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As filed with the Securities and Exchange Commission on November 10, 1998
Registration No. 333-61727
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
HYPERION SOLUTIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-0277772
(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation or Organization) Number)
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
(408) 744-9500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STEPHEN V. IMBLER
CHIEF FINANCIAL OFFICER
HYPERION SOLUTIONS CORPORATION
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
(408) 744-9500
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
ROBERT V. GUNDERSON, JR., ESQ.
STEVEN M. SPURLOCK, ESQ.
GUNDERSON DETTMER STOUGH
VILLENEUVE FRANKLIN & HACHIGIAN, LLP
155 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 321-2400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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The information contained herein is subject to change, completion or amendment
without notice. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
Subject to Completion, dated November 10, 1998
16,855 SHARES
HYPERION SOLUTIONS CORPORATION
COMMON STOCK
-----------------
This Prospectus relates to the public offering, which is not being
underwritten, of 16,855 shares (the "Shares") of Common Stock, $0.001 par value
(the "Common Stock") of Hyperion Solutions Corporation ("Hyperion Solutions" or
the "Company").
The Shares may be offered by certain stockholders of the Company (the
"Selling Stockholders") from time to time in transactions on the Nasdaq National
Market, in privately negotiated transactions, or by a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Selling Stockholders" and "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company has agreed to bear certain
expenses in connection with the registration and sale of the Shares being
offered by the Selling Stockholders.
On November 9, 1998, the closing sale price of the Company's Common
Stock on the Nasdaq National Market was $33 1/16 per share. The Common Stock is
traded on the Nasdaq National Market under the symbol "HYSL."
-----------------
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------------
The date of this Prospectus is ______________, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
AVAILABLE INFORMATION........................................................................1
INFORMATION INCORPORATED BY REFERENCE........................................................2
THE COMPANY..................................................................................3
RISK FACTORS.................................................................................4
USE OF PROCEEDS.............................................................................16
DIVIDEND POLICY.............................................................................16
SELLING STOCKHOLDERS........................................................................17
DESCRIPTION OF CAPITAL STOCK................................................................19
PLAN OF DISTRIBUTION........................................................................24
LEGAL MATTERS...............................................................................25
EXPERTS.....................................................................................25
</TABLE>
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Arbor, Arbor Software, Hyperion Essbase, Hyperion, Hyperion Software,
the Hyperion Software Logo, Hyperion Admin, Hyperion Analyst, Hyperion Assets,
Hyperion Financials, Hyperion Forms, Hyperion Ledger, Hyperion OLAP, Hyperion
OnTrack, Hyperion Payables, Hyperion Pillar, Hyperion Receivables, Hyperion
Reporting, Hyperion Retrieve, Hyperion Tools, Business Intelligence, Financial
Intelligence, IMRS, LedgerLink, Micro Control and Pillar are registered
trademarks of the Company, and Essbase-Ready, Driving Business Performance,
WIRED for OLAP, Hyperion Analytical Ledger, Hyperion Enterprise, Hyperion MBA,
Hyperion Purchasing, Hyperion Ready, Build&Link, Business Analytics, ERPLINK and
Listen to your Business are trademarks of the Company or its subsidiaries.
MARVEL COMICS, SPIDER-MAN; TM & (C) 1988 Marvel Characters, Inc. All rights
reserved. All other trademarks or trade names referred to herein are the
property of their respective owners.
-----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information filed by
the Company may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the Commission's following Regional
Offices: Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 7 World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
at prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549-1004. Reports, proxy
and information statements and other information filed electronically by the
Company with the Commission are available at the Commission's world wide web
site at http://www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments, exhibits and schedules, referred
to as the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act") with the Commission, with respect to the Shares offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and to
which reference is hereby made. Statements contained in this Prospectus
regarding the contents of any contract or other document to which reference is
made are not necessarily complete, and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in its entirety by such
reference. The Registration Statement, including the exhibits and schedules
thereto, may be inspected at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such material may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
upon the payment of the fees prescribed by the Commission.
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INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the 1934 Act are hereby incorporated by reference in this
Prospectus and made a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended
March 31, 1998, filed with the Commission on June 10, 1998;
2. The Company's Current Report on Form 8-K, dated May 25, 1998,
filed with the Commission on May 29, 1998, and as amended on
June 25, 1998;
3. The Company's Current Report on Form 8-K, dated June 12, 1998,
filed with the Commission on June 17, 1998;
4. The Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1998, filed with the Commission on August
13, 1998.
5. The Company's Current Report on Form 8-K, dated July 31,
1998, filed with the Commission on August 10, 1998;
6. The Company's Current Report on Form 8-K, dated August 24,
1998, filed with the Commission on October 13, 1998.
7. The description of the Company's Capital Stock contained in the
Company's Registration Statement filed on Form 8-A, dated
October 9, 1995, and as amended on Form 8-A/A, dated November 3,
1995.
8. The Company's definitive proxy statement included in the
Registration Statement on Form S-4 filed with the Commission on
June 18, 1998, as amended.
All documents filed with the Commission pursuant to Section 13(a),
13(c),14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as modified or superseded, to constitute a part of this Prospectus.
Upon written or oral request, the Company will provide without charge to
each person to whom a copy of the Prospectus is delivered a copy of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference
herein). Requests should be directed to Investor Relations, Hyperion Solutions
Corporation, 1344 Crossman Avenue, Sunnyvale, California 94089, (408) 744-9500.
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NO DEALER, SALESPERSON, SELLING STOCKHOLDER OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, included or
incorporated by reference in this Prospectus.
THE COMPANY
Hyperion develops, markets and supports comprehensive analytic
application software for the workgroup, division, or extended enterprise. The
Company's offerings include packaged analytic applications that are quickly
configured and deployed, an industry leading OLAP (on-line analytical
processing) server used by IT and end-user departments to build fully
customized analytic applications, and a range of end-user reporting, analysis,
and presentation tools. Packaged analytic applications from Hyperion include
the ability to draw data from multiple sources across the enterprise for tasks
such as reporting, ad hoc analysis, consolidation, planning, and budgeting. The
Company's solutions are used by large organizations worldwide.
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RISK FACTORS
This Prospectus contains or incorporates by reference forward-looking
statements that involve risks and uncertainties. The statements contained or
incorporated by reference in this Prospectus that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including without limitation statements regarding the Company's
expectations, beliefs, intentions or strategies regarding the future. All
forward-looking statements included in this document are based on information
available to the Company on the date hereof, and all forward-looking statements
in documents incorporated by reference are based on information available to the
Company as of the date of such documents. The Company assumes no obligation to
update any such forward-looking statements. The Company's actual results may
differ materially from those discussed in the forward-looking statements as a
result of certain factors, including those set forth in the following risk
factors and elsewhere in this Prospectus and incorporated by reference herein.
In evaluating the Company's business, prospective investors should carefully
consider the following factors in addition to the other information set forth in
this Prospectus and incorporated by reference herein.
UNCERTAINTY RELATING TO INTEGRATION OF MULTIPLE OPERATIONS AND PRODUCT LINES;
MANAGEMENT OF GROWTH
On August 24, 1998, the Company's merger with Hyperion Software Corporation
was completed (the "Merger"). As a combined entity, the Company expects to
undergo significant efforts to integrate the combined businesses and personnel.
The integration of Hyperion Software Corporation's and the Company's business
and personnel following the Merger presents difficult challenges for the
management of the combined company. The combined company is more complex and
diverse than either company individually, and the combination and continued
operation of their business operations is expected to be difficult. Although
management and the Board of Directors of the Company believe that the
integration of the two companies has been and will continue to be effected in a
manner that realizes the value of the combined company, the management of the
combined company has limited experience in combinations of this complexity or
size. Accordingly, there can be no assurance that the process of effecting the
business integration can be effectively managed to realize the synergies
anticipated to result therefrom.
The Company and Hyperion Software Corporation entered into the Merger,
among other reasons, in order to achieve potential mutual benefits from
combining each of their respective expertise, product lines and distribution
channels for the enterprise software market. Realization of these potential
benefits requires, among other things, continued integration of the companies'
respective product offerings and coordinating the combined company's sales and
marketing and research and development efforts. As a result of the Merger, the
Company has different systems and procedures in many operational areas that must
be rationalized and integrated. There can be no assurance that such integration
will continue to be accomplished effectively, expeditiously or efficiently. The
difficulties of such integration is amplified by the necessity of coordinating
geographically separated divisions, integrating personnel with disparate
business backgrounds and combining different corporate cultures. The integration
of certain operations requires the dedication of management resources that has
distracted and is likely to continue to temporarily distract attention from the
day-to-day business of the Company. The business of the Company may also be
disrupted by employee uncertainty and lack of focus during such integration.
There can also be no assurance that the Company will be able to retain all of
its key technical, sales and other personnel. Failure to effectively accomplish
the integration of the operations of the Company and Hyperion Software
Corporation could have a material adverse effect on the Company's business,
operating results and financial condition. Moreover, uncertainty in the
marketplace or customer hesitation relating to the integration could negatively
affect the Company's business, operating results and financial condition.
The Company has experienced periods of rapid growth and expansion that has
placed and will continue to place significant strains upon the Company's
management systems and resources. The Company's ability to compete effectively
and to manage future growth, if any, will require the Company to continue to
implement and improve operational, financial and management information systems
on a timely basis and to expand, train, motivate and manage its work force.
There can be no assurance that the Company's personnel, systems, procedures and
controls will be adequate to support the Company's operations.
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FLUCTUATIONS IN QUARTERLY RESULTS; FUTURE OPERATING RESULTS UNCERTAIN
It is anticipated that the quarterly operating results of the Company could
vary significantly in the future depending on a number of factors, including:
(i) demand for the Company's software products; (ii) the number, timing and
significance of product enhancements and new product announcements by the
Company and its current or future competitors; (iii) changes in pricing policies
by the Company or its competitors; (iv) the level of price and product
competition; (v) unanticipated events or announcements relating to the
post-Merger integration; (vi) the integration of newly acquired products,
technologies and businesses, if any, by the Company; (vii) the impact of
acquisitions by competitors and indirect channel partners; (viii) changes in the
mix of indirect channels through which the Company's products are offered; (ix)
customer order deferrals in anticipation of enhancements to the Company's
products or enhancements or new products of competitors; (x) the ability of the
Company to develop, introduce and market new and enhanced versions of its
enterprise software and complementary products on a timely basis; (xi) changes
in the Company's sales incentive strategy; (xii) the timing of revenue
recognition under the Company's agreements and changes in accounting standards
with respect to revenue recognition; (xiii) the size, timing and structure of
significant licenses; (xiv) changes in the Company's strategy; (xv) the level of
the Company's international revenues; (xvi) the renewal of maintenance and
support agreements; (xvii) product life cycles; (xviii) software defects and
other product quality problems; (xix) management and other personnel changes;
(xx) changes in the level of operating expenses; (xxi) foreign currency exchange
rates; and (xxii) general domestic and international economic and political
conditions. In addition, it is anticipated that the quarterly operating results
of the Company could vary significantly in the future depending on the
successful development and marketing of platform-specific versions of the
Company's products by certain third parties that independently market such
versions. The operating results of many software companies reflect seasonal
trends, and the Company's business, operating results and financial condition
may experience comparatively slower growth in its first fiscal quarter and
summer months. The Company sells substantially more product towards the end of
each quarter, particularly in the last two weeks of the quarter, due in part to
established buying patterns within the software industry. The Company
experiences traditionally slow purchase activity in the summer months, and also
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expects to experience reduced purchase activity in the corporate financial
applications market during the quarter ending March 31, as many potential
customers are busy with their year-end closing and financial reporting. In any
case, due to the relatively fixed nature of certain costs, including personnel
and facilities expenses, a decline or shortfall in quarterly and/or annual
revenues typically results in lower profitability or may result in losses. As a
result, the magnitude of any quarterly fluctuations may not become evident until
the last few days of a quarter. In addition, the Company's orders are typically
shipped shortly after receipt, and as a result the Company has had limited
ability to predict quarterly revenues at the beginning of any quarter. As a
result, the Company's license revenues in any quarter are substantially
dependent on orders booked and shipped in that quarter.
Due to all of the foregoing, the Company's revenues for any future quarter
are not predictable, with any significant degree of accuracy. Quarterly revenues
are also difficult to forecast because the Company's sales cycle, from initial
evaluation to license and maintenance and support purchases, varies
substantially from customer to customer. Accordingly, 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.
Although the Company has experienced significant growth in total revenues in
recent years, the Company does not believe that historical growth rates are
sustainable. Accordingly, the rate at which each of the Company and Hyperion
Software Corporation has grown in the past should not be considered indicative
of future revenue growth, if any, or future operating results of the combined
company.
The Company's expense levels are based in significant part on the Company's
expectations of future revenues and therefore are higher than past expense
levels, and are relatively fixed in the short run. If revenue levels are below
expectations, net income is likely to be disproportionately affected. There can
be no assurance that the Company will be able to achieve or maintain
profitability on a quarterly or annual basis. In addition, it is possible that
in some future quarter the Company's operating results will be below the
expectations of public market analysts or investors. In such event, or in the
event that adverse conditions prevail or are perceived to prevail generally or
with respect to the Company's business, the price of the Company's Common Stock
would likely be materially adversely affected.
COMPETITION
The markets in which the Company competes are intensely competitive, highly
fragmented and characterized by rapidly changing technology and evolving
standards. The Company's current and potential competitors offer a variety of
planning and analysis software solutions and generally fall within five
categories: (i) vendors of multidimensional database and analysis software; (ii)
vendors of dedicated software applications for budgeting and financial
consolidation; (iii) vendors of relational/on-line analytical processing
database software; (iv) vendors of financial analytic applications and software
tools; and (v) in-house IT departments of potential customers. Many of the
Company's existing and potential customers utilize legacy software developed
internally for mainframes or minicomputers. The market for comprehensive
analytic application software for the working group, division of extended
enterprise is still an emerging one. As markets develop for products of the
Company, additional competitors may enter or expand into those markets and
competition may intensify.
The Company has experienced, and it is anticipated that the Company will
continue to experience, increased competition from current and potential
competitors, many of whom have significantly greater financial, technical,
marketing and other resources than the Company. Such competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements or devote greater resources to the development, promotion and sale
of their products than the Company. Also, certain current and potential
competitors have greater name recognition or more extensive customer bases that
could be leveraged, thereby gaining market share to the Company's detriment. The
Company expects additional competition as other established and emerging
companies enter into the enterprise software market and new products and
technologies are
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introduced. In addition, as the Company develops and enhances its enterprise
software and complementary products, the resulting new functionality may
duplicate the functionality of, and thus compete with, other products offered by
indirect channel partners. Increased competition could result in price
reductions, fewer customer orders, reduced gross margins and loss of market
share, any of which would materially adversely affect the Company's business,
operating results and financial condition.
The Company's future success will depend in part upon the availability of
third party tools and applications that address customer requirements and work
with Arbor Essbase through the Company's Arbor Essbase Application Programming
Interface ("API"). Failure by third parties to support the Company's API, or
failure by the Company to maintain, develop and market competitive analytic
applications or to adopt industry standard API's, if and when they emerge, could
materially adversely affect the Company's business, operating results and
financial condition.
Current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties,
thereby increasing the ability of their products to address the needs of the
Company's existing and prospective customers. Further competitive pressures,
such as those resulting from competitors' discounting of their products, may
require the Company to reduce the price of its enterprise software and
complementary products, which would materially adversely affect the Company's
business, operating results and financial condition. There can be no assurance
that the Company will be able to compete successfully against current and future
competitors, and the failure to do so would have a material adverse effect upon
the Company's business, operating results and financial condition.
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FUTURE ACQUISITION-RELATED RISKS
It is anticipated that a key component of the Company's growth strategy
will be the acquisition of complementary businesses, products and technologies
that meet the Company's criteria for revenues, profitability, growth potential
and operating strategy. The successful implementation of this strategy depends
on the Company's ability to identify suitable acquisition candidates, acquire
such companies on acceptable terms and integrate their operations successfully
with those of the combined company. There can be no assurance that the Company
will be able to identify suitable acquisition candidates or that the Company
will be able to acquire such candidates on acceptable terms. Moreover, in
pursuing acquisition opportunities the Company may compete with other companies
with similar growth strategies. Certain of these competitors may be larger and
have greater financial and other resources than the Company. Competition for
these acquisition targets could also result in increased prices of acquisition
targets and a diminished pool of companies available for acquisition.
Acquisitions, such as the Company's acquisition of AppSource Corporation in
December 1997 and Hyperion Software Corporation's acquisition of Pillar
Corporation in November 1994, involve a number of other risks, including, among
other things, adverse effects on the Company's reported operating results from
goodwill amortization, acquired in-process technology, stock compensation
expense and increased compensation expense resulting from newly hired employees,
difficulties in managing diverse geographic sales and research and development
operations, the diversion of management attention, potential disputes with the
sellers of acquired entities and the possible failure to retain key acquired
personnel and the impairment of relationships with employees and strategic
partners as a result of such acquisitions or the integration of new personnel.
Due to the foregoing, the Company's pursuit of an acquisition strategy or any
individual acquisition may have a material adverse effect on the Company's
business, operating results and financial condition.
The Company's future performance will depend on its ability to integrate
any acquired organization, which, even if successful, may take a significant
period of time, will place a significant strain on the Company's resources, and
could subject the Company to additional expenses. As a result, there can be no
assurance that the Company will be able to integrate acquired businesses
successfully or in a timely manner in accordance with its strategic objectives.
If the Company is unable to manage acquisition-based growth effectively, the
Company's business, operating results and financial condition will be materially
adversely affected.
DEPENDENCE UPON INDIRECT CHANNEL PARTNERS
In addition to its direct sales force, the Company relies on indirect
channel partners such as original equipment manufacturers ("OEMs"), value added
resellers ("VARs") and distributors for licensing and support of its products in
the United States and internationally. Sales by the Company's indirect channel
partners including independent sales agents for the Company's fiscal years ended
June 30, 1996, 1997 and 1998 were 7%, 7% and 11% of the Company's total
revenues, respectively. The Company's indirect channel partners generally offer
products of several different companies, including, in some cases, products that
compete with the products offered by the Company. Further, as the Company
enhances the functionality in its products and develops complementary products
or expands its product offerings through acquisition or other means, such
enhancements and complementary products may duplicate the functionality of
products already offered by the Company's channel partners. In such event, sales
of the Company's products by such channel partner may decline. There can be no
assurance that the Company's current indirect channel partners will elect, or be
able, to market or support the Company's products effectively or be able to
release their products embedded with the Company's products in a timely manner,
that the Company will be able to effectively manage channel conflicts, that
economic conditions or industry demand will not adversely
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affect these or other indirect channel partners or that these indirect channel
partners will not devote greater resources to marketing and supporting the
products of other companies. No assurance can be given that revenues derived
from indirect channel partners will not fluctuate significantly in subsequent
periods or terminate entirely. The Company has been involved in litigation with
a significant channel partner and, although such litigation has been settled,
there can be no assurance that there will be no future disputes with current or
future channel partners. Such disputes could materially adversely affect the
Company's business, operating results and financial condition.
PRODUCT CONCENTRATION; DEPENDENCE UPON THE MARKET FOR ENTERPRISE SOFTWARE
The Company derived approximately 68%, 67% and 66% of its worldwide total
revenues from licenses and related services for its Hyperion Enterprise and
Hyperion Pillar products for the Company's fiscal years ended June 30, 1996,
1997 and 1998, respectively. In addition, 13%, 18% and 21% of the Company's
total revenues for the Company's fiscal years ended June 30, 1996, 1997 and 1998
were derived from licenses for Hyperion Essbase and complementary products and
services. It is anticipated that Hyperion Enterprise, Hyperion Pillar and
Hyperion Essbase-related revenues, including revenues from complementary
products, as well as maintenance and support contracts, will continue to account
for a significant portion of the Company's revenues for the foreseeable future.
As a result, it is anticipated that the Company's future operating results will
be dependent upon continued market acceptance of Hyperion Enterprise, Hyperion
Pillar and Hyperion Essbase enhancements and extensions thereto and applications
and tools therefor. There can be no assurance that these products will achieve
continued or increased market acceptance or that the Company will be successful
in marketing these products, enhancements thereto or applications therefor. A
decline in demand for, or market acceptance of, these products as a result of
competition, technological change or other factors would have a material adverse
effect on the Company's business, operating results and financial condition. The
Company intends to continue its efforts to improve and enhance Hyperion
Enterprise, Hyperion Pillar and Hyperion Essbase by maintaining its commitment
to an open architecture, extending its partnerships, integrating third party
technologies, enhancing its linkage with leading general-purpose database
management systems, continuing to evolve the Hyperion Essbase OLAP Server, and
developing complementary products. No assurance can be given that such efforts
will enhance the value of the Company's product offerings to customers.
Although sales of Hyperion Essbase have increased in recent years, the
market in which the Company competes is undergoing rapid change, and there can
be no assurance that existing customers will continue to purchase or that
potential customers will purchase Hyperion Essbase and complementary products.
The Company has spent, and it is anticipated that it will continue to spend,
considerable resources educating potential customers about Hyperion Essbase and
its functions and the market for OLAP and enterprise software solutions.
However, there can be no assurance that such expenditures will enable Hyperion
Essbase to achieve any additional degree of market acceptance, and if the market
for Hyperion Essbase or utilization of OLAP tools and complementary applications
in general fails to grow or grows more slowly than the Company currently
anticipates, the Company's business, operating results and financial condition
would be materially adversely affected. Historically, the software industry has
experienced significant periodic downturns, often in connection with, or in
anticipation of, declines in general economic conditions during which MIS
budgets often decrease. As a result, the Company's business, operating results
and financial condition may in the future reflect substantial fluctuations from
period to period as a consequence of patterns and general economic conditions in
the software industry.
HIRING AND RETENTION OF PERSONNEL
The Company's future operating results will depend in significant part upon
the continued service of its key technical, sales and senior management
personnel. Few of the Company's employees are bound by employment or
non-competition agreements, and due to the intense competition for such
personnel, as well as the uncertainty caused by the post-Merger integration, it
is possible that the Company will be unable to retain such key technical, sales
and senior managerial personnel. The
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<PAGE> 12
Company's future success also depends on its ability to attract and retain
additional highly qualified technical, sales and managerial personnel.
