<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 March 31, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________to______________
Commission File Number
0-17195
LANDMARK GRAPHICS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0029459
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
Number)
15150 MEMORIAL DRIVE
HOUSTON, TEXAS 77079-4304
(Address of principal executive offices) (Zip Code)
(713) 560-1000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
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, $0.05 par
value, as of May 12, 1995 was 16,400,673.
PAGE 1 OF 18
<PAGE> 2
INDEX
PART I: FINANCIAL INFORMATION
<TABLE>
<S> <C>
PAGE NO.
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets -
As of March 31, 1995 and June 30, 1994 . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations -
For the Three Months and Nine Months Ended March 31, 1995
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
For the Nine Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . 13
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . 17
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
PAGE 2 OF 18
<PAGE> 3
LANDMARK GRAPHICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1995 1994
-------- --------
(RESTATED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . $ 63,073 $ 73,840
Receivables:
Trade accounts, net . . . . . . . . . . . . . . . . . . . . 43,644 40,705
Current income tax receivable . . . . . . . . . . . . . . . 1,003 1,003
Accrued revenue and other receivables . . . . . . . . . . . 6,896 7,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,710 3,444
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 3,633 3,618
Deferred income taxes, net of valuation allowance . . . . . . . 5,135 4,667
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . 128,094 134,277
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 857 851
Property and equipment, net . . . . . . . . . . . . . . . . . . . 44,834 40,493
Software development costs, net . . . . . . . . . . . . . . . . . 7,656 5,781
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . 12,648 129
Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . 5,250 4,561
-------- --------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $199,339 $186,092
======== ========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . $ 10,962 $ 7,915
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . 9,133 8,038
Deferred maintenance fees . . . . . . . . . . . . . . . . . . . 9,237 10,136
Income taxes payable . . . . . . . . . . . . . . . . . . . . . 2,625 1,596
Current maturities of long-term debt . . . . . . . . . . . . . 1,008 1,150
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . 32,965 28,835
Deferred income taxes, net of current portion . . . . . . . . . . 4,161 4,161
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 11,250 12,000
Other long-term liabilities . . . . . . . . . . . . . . . . . . . 58 -
Common stockholders' equity:
Common stock, $0.05 par value; 16,382 and 16,269
shares issued, respectively . . . . . . . . . . . . . . 819 813
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 120,578 118,590
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 29,508 21,693
-------- --------
Total common stockholders' equity . . . . . . . . . . . . . . 150,905 141,096
-------- --------
Total Liabilities and Common Stockholders' Equity . . . . . . . . $199,339 $186,092
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE 3 OF 18
<PAGE> 4
LANDMARK GRAPHICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------ -----------------------
1995 1994 1995 1994
-------- -------- -------- --------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Revenues:
Software product sales . . . . . . . . . . . . . . $ 21,730 $ 17,385 $ 56,238 $ 50,372
Hardware product sales . . . . . . . . . . . . . . 8,368 7,557 23,611 23,109
Maintenance and other . . . . . . . . . . . . . . . 13,338 10,422 37,132 28,695
-------- -------- -------- --------
Total revenues . