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 quarter ended June 30, 1998
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
For the transition period from __________ to __________.
Commission File Number 000-22841
MARCAM SOLUTIONS, INC.
----------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3371621
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
95 Wells Avenue
- ---------------
Newton, Massachusetts 02159
- --------------------- (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 965-0220
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
The number of shares outstanding of the registrant's Common Stock, $.01 Par
Value, as of August 11, 1998, was 7,678,986 shares.
<PAGE>
MARCAM SOLUTIONS, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited) at June 30, 1998 and
September 30, 1997
Consolidated Statements of Operations (unaudited) for
the three and nine months ended June 30, 1998 and
1997
Consolidated Statements of Cash Flows (unaudited) for
the nine months ended June 30, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
2
<PAGE>
PART I.
ITEM 1. FINANCIAL STATEMENTS
MARCAM SOLUTIONS, INC.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
June 30, September 30,
1998 1997
---------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 24,359 $ 26,474
Short-term investments 8,018 11,503
Accounts receivable, net of allowances of $2,231 at June 30, 1998
and $2,037 at September 30, 1997 25,591 24,273
Prepaid expenses and other current assets 6,665 6,639
---------- ---------
Total current assets 64,633 68,889
---------- ---------
Property and equipment, net 6,227 6,224
Computer software costs, net 1,281 2,475
Other assets 220 281
---------- ---------
Total assets $ 72,361 $ 77,869
========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 6,794 $ 4,142
Accrued expenses and other current liabilities 28,589 29,457
Deferred revenue 18,165 22,396
---------- ---------
Total current liabilities 53,548 55,995
---------- ---------
Long-term debt 248 318
Deferred income taxes 48 694
---------- ---------
Total liabilities 53,844 57,007
---------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 5,000 shares authorized -- --
Common stock, $.01 par value; 30,000 shares authorized; 7,657 and 7,457 shares
issued and outstanding at June 30, 1998 and September 30, 1997 77 75
Additional paid-in capital 144,139 142,766
Accumulated deficit (124,382) (121,072)
Cumulative translation adjustment (1,317) (907)
---------- ---------
Total stockholders' equity 18,517 20,862
---------- ---------
Total liabilities and stockholders' equity $ 72,361 $ 77,869
========== =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
MARCAM SOLUTIONS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1998 1997 1998 1997
------- -------- ------- --------
<S> <C> <C> <C> <C>
Revenues:
License $13,493 $ 17,698 $39,138 $ 55,782
Services 17,460 26,344 50,972 77,811
------- -------- ------- --------
Total revenues 30,953 44,042 90,110 133,593
------- -------- ------- --------
Operating expenses:
Cost of license revenues 1,044 3,967 3,061 12,643
Cost of services revenues 12,159 14,695 35,580 43,813
Selling and marketing 10,095 18,828 28,943 55,585
Product development 8,340 9,637 23,725 25,316
General and administrative 1,604 3,197 4,698 7,513
Restructuring and other charges (1,896) 18,535 (1,896) 18,535
------- -------- ------- --------
Total operating expenses 31,346 68,859 94,111 163,405
------- -------- ------- --------
Operating loss (393) (24,817) (4,001) (29,812)
Interest and other income 596 79 2,181 694
Interest and other expense (190) (1,238) (390) (3,273)
------- -------- ------- --------
Income (loss) before income tax expense 13 (25,976) (2,210) (32,391)
Income tax expense -- (1,001) (1,100) (3,002)
------- -------- ------- --------
Net income (loss) $ 13 $(26,977) $(3,310) $(35,393)
======= ======== ======== ========
Basic and diluted net income (loss) per share $ 0.00 $ (4.70) $ (0.44) $ (6.18)
======= ======== ======== ========
Weighted average number of basic
shares outstanding 7,598 5,749 7,536 5,736
Weighted average number of diluted
shares outstanding 8,678 5,749 7,536 5,736
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
MARCAM SOLUTIONS, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1998 1997
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,310) $(35,393)
Adjustments to reconcile net loss to net cash provided by (used
for) operating activities:
Depreciation and amortization 4,038 13,313
Write-off of computer software costs -- 11,125
Provision for (reversal of) restructuring charge, non-cash portion (1,896) 280
Non-cash compensation -- 313
Provision for bad debts 1,152 2,036
Deferred income taxes (23) 69
Changes in operating assets and liabilities:
Accounts receivable (2,698) 2,110
Prepaid expenses and other assets 87 (1,949)
Accounts payable 2,763 (2,873)
Accrued expenses and other current liabilities 333 4,504
Deferred revenue (3,974) 4,565
------- --------
Net cash used for operating activities (3,528) (1,900)
------- --------
Cash flows from investing activities:
Purchases of property and equipment (2,970) (3,285)
Additions to computer software costs -- (7,138)
Purchases of short-term investments (488) --
Proceeds from sale of short-term investments 3,973 --
------- --------
Net cash provided by (used for) investing activities 515 (10,423)
------- --------
Cash flows from financing activities:
Principal payments on capital lease obligations (88) (318)
Proceeds from stock option exercises 1,198 302
Proceeds from common stock issued under Employee Stock Purchase Plan 177 427
------- --------
Net cash provided by financing activities 1,287 411
------- --------
Effect of exchange rate changes on cash and cash equivalents (389) (92)
------- --------
Net decrease in cash and cash equivalents (2,115) (12,004)
Cash and cash equivalents at beginning of period 26,474 21,817
------- --------
Cash and cash equivalents at end of period $24,359 $ 9,813
======= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
Marcam Solutions, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(1) Reporting Entity
----------------
On July 29, 1997, Marcam Corporation spun off in a tax-free distribution
the portion of its business relating to its PRISM, Protean and Avantis product
lines. In connection with the distribution, Marcam Corporation transferred to
Marcam Solutions, Inc. ("Marcam Solutions" or the "Company"), at that time a new
wholly owned subsidiary of Marcam Corporation, substantially all of the
business, assets and liabilities relating to its PRISM, Protean and Avantis
product lines and an aggregate of $39.0 million in cash in exchange for (i) the
assumption by Marcam Solutions of certain liabilities and obligations relating
to the business to be conducted by Marcam Solutions, (ii) a number of shares of
common stock of Marcam Solutions sufficient for Marcam Corporation to make the
distribution and (iii) warrants to purchase an aggregate of 500,000 shares of
common stock of Marcam Solutions. Marcam Corporation distributed all of its
ownership interest in Marcam Solutions by means of a distribution on July 29,
1997 to its stockholders of record on July 23, 1997 (the "Distribution"). In the
Distribution, each stockholder of Marcam Corporation received one share of
Marcam Solutions common stock for each two shares of Marcam Corporation common
stock held and five shares of Marcam Solutions common stock for each share of
Marcam Corporation preferred stock held. In connection with the Distribution,
Marcam Corporation changed its name from "Marcam Corporation" to "MAPICS, Inc."