Competition for such personnel is intense, and there can be no assurance that
the Company will be able to retain its key managerial, technical or sales
personnel or attract such personnel in the future. The Company has at times
experienced and continues to experience difficulty in recruiting qualified
personnel, and there can be no assurance that the Company will not experience
such difficulties in the future, particularly in the San Francisco Bay Area,
where the employment market for qualified marketing, finance and engineering
personnel is extremely competitive. The Company, either directly or through
personnel search firms, actively recruits qualified research and development,
financial and sales personnel. If the Company is unable to hire and retain
qualified personnel in the future, such inability could have a material adverse
effect on the Company's business, operating results and financial condition.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company's future financial performance will depend in large part on the
growth and performance of the Company's international operations. The Company
maintains sales and service offices in 24 cities outside the United States. The
Company is currently investing significant time, financial resources and
management attention to developing its international operations, including the
development of certain third party distributor relationships and the hiring of
additional sales representatives. However, there can be no assurance that the
Company will be successful in expanding its international operations or that the
Company will be able to maintain or increase international market demand for its
enterprise software products. To the extent that the Company is unable to do so
in a timely manner, the Company's international sales will be limited, and the
Company's business, operating results and financial condition would be
materially adversely affected. In the event of a dispute with an international
distributor, it is possible that the Company would incur additional costs and
expenses and certain obstacles to termination of the relationship, as the laws
of certain foreign jurisdictions are more favorable to distributors than those
of the United States. In addition, as the Company establishes and protects its
trademarks in jurisdictions outside the United States, it is possible it will
encounter opposition from entities claiming rights to such trademarks in those
jurisdictions.
Included in the Company's total revenues are direct export sales from the
United States to international customers. The Company's international revenues,
which are attributable primarily to direct export sales to customers in Europe,
accounted for 30%, 32% and 32% of total revenues in the Company's fiscal years
ended June 30, 1996, 1997 and 1998, respectively. International sales are
subject to inherent risks, including the impact of possible recessionary
environments in economies outside the United States, higher costs of doing
business, costs of localizing products for different languages, longer
receivables collection periods and greater difficulty in accounts receivable
collection, unexpected changes in regulatory requirements, difficulties and
costs of staffing and managing foreign operations, reduced protection for
intellectual property rights in some countries, potentially adverse tax
consequences and political and economic instability. There can be no assurance
that the Company or its indirect channel partners will be able to sustain or
increase international revenues from international licenses and maintenance,
support and other services, or that the foregoing factors will not have a
material adverse effect on the Company's future international revenues and,
consequently, on the Company's business, operating results and financial
condition. The Company's direct international sales are currently denominated in
either United States dollars or local currency. Although neither the Company's
exposure to currency fluctuations has been material to date, there can be no
assurance that fluctuations in the currency exchange rates in the future will
not have a material adverse impact on revenues from direct international sales
and thus
10
<PAGE> 13
the Company's business, operating results or financial condition. Sales
generated by the Company's indirect channel partners are currently primarily
paid to the Company in United States dollars. There can be no assurance,
however, that foreign currency translations of international indirect sales that
are denominated in local currencies will not contribute in the future to
significant fluctuations in, and have a material adverse effect upon, the
Company's business, operating results and financial condition.
RISKS ASSOCIATED WITH NEW VERSIONS AND NEW PRODUCTS; RAPID TECHNOLOGICAL CHANGE
The software industry, and specifically the markets in which the Company
competes, is characterized by rapid technological change, frequent introductions
of new products, changes in customer demands and evolving industry standards.
The introduction of products embodying new technologies and the emergence of new
industry standards can render existing products obsolete and unmarketable. The
life cycle of each version of the products offered by the Company is difficult
to estimate. The Company's future success will depend upon its ability to
address the increasingly sophisticated needs of its customers by developing and
introducing enhancements to its products on a timely basis that keep pace with
technological developments and emerging industry standards and customer
requirements. There can be no assurance that the Company will be successful in
developing and marketing enhancements to its products that respond to
technological change, evolving industry standards or customer requirements, that
the Company will not experience difficulties that could delay or prevent the
successful development, introduction and sale of such enhancements or that such
enhancements will adequately meet the requirements of the marketplace and
achieve any significant degree of market acceptance. The Company has in the past
experienced delays in the release dates of enhancements to its products. If the
release dates of any future product enhancement are delayed, or if when
released, such products fail to achieve market acceptance, the Company's
business, operating results and financial condition could be materially
adversely affected. There can be no assurance that the introduction or
announcement of new product offerings by the Company or the Company's
competitors will not cause customers to defer or forego purchases of current
versions of the Company's products, which could have a material adverse effect
on the Company's business, operating results and financial condition.
RISK OF SOFTWARE DEFECTS
Software products as internally complex as those offered by the Company
frequently contain errors or defects, especially when first introduced or when
new versions or enhancements are released. Despite product testing, the Company
has in the past released versions of its products with defects and has
discovered software errors in those products after their introduction. Although
the Company has not experienced material adverse effects resulting from any such
defects and errors to date, there can be no assurance that, despite testing by
the Company and by current and potential customers, defects and errors will not
be found in new versions or enhancements after commencement of commercial
shipments resulting in loss of revenues or delay in market acceptance, which
could have a material adverse effect upon the Company's business, operating
results and financial condition. See "-- Year 2000 Compliance."
RISKS ASSOCIATED WITH LITIGATION AND RELATED COSTS
The Company's ongoing litigation with Gentia Software plc (formerly known
as Planning Sciences International plc and Planning Sciences, Inc.) ("Gentia
Software") has resulted in increased legal costs to the Company and will
continue to result in increased legal costs to the Company. No assurance can be
given as to when the litigation proceedings will be resolved or that management
will not be distracted from their normal duties as a result of the proceedings.
the Company believes that it has meritorious claims against Gentia Software and
meritorious defenses against Gentia Software's claims that U.S. Patent No.
5,359,724 (the " '724 patent"), owned by the Company, is invalid, and intends to
pursue vigorously its claims and defend against Gentia Software's claims. In
addition, Gentia Software has filed two requests for reexamination of the '724
patent by the U.S. Patent and Trademark Office, both of which have been granted.
The reexamination proceedings are currently pending. The outcomes of the Gentia
Software litigation and the patent reexamination proceedings are uncertain at
this time, and no assurance can be given that the outcome of the litigation will
be in the combined
11
<PAGE> 14
company's favor, or that the U.S. Patent and Trademark Office will not declare
the '724 patent invalid or narrow the scope of its claims. The Company's
management believes that the outcome of the Gentia Software litigation or the
reexamination proceedings will not have a material adverse effect on the
Company's business, operating results or financial condition. However, should
the '724 patent be declared invalid or the scope of its claims narrowed,
competitors may be able to implement the technology described in the '724
patent, which could result in increased competition. Increased competition could
materially adversely affect the Company's future business. See "-- Competition."
PROPRIETARY RIGHTS AND RISKS OF INFRINGEMENT
The Company relies primarily on a combination of patent, copyright and
trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect its proprietary rights. The Company also believes that
factors such as the technological and creative skills of their personnel, new
product developments, frequent product enhancements, name recognition and
reliable product maintenance are essential to establishing and maintaining a
technology leadership position. The Company seeks to protect its software,
documentation and other written materials under contract, trade secret and
copyright laws, which afford only limited protection. The Company currently has
four United States patents, one foreign patent and a number of patent
applications pending in the United States and abroad. There can be no assurance
that the Company's patents will not be invalidated, circumvented or challenged,
that the rights granted thereunder will provide competitive advantages to the
Company or that any of the Company's future patent applications, whether or not
being currently challenged before applicable governmental patent agencies, will
be issued with the scope of the claims sought by the Company, if at all.
Furthermore, there can be no assurance that others will not develop technologies
that are similar or superior to the Company's technology or design around the
patents owned by the Company. See "-- Risks Associated with Litigation and
Related Costs."
Despite the Company's efforts to protect their respective proprietary
rights, unauthorized parties may attempt to copy aspects of the Company's
products or to obtain and use information that the combined company regards as
proprietary. Policing unauthorized use of the Company's products is difficult,
and while the Company is unable to determine the extent to which piracy of its
software products exists, software piracy can be expected to be a persistent
problem for the Company. In addition, the laws of some foreign countries do not
protect the Company's proprietary rights as fully as do the laws of the United
States. There can be no assurance that the Company's means of protecting its
proprietary rights in the United States or abroad will be adequate or that
competitors will not independently develop similar technology. The Company has
entered into source code escrow agreements with a number of its customers and
indirect channel partners requiring release of source code under certain
conditions. Such agreements provide that such parties will have a limited,
non-exclusive right to use such code in the event that there is a bankruptcy
proceeding by or against the Company, if the Company ceases to do business or if
the Company fails to meet its contractual obligations. The provision of source
code may increase the likelihood of misappropriation by third parties.
