-----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, EdRxWwWyRTSZy2Pz4WB4qi/liP5KwJLP7QtGbgpZeKqxSvYwRMXA2vtIasy+V8Gm 2/J/FeK6qJUB2yQeiF+RxQ== 0000950144-99-006304.txt : 19990518 0000950144-99-006304.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950144-99-006304 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARBINGER CORP CENTRAL INDEX KEY: 0000947116 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 581817306 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26298 FILM NUMBER: 99626847 BUSINESS ADDRESS: STREET 1: 1277 LENOX PK BLVD CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048414334 10-Q 1 HARBINGER CORPORATION 1 - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [MARK ONE] |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO ------------ --------------- COMMISSION FILE NUMBER 0-26298 HARBINGER CORPORATION (Exact name of registrant as specified in its charter)
GEORGIA 58-1817306 (State or other Jurisdiction of incorporation or (I.R.S. Employer Identification No.) organization) 1277 LENOX PARK BOULEVARD 30319 ATLANTA, GEORGIA (Zip Code) (Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 467-3000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| The number of shares of the issuer's class of capital stock outstanding as of May 3, 1999, the latest practicable date, is as follows: 38,383,412 shares of Common Stock, $.0001 par value. - ------------------------------------------------------------------------------- 2 HARBINGER CORPORATION FORM 10-Q QUARTER ENDED MARCH 31, 1999 TABLE OF CONTENTS
Page Number ------------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - (Unaudited) March 31, 1999 and December 31, 1998................................................. Consolidated Statements of Operations (Unaudited) - Three Months Ended March 31, 1999 and 1998.................................... Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Three Months Ended March 31, 1999 and 1998........................... Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 1999 and 1998........................... Notes to Consolidated Financial Statements (Unaudited)...................... Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................................... PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders.............................. Item 6. Exhibits and Reports on Form 8-K................................................. PART III. SIGNATURES.....................................................................
3 ITEM 1. FINANCIAL STATEMENTS HARBINGER CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA)
March 31, December 31, 1999 1998 ---------- ------------ ASSETS Current assets: Cash and cash equivalents ................................................ $ 14,109 $ 33,059 Short-term investments ................................................... 59,901 59,248 Accounts receivable, less allowances for returns and doubtful accounts of $5,458 at March 31, 1999 and $5,464 at December 31, 1998 ........................................ 32,469 35,891 Royalties receivable, less allowance for doubtful accounts of $2,864 at March 31, 1999 and $3,614 at December 31, 1998 ................................................... 681 1,730 Deferred income taxes .................................................... 2,103 2,103 Other current assets ..................................................... 4,975 5,622 ---------- ------------ Total current assets ................................................. 114,238 137,653 ---------- ------------ Property and equipment, less accumulated depreciation and amortization ....................................................... 23,707 23,150 Intangible assets, less accumulated amortization ......................... 16,884 16,803 Deferred income taxes .................................................... 698 698 Other assets ............................................................. 637 65 ---------- ------------ $ 156,164 $ 178,369 ========== ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ......................................................... $ 3,538 $ 5,566 Accrued expenses ......................................................... 26,726 31,571 Deferred revenues ........................................................ 19,467 21,213 ---------- ------------ Total current liabilities ............................................ 49,731 58,350 ---------- ------------ Commitments and contingencies Redeemable preferred stock: Zero coupon redeemable preferred stock, no par value; 2,000,000 shares authorized, issued and outstanding .............................. _ _ Shareholders' equity: Preferred stock, no par value; 18,000,000 shares authorized; none issued or outstanding.............................................. _ _ Common stock, $0.0001 par value; 100,000,000 shares authorized, 42,439,760 shares and 42,313,031 shares issued as of March 31, 1999 and December 31, 1998 ............................ 4 4 Additional paid-in capital ............................................... 202,101 201,615 Accumulated deficit ...................................................... (71,187) (73,528) Accumulated other comprehensive loss .................................... (1,257) (622) Treasury stock, 4,056,050 shares as of March 31, 1999 and 1,562,100 shares as of December 31, 1998 ........................... (23,228) (7,450) ---------- ------------ Total shareholders' equity .................................... 106,433 120,019 ---------- ------------ $ 156,164 $ 178,369 ========== ============
See accompanying notes to consolidated financial statements. 4 HARBINGER CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended March 31, --------------------- 1999 1998 ------- -------- Revenues: Services ........................................................... $25,372 $ 19,849 Software ........................................................... 8,131 10,203 ------- -------- Total revenues ................................................... 33,503 30,052 ------- -------- Direct costs: Services ........................................................... 10,626 7,033 Software ........................................................... 1,131 771 ------- -------- Total direct costs ............................................... 11,757 7,804 ------- -------- Gross margin ................................................. 21,746 22,248 ------- -------- Operating costs: Selling and marketing .............................................. 8,183 6,612 General and administrative ......................................... 6,560 5,499 Depreciation and amortization ...................................... 2,233 1,875 Product development ................................................ 3,214 2,519 Charge for purchased in-process product development, write-off of software development costs, restructuring, acquisition related and other charges ............................ -- 8,039 ------- -------- Total operating costs .......................................... 20,190 24,544 ------- -------- Operating income (loss) ...................................... 1,556 (2,296) Interest income, net .................................................. 898 1,311 ------- -------- Income (loss) from continuing operations before income taxes 2,454 (985) Income tax expense .................................................... 113 136 ------- -------- Income (loss) from continuing operations ..................... 2,341 (1,121) Loss from discontinued operations ..................................... -- (217) ------- -------- Net income (loss) applicable to common shareholders .......... $ 2,341 $ (1,338) ======= ======== Basic earnings per common share: Income (loss) from continuing operations ........................... $ 0.06 $ (0.03) Income (loss) from discontinued operations ......................... -- -- ------- -------- Net income (loss) per common share ............................. $ 0.06 $ (0.03) ======= ======== Weighted average number of common shares outstanding 39,879 41,046 ======= ======== Earnings per common share assuming dilution: Income (loss) from continuing operations ........................... $ 0.06 $ (0.03) Income (loss) from discontinued operations ......................... -- -- ------- -------- Net income (loss) per common share ............................. $ 0.06 $ (0.03) ======= ======== Weighted average number of common shares outstanding assuming dilution ........................................................... 40,451 41,046 ======= ========
See accompanying notes to consolidated financial statements. 5 HARBINGER CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (IN THOUSANDS)
Three Months Ended March 31, --------------------- 1999 1998 ------- ------- Net income (loss) applicable to common shareholders $ 2,341 $(1,338) Other comprehensive loss, net of tax: Foreign currency translation adjustments ........ (635) (205) ------- ------- Comprehensive income (loss) ................... $ 1,706 $(1,543) ======= =======
See accompanying notes to consolidated financial statements. 6 HARBINGER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Three Months Ended March 31, ----------------------- 1999 1998 -------- -------- Cash flows provided by operating activities ................ $ 454 $ 1,150 Cash flows from investing activities: Net (purchases) redemption of short-term investments ... (653) 1,066 Purchases of property and equipment ..................... (2,378) (2,545) Additions to software development costs ................. (887) (869) -------- -------- Net cash used in investing activities ............. (3,918) (2,348) -------- -------- Cash flows from financing activities: Exercise of stock options and warrants and issuance of stock under employee stock purchase plan .............. 486 6,746 Purchases of common stock ............................... (15,778) -- Principal payments under notes payable and long-term debt -- (169) -------- -------- Net cash provided by (used in) financing activities (15,292) 6,577 -------- -------- Net increase (decrease) in cash and cash equivalents ....... (18,756) 5,379 Cash and cash equivalents at beginning of period ........... 33,059 69,811 Effect of exchange rates on cash held in foreign currencies (194) 12 Cash received from acquisitions ............................ -- 52 -------- -------- Cash and cash equivalents at end of period ................. $ 14,109 $ 75,254 ======== ======== Supplemental disclosures: Cash paid for interest .................................. $ -- $ 25 ======== ======== Cash paid for income taxes .............................. $ 45 $ 347 ======== ========
See accompanying notes to consolidated financial statements. 7 HARBINGER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED) 1. SUMMARY OF 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 information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial information included herein is unaudited; however, the information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary to a fair presentation of the financial position, results of operations, and cash flows for the interim periods. Operating results for the three months ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ended December 31, 1999. For further information, refer to the financial statements and footnotes thereto included in Harbinger Corporation's ("Harbinger" or the "Company") Form 10-K for the year ended December 31, 1998 and the Company's current report on Form 8-K dated April 2, 1999. RECLASSIFICATIONS Certain reclassifications have been made to the quarter ended March 31, 1998 unaudited consolidated financial statements to conform with the presentation of quarter ended March 31, 1999. SEGMENT REPORTING On December 31, 1998, the Company adopted Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, issued by the FASB in June 1997, effective for fiscal years beginning after December 15, 1997. 2. SHAREHOLDERS' EQUITY On March 22, 1999 the Board of Directors approved the purchase of an additional 10% of the Company's outstanding shares of common stock under its existing stock repurchase program. The Company completed the 10% repurchase authorized on October 2, 1998 on March 19, 1999. 3. CHARGE FOR PURCHASED IN-PROCESS PRODUCT DEVELOPMENT, WRITE-OFF OF SOFTWARE DEVELOPMENT COSTS, RESTRUCTURING, ACQUISITION RELATED AND OTHER CHARGES For the quarter ended March 31, 1999, the Company did not incur charges for purchased in-process product development, write-off of software development costs, restructuring, acquisition related and other charges ("Charges"). A summary of the Charges incurred in the quarter ended March 31, 1998 is as follows:
Three Months Ended March 31, 1998 --------- Integration costs ............................... $ 6,380 Transaction charges.............................. 388 Asset write downs................................ 151 Severance costs.................................. 1,120 --------- $ 8,039 =========
8 Approximately $2.0 million of the Charges incurred in the three months ended March 31, 1998 resulted from the redirection of internal resources and their associated costs ("Integration Activity Costs") to manage integration activities. In 1999 the management of these activities has been completed and these internal resources and their associated costs are therefore recorded to their original operation expense categories. At March 31, 1999 the accrued liabilities related to Charges were approximately $5.8 million, compared to approximately $7.5 million at December 31, 1998, primarily as a result of charges to the reserve for leases, severance costs, professional fees and payments to customers of phased-out products in lieu of continued service obligations on those contracts. Certain Charges involve management estimates, as follows: lease termination costs and other costs to exit activities, which include anticipated liabilities and obligations associated with phasing out products. Actual results could vary from these estimates. 4. INCOME TAXES The Company reduced its valuation allowance in the quarter ended March 31, 1999 by $844,000. This relates to the reduction in the gross deferred income tax assets that are realized through reversals of existing deductible temporary differences. The Company continually reviews the adequacy of the valuation allowance and recognizes these benefits as reassessment indicates it is more likely than not that the benefits will be realized. 5. DISCONTINUED OPERATIONS In the third quarter of 1998 the Board of Directors approved the discontinuance of the TrustedLink Procurement business ("TLP"), expected to be sold or liquidated within 12 months. The results of operations for the TLP business for all periods prior to the discontinuation date of September 30, 1998 are reported in the accompanying consolidated statements of operation under "loss from discontinued operations". Revenues from TLP were $29,000 and $1.0 million for the three-month periods ended March 31, 1999 and 1998, respectively. The Company provided for an estimated anticipated loss on the future disposal of TLP, including an estimate for operating losses during the phase-out period, of $6.4 million at September 30, 1998. The balance of the loss reserve at March 31, 1999 was $4.7 million after $455,000 in operating losses in the first quarter of 1999. The anticipated loss on the disposal of TLP contains certain management estimates, included but not limited to sales proceeds, lease exist costs and length of operations beyond the measurement date. Actual results could vary from such estimates. No income tax benefit was recognized in any period due to the Company's net operating loss carry forwards. The operating loss incurred for TLP from the measurement date to March 31, 1999 was $1.1 million. The assets and liabilities of TLP are included in the Company's consolidated balance sheets as follows:
March 31, December 31, 1999 1998 --------- ------------ Accounts receivable $ 380 $ 454 Other current assets 102 106 Property and equipment, net 766 766 Intangible assets, net 2,454 2,454 Deferred revenue (26) (45) Current liabilities (345) (281) --------- ------------ Net Assets $ 3,331 $ 3,454 ========= ============
9 6. RELATED PARTY TRANSACTIONS The Company received notes receivable during the first quarter of 1999 of $605,000 from five former shareholders of EDI Works! LLC., an immaterial pooling of interests acquisition completed in 1998. The terms of the notes are for 18 months with an annual interest rate of 8.75%. Interest accrues on a monthly basis with principal and interest due at the end of the notes. 7. SEGMENT INFORMATION The Company operates in a single industry segment: the development, marketing and supporting of software products and the providing of network and consulting services to enable businesses to engage in E-Commerce. The Company manages its business along geographical lines, thus resulting in three reportable segments: North America, Europe, and Asia Pacific and Latin America. The accounting policies of each segment are the same as those described in the summary of significant accounting policies. Revenues are attributed to a reportable segment based on the location of the customer. Management evaluates the performance of each segment on the basis of operating income, excluding integration and restructuring charges and certain general and administrative credits. Intersegment royalties are calculated based upon revenues, as defined, derived from the sales of certain software products and services at agreed upon percentages between the segments. A summary of the Company's reportable segments as of March 31, 1999 and March 31, 1998 is presented below (in thousands):
North Latin America Europe America Total & Asia Pacific ---------- ------- --------------- --------- Revenues: 1999 $ 28,413 $ 5,729 $ 511 $ 34,653 1998 $ 25,311 $ 5,096 $ 398 $ 30,805 Intersegment Royalties: 1999 $ 1,150 $ - $ - $ 1,150 1998 $ 753 $ - $ - $ 753 Operating Income (as defined): 1999 $ 54 $ 833 $ (81) $ 806 1998 $ 5,380 $ 231 $ 132 $ 5,743
1999 1998 -------- -------- Revenues: - --------- Total gross revenues for reportable segments $ 34,653 $ 30,805 Elimination of intersegment royalties (1,150) (753) -------- -------- Total consolidated revenues $ 33,503 $ 30,052 ======== ======== 1999 1998 -------- -------- Operating Income (as defined): - ------------------------------ Total operating income for reportable segments $ 806 $ 5,743 Charges for integration and restructuring -- (8,039) Certain general and administrative credits 750 -- -------- -------- Total consolidated operating income (loss) $ 1,556 $ (2,296) ======== ========
10 8. CONTINGENCIES The Company is involved in claims and other legal actions arising out of the ordinary course of business. While the ultimate results and outcome cannot be determined, management does not expect that they will have a material adverse effect on the Company's results of operations or financial position. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein and the Company's Form 10-K for the year ended December 31, 1998 and the Company's current report on Form 8-K dated April 2, 1999. OVERVIEW Harbinger Corporation (the "Company") generates revenues from various sources, including revenues for services and license fees and royalties for software. Revenues for services principally include subscription fees for transactions on Harbinger.net, the Company's electronic commerce portal, software maintenance and implementation charges and professional service fees for consulting and training services. Subscription fees are based on a combination of monthly access charges and transaction-based usage charges and are recognized based on actual charges incurred each month. Software maintenance and implementation revenues represent recurring charges to customers and are deferred and recognized ratably over the service period. Revenues for professional services are based on actual services rendered and are recognized as services are performed. License fees for software are generally recognized upon shipment, net of estimated returns. Software revenues also include royalty revenues under distribution agreements with third parties which are recognized either on shipment of software to a distributor or upon sales to end users by a distributor depending on the terms of the distribution agreement. RESULTS OF OPERATIONS REVENUES Total revenues increased 11% to $33.5 million in the three months ended March 31, 1999 from $30.1 million in the same period in 1998. Revenues for services increased 28% to $25.4 million in the three months ended March 31, 1999 from $19.8 million in the same period in 1998, reflecting increases in professional services and maintenance revenues. Revenues from software license fees decreased 20% to $8.1 million in the three months ended March 31, 1999 from $10.2 million in the same period in 1998. The decrease in 1999 compared to 1998 was primarily attributable to the phase-out of certain non-strategic software products ("Sunset Products") and a reduction in the fees received from third party resellers of the Company's software products. 11 DIRECT COSTS Direct costs for services increased to $10.6 million in the three months ended March 31, 1999 from $7.0 million in the three months ended March 31, 1998. As a percentage of services revenues, these costs were 41.9% for the three months ended March 31, 1999 and 35.4% for the three months ended March 31, 1998. The increase in direct costs as a percentage of services revenues for the first quarter of 1999 compared to the first quarter of 1998 primarily reflects the effects of a higher mix of professional services revenues in the first quarter of 1999 and the effect of reallocating costs to Integration Activity Costs in 1998. Direct software costs increased to $1.1 million for the three months ended March 31, 1999 from $771,000 for the three months ended March 31, 1998. Direct software costs as a percentage of software revenues were 13.9% for the three months ended March 31, 1999 and 7.6% for the three months ended March 31, 1998. The increase in direct software costs as a percentage of software revenues for the first quarter of 1999 compared to the first quarter of 1998 primarily reflects the effects of increased amortization of capitalized software for certain newly released products, and to a lesser extent, write-off of outdated collateral materials, accompanied by the decreased revenues from Sunset Products. SELLING AND MARKETING Selling and marketing expenses increased 24% to $8.2 million, or 24.4% of revenues in the three months ended March 31, 1999, from $6.6 million, or 22.0% of revenues in the three months ended March 31, 1998. The increase in selling and marketing expenses as a percentage of revenues is primarily due to increased marketing programs in 1999 and the effect of reallocating costs to Integration