("MAPICS").
Although the common stock of Marcam Solutions was distributed to Marcam
Corporation's shareholders, the Distribution was recorded for accounting
purposes as a disposal of the business conducted by MAPICS, due to the relative
significance of the business conducted by Marcam Solutions. The financial
statements of Marcam Solutions for reporting periods after the Distribution
reflect the Distribution as a disposal of the business conducted by MAPICS and
have not been restated to remove the effects of the prior operating results of
the MAPICS business. The financial statements of Marcam Solutions for periods
prior to the Distribution correspond to the historical consolidated financial
statements of Marcam Corporation.
Marcam Corporation and Marcam Solutions entered into various agreements
providing for the separation of the product lines and governing various ongoing
relationships between MAPICS and Marcam Solutions after the Distribution,
including a distribution agreement, a general services agreement and a tax
sharing agreement.
(2) Interim Financial Statements
----------------------------
The accompanying unaudited consolidated financial statements of Marcam
Solutions in this Form 10-Q have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission (the
"Commission"). As permitted by the rules of the Commission applicable to
quarterly reports on Form 10-Q, these notes are condensed and do not contain all
disclosures required by generally accepted accounting principles. In the opinion
of management, these financial statements contain all adjustments (consisting of
only normal, recurring adjustments) necessary to present fairly the Company's
financial position, results of operations and cash flows as of the dates and for
the periods indicated. While management believes the disclosures presented are
adequate to make these financial statements not misleading, these financial
statements should be read in conjunction with Marcam Solutions' audited
financial statements and related notes included in the Marcam Solutions Annual
Report on Form 10-K for the fiscal year ended September 30, 1997.
The results of operations for the three and nine months ended June 30, 1998
are not necessarily indicative of the results to be expected for the full year.
6
<PAGE>
Marcam Solutions, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(3) Restructuring and Other Charges
-------------------------------
1998 Charge Reversal
During the third quarter of fiscal 1998, as a result of the substantial
completion of the planned restructuring actions and management's assessment of
additional payments required, the Company reversed $1,896,000 of restructuring
and other charges accrued in previous periods. This amount is the result of cost
savings achieved by the Company as compared to the amounts forecast at the time
of the restructurings. Savings from the original forecast were a result of lower
than expected severance payments to employees, lower than expected expenses
associated with the termination of leases, and the sale of fixed assets
associated with the closing of several facilities.
1997 Charges
During the third quarter of fiscal 1997, Marcam Corporation's business and
operating expense structure was reviewed to identify opportunities for cost
reductions, and actions were initiated to reduce operating expenses. As a result
of these actions, as well as an assessment of capitalized software costs and the
costs associated with the Distribution, Marcam Corporation recorded
restructuring and other charges totaling $18,535,000 in the quarter ended June
30, 1997. Of this amount, approximately $1,710,000 related principally to
reductions in staffing throughout the business, except the Protean and Avantis
development organizations; $1,500,000 related to the closure of certain European
facilities, including associated write-offs of property and equipment and lease
cancellation costs; and $1,100,000 related to other restructuring actions. An
additional $11,125,000 of the 1997 charge related to write-offs of the
capitalized software development costs related to the Protean and Avantis.Pro
product lines. This write-off resulted from lower than expected revenue from
these product lines during fiscal 1997 and the uncertainty at the time regarding
market acceptance of, and significant generation of revenue from, these product
lines in the near future. The charge also included costs of $3,200,000
associated with the spin-off of Marcam Solutions, Inc. in connection with the
Distribution (see Note 1).
(4) Basic and Diluted Earnings per Share
------------------------------------
The Company computes basic and diluted earnings per share ("EPS") in
accordance with Statement of Financial Accounting Standards No. 128, "Earnings
Per Share", which the Company adopted on October 1, 1997. Basic earnings per
share is based upon the weighted average number of common shares outstanding
during the period. Diluted earnings per share is based upon the weighted average
number of common shares outstanding during the period plus additional weighted
average common equivalent shares outstanding during the period. Common
equivalent shares have been excluded from the computation of diluted loss per
share for the three- and nine-month periods ended June 30, 1997 and the
nine-month period ended June 30, 1998, respectively, as their effect would have
been anti-dilutive. Common equivalent shares result from the assumed exercise of
outstanding stock options and warrants, the proceeds of which are then assumed
to have been used to repurchase outstanding common stock using the treasury
stock method. The following table reconciles the numerator and denominator of
the basic and diluted earnings per share computations shown on the Consolidated
Statements of Operations:
7
<PAGE>
Marcam Solutions, Inc.