The Company expect that software providers will increasingly be subject to
infringement claims, particularly patent claims, as the number of products and
competitors in the Company's markets grows and the functionality of products in
different markets overlaps. Any such claims, with or without merit, could be
time consuming to defend, result in costly litigation, divert management's
attention and resources, cause product shipment delays or require the Company to
enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to the
Company, if at all. In the event of a successful claim of product infringement
against the Company and failure or inability of the Company to license the
infringed or similar technology, the Company's business, operating results and
financial condition could be materially adversely affected. The Company is
12
<PAGE> 15
currently engaged in litigation with Gentia Software concerning the enforcement
and validity of the '724 patent. In addition, Gentia Software has filed two
requests for reexamination of the '724 patent by the U.S. Patent and Trademark
Office, both of which have been granted. The reexamination proceedings are
currently pending. See "-- Risks Associated with Litigation and Related Costs."
The Company relies upon certain software that it licenses from third
parties, including software that is integrated with the Company's internally
developed software and used in the Company's products to perform key functions.
There can be no assurance that these third-party software licenses will continue
to be available to the Company on commercially reasonable terms. The loss of, or
inability to maintain, any such software licenses could result in shipment
delays or reductions until equivalent software could be developed, identified,
licensed and integrated, which would materially adversely affect the Company's
business, operating results and financial condition. In addition, there can be
no assurance that third parties will not claim infringement by the Company with
respect to the Company's products or enhancements thereto.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products do not
handle or process dates falling on or after the Year 2000 correctly, and as a
result, in less than two years, such computer systems and/or software may need
to be upgraded or replaced.
The Company has commenced an assessment of both the readiness of its
internal business information systems for handling the Year 2000 and the
compliance of products sold by the Company. The Company has determined that it
will need to modify or replace portions of its internal business information
systems so that the systems will function properly with respect to dates in the
Year 2000 and beyond.
The Company believes that its current products are Year 2000 compliant.
However, there can be no assurance that the Company's current products do not
contain undetected errors or defects associated with Year 2000 date functions
that may result in material costs to the Company. In addition, prior versions of
certain of these products currently installed at customer sites will require
upgrading or other modifications to become Year 2000 compliant. The Company
believes that it is not legally responsible for costs incurred by these
customers to achieve Year 2000 compliance. However, there can be no assurance
that these customers will not assert claims against the Company with respect to
Year 2000 issues and, in the event such claims are asserted and adjudicated in
favor of those customers, the Company's liability could be material. The Company
is taking steps to identify affected customers, raise customer awareness related
to noncompliance of certain of the Company's older products and assist customers
in assessing their risks.
The Company's Hyperion accounting software, a product set formerly offered
by the Company, was not originally Year 2000 compliant. The Company is aware of
a limited number of customers continuing to use this product. The Company is
obligated under its agreements with certain of these customers to provide
upgrades which are Year 2000 compliant. The Company expects to make available to
these customers a Year 2000 compliant release of its accounting software prior
to the end of calendar year 1998. The Company has also made available to these
customers a migration path to a product offered pursuant to the Company's
alliance with Baan/Coda, which the Company believes is Year 2000 compliant.
However, there can be no assurance that such product is Year 2000 compliant and
there can be no assurance that customers of the Company's accounting software
will migrate to such product. The Company does not expect the cost associated
with this compliance effort, including planning, implementation and testing, to
be material to the financial position of the Company, although there can be no
assurance that the Company will not be required to incur significant
unanticipated costs in relation to their compliance obligations. Such
unanticipated costs, if incurred, could have a material advance effect on the
Company's business, operating results and financial condition.
The Company has also initiated discussions with its significant vendors,
service providers and large customers to evaluate Year 2000 issues, if any,
relating to the interaction of their systems with the Company's internal
systems. The Company anticipates that it will successfully address Year 2000
issues relating to its internal business information systems by the end of the
Company's fiscal 1999. The cost of the Company's internal systems Year 2000
efforts is not expected to be material to the Company's business, operating
results and financial condition.
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<PAGE> 16
In addition, the Company could be adversely impacted by Year 2000 issues in
its internal computer systems, as well as by Year 2000 issues faced by
customers, resellers and service providers. For example, customer allocations of
financial resources to deal with this issue may reduce their ability to purchase
the Company's products. This reallocation of financial resources could
have an adverse effect on the Company's business, operating results and
financial condition. Significant uncertainty exists in the software industry
concerning the potential effects associated with such compliance. If any of the
Company's licensees experience Year 2000 problems, such licensee could
assert claims for damages against the Company. Any such litigation
could result in substantial costs and diversion of the company's resources even
if ultimately decided in favor of the Company. The occurrence of any of the
foregoing could have a material adverse effect on the Company's
business, operating results or financial condition.
PRODUCT LIABILITY
The Company's license agreements with their customers typically 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 the Company's license agreements may not be effective as
a result of federal, state or local laws or ordinances enacted in the future or
judicial decisions. Although the Company has not experienced any material
product liability claims to date, the sale and support of enterprise software
products by the Company may entail the risk of such claims. A successful product
liability claim brought against the Company could have a material adverse effect
upon the Company's business, operating results and financial condition. See "--
Year 2000 Compliance."
POSSIBLE VOLATILITY OF COMMON STOCK AND NOTES
The market price of the Company's Common Stock has fluctuated in the past,
and it is likely that such market price will continue to fluctuate in the
future. In addition, the market price of the Company's 4 1/2% Convertible
Subordinated Notes due 2005 (the "Notes") has fluctuated in the past, and it is
likely will continue to fluctuate in the future. Various factors, including
quarterly fluctuations in results of operations, announcements of new products
by the Company or by its competitors, and changes in the software industry in
general may significantly affect the market price of the Company's Common Stock
and the Notes. In addition, in recent years the stock market in general, and the
shares of technology companies in particular, have experienced extreme price
fluctuations. This volatility has had a substantial effect on the market prices
of securities issued by the Company and other high technology companies, often
for reasons unrelated to the operating performance of the specific companies.
The market prices of many high technology companies stocks are at or near their
historical highs and reflect price/earning ratios substantially above historical
norms. There can be no assurance that the market price of the Company's Common
Stock in the future will remain at or near the current level. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against that
14
<PAGE> 17
company. Such litigation, if instituted against the Company, could result in
substantial costs and a diversion of management attention and resources, which
could have a material adverse effect on the Company's business, financial
condition and results of operation, even if the Company is successful in such
litigation. These market fluctuations, as well as general economic, political
and market conditions such as recessions, may adversely affect the market price
of the Company's Common Stock and the Notes.