Activity Costs in 1998. GENERAL AND ADMINISTRATIVE General and administrative expenses increased 19% to $6.6 million in the three months ended March 31, 1999 from $5.5 million in the three months ended March 31, 1998. As a percentage of revenues, these expenses increased to 19.6% of revenues in the three months ended March 31, 1999 from 18.3% of revenues in the three months ended March 31, 1998. The 1999 period includes a credit of $750,000 due to the receipt of an outstanding royalty receivable from a specific customer that had been written off in 1998. If this receipt had not occurred, general and administrative expenses would have been $7.3 million or 21.8% of revenues. The increase as a percentage of revenues is attributed to the effect of reallocating costs to Integration Activity Costs in 1998, and an increase in office space to accommodate expansion, an increase in infrastructure investments, principally in the Information Technology area, and an increase in compensation-related accruals in 1999. DEPRECIATION AND AMORTIZATION Depreciation and amortization increased 19% to $2.2 million in the three months ended March 31, 1999 from $1.9 million in the three months ended March 31, 1998. As a percentage of revenues, these expenses were 6.7% for the first quarter of 1999 and 6.2% for the first quarter of 1998. The increase in depreciation and amortization for the three months ended March 31, 1999 compared to 1998 is primarily associated with the purchase of computer hardware and software associated with the Company's increased investments in its information technology infrastructure. PRODUCT DEVELOPMENT Total expenditures for product development, including capitalized software development costs, increased to $4.1 million for the three months ended March 31, 1999 from $3.4 million for the three months ended March 31, 1998. Total expenses for product development increased to $3.2 million, for the three months ended March 31, 1999 from $2.5 million compared to the same period of 1998. As a percentage of revenues total product development expenses increased to 9.6% in the three months ended March 31, 1999 from 8.4% in the same period of 1998. The increase in 1999 is due to increased development of internet based products and the effect of reallocating costs to Integration Activity Costs in 1998. The Company capitalized software costs of $887,000 in 1999 and $869,000 in 1998. 12 CHARGE FOR PURCHASED IN-PROCESS PRODUCT DEVELOPMENT, WRITE-OFF OF SOFTWARE DEVELOPMENT COSTS, RESTRUCTURING, ACQUISITION RELATED AND OTHER CHARGES ("CHARGES") The Company incurred Charges of $27.0 million during the year ended December 31, 1998 relating to the costs of integrating its acquisition in 1998 and 1997 and restructuring in 1998. Approximately $4.1 million of the Charges consisted of an allocation of internal costs associated with personnel who performed integration-related activities associated with these acquisitions ("Integration Activity Costs"). The integration activities were completed by the end of 1998 and the internal resources and their associated costs may recur in their original expense categories in 1999. For the quarters ended March 31, 1999 and 1998, the Company incurred $0 and $8.0 million, respectively, in Charges, of which $2.0 million in 1998 was costs reclassified internally as Integration Activity Costs. (See Note 3 to the accompanying unaudited consolidated financial statements.) INTEREST INCOME, NET Interest income, net, decreased 31% to $898,000 for the three months ended March 31, 1999 from $1.3 million for the three months ended March 31, 1998 as a result of spending approximately $15.8 million to acquire common stock of the Company authorized in its on-going repurchase program. INCOME TAXES The Company recorded lower income tax expense of $113,000 for the three months ended March 31, 1999 as compared to $136,000 for the three months ended March 31, 1998, primarily as a result of the reduction of the valuation allowance. DISCONTINUED OPERATIONS In the third quarter of 1998, the Board of Director's approved the discontinuance of Trusted Link Procurement ("TLP") business. The $217,000 loss from discontinued operations is the result of reclassifying the net operating results of TLP for the three months ended March 31, 1998. (See Note 5 to the accompanying unaudited consolidated financial statements.) NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE Net income applicable to common shareholders increased to $2.3 million or $0.06 per share for the quarter ended March 31, 1999 from a loss of $1.3 million or ($0.03) per share for the quarter ended March 31, 1998. Net income, adjusted to exclude a specific $750,000 credit to general and administrative expense in the first quarter of 1999 and $8.0 million in Charges in the first quarter of 1998, net of the effect of income taxes at 39%, would have been $1.0 million or $0.3 per share for the first quarter of 1999, compared to $4.4 million or $0.10 per share in the same period in 1998, representing a 76% decrease in net income from 1998 to 1999. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital decreased $14.8 million to $64.5 million as of March 31, 1999 from $79.3 million as of December 31, 1998. In the three months ended March 31, 1999, cash provided by operating activities was $454,000 compared to $1.1 million for the three months ended March 31, 1998. The Company used net cash in investing activities of $3.9 million for the three months ended March 31, 1999 compared to $2.4 million for the three months ended March 31, 1998. The change in cash used in investing activities for the period ended March 31, 1999 compared to 1998 was primarily from increased net purchases of short-term investments. Cash used in financing activities of $15.3 million for the period ended March 31, 1999 was primarily for the repurchase of common stock. Cash provided by financing activities for the period ended March 31, 1998 was from the exercise of stock options and warrants and issuance of stock under the employee stock purchase plan. 2 13 Management expects the Company will continue to be able to fund its operations, investment needs and capital expenditures through cash flows generated from operations, cash on hand, borrowings under the Company's uncommitted credit facility and additional equity and debt capital. Several factors could have an impact on the Company's ongoing cash flows in the future, including the effects of the Company's ongoing common stock repurchase program, liquidation of liabilities incurred due to Charges and discontinued operations and anticipated outlays for the Company's ongoing effort to enhance and consolidate its information technology infrastructure. The Company does not believe that inflation has had a material impact on its business. However, there can be no assurance that Harbinger's business will not be affected by inflation in the future. YEAR 2000 COMPLIANCE Many currently installed computer systems and software products will not properly process date information in the time period leading up to, including and following the year 2000. These systems and products often store and process the year field of date information as two digit numbers, and misinterpret dates in the year 2000 and beyond as being dates in the year 1900 or subsequent years. This "Year 2000" issue impacts Harbinger both with respect to its customers as a developer and vendor of computer software products and services and internally for its information technology ("IT") and non-IT systems. The Company formed a Year 2000 Steering Committee in July 1998 to formally address the Company's Year 2000 