Notes to Consolidated Financial Statements
(unaudited)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
June 30, June 30,
------------------------------ -------------------------------
1998 1997 1998 1997
------------- ------------- ------------- --------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
BASIC EPS
Numerator:
Net income (loss) $ 13 $(26,977) $(3,310) $(35,393)
------ -------- ------- --------
Denominator:
Common shares outstanding 7,598 5,749 7,536 5,736
------ -------- ------- --------
Basic EPS $ 0.00 $ (4.70) $ (0.44) $ (6.18)
====== ======== ======= ========
DILUTED EPS
Numerator:
Net income (loss) $ 13 $(26,977) $(3,310) $(35,393)
------ -------- ------- --------
Denominator:
Common shares outstanding 7,598 5,749 7,536 5,736
Incremental shares from assumed conversion of
stock options and warrants 1,080 -- -- --
------ -------- ------- --------
Adjusted common shares outstanding 8,678 5,749 7,536 5,736
------ -------- ------- --------
Diluted EPS $ 0.00 $ (4.70) $ (0.44) $ (6.18)
====== ======== ======= ========
</TABLE>
Options and warrants to purchase 97,174, 130,828 and 556,813 shares of
common stock outstanding during the three and nine months ended June 30, 1997
and the nine months ended June 30, 1998, respectively, and 1,625,000 common
shares issuable upon the conversion of Marcam Corporation's preferred stock
during the three and nine months ended June 30, 1997, were excluded from the
calculation of diluted earnings per share because the effect of their inclusion
would have been anti-dilutive. Options to purchase 3,977 shares of common stock
during the three months ended June 30, 1998 were excluded from the calculation
of diluted earnings per share because the exercise prices of those options
exceeded the average market price of common stock for the period reported.
For purposes of computations of basic and diluted earnings per share, the
distribution of one share of Marcam Solutions common stock for each two shares
of Marcam Corporation common stock in connection with the Distribution was
reflected as a 2-for-1 reverse stock split occurring on July 29, 1997.
Accordingly, historical basic and diluted loss per share and the corresponding
weighted average shares outstanding have been restated to present this stock
split.
(5) Commitments and Contingencies
-----------------------------
The Company is subject to legal proceedings and claims which arise in the
normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these legal matters will have a material adverse effect on the Company's future
financial position or results of operations.
8
<PAGE>
Marcam Solutions, Inc.
Notes to Consolidated Financial Statements
(unaudited)
Pursuant to the tax sharing agreement between Marcam Solutions and Marcam
Corporation (renamed MAPICS, Inc.), Marcam Solutions is generally responsible
for certain state and local non-income taxes and certain foreign income taxes
for periods ending on or before the date of the Distribution. MAPICS is
responsible for all other taxes for such periods, including any taxes arising
out of the Distribution.
(6) Recently Enacted Accounting Standards
-------------------------------------
In March 1998, Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), was
issued which provides guidance on applying generally accepted accounting
principles in accounting for the costs of computer software developed or
obtained for internal use. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998, and will result in the
capitalization of certain qualifying costs incurred in the development of
software for internal use. The Company will adopt the guidelines of SOP 98-1 as
of October 1, 1999 and its adoption is not expected to have a material impact on
the Company's financial position and results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999 (October 1, 1999 for
the Company). SFAS 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 anticipates that, due
to the Company's 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.
9
<PAGE>
Marcam Solutions, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(7) Selected Pro Forma Financial Information
----------------------------------------
The following unaudited pro forma financial information for the three- and
nine-month periods ended June 30, 1997 reflects how the disposition of the
MAPICS business (see Note 1) might have affected the statement of operations if
the disposition had occurred on October 1, 1996. The pro forma financial
information is presented as if Marcam Solutions had been operated as a separate
entity, principally by deducting the operating results of MAPICS from the
historical consolidated operating results of Marcam Corporation. The pro forma
data is for informational purposes only and may not necessarily reflect future
results of operations or what the results of operations would have been had
Marcam Solutions been operated as a separate entity. Actual results for the
three- and nine-month periods ended June 30, 1998 have been presented for
comparative purposes.
Pro Forma Results of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1998 1997 1998 1997
------------ ------------ ------------ -------------
Actual Pro Forma Actual Pro Forma
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
License $13,493 $ 5,521 $39,138 $ 18,277
Services 17,460 16,524 50,972 49,154
------- -------- ------- --------
Total revenues 30,953 22,045 90,110 67,431
------- -------- ------- --------
Operating expenses:
Cost of license revenues 1,044 1,734 3,061 6,281
Cost of services revenues 12,159 11,119 35,580 33,629
Selling and marketing 10,095 10,617 28,943 30,927
Product development 8,340 7,102 23,725 17,812
General and administrative 1,604 2,616 4,698 5,492
Restructuring and other charges (1,896) 18,535 (1,896) 18,535
------- -------- ------- --------
Total operating expenses 31,346 51,723 94,111 112,676
------- -------- ------- --------
Operating loss (393) (29,678) (4,001) (45,245)
Other income (expense), net 406 (1,159) 1,791 (2,579)
------- -------- ------- --------
Income (loss) before income tax expense 13 (30,837) (2,210) (47,824)
Income tax expense -- (861) (1,100) (2,573)
------- -------- ------- --------
Net income (loss) $ 13 $(31,698) $(3,310) $(50,397)
======= ======== ======= ========
Basic and diluted net income (loss) per share $ 0.00 $ (4.30) $ (0.44) $ (6.85)
======= ======== ======= ========
Weighted average number of basic
shares outstanding 7,598 7,374 7,536 7,361
Weighted average number of diluted
shares outstanding 8,678 7,374 7,536 7,361
</TABLE>
Historical weighted average shares outstanding and loss per share have been
restated for the Distribution, which has been presented, in part for accounting
purposes, as a 2-for-1 reverse stock split occurring on July 29, 1997 (see Note
4).
10
<PAGE>
PART I.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements. Factors
that might cause such a difference include, but are not limited to, fluctuations
in quarterly results, particularly resulting from lengthy sales cycles, the
variable size and timing of the Company's transactions with customers and
relatively fixed expenses in the short term; successful development and
enhancement of the Company's products; demand for and market acceptance of the
Company's products; availability of funds for the continued financing of the
Company's operations and development activities; the proportion of revenues
attributable to license fees versus services fees; and the highly competitive
nature of the Company's markets. Further information on potential factors that
could affect the Company's financial results are included in filings made by the
Company from time to time with the Securities and Exchange Commission, included
in the section entitled "Factors Affecting Future Performance" contained in the
Marcam Solutions, Inc. Annual Report on Form 10-K for the fiscal year ended
September 30, 1997 (File No. 0-22841).
Overview
- --------
On July 29, 1997, Marcam Corporation spun off in a tax-free distribution
the portion of its business relating to its PRISM, Protean and Avantis product
lines. In connection with the distribution, Marcam Corporation transferred to
Marcam Solutions, Inc. ("Marcam Solutions"), at that time a wholly owned
subsidiary of Marcam Corporation, substantially all of the business, assets and
liabilities relating to its PRISM, Protean and Avantis product lines and an
aggregate of $39.0 million in cash in exchange for (i) the assumption by Marcam
Solutions of certain liabilities and obligations relating to the business to be
conducted by Marcam Solutions, (ii) a number of shares of common stock of Marcam
Solutions sufficient for Marcam Corporation to make the distribution and (iii)
warrants to purchase an aggregate of 500,000 shares of common stock of Marcam
Solutions. Marcam Corporation distributed all of its ownership interest in
Marcam Solutions by means of a distribution on July 29, 1997 to its stockholders
(the "Distribution"). In connection with the Distribution, Marcam Corporation
changed its name from "Marcam Corporation" to "MAPICS, Inc." ("MAPICS").
Although the common stock of Marcam Solutions was distributed to Marcam
Corporation's shareholders, the Distribution was recorded for accounting
purposes as a disposal of the business conducted by MAPICS, due to the relative
significance of the business conducted by Marcam Solutions. The financial
statements of Marcam Solutions for reporting periods after the Distribution
reflect the Distribution as a disposal of the business conducted by MAPICS and
were not restated to remove the effects of the prior operating results of the
MAPICS business. The financial statements of Marcam Solutions for periods prior
to the Distribution correspond to the historical consolidated financial
statements of Marcam Corporation.
Marcam Solutions develops, globally markets, implements and supports
enterprise resource planning software components designed for process plant
operations. The Company's mission is to provide process manufacturing companies
with specialized, agile, business solutions that enable them to continuously
improve their plant operations while realizing low total cost of ownership and
faster time to returns on investment. The Company's products offer comprehensive
business planning and management solutions to customers' production, logistics,
asset management and financial requirements.
The Company's revenues have historically been derived from licensing its
Protean, PRISM, Avantis and MAPICS product lines. The Protean product line,
which utilizes advanced object technology, tools and databases, is platform
independent. The PRISM and MAPICS product lines provide customer solutions on
the IBM AS/400 platform. The Avantis product line provides customer solutions on
both the IBM AS/400 and open systems, utilizing object technology.
11
<PAGE>
Marcam Solutions also derives revenues from the sale of customer support
and consulting services. Customer support is offered to license customers
generally based on agreements that are billed annually, with revenues recognized
on a ratable basis during the contract period. Consulting services include
assisting with customer implementation of licensed software, providing custom
programming and system integration services, and providing educational material
and instruction in the use of licensed software.
Management continues to assess the expected future payments required as a
result of restructuring and other charges. During the third quarter of fiscal
1998, as a result of the substantial completion of the planned restructuring
actions and management's assessment of future payments required, the Company
reversed $1,896,000 of restructuring and other charges accrued in previous
periods. This amount is the result of cost savings achieved in relation to the
amounts forecast at the time of the restructurings. Savings from the original
forecast were a result of lower than expected severance payments to employees,
lower than expected expenses associated with the termination of leases, and the
sale of fixed assets associated with several facilities that were closed.
For the past three months, the Company has increased its investment in its
distribution channel, as evidenced by increased selling and marketing expenses.
Management believes that such expenditures, primarily related to expanding the
direct sales capacity, are critical to future revenue growth. In addition, the
Company continues to undertake a number of actions designed to increase
revenues, including introducing enhanced versions of its Protean (including the
June 1998 release of Protean version 3.0) and Avantis.Pro products designed to
make them more competitive. The Company continues to invest not only in the
translation of its software into additional foreign languages, but also in the
integration of its products with a number of third-party software packages.
Management expects this investment will result in additional markets for the
Company's products. Management believes continued increases in license revenues
are required to offset the costs of growing the distribution channel and funding
development, translation and integration activities related to the Protean
product line. There can be no assurances these actions will result in increased
revenues or, when combined with cost control measures, will result in operating
profitability or positive cash flows from operations. Failure to achieve
operating profitability or to generate positive cash flows from operations would
materially and adversely affect Marcam Solutions' financial condition.
12
<PAGE>
Results of Operations
- ---------------------
Except for the information provided under the caption "Selected Pro Forma
Results of Operations" which gives effect to the Distribution, the following
discussion and analysis includes historical results relating to the MAPICS
business for the three and nine months ended June 30, 1997. Only the selected
pro forma information reflects Marcam Solutions as if it had been operated as a
separate entity during those periods.
Revenues
- --------
Total revenues decreased 29.7% to $30,953,000 for the three-month period
ended June 30, 1998, as compared to $44,042,000 for the three-month period ended
June 30, 1997. For the nine-month period ended June 30, 1998, total revenues
decreased 32.5% to $90,110,000, as compared to $133,593,000 in the same period
of 1997.
License revenues decreased 23.8% to $13,493,000 for the three-month period
ended June 30, 1998, as compared to $17,698,000 for the three-month period ended
June 30, 1997. For the nine-month period ended June 30, 1998, license revenues
decreased 29.8%, to $39,138,000, as compared to $55,782,000 for the same period
in 1997. These decreases in license revenues for the three- and nine-month
periods ended June 30, 1998, as compared to the same periods in 1997, were
primarily due to the absence of MAPICS license revenues for the three and nine
months ended June 30, 1998, as compared to $12,177,000 and $37,505,000 in MAPICS
license revenues for the three and nine months ended June 30, 1997,
respectively. These decreases were partially offset by increased license
revenues from the Protean product line, and to a lesser extent, increases in
revenue from the PRISM and Avantis products.
Services revenues decreased 33.7% to $17,460,000 for the three-month period
ended June 30, 1998, as compared to $26,344,000 for the three-month period ended
June 30, 1997. Service revenues for the nine-month period ended June 30, 1998
decreased 34.5% to $50,972,000 in 1998, as compared to $77,811,000 for the same
period in 1997. Service revenues include two distinct components: customer
support, including annual software maintenance and support, and consulting,
which includes customization, implementation and integration of Marcam Solutions
products to meet customer requirements. These decreases in services revenues
were primarily due to the lack of MAPICS service revenues for the three and nine
months ended June 30, 1998, as compared to MAPICS service revenues of $9,820,000
and $28,657,000 for the three and nine months ended June 30, 1997, respectively.
Total customer support revenues and consulting revenues for all non-MAPICS
product lines for the three and nine months ended June 30, 1998 were slightly
higher than such revenues during the same period in 1997.
Cost of License Revenues
- ------------------------
Cost of license revenues represented 7.7% and 7.8% of license revenues for
the three- and nine-month periods ended June 30, 1998, respectively, as compared
to 22.4% and 22.7% for the same periods in 1997, respectively. These decreases
in cost of license revenues as a percentage of license revenues for the three-
and nine-month periods ended June 30, 1998, as compared to the same periods in
1997, were primarily due to decreased amortization of capitalized software
translation costs and decreased amortization of capitalized software development
costs related to the MAPICS and Protean products. In the third quarter of fiscal
1997, capitalized software assets related to the Protean and Avantis.Pro product
lines were written-off as a result of an assessment of net realizable value.
Management expects amortization costs for the remainder of fiscal 1998 to be
lower than in comparable prior periods. In addition to the decrease in
amortization costs, a portion of the percentage decreases in cost of license
revenues were attributable to a decrease in product royalties as a result of the
absence of MAPICS revenues following the Distribution.
Cost of Services Revenues
- -------------------------
Cost of services revenues represented 69.6% and 69.8% of services revenues
for the three- and nine-month periods ended June 30, 1998, respectively, as
compared to 55.8% and 56.3% for the same periods in 1997, respectively. These
increases in cost of services revenues as a percentage of services revenues for
the three- and nine- month periods ended June 30, 1998, as compared to the same
period in 1997, were the result of a decrease in the proportion of support
revenues as a percentage of total services revenues, primarily a result of the
absence of MAPICS service revenues, as support revenues typically provide better
margins than the Company's other services.
13
<PAGE>
Selling and Marketing
- ---------------------
Selling and marketing expenses decreased $8,733,000, or 46.4%, for the
three-month period ended June 30, 1998, as compared to the same period in 1997.
These expenses decreased $26,642,000, or 47.9%, for the nine-month period ended
June 30, 1998, as compared to the same period in 1997. These decreases were
primarily related to the lack of MAPICS related expenses in the three and nine
months ended June 30, 1998, and to a lesser extent, from a reduction in
headcount in both the marketing and sales staff as part of the 1997
restructuring.
Product Development
- -------------------
Gross research and product development expenditures for the three-month
period ended June 30, 1998 were $8,340,000 as compared to $11,576,000 for the
same period in 1997. These expenditures were $23,725,000 for the nine months
ended June 30, 1998, as compared to $32,454,000 for the nine months ended June
30, 1997. These decreases in gross research and product development expenditures
for the three and nine months ended June 30, 1998, as compared to the same
periods in 1997, were due to the lack of expenses related to the MAPICS product
line, and a decrease in spending on the PRISM product line. These decreases in
gross research and development spending were partially offset by an increase in
development costs for the Protean product line and costs incurred to integrate
the Company's products with various third-party software products.
No computer software development costs were capitalized during the three-
and nine-month periods ended June 30, 1998. Computer software costs capitalized
during the three- and nine-month periods ended June 30, 1997 totaled $1,939,000
and $7,138,000, respectively, representing 16.8% and 22.0% of gross research and
development expenditures, respectively. Capitalization of Protean and
Avantis.Pro development and translation costs ceased during the third fiscal
quarter of 1997, as discussed above.
As a result, product development expenses were $8,340,000 and $23,725,000
for the three- and nine-month periods ended June 30, 1998, respectively,
representing 26.9% and 26.3% of total revenues, respectively. For the three- and
nine-month periods ended June 30, 1997, product development expenses were
$9,637,000 and $25,316,000, respectively, representing 21.9% and 19.0% of total
revenues, respectively. These increases in product development expenses as a
percentage of revenues, as compared to the same periods in 1997, were primarily
related to the continuing investment in the Company's Protean product lines and
having no costs qualifying for capitalization. These percentage increases in
product development expenses as a percentage of revenues were also attributable
to the decrease in total revenues for the three- and nine-month periods ended
June 30, 1998, as compared to the same periods in 1997.
General and Administrative
- --------------------------
General and administrative expenses, which include the Company's finance,
accounting and corporate administrative functions, decreased by $1,593,000 and
$2,815,000 for the three- and nine-month periods ended June 30, 1998,
respectively, as compared to the same periods in 1997. These decreases were due
to the absence of expenses related to the MAPICS business in the three and nine
months ended June 30, 1998, and to a lesser extent, due to decreases in
non-income taxes, employee compensation charges related to the separation from
the MAPICS business, and consulting fees incurred to review and recommend
efficiencies in business processes.
Restructuring and Other Charges
- -------------------------------
During the third quarter of fiscal 1998, the Company recorded income of
$1,896,000 resulting from the reversal of restructuring and other charges that
had been accrued in previous periods (see "Overview").
