and financial advisers, provided the person to whom she intends to make such disclosure first agrees to be bound by this provision, and she may also disclose this Agreement insofar as such disclosure is required by law. 6.2 Binding Effect; Non-Assignability. The rights and obligations of the parties hereto shall bind and inure to the benefit of their respective successors, assigns, heirs, executors and administrators, as the case may be; provided that, as the Company has specifically contracted for Executive's services, Executive may not assign or delegate his consulting obligations under this Agreement either in whole or in part without the prior express written consent of an authorized officer of the Company. 6.3 Complete Understanding; Modification. This Agreement, including Exhibit A, constitutes the complete, final and exclusive embodiment of the entire agreement between the parties hereto with respect to the subject matter hereof. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises and representations. Any modification or amendment of this Agreement shall be effective only if in writing and signed by Executive and an authorized officer of the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. BARBARA M. HUBBARD WALKER INTERACTIVE SYSTEMS, INC. /s/ BARBARA M. HUBBARD By: /s/ WALLACE E. BREITMAN - ------------------------------- ------------------------------------- Date Signed: February 4, 1999 Date Signed: February 4, 1999 ------------------ ------------------------ EX-27 4 FINANCIAL DATA SCHEDULE
5 WALKER INTERACTIVE SYSTEMS, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1999. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 7,539 6,557 33,844 1,284 0 47,164 28,799 23,910 90,541 31,086 0 0 0 14 54,982 90,541 23,907 23,907 12,933 25,820 0 0 0 (1,674) (636) 0 0 0 0 (1,038) (0.07) (0.07)
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