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