14
<PAGE>
During the third quarter of fiscal 1997, Marcam Corporation's business and
operating expense structure was reviewed to identify opportunities for cost
reductions, and actions were initiated to reduce operating expenses. As a result
of these actions, as well as an assessment of capitalized software costs and the
costs associated with the Distribution, Marcam Corporation recorded
restructuring and other charges totaling $18,535,000 in the quarter ended June
30, 1997. Of this amount, approximately $1,710,000 related principally to
reductions in staffing throughout the business, except the Protean and Avantis
development organizations; $1,500,000 related to the closure of certain European
facilities, including associated write-offs of property and equipment and lease
cancellation costs; and $1,100,000 related to other restructuring actions. An
additional $11,125,000 of the 1997 charge related to write-offs of the
capitalized software development costs related to the Protean and Avantis.Pro
product lines. This write-off resulted from lower than expected revenue from
these product lines during fiscal 1997 and the uncertainty at the time regarding
market acceptance of, and significant generation of revenue from, these product
lines in the near future. The charge also included costs of $3,200,000
associated with the spin-off of Marcam Solutions in connection with the
Distribution.
Interest and Other Income
- -------------------------
Interest and other income increased $517,000 and $1,487,000 for the three-
and nine-month periods ended June 30, 1998, respectively, as compared to the
same periods in 1997. These increases were primarily related to interest earned
on significantly higher cash and short-term investment balances during the 1998
periods as compared to the 1997 periods. In addition, a portion of the of the
increase during the nine-month period in 1998 is related to gains resulting from
favorable changes in foreign currency rates.
Interest and Other Expense
- --------------------------
Interest and other expense decreased $1,048,000 and $2,883,000 for the
three- and nine-month periods ended June 30, 1998, respectively, as compared to
the same periods in 1997. These decreases were due to the repayment of all of
Marcam Corporation's long-term debt during the fourth quarter of fiscal 1997.
The decrease in the three-month period in 1998 was offset somewhat by losses
resulting from unfavorable changes in foreign currency rates.
Provision for Income Taxes
- --------------------------
The income tax expense for the nine-month period ended June 30, 1998 was
$1,100,000. The income tax expense for the three- and nine-month periods ended
June 30, 1997 was $1,001,000 and $3,002,000, respectively. The expense in each
period was primarily due to foreign withholding taxes and income taxes on income
generated in foreign jurisdictions, for which U.S. tax credit utilization is
currently uncertain. There was no tax benefit recorded for losses generated in
the U.S. during applicable periods due to the uncertainty of realizing such
benefits. No income tax expense was recorded for the three months ended June 30,
1998. Based on a reforecast of operating results of the Company's foreign
subsidiaries, management believes that the foreign withholding and income taxes
previously recorded in fiscal 1998 are sufficient.
Liquidity and Capital Resources
- -------------------------------
Prior to the Distribution, the Company funded its activities primarily from
cash generated from operations, from borrowings and from equity financings.
Since the time of the Distribution, the Company has funded its activities with
the capital contribution from MAPICS, as described above.
Current assets decreased $4,256,000 during the nine-month period ended June
30, 1998, from $68,889,000 at September 30, 1997 to $64,633,000 at June 30,
1998. This decrease was primarily due to lower cash and short-term investment
balances. The decrease in cash and short-term investments was primarily
attributable to cash used to fund operating losses and investments in fixed
assets.
15
<PAGE>
Current liabilities decreased $2,447,000 during the nine-month period, from
$55,995,000 at September 30, 1997 to $53,548,000 at June 30, 1998. The decrease
was primarily due to decreases in deferred revenue and accrued expenses, and was
partially offset by an increase in accounts payable. The decrease in deferred
revenues was caused by several factors. The prepayment of certain license
revenues in the fourth quarter of fiscal 1997 caused an increase in deferred
revenues at September 30, 1997. These prepayments have since been partially
recognized as revenue, resulting in a decrease in deferred revenues at June 30,
1998. This decrease in deferred revenues was partially offset by the timing of
maintenance contract periods, many of which end with the calendar year.
Maintenance contracts for PRISM, Protean and Avantis products typically run from
January to December, with the billing occurring in January. The revenues from
these maintenance contracts are deferred and recognized ratably over the
contract period, resulting in higher deferred revenue balances at June 30, 1998
than at September 30, 1997. The decrease in accrued expenses was primarily
caused by decreases in the restructuring reserve due to payments made during the
period, as well as the reversal of previously forecast amounts. The increase in
accounts payable was the result of the timing of cash disbursements at the end
of each period, resulting in additional payments at the end of September as
compared to at the end of June. As a result of the decrease in current assets
and a smaller decrease in current liabilities, the Company's working capital
surplus decreased by $1,809,000, from $12,894,000 at September 30, 1997 to
$11,085,000 at June 30, 1998.
During the nine-month period ended June 30, 1998, operating activities used
approximately $3,528,000 of cash. The use of cash from operating activities
included a decrease in deferred revenues of $3,974,000, a majority of which
resulted from a decrease in advance payments received for license contracts from
September 30, 1997 to June 30, 1998. During the same period, investing
activities provided $515,000 from the sale of short-term investments, and used
approximately $2,970,000 of cash for the purchase of fixed assets. Financing
activities during the same period provided $1,287,000 of cash primarily from
proceeds received from the sale of stock to employees, partially offset by
payments made on capitalized leases.
In fiscal years 1997 and 1996, the Company recorded restructuring and other
charges of $19,175,000 and $10,600,000, respectively. In fiscal year 1998, the
Company recorded income of $1,896,000 related to the reversal of restructuring
charges recorded in prior years. This reversal represents cost savings from
original forecasts. At June 30, 1998, a balance of $683,000 associated with
these charges remained in accrued expenses and is expected to result in cash
expenditures. Management believes the remaining balance is adequate to cover
future expenditures associated with these restructuring actions.
There can be no assurance that the Company will be profitable in the future
or that operating profitability, if achieved, will be sustained. In order to
support the anticipated growth of its business, the Company expects to continue
investing in its marketing, sales and product development activities. The
Company's expenses for these and other activities are based on expectations
regarding future revenues and are fixed to a large extent in the short-term. The
Company may be unable to adjust its spending in a timely manner to compensate
for any unexpected revenue shortfalls.