issues, which formalized the Company's Year 2000 assessment program begun in March 1997. The Year 2000 Steering Committee has overseen the Company's Year 2000 Readiness Assessment Program, which includes establishing the Company's standard for Year 2000 Readiness, designing test parameters for its products, IT and non-IT systems, overseeing the Company's remediation program, including establishing priorities for remediation and allocating available resources, overseeing the communication of the status of the Company's efforts to its customers, and establishing contingency plans in the event the Company experiences Year 2000 disruptions. The Company describes its products and services as "Year 2000 Ready" when they have been successfully tested using the procedure proscribed in its Readiness Assessment Program. This procedure defines the criteria used to design tests that seek to determine the Year 2000 readiness of a product. Under the Company's criteria, a software product is Year 2000 Ready if it: 1. Correctly handles date information before, during, and after January 1, 2000, accepting date input, providing date output and performing calculation on dates or portions of dates. 2. Functions accurately and without interruption before, during and after January 1, 2000 without changes in operation associated with the advent of the new century assuming correct configuration. 3. Where appropriate, responds to two-digit date input in a way that resolves the ambiguity as to century in a disclosed, defined and pre-determined manner. 4. Stores and provides output of date information in ways that are unambiguous as to century. 5. Manages the leap year occurring in the year 2000, following the quad-centennial rule. As of March 31, 1999 Company management estimates that approximately 95% of its product readiness testing has been completed. While most of the Company's products are presently Year 2000 Ready, the Company currently estimates that all of its continuing products will be available to customers in a Year 2000 Ready version by the end of the first quarter of 1999. Certain of the Company's customers are currently using legacy versions of the Company's products for which a Year 2000 Ready version will not be developed. The Company has developed migration plans to move such customers to functionally similar Year 2000 Ready products. The Company is also in the process of implementing a website on the Internet that will include a general overview of the Company's Readiness Assessment Program, including a list of products and the applicable Year 2000 Ready version numbers of such products. The Company is presently engaged in a significant upgrade of substantially all of its core IT systems, including those related to sales, customer service, human resources, finance, accounting and other enterprise resource planning functions, as a result of its growth in recent years. The Company believes that the upgraded systems, which it expects to have substantially implemented by mid-year 1999, are all Year 2000 Ready. The Company is reviewing its remaining IT systems for Year 2000 Readiness, and expects to modify, replace or discontinue the use of non-compliant systems before the end of 1999. In addition, the Company is in the process of evaluating its Year 2000 readiness with respect to non-IT systems, including systems embedded in the Company's communications and office facilities. In many cases these facilities have been recently upgraded or are scheduled to be upgraded before year-end 1999 as a result of the Company's growth in recent years. The Company is in the process of distributing surveys to its principal IT and non-IT systems and services vendors soliciting information on their Year 2000 Readiness as part of this review. The Company is also surveying its vendors' websites for additional related information. The majority of the work performed for the Company's Year 2000 Readiness Assessment Program has been completed by the Company's staff. Additionally, the Company engaged outside advisors to evaluate the Readiness Assessment Program and to participate in certain elements of product testing. The total costs for completing the Year 2000 Readiness Assessment Program, including modifications to the Company's software products, is estimated to be between $1 million and $2 million, funded through the Company's internal operating cash flows. This cost does not include the cost for new software, or for modifications to existing software, for the Company's core IT and non-IT systems, as these projects were not accelerated due to the Year 2000 issue. Approximately $100,000 to $200,000 in cost remains to be incurred to complete the Company's Readiness Assessment Program. The Company believes that the purchasing patterns of customers and potential customers may be affected by Year 2000 issues in a variety of ways. Many companies are expending significant resources to correct or patch their current software systems for Year 2000 compliance. These expenditures may result in reduced funds available to purchase software products such as those offered by the Company. Potential customers may also choose to defer purchasing Year 2000 compliant products until they believe it is absolutely necessary, thus resulting in potentially stalled market sales within the industry. Conversely, Year 2000 issues may cause other companies to accelerate purchases, thereby causing an increase in short-term demand and a consequent decrease in long-term demand for software products. In addition, Year 2000 issues could cause a significant number of companies, including current Company customers, to reevaluate their current software needs, and as a result switch to other systems or suppliers. Any of the foregoing could result in a material adverse effect on the Company's business, operating results and financial condition. At present the Company has only preliminarily discussed contingency plans in the event that Year 2000 non-compliance issues materialize. The Company expects to formalize its contingency plans prior to year-end 1999. In the case of certain of the Company's value-added network operations, it will be difficult for the Company to seamlessly implement alternative service arrangements due to the nature and complexity of the customer interface. While the Company believes that its Readiness Assessment Program is addressing the risks specific to the Company for the Year 2000 issue, including its operations in markets outside of the United States, it cannot be assured that events will not occur that could have a material adverse impact on its business, operating results and financial condition. Such events include the risk of lawsuits from customers and the inability to process data internally on its IT systems. Further, the Company is aware of the risk that domestic and international third parties, including vendors and customers of the Company, will not adequately address the Year 2000 problem and the resultant potential adverse impact on the Company. Regardless of whether the Company's products are Year 2000 compliant, there can be no assurance that customers will not assert Year 2000 related claims against the Company. FORWARD LOOKING STATEMENTS Other than historical information contained herein, certain statements included in this report may constitute "forward looking" statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 related to the Company that involve risks and uncertainties including, but not limited to, fluctuation of operating results, the ability to compete successfully, the ability to integrate acquired companies, the impact of Year 2000 compliance and other risks. For further information about these and other factors that could affect the Company's future results, please see Exhibit 99.1 to the Company's most recent Form 10-K for the year ended December 31, 1998 filed with the Securities and Exchange Commission. Investors are cautioned that any forward looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those contemplated by such forward looking statements. The Company undertakes no obligation to update or revise forward looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a) The Annual Meeting of Shareholders (the "Annual Meeting") of Harbinger Corporation (the "Company") was held on April 30, 1999. There were present at said meeting in person or by proxy, shareholders of the Corporation who were the holders of 33,123,733 shares or 82.0% of the Common Stock entitled to vote. b) The following directors were elected to hold office for a term as designated below or until their successors are elected and qualified, with the vote for each director being reflected below: 14