EFFECT OF CERTAIN CHARTER PROVISIONS; RIGHTS PLAN; CERTIFICATE OF INCORPORATION,
BYLAWS, AND DELAWARE LAW
Certain provisions of the Restated Certificate of Incorporation and Bylaws
of the Company, as well as certain provisions of Delaware law, could delay or
make difficult a merger, tender offer or proxy contest involving the combined
company. The authorized but unissued capital stock of the Company includes
5,000,000 shares of preferred stock. The Board of Directors is authorized to
provide for the issuance of such preferred stock in one or more series and to
fix the designations, preferences, powers and relative, participating, optional
or other rights and restrictions thereof. Accordingly, the Company may in the
future issue a series of preferred stock, without further stockholder approval,
that will have preference over the Common Stock of the Company with respect to
the payment of dividends and upon liquidation, dissolution or winding-up of the
Company. The Company has no current plans to issue shares of Preferred Stock,
although Series A Junior Participating Preferred Stock has been designated for
issuance under certain conditions, pursuant to the Company's stockholder rights
plan. See "Description of Capital Stock -- Preferred Stock," and "Description of
Capital Stock -- Stockholder Rights Plan.". Further, Section 203 of the DGCL,
which is applicable to the Company, prohibits certain business combinations with
certain stockholders for a period of three years after they acquire 15% or more
of the outstanding voting stock of a corporation. In addition, the Restated
Certificate of Incorporation provides that the Board of Directors of the Company
is divided into three classes of directors, with each class serving a staggered
three-year term. The classification of the Board of Directors has the effect
generally of requiring at least two annual stockholder meetings, instead of one,
to replace a majority of the Board members. Any of the foregoing could adversely
affect holders of the Company's Common Stock or discourage or make difficult any
attempt to obtain control of the Company. See "Description of Capital Stock --
Antitakeover Provisions of the Certificate of Incorporation, Bylaws and Delaware
Law."
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<PAGE> 18
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future. In
addition, the Company's credit facility restricts the Company's ability to pay
cash dividends.
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<PAGE> 19
SELLING STOCKHOLDERS
The following table sets forth certain information, as of September 30,
1998, with respect to the number of shares of Common Stock owned by the Selling
Stockholders and as adjusted to give effect to the sale of the Shares offered
hereby. The Shares are being registered to permit public secondary trading of
the Shares, and the Selling Stockholders may offer the Shares for resale from
time to time. See "Plan of Distribution."
The Shares being offered by the Selling Stockholders were acquired from
the Company in the Company's acquisition of AppSource Corporation, a Florida
corporation ("AppSource"), pursuant to the Agreement and Plan of Merger and
Reorganization dated December 16, 1997, whereby AS Acquisitions Corporation, a
Delaware corporation and a wholly-owned subsidiary of the Company, was merged
with and into AppSource, and all outstanding shares of capital stock of
AppSource were converted into cash and/or shares of Common Stock of the Company.
The Common Stock was issued pursuant to the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof. Each of the
Selling Stockholders represented to the Company that it was acquiring the Shares
for investment and with no present intention of distributing the Shares.
The Company has filed with the Commission, under the Securities Act, a
Registration Statement on Form S-3, of which this Prospectus forms a part, with
respect to the resale of the Shares from time to time on the Nasdaq National
Market or in privately-negotiated transactions. The Company has agreed to use
commercially reasonable efforts to keep such Registration Statement effective
for the earlier of until December 16, 1998 or until all Shares have been sold.
The Shares offered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Prior to Offering After the Offering
-------------------------- --------------------------
Number of Number of Shares Number of
Name and Address of Selling Stockholder Shares Percent(1) Being Offered Shares Percent(1)
- --------------------------------------- ----------- ---------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Marc D. Batchelor 8,268 * 1,654 6,614 *
1894 Branchwater Trail,
Orlando, FL 32825
Roger A. Boutilier 182 * 37 145 *
7429 Betty St
Winter Park, FL 32792
Daley Family Ltd. 35,534 * 7,107 28,427 *
4751 Rosewood Dr.
Orlando, FL 32806
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
Prior to Offering After the Offering
-------------------------- --------------------------
Number of Number of Shares Number of
Name and Address of Selling Stockholder Shares Percent(1) Being Offered Shares Percent(1)
- --------------------------------------- ----------- ---------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James Dixon 12,004 * 2,401 9,603 *
956 Stonecreek Ct
Longwood, FL 32779
Chris Dziekan 1,200 * 240 960 *
774 Spring Island Way
Orlando, FL 32828
Adrian J. Marshall 16,806 * 3,362 13,444 *
13037 Mulberry Park Dr. #521
Orlando, FL 32821
Douglas A. Moran 10,084 * 2,017 8,067 *
5055 Canoni Place
Cocoa, FL 32927
Todd A. Vanhoozier 182 * 37 145 *
3355 Mission Lake Dr. #393
Orlando, FL 32817
====== ==== ====== ====== ======
TOTAL 84,260 * 16,855 67,405 *
</TABLE>
- ----------
* Less than 1%
1 Based upon shares of Common Stock outstanding on September 30, 1998. This
Registration Statement shall also cover any additional shares of Common
Stock which become issuable in connection with the shares registered for
sale hereby by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without the receipt of consideration
which results in an increase in the number of the Company's outstanding
shares of Common Stock.
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<PAGE> 21
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 300,000,000
shares of Common Stock, $0.001 par value, and 5,000,000 shares of Preferred
Stock, $0.001 par value.
COMMON STOCK
As of September 30, 1998, there were 29,782,533 shares of Common Stock
outstanding that were held of record by approximately 371 stockholders. The
holders of Common Stock are entitled to one vote per share on all matters to be
voted upon by the stockholders. Subject to preferences that may be applicable to
any outstanding Preferred Stock, the holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared from time to time by
the Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of the liquidation, dissolution, or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
Preferred Stock, if any, then outstanding. The Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are fully paid and nonassessable, and the shares of Common Stock
to be issued upon completion of this offering will be fully paid and
nonassessable.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes 5,000,000 shares
of Preferred Stock. The Board of Directors has the authority to issue the
Preferred Stock in one or more series and to fix the rights, preferences,
privileges, and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences, and the number of shares constituting any series or the
designation of such series, without further vote or action by the stockholders.
The issuance of Preferred Stock may have the effect of delaying, deferring, or
preventing a change in control of the Company without further action by the
stockholders and may adversely affect the voting and other rights of the holders
of Common Stock. The issuance of Preferred Stock with voting and conversion
rights may adversely affect the voting power of the holders of Common Stock,
including the loss of voting control to others. The Company has no current
plans to issue shares of Preferred Stock, although Series A Junior
Participating Preferred Stock has been designated for issuance under certain
conditions, pursuant to the Company's stockholder rights plan as described more
fully below.
STOCKHOLDER RIGHTS PLAN
On June 15, 1998, the Board of Directors declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of Common
Stock outstanding on July 3, 1998 (the "Record Date") to the stockholders of
record on that date. Each Right entitles the registered holder to purchase from
one one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $0.001 per share (the "Preferred Shares"), of the Company, at a price
of $250 per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and Bank Boston,
N.A., as rights agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 15% or in the case of (x) a
Grandfathered Stockholder other than a Second Tier Grandfathered Stockholder (as
defined in the Rights Agreement), 25%, or (y) a Second Tier Grandfathered
Stockholder, the greater of 15% or such percentage as is beneficially owned by
each Amerindo Holder (as defined in the Rights Agreement) plus 1%, or more of
the outstanding Common Shares (as defined in the Rights Agreement), or (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person or group becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or in the case of (x) a Grandfathered
Stockholder other than a Second Tier Grandfathered Stockholder, 25%, or (y) a
Second Tier Grandfathered Stockholder, such percentage as is beneficially owned
by each Amerindo Holder plus 1%, or more of the outstanding Common Stock (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock certificates outstanding as
of the Record Date, by such Common Stock certificate with a summary of the
Rights attached thereto.
By its terms, the Rights Agreement exempts the Merger as a transaction that
could have otherwise triggered the distribution of Rights under the Rights
Agreement. Similarly, neither Hyperion Software Corporation nor any of its
affiliates, by virtue of its ownership or voting of the Company's Common Stock
acquired pursuant to the Merger is defined as an Acquiring Person (as defined in
the Rights Agreement) under the Rights Agreement.