The Company has used cash during fiscal years 1998, 1997 and 1996 to fund
strategic investments, in particular substantial expenditures for marketing and
selling activities and for new product development, and operating losses. For
the first nine months of fiscal 1998 and for fiscal years 1997 and 1996 (which
included development expenditures related to the MAPICS product line), the
Company's gross product development expenditures were $23,725,000, $41,864,000,
and $39,913,000, respectively. During the remainder of fiscal year 1998, the
Company intends to continue to make investments in selling and marketing
activities and product development. The Company's objective is to fund these
investments primarily with cash from improved operations and existing cash
resources. The Company's timely ability to generate cash from operations depends
upon, among other things, revenue growth, completion and market acceptance of
new products, success in enhancing and selling its current AS/400-based families
of products, improvements in operating productivity, and payment terms and
collection of accounts receivable.
16
<PAGE>
There can be no assurances that the Company's operations will generate
sufficient cash to finance these activities. Until operations improve to meet
its cash requirements, the Company will need to rely on existing cash resources.
The Company anticipates that cash from operations and its available cash will be
sufficient to fund operations through at least the next twelve months. If,
however, such sources prove insufficient in 1998, or over the longer term, the
Company will be required to make changes in operations or seek additional debt
or equity financing. Management believes that the Company's potential borrowing
capacity is limited to revolving lines of credit with borrowing availability
based on qualifying accounts receivable. There can be no assurances that such a
revolving line of credit or any other additional debt or equity financing will
be available or available with terms acceptable to the Company. The continued
incurrence of operating losses by Marcam Solutions would have a material adverse
affect on Marcam Solutions' business, financial condition and results of
operations.
Selected Pro Forma Results of Operations
- ----------------------------------------
The following discussion and analysis relates to Marcam Solutions on a pro
forma basis, giving effect to the Distribution. The unaudited pro forma
financial information for the three- and nine-month periods ended June 30, 1997
is presented as if Marcam Solutions had been operated as a separate entity,
principally by deducting the operating results of MAPICS from the historical
consolidated operating results of Marcam Corporation. The pro forma data is for
informational purposes only and may not necessarily reflect future results of
operations or what the actual results of operations would have been had Marcam
Solutions been operated as a separate entity.
Revenues
- --------
Total revenues increased 40.4% to $30,953,000 for the three-month period
ended June 30, 1998, as compared to $22,045,000 for the three-month period ended
June 30, 1997. Total revenues increased 33.6% to $90,110,000 for the nine-month
period ended June 30, 1998, as compared to $67,431,000 for the same period in
1997.
License revenues increased 144.4% to $13,493,000 for the three-month period
ended June 30, 1998, as compared to $5,521,000 for the three-month period ended
June 30, 1997. License revenues increased 114.1% to $39,138,000 for the
nine-month period ended June 30, 1998, as compared to $18,277,000 for the same
period in 1997. These increases in license revenues for the three- and
nine-month periods ended June 30, 1998 as compared to the same periods in 1997,
were primarily due to significantly increased license revenue from the Protean
product line, and to a lesser extent, increases in revenue from the PRISM and
Avantis products.
Services revenues increased 5.7% to $17,460,000 for the three-month period
ended June 30, 1998, as compared to $16,524,000 for the three-month period ended
June 30, 1997. Service revenues for the nine-month period ended June 30, 1998
increased 3.7% to $50,972,000 in 1998, as compared to $49,154,000 for the same
period in 1997. Customer support revenues and consulting revenues for the three-
and nine-month periods ended June 30, 1998 were slightly higher than related
revenues during the same period in 1997.
Cost of License Revenues
- ------------------------
Cost of license revenues represented 7.7% and 7.8% of license revenues for
the three- and nine-month periods ended June 30, 1998, respectively, as compared
to 31.4% and 34.3% for the same periods in 1997, respectively. These decreases
in cost of license revenues as a percentage of license revenues for the three-
and nine-month periods ended June 30, 1998, as compared to the same periods in
1997, were due to decreased amortization of capitalized software translation
costs and decreased amortization of capitalized software development costs
related to the Protean products. In the third quarter of fiscal 1997,
capitalized software assets related to the Protean and Avantis.Pro product lines
were written-off as a result of an assessment of net realizable value.
Management expects amortization costs for the remainder of fiscal 1998 will be
lower than in comparable prior periods. In addition, the royalty rates
associated with third-party software decreased as a percent of license revenue,
due to an increase in the proportion of Protean license revenues to the overall
license revenues.
17
<PAGE>
Cost of Services Revenues
- -------------------------
Cost of services revenues represented 69.6% and 69.8% of services revenues
for the three- and nine-month periods ended June 30, 1998, respectively, as
compared to 67.3% and 68.4% for the same periods in 1997, respectively. This
deterioration was primarily related to increased investments in the Company's
service delivery capabilities, primarily related to the Protean product line.
Selling and Marketing
- ---------------------
Selling and marketing expenses decreased $522,000, or 4.9%, for the
three-month period ended June 30, 1998, as compared to the same period in 1997.
These expenses decreased $1,984,000, or 6.4%, for the nine months ended June 30,
1998, as compared to the same period in 1997. These decreases were primarily
related to the cost controls described above, including a reduction in headcount
in both the marketing and sales staff as part of the 1997 restructuring.
Product Development
- -------------------
Gross research and product development expenditures for the three-month
period ended June 30, 1998 were $8,340,000, as compared to $7,673,000 for the
same period in 1997. These expenditures were $23,725,000 for the nine months
ended June 30, 1998, as compared to $21,193,000 for the nine months ended June
30, 1997. These increases in gross research and product development expenditures
for the three and nine months ended June 30, 1998, as compared to the same
periods in 1997, were primarily due to increased development costs for the
Protean product line and costs incurred to integrate the Company's products with
various third-party software products.
No computer software development costs were capitalized for the three- and
nine-month periods ended June 30, 1998. Computer software costs capitalized
during the three- and nine-month periods ended June 30, 1997 were $571,000 and
$3,381,000, respectively, representing 7.4% and 16.0% of gross research and
development expenditures, respectively. Capitalization of Protean and
Avantis.Pro development and translation costs ceased during the third fiscal
quarter of 1997.