VOTES FOR VOTES WITHHELD Elected to hold office until the 2002 Annual Meeting: C. Tycho Howle 33,029,801 93,932 William D. Savoy 33,026,554 97,179 John D. Lowenberg 33,024,819 98,914 Benn R. Konsynski 33,024,819 98,914
The affirmative vote of the holders of a plurality of the outstanding shares of Common Stock represented at the Annual Meeting was required to elect each director. The Directors of the Company continuing in office until the 2001 Annual Meeting are as follows: David T. Leach, Ad Nederlof, and David Hildes. The directors of the Company continuing in office until the 2000 Annual Meeting are as follows: Klaus Neugebauer, Stuart L. Bell, William B. King, and James M. Travers. c) The proposal to amend the Company's 1996 Stock Option Plan was approved with 30,530,592 affirmative votes, 2,422,284 negative votes cast and 170,857 abstentions. An affirmative vote of the holders of a majority of the outstanding shares of Common Stock represented at the annual meeting was required to approve the amendment. d) The appointment of KPMG LLP as independent public accountants to audit the accounts of the Company and its subsidiaries for the year ending December 31, 1999, was ratified with the votes as follows: 33,049,741 affirmative votes, 45,059 negative votes cast and 28,933 abstentions. An affirmative vote of the holders of a majority of the outstanding shares of Common Stock represented at the annual meeting was required to ratify the appointment of KPMG LLP. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibit 10.1 Fourth Amendment to the Harbinger Corporation Stock Option Plan Exhibit 10.2 Employment Agreement with Douglas L. Roberts Exhibit 11.1 Computation of Earnings per Share Exhibit 27.1 Financial Data Schedule Exhibit 27.2 Restated Financial Data Schedule (b) Reports on Form 8-K Form 8-K dated April 2, 1999 reporting under Item 5 and Item 7 (c) the text of a press release dated March 22, 1999 concerning the Board of Directors approving the purchase of an additional (10%) of the Company's outstanding common shares under its existing stock repurchase program.
15 S I G N A T U R E S 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.
HARBINGER CORPORATION Date: May 17, 1999 /s/ C. Tycho Howle ----------------------------------------------- ----------------------------------- C. Tycho Howle Chief Executive Officer (Principal Executive Officer) Date: May 17, 1999 /s/ James K. McCormick ----------------------------------------------- ----------------------------------- James K. McCormick Chief Financial Officer (Principal Financial Officer; Principal Accounting Officer)
EX-10.1 2 FOURTH AMENDMENT TO HARBINGER STOCK OPTION PLAN 1 EXHIBIT 10.1 FOURTH AMENDMENT TO THE HARBINGER CORPORATION 1996 STOCK OPTION PLAN THIS FOURTH AMENDMENT TO THE HARBINGER CORPORATION 1996 STOCK OPTION PLAN (the "Amendment") is made effective as of the _____ day of May, 1999 (the "Effective Date"), by HARBINGER CORPORATION, a corporation organized and doing business under the laws of the State of Georgia (the "Company"). All capitalized terms in this Amendment have the meaning ascribed to such term as in the Harbinger Corporation 1996 Stock Option Plan (the "Plan"), unless otherwise stated herein. W I T N E S S E T H: WHEREAS, the First Amendment to the Plan was approved by the shareholders of the Company at the 1997 Annual Meeting of Shareholders; WHEREAS, the Second Amendment to the Plan was approved by the shareholders of the Company at the Special Meeting of Shareholders held on December 18, 1997; WHEREAS, the Third Amendment to the Plan was approved by the shareholders of the Company at the 1998 Annual Meeting of Shareholders; and WHEREAS, the Board of Directors of the Company desires to amend the Plan to add certain provisions to insure compliance with the safe harbor provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder; NOW, THEREFORE, in consideration of the premises and mutual promises contained herein, the Plan is hereby amended as follows: SECTION 1. Section 3.1 of the Plan is hereby amended by deleting the first sentence of Section 3.1 of the Plan in its entirety and substituting in lieu thereof the following: "3.1 Shares Reserved for Issuance. Subject to any antidilution adjustment pursuant to Section 3.2, the maximum number of Shares that may be subject to Options granted hereunder shall not exceed 8,737,500, plus the number of Prior Plan Shares; provided, however, the maximum number of Shares with respect to which Options may be granted to any individual grantee in any calendar year shall be 1,000,000." SECTION 2. Section 5 of the Plan is hereby amended by deleting the first sentence of Section 2 in its entirety and substituting in lieu thereof the following: "This Plan shall be administered by the Committee, which shall consist of three (3) or more directors appointed by the Board, each of whom is an "outside director" within the meaning of Section 162(m) of the Code and is not while a member of the Committee, or was not during the one (1) year prior to serving as a member of the Committee, eligible to receive equity securities of the Company, or any affiliate of the Company, pursuant to this Plan, the Prior Plan, or any other plan of the Company or any affiliate of the Company, except as may be permitted under Section 16(b)(3) of the Exchange Act." SECTION 3. Except as specifically amended by this Fourth Amendment, the Plan shall remain in full force and effect as prior to this Fourth Amendment. 2 IN WITNESS WHEREOF, the Company has caused this FOURTH AMENDMENT TO THE HARBINGER CORPORATION 1996 STOCK OPTION PLAN to be executed on the Effective Date. HARBINGER CORPORATION By: ----------------------------- ATTEST: By: ---------------------------- EX-10.2 3 EMPLOYMENT AGREEMENT WITH DOUGLAS L. ROBERTS 1 EXHIBIT 10.2 EMPLOYMENT AND CONFIDENTIALITY AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of the day of April 1999, by and between HARBINGER CORPORATION ("HC"), including its wholly owned affiliates and Douglas Roberts ("Employee"), an individual. For and in consideration of the mutual covenants described below, the parties hereto agree as follows: 1. EMPLOYMENT. HC agrees to employ or continue to employ Employee, and Employee agrees to accept and continue such employment, upon the following terms and conditions. 