19
<PAGE> 22
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Stock. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date or upon transfer or new issuance of
Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Stock
outstanding as of the Record Date, even without such notation or a copy of a
summary of the Rights being attached thereto, will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on the tenth anniversary of the effective date (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then current market price of the Preferred Shares, or (iii) upon
the distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations, or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a quarterly dividend
payment of 1,000 times the dividend declared per share of Common Stock. In the
event of liquidation, the holders of the Preferred Shares will be entitled to an
aggregate payment of 1,000 times the aggregate payment made per share of Common
Stock. Each Preferred Share will have 1,000 votes, voting together with the
Common Stock. In the event of any merger, consolidation, or other transaction in
which Common Stock is exchanged, each Preferred Share will be entitled to
receive 1,000 times the amount received per share of Common Stock. These rights
are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation, and
voting rights, the value of the one one-thousandth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock.
From and after the occurrence of an event described in Section 11(a)(ii) of
the Rights Agreement, if the Rights evidenced by the Right Certificate are or
were at any time on or after the earlier of (x) the date of such event and (y)
the Distribution Date acquired or beneficially owned by an Acquiring Person or
an Associate or Affiliate of an Acquiring Person (as such terms are defined in
the Rights Agreement), such Rights shall become void, and any holder of such
Rights shall thereafter have no right to exercise such Rights.
In the event that, at any time after there is an Acquiring Person, the
Company is acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the
20
<PAGE> 23
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right.
In the event that any person or group becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person and its Affiliates and Associates
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of shares of Common Stock having a market value of two
times the exercise price of the Right. If the Company does not have a sufficient
number of shares of Common Stock to satisfy such obligation to issue Common
Stock, or if the Board of Directors so elects, the Company shall deliver upon
payment of the exercise price of a Right an amount of cash or securities
equivalent in value to the Arbor Common Stock issuable upon exercise of a Right;
provided that, if the Company fails to meet such obligation within 30 days
following the later of (x) the first occurrence of an event triggering the right
to purchase Common Stock and (y) the date on which the Company's right to redeem
the Rights expires, Arbor must deliver, upon exercise of a Right but without
requiring payment of the exercise price then in effect, Arbor Common Stock (to
the extent available) and cash equal in value to the difference between the
value of the Common Stock otherwise issuable upon the exercise of a Right and
the exercise price then in effect. The Board of Directors may extend the 30-day
period described above for up to an additional 60 days to permit the taking of
action that may be necessary to authorize sufficient additional shares of Common
Stock to permit the issuance of Arbor Common Stock upon the exercise in full of
the Rights.
At any time after there is an Acquiring Person and prior to the acquisition
by any person or group of a majority of the outstanding shares of Common Stock,
the Board of Directors may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions that are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the time any person or group becomes an Acquiring
Person, the Board of Directors may redeem the Rights in whole, but not in part,
at a price of $0.01 per Right (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis, and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors without
the consent of the holders of the Rights, except that from and after such time
as any person or group becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights (other than the
Acquiring Person and its Affiliates and Associates).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed. However, the Rights
should not interfere with any tender offer or merger approved by the Company
because the Rights may be redeemed by the Board of Directors at any time prior
to such time as there is an Acquiring Person.
21
<PAGE> 24
ANTITAKEOVER PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE
LAW
Certificate of Incorporation and Bylaws
The Company's Certificate of Incorporation provides that the Board of
Directors is divided into three classes, with each class serving a staggered
three-year term. The classification of the Board of Directors has the effect of
generally requiring at least two annual stockholder meetings instead of one to
replace a majority of the members of the Board of Directors. The Certificate of
Incorporation also provides that all stockholder actions must be effected at a
duly called meeting and not by a consent in writing. In addition, the Company's
Amended and Restated Bylaws will not permit the stockholders of the Company to
call a special meeting of stockholders. These provisions of the Certificate of
Incorporation and Bylaws could discourage potential acquisition proposals and
could delay or prevent a change in control of the Company. These provisions are
intended to enhance the likelihood of continuity and stability in the
composition of the Board of Directors and in the policies formulated by the
Board of Directors and to discourage certain types of transactions that may
involve an actual or threatened change of control of the Company. These
provisions are designed to reduce the vulnerability of the Company to an
unsolicited acquisition proposal. The provisions also are intended to discourage
certain tactics that may be used in proxy fights. However, such provisions could
have the effect of discouraging others from making tender offers for the
Company's shares and, as a consequence, they also may inhibit fluctuations in
the market price of the Company's shares that could result from actual or
rumored takeover attempts. Such provisions also may have the effect of
preventing changes in the management of the Company. See "Risk Factors--Effect
of Certain Charter Provisions; Rights Plan; Certificate of Incorporation,
Bylaws, and Delaware Law."
Delaware Antitakeover Statute
The Company is subject to Section 203 of the Delaware General
Corporation Law ("Section 203"), which, subject to certain exceptions, prohibits
a Delaware corporation from engaging in any business combination with any
interested stockholder for a period of three years following the date that such
stockholder became an interested stockholder, unless: (i) prior to such date,
the board of directors of the corporation approved either the business
22
<PAGE> 25
combination or the transaction that resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction that resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (x) by persons
who are directors and also officers and (y) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer,
or (iii) on or subsequent to such date, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least 66
2/3% of the outstanding voting stock that is not owned by the interested
stockholder.
Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge, or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges, or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
REGISTRATION RIGHTS
As of September 30, 1998, the holders of 438,949 shares of Common Stock
(assuming no exercise of options outstanding) (the "Registrable Securities")
were entitled to certain rights with respect to the registration of such shares
under the Securities Act. Under the terms of the agreements between the Company
and the holders of such Registrable Securities, if the Company proposed to
register any of its securities under the Securities Act, either for its own
account or, for certain such holders, for the account of other security holders
exercising registration rights, such holders are entitled to notice of such
registration and are entitled to include shares of such Common Stock therein.
Additionally, certain of such holders are also entitled to certain demand
registration rights pursuant to which they may require the Company to file a
registration statement under the Securities Act at its expense with respect to
their shares of Common Stock, and the Company is required to use its reasonable
efforts to effect such registration. Further, certain such holders may require
the Company to file additional registration statements on Form S-3. All of these
registration rights are subject to certain conditions and limitations, including
the right of the underwriters of an offering to limit the number of shares
included in such registration.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Boston
EquiServe, L.P.
23
<PAGE> 26
PLAN OF DISTRIBUTION
The Company will receive no proceeds from this offering. The Shares
offered hereby may be sold by the Selling Stockholders from time to time in
transactions in the over-the-counter market, on the Nasdaq National Market, in
privately negotiated transactions, or by a combination of such methods of sale,
at fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of the Shares for whom such broker-dealers may act as
agents or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
under certain circumstances be deemed to be "underwriters" within the meaning of
the Securities Act, and any commissions received by them and any profit realized
on the resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholders may
agree to indemnify such broker-dealers against certain liabilities, including
liabilities under Securities Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholders (and, if it acts as agent for
the purchase of such Shares, from such purchaser). Broker-dealers may agree with
the Selling Stockholders to sell a specified number of Shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for the Selling Stockholders, to purchase as principal any
unsold Shares. Brokers-dealers who acquire Shares as principal may thereafter
resell such Shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, on the Nasdaq National Market, in privately negotiated
transactions, or by a combination of such methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above.
Under applicable rules and regulations under the 1934 Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the 1934 Act and the rules and regulations
thereunder, including, without limitation, Rules 10b-6 and 10b-7, which
provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholders.
The Selling Stockholders will pay all commissions and other expenses
associated with the sale of Shares by it. The Shares offered hereby are being
registered pursuant to contractual obligations of the Company, and the Company
has agreed to bear certain expenses in connection with the registration and sale
of the Shares being offered by the Selling Stockholders. The Company has not
made any underwriting arrangements with respect to the sale of Shares offered
hereby.
24
<PAGE> 27
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP,
Menlo Park, California.