As a result, product development expenses were $8,340,000 and $23,725,000
for the three- and nine-month periods ended June 30, 1998, respectively,
representing 26.9% and 26.3% of total revenues, respectively. For the three- and
nine-month periods ended June 30, 1997, product development expenses were
$7,102,000 and $17,812,000, representing 32.2% and 26.4% of total revenues,
respectively. These decreases in product development expenses as a percentage of
revenues, as compared to the same periods in 1997, were primarily related to the
increase in revenues in each period in 1998, and were partially offset by the
continuing investment in the Company's Protean product line, as well as the
discontinuance of capitalization of Protean and Avantis.Pro development and
translation costs (as described above) during the third fiscal quarter of 1997.
General and Administrative
- --------------------------
General and administrative expenses, which include the Company's finance,
accounting and corporate administrative functions, decreased by $1,012,000 for
the three-month period ended June 30, 1998, as compared to the same period in
1997, and decreased $794,000 for the nine-month period ended June 30, 1998, as
compared to the same period in 1997. These decreases in the three- and
nine-month periods ended June 30, 1998 were primarily related to headcount
reductions as part of the 1997 restructuring. In addition, a portion of the
decreases were due to decreases in non-income taxes, employee compensation
charges related to the separation from the MAPICS business, and consulting fees
incurred to review and recommend efficiencies in business processes.
Restructuring and Other Charges
- -------------------------------
During the third quarter of fiscal 1998, the Company recorded income of
$1,896,000 resulting from the reversal of restructuring and other charges that
had been accrued in previous periods (see "Overview").
18
<PAGE>
During the third quarter of fiscal 1997, Marcam Corporation's business and
operating expense structure was reviewed to identify opportunities for cost
reductions, and actions were initiated to reduce operating expenses. As a result
of these actions, as well as an assessment of capitalized software costs and the
costs associated with the Distribution, Marcam Corporation recorded
restructuring and other charges totaling $18,535,000 in the quarter ended June
30, 1997. Of this amount, approximately $1,710,000 related principally to
reductions in staffing throughout the business, except the Protean and Avantis
development organizations; $1,500,000 related to the closure of certain European
facilities, including associated write-offs of property and equipment and lease
cancellation costs; and $1,100,000 related to other restructuring actions. An
additional $11,125,000 related to write-offs of the capitalized software
development costs related to the Protean and Avantis.Pro product lines. This
write-off resulted from lower than expected revenue from these product lines
during fiscal 1997 and the uncertainty at the time regarding market acceptance
of, and significant generation of revenue from, these product lines in the near
future. The charge also included costs of $3,200,000 associated with the
spin-off of Marcam Solutions in connection with the Distribution.
Other Income (Expense), net
- ---------------------------
The net income of other income and other (expense) increased from a net
expense of $1,159,000 for the three months ended June 30, 1997 to a net income
of $406,000 for the three months ended June 30, 1998. The net income of other
income and other (expense) also increased from a net expense of $2,579,000 for
the nine months ended June 30, 1997 to a net income of $1,791,000 for the nine
months ended June 30, 1998. These increases were primarily related to interest
earned on significantly higher cash and short-term investment balances during
the 1998 periods as compared to the 1997 periods, as well as lower interest
expense as the result of the repayment of all of Marcam Corporation's long-term
debt during the fourth quarter of fiscal 1997, and to a lesser extent, from
gains resulting from favorable changes in foreign currency rates.
Provision for Income Taxes
- --------------------------
The income tax expense for the nine-month period ended June 30, 1998 was
$1,100,000. The income tax expense for the three- and nine-month periods ended
June 30, 1997 was $861,000 and $2,573,000, respectively. The expense in each
period was primarily due to foreign withholding taxes and income taxes on income
generated in foreign jurisdictions, for which U.S. tax credit utilization is
currently uncertain. There was no tax benefit recorded for losses generated in
the U.S. during these periods due to the uncertainty of realizing such benefits.
No income tax expense was recorded for the three months ended June 30, 1998.
Based on current forecasts of operating results of the Company's foreign
subsidiaries, management believes foreign withholding and income taxes
previously recorded in fiscal 1998 are sufficient.
19
<PAGE>
PART II.
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims which arise in the
normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these other legal matters will have a material adverse effect on the Company's
future financial position or results of operations.
ITEM 5. OTHER INFORMATION
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting of
stockholders of the Company must be received at the Company's principal
executive offices not later than October 20, 1998. The deadline for providing
timely notice to the Company of matters that stockholders otherwise desire to
introduce at the next annual meeting of stockholders of the Company is January
11, 1999. In order to curtail any controversy as to the date on which a proposal
was received by the Company, it is suggested that proponents submit their
proposals by Certified Mail, Return Receipt Requested.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
20
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MARCAM SOLUTIONS, INC.
August 13, 1998 /s/ Denis E. Liptak
- --------------- -------------------
Date Denis E. Liptak
Chief Financial Officer
(Principal Financial and Accounting
Officer)
21
<PAGE>
EXHIBIT INDEX
- -------------
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 24,359
<SECURITIES> 8,018
<RECEIVABLES> 27,822
<ALLOWANCES> 2,231
<INVENTORY> 0
<CURRENT-ASSETS> 64,633
<PP&E> 24,851
<DEPRECIATION> 18,624
<TOTAL-ASSETS> 72,361
<CURRENT-LIABILITIES> 53,548
<BONDS> 248
0
0
<COMMON> 77
<OTHER-SE> 18,440
<TOTAL-LIABILITY-AND-EQUITY> 72,361
<SALES> 39,138
<TOTAL-REVENUES> 90,110
<CGS> 3,061
<TOTAL-COSTS> 38,641
<OTHER-EXPENSES> 23,725
<LOSS-PROVISION> 1,152
<INTEREST-EXPENSE> 390
<INCOME-PRETAX> (2,210)
<INCOME-TAX> 1,100
<INCOME-CONTINUING> (3,310)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,310)
<EPS-PRIMARY> (0.44)
<EPS-DILUTED> (0.44)
</TABLE>