2. DUTIES. (a) Employee shall assume the responsibilities and perform the Duties specified in Exhibit A ("Duties"). Such Duties may be revised from time to time at the sole discretion of HC. Employee agrees to devote his or her full time and energy to the furtherance of the business of HC and shall not during the term hereof work or perform services in any advisory or other capacity for any individual, firm, company, or corporation other than for HC without HC's prior written consent. This Agreement may be supplemented from time to time by rules and regulations of employment issued by HC, including, without limitation, such rules and regulations described in the HC employee handbook, and Employee agrees to adhere to these rules and regulations. (b) If Employee desires to perform any services during the term hereof for anyone other than HC, whether or not Employee is compensated, then Employee agrees to contact an officer of HC to discuss this matter. HC will review the request and advise Employee of HC's approval or disapproval of the proposed outside work, in HC's sole discretion. In making its decision, HC may consider such factors as whether the outside work may be harmful to the business of HC or interfere with Employee's ability to satisfactorily discharge his or her Duties, whether the outside work is based directly or indirectly on a business practice of HC or idea that was conceived by Employee while on HC's payroll, or whether such outside work could result in a violation of any covenants of Employee in this Agreement. In this case, HC will notify Employee of HC's approval or disapproval of such request to perform outside work within a reasonable period of time after HC is notified by Employee of the request to perform such services. Unless HC grants such approval in writing, Employee agrees to refrain from such outside work. 3. COMPENSATION. HC shall pay as compensation for all the services to be rendered the salary and additional compensation, if any, described in Exhibit B (the "Employee Compensation") and as the Employee Compensation may be determined by HC in its sole discretion from time to time. HC's obligation to pay Employee any Employee Compensation shall cease upon termination of Employee's employment with HC. Employee's annual salary shall be prorated on a daily basis for the years in which Employee commences and terminates his or her employment relationship with HC. 3. TERM AND TERMINATION. This Agreement shall be effective upon execution by the parties and shall remain in full force and effect for an indefinite period of time. The parties agree that Employee's term of employment may be terminated at any time, for any reason or for no reason, for cause or not for cause, with or without notice, by HC or Employee. Upon termination of employment for any reason, Employee shall return immediately to HC all documents, property, and other records of HC, and all copies thereof, within Employee's possession, custody or control, including but not limited to any materials containing any Trade Secrets or Confidential Information (as defined below) or any portion thereof. 4. OWNERSHIP. (a) For purposes of this Agreement, "Work Product" shall mean the data, materials, documentation, computer programs, inventions (whether or not patentable), and all works of authorship, including all worldwide rights therein under patent, copyright, trade secret, confidential information, or other property right, created or developed in whole or in part by Employee, whether prior to the date of this Agreement or in the future, either (i) while retained by HC and that have been or will be paid for by HC, or (ii) while employed by HC (whether developed during work hours or not). All Work Product shall be considered work made for hire by the Employee and owned by HC. If any of the Work Product may not, by operation of law, be considered work made for hire by Employee for HC, or if ownership of all right, title, and interest of the intellectual property rights therein shall not otherwise vest exclusively in HC, Employee hereby assigns to HC, and upon the future creation thereof automatically assigns to HC, without further consideration, the ownership of all Work Product. HC shall have the right to obtain and hold in its own name copyrights, patents, registrations, and any other protection available in the Work Product. Employee agrees to perform, during or after Employee's employment, such further acts as may be 2 necessary or desirable to transfer, perfect, and defend HC's ownership of the Work Product that are reasonably requested by HC. (b) Employee agrees that during the term of employment, any money or other remuneration received by Employee for services rendered to a customer or potential customer of HC shall be the property of HC. 5. TRADE SECRETS AND CONFIDENTIAL INFORMATION. (a) HC may disclose to Employee certain Trade Secrets and Confidential Information (defined below). Employee acknowledges and agrees that the Trade Secrets and Confidential Information are the sole and exclusive property of HC (or a third party providing such information to HC) and that HC or such third party owns all worldwide rights therein under patent, copyright, trade secret, confidential information, or other property right. Employee acknowledges and agrees that the disclosure of the Trade Secrets and Confidential Information to Employee does not confer upon Employee any license, interest or rights of any kind in or to the Trade Secrets or Confidential Information. Employee may use the Trade Secrets and Confidential Information solely for the benefit of HC while Employee is employed or retained by HC. Except in the performance of services for HC, Employee will hold in confidence and not reproduce, distribute, transmit, reverse engineer, decompile, disassemble, or transfer, directly or indirectly, in any form, by any means, or for any purpose, the Trade Secrets or the Confidential Information or any portion thereof. Employee agrees to return to HC, upon request by HC, the Trade Secrets and Confidential Information and all materials relating thereto. (b) Employee's obligations under this Agreement with regard to the Trade Secrets shall remain in effect for as long as such information shall remain a trade secret under applicable law. Employee acknowledges that its obligations with regard to the Confidential Information shall remain in effect while Employee is employed or retained by HC and for three (3) years thereafter. As used herein, "Trade Secrets" means information of HC, its licensors, suppliers, customers, or prospective licensors or customers, including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers, which (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. As used herein, "Confidential Information" means information, other than Trade Secrets, that is of value to its owner and is treated as confidential, including, but not limited to, future business plans, licensing strategies, advertising campaigns, information regarding executives and employees, and the terms and conditions of this Agreement. 6. CUSTOMER NON-SOLICITATION. Employee agrees that for a period of eighteen (18) months immediately following termination of Employee's employment with HC for any reason, including, without limitation, voluntary resignation from employment by Employee ("Non-Solicitation Period"), Employee shall not, on Employee's own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit, contact, call upon, communicate with or attempt to communicate with any customer or prospect of HC, or any representative of any customer or prospect of HC, with a view to sale or providing of any deliverable or service competitive or potentially competitive with any deliverable or service sold or provided or under development by HC during the time of two (2) years immediately preceding cessation of Employee's employment with HC, provided that the restrictions set forth in this paragraph shall apply only to customers or prospects of HC, or representatives of customers or prospects of HC, with which Employee had contact during such two (2) year period. The actions prohibited by this paragraph shall not be engaged in by Employee directly or indirectly, whether as manager, salesperson, agent, technical support, sales, or service representative, or otherwise. 7. EMPLOYEE NON-SOLICITATION. Employee agrees that Employee shall not call upon, solicit, recruit, or assist others in calling upon, recruiting or soliciting any person who is or was an employee of HC within the Non-Solicitation Period, for the purpose of having such person work in any other corporation, association, entity, or business engaged in providing any of the following: (i) development and operation of computer networks (the "Hosts") to facilitate electronic data interchange and electronic commerce ("EDI") transactions and cash management services; (ii) development, marketing, distribution, and licensing of personal computer, workstation and networking software to facilitate EDI and transaction processing and other communications with the Hosts; (iii) development, marketing, distribution, and licensing of software products for operation on personal computers and workstations relating to the performance of cash management services, including balance and transaction reporting, transfers, stop payments, account reconciliation, check writing, financial record keeping, messaging, and information services; and (iv) consulting, training, and implementation of the products and services described in (i), (ii) and (iii) above (collectively the "Company Business"). 8. NONCOMPETITION. Employee agrees that, without the prior written consent of HC, Employee shall not, so long as Employee is employed hereunder and for a period of one (1) year 3 thereafter within the area described in Exhibit C (the "Territory"), directly or indirectly perform the Duties on behalf of any person, firm, corporation, or other entity in the Company Business, if the Company is also then still engaged in the Company Business. 9. WARRANTIES OF EMPLOYEE. (a) Employee warrants to HC that (i) Employee is not presently under any contract or agreement with any party that will prevent Employee from performing the Duties assigned by HC, and (ii) Employee is not in breach of any agreement with respect to any trade secrets or confidential information owned by any other party. (b) Employee agrees to indemnify and hold harmless HC, any affiliated corporation, and their respective shareholders, directors, officers, agents, and employees, from and against any and all liability, including payment of attorneys' fees, arising directly or indirectly from a violation of Section 10(a). 10. EQUITABLE RELIEF. The parties to this Agreement acknowledge that a breach by Employee of any of the terms or conditions of this Agreement will result in irrevocable harm to HC and that the remedies at law for such breach may not adequately compensate HC for damages suffered. Accordingly, Employee agrees that in the event of such breach, HC shall be entitled to injunctive relief or such other equitable remedy as a court of competent jurisdiction may provide. Nothing contained herein will be construed to limit HC's right to any remedies at law, including the recovery of damages for breach of this Agreement. 11. SEVERABILITY. If any provision or part of any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, such holding shall not affect the enforceability of any other provisions or parts thereof, and all other provisions and parts thereof shall continue in full force and effect. 12. MISCELLANEOUS. This Agreement shall not be amended or modified except by a writing executed by both parties. This Agreement shall be binding upon and inure to the benefit of HC and its successors and assigns. Due to the personal nature of this Agreement, Employee shall not have the right to assign Employee's rights or obligations under this Agreement without the prior written consent of HC. This Agreement shall be governed by the laws of the States of Georgia, Michigan, Texas, and California without regard to its rules governing conflicts of law. This Agreement and the attached Exhibits represent the entire understanding of the parties concerning the subject matter hereof and supersede all prior communications, agreements and understandings, whether oral or written, relating to the subject matter hereof. All communications required or otherwise provided under this Agreement shall be in writing and shall be deemed given when delivered to the address provided below such party's signature (as may be amended by notice from time to time), by hand, by courier or express mail, or by registered or certified United States mail, return receipt requested, postage prepaid. The exhibits attached hereto are incorporated herein by this reference. IN WITNESS WHEREOF, the parties hereto have executed this Agreement and affixed their hands and seals effective as of the date first above written. HARBINGER CORPORATION By: ----------------------------------------------- Title: Michael Lieb, Director of Human Resources Date: --------------------------------------------- 1277 Lenox Park Boulevard Atlanta, Georgia 30319 EMPLOYEE: Douglas Roberts - -------------------------------------------------- Signature Date: --------------------------------------------- Address: ------------------------------------------ - -------------------------------------------------- - -------------------------------------------------- EX-11.1 4 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11.1 HARBINGER CORPORATION COMPUTATION OF EARNINGS PER SHARE (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended March 31 ---------------------- 1999 1998 ------- -------- Basic: Net income (loss) available to common shareholders.................................... $ 2,341 $ (1,338) ======= ======== Weighted average number of common shares outstanding.............................. 39,879 41,046 ======= ======== Basic earnings (loss) per share................... $ 0.06 $ (0.03) ======= ======== Diluted: Net income (loss) available to common shareholders................................... $ 2,341 $ (1,338) ======= ======== Weighted average number of common shares outstanding.............................. 39,879 41,046 Effect of potentially dilutive stock options...... 567 -- Effect of potentially dilutive warrants........... 5 -- ------- -------- Weighted average number of common shares outstanding assuming dilution............ 40,451 41,046 ======= ======== Diluted earnings (loss) per share................. $ 0.06 $ (0.03) ======= ========
Computational Note: In connection with the computation of diluted earnings per share for the quarter ended March 31, 1998 all common share equivalents have been excluded because their impact on the Company's net loss per share is antidilutive. EX-27.1 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF HARBINGER CORPORATION FOR THE QUARTER ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 14,109 59,901 37,926 5,464 0 114,238 47,651 23,944 156,164 49,731 0 0 0 4 106,429 156,164 8,131 33,503 1,131 11,757 20,190 0 0 2,454 113 2,341 0 0 0 2,341 .06 .06
EX-27.2 6 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS OF HARBINGER CORPORATION FOR THE QUARTER ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 75,254 31,050 32,988 2,773 0 149,862 34,944 16,164 186,421 51,070 0 0 0 4 135,347 186,421 10,203 30,052 771 7,804 24,544 0 27 (985) 136 (1,121) (217) 0 0 (1,338) (.03) (.03)
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