EXPERTS
The consolidated financial statements of the Company incorporated in this
Prospectus by reference to the Current Report on Form 8-K, dated August 24,
1998, except as they relate to Hyperion Software Corporation for the years ended
June 30, 1997 and 1996, have been audited by PricewaterhouseCoopers LLP,
independent accountants, and, insofar as they relate to Hyperion Software
Corporation for the years ended June 30, 1997 and 1996, by Ernst & Young LLP,
independent auditors, whose reports thereon appear therein. The consolidated
financial statements of Arbor Software Corporation incorporated in this
Prospectus by reference to the Annual Report on Form 10-K of Arbor Software
Corporation for the year ended March 31, 1998 (which financial statements and
financial statement schedule have not been restated to give effect to the
pooling of Arbor Software Corporation and Hyperion Software Corporation) have
been audited by PricewaterhouseCoopers LLP, independent accountants, whose
report thereon appears therein. The consolidated financial statements of
Hyperion Software Corporation as of June 30, 1997 and 1996 and for the three
years ended June 30, 1997, incorporated in this Prospectus by reference to the
Company's Current Report on Form 8-K, dated May 25, 1998, as amended on June 25,
1998, have been audited by Ernst & Young LLP, independent auditors, whose report
thereon appears therein. Such financial statements have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
and Ernst & Young LLP, independent auditors, given on the authority of said
firms as experts in auditing and accounting.
25
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The fees and expenses incurred by the Registrant in connection with the
offering are payable by the Registrant and, other than filing fees, are
estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.................. $ 180
Legal Fees and Expenses.............................................. 25,000
Accounting Fees and Expenses......................................... 10,000
Miscellaneous........................................................ 39,820
------
Total............................................................ $75,000
======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
SubSection (a) of Section 145 of the General Corporation Law of the
State of Delaware (the "DGCL") empowers a corporation to indemnify any person
who was or is a party or who is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
SubSection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; that
indemnification provided for by Section 145 shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators; and that the corporation is
empowered to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the corporation against any
liability asserted against him and incurred by him in any such capacity, or
26
<PAGE> 29
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under Section 145.
The Registrant also provides liability insurance for its directors and
officers which provides for coverage against loss from claims made against
directors and officers in their capacity as such, including liabilities under
the Securities Act of 1933, as amended.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article IX of the Registrant's Restated Certificate of Incorporation limits the
liability of directors to the fullest extent permitted by Section 102(b)(7).
ITEM 16. EXHIBITS.
The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1+ Registration Rights Agreement dated July 31, 1998, by and among the
Registrant and the Selling Stockholders
4.2 Specimen Common Stock Certificate(1)
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
10.1 Registration Rights Agreement (see exhibit 4.1)
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
(included in the opinion filed as Exhibit 5.1)
24++ Power of Attorney
27.1 Financial Data Schedule(2)
</TABLE>
-------------------
+ Incorporated by reference to such exhibit as filed in the Registrant's
Form 8-K, dated July 31, 1998, filed with the Commission on August 10,
1998.
++ Previously filed.
(1) Incorporated by reference to such exhibit as filed in the Registrant's
Registration Statement on Form S-4 filed with the Commission on June 18,
1998, as amended (Registration No. 333-57197).
(2) Incorporated by reference to such exhibit as filed in the Registrant's
Form 10-K for the fiscal year ended March 31, 1998.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or event arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
27
<PAGE> 30
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b), if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) of this Section
do not apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
28
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Sunnyvale, State of California, on the 10th day of
November, 1998.
HYPERION SOLUTIONS CORPORATION
By: /s/ John M. Dillon
--------------------------------------
John M. Dillon
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ John M. Dillon President, Chief Executive November 10, 1998
- -------------------------- Officer, and Director
John M. Dillon
/s/ Stephen V. Imbler Senior Vice President and November 10, 1998
- -------------------------- Chief Financial Officer
Stephen V. Imbler
/s/ Harry S. Gruner Director November 10, 1998
- --------------------------
Harry S. Gruner
/s/ Aldo Papone Director November 10, 1998
- --------------------------
Aldo Papone
/s/ James A. Perakis Director and Chairman November 10, 1998
- -------------------------- of the Board
James A. Perakis
/s/ Mark W. Perry* Director November 10, 1998
- --------------------------
Mark W. Perry
/s/ Jeffrey R. Rodek * Director November 10, 1998
- --------------------------
Jeffrey R. Rodek
/s/ Gary G. Greenfield Director November 10, 1998
- --------------------------
Gary G. Greenfield
*By: /s/ John M. Dillon
- --------------------------
John M. Dillon
(Attorney-in-Fact)
</TABLE>
29
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1+ Registration Rights Agreement dated July 31, 1998, by and among the
Registrant and the Selling Stockholders
4.2 Specimen Common Stock Certificate(1)
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
10.1 Registration Rights Agreement (see exhibit 4.1)
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
(included in the opinion filed as Exhibit 5.1)
24++ Power of Attorney
27.1 Financial Data Schedule(2)
</TABLE>
-------------------
+ Incorporated by reference to such exhibit as filed in the Registrant's
Form 8-K, dated July 31, 1998, filed with the Commission on August 10,
1998.
++ Previously filed.
(1) Incorporated by reference to such exhibit as filed in the Registrant's
Registration Statement on Form S-4 filed with the Commission on June 18,
1998, as amended (Registration No. 333-57197).
(2) Incorporated by reference to such exhibit as filed in the Registrant's
Form 10-K for the fiscal year ended March 31, 1998.
30
<PAGE> 1
Exhibit 5.1
November 10, 1998
Hyperion Solutions Corporation
1344 Crossman Avenue
Sunnyvale, California 94089
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 (File No.
333-61727) originally filed by Hyperion Solutions Corporation (formerly Arbor
Software Corporation)(the "Company") with the Securities and Exchange Commission
(the "Commission") on August 14, 1998, as thereafter amended or supplemented
(the "Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of up to 16,855 shares of the Company's
Common Stock (the "Shares") previously issued to certain of the shareholders
(the "Stockholders") of AppSource Corporation, a Florida corporation
("AppSource"), in connection with the merger of a wholly owned subsidiary of the
Company with and into AppSource. As your counsel in connection with the filing
of the Registration Statement, we have examined the proceedings taken and are
familiar with the proceedings proposed to be taken by you in connection with the
sale and issuance of the Shares.
It is our opinion that the Shares being sold by the Stockholders have been
validly issued, are non-assessable and, to our knowledge, are fully paid. Our
opinion with respect to the shares being sold by the stockholders of the Company
being fully paid is based solely upon your written representations to us with
respect to the consideration received for such Shares.
We consent to the use of this opinion as an exhibit to said Registration
Statement and further consent to the use of our name wherever appearing in said
Registration Statement, including the prospectus constituting a part thereof,
and in any amendment or supplement thereto.
Very truly yours,
/s/ Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
-----------------------------------------
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
October 5, 1998, which appears in the Current Report on Form 8-K dated August
24, 1998. We also consent to the incorporation of our report dated April 23,
1998, except as to Note 12, which is as of May 25, 1998, appearing on page 31 of
Arbor Software Corporation's Annual Report on Form 10-K for the year ended March
31, 1998 (which financial statements and financial statement schedule have not
been restated to give effect to the pooling of Arbor Software Corporation and
Hyperion Software Corporation). We also consent to the reference to us under the
heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
San Jose, California
November 6, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Pre-effective Amendment No. 1 to the Registration Statement (Form S-3 No.
333-61727) and related Prospectus of Hyperion Solutions Corporation for the
registration of 16,855 shares of its common stock and to the incorporation by
reference of our reports dated July 17, 1997, with respect to the financial
statements of Hyperion Software Corporation for the year ended June 30, 1997
included in Hyperion Solutions Corporation's Current Report on Form 8-K dated
May 25, 1998 (as amended on June 25, 1998) and Hyperion Solutions Corporation's
Current Report on Form 8-K dated August 24, 1998.
/s/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP
Stamford, Connecticut
November 6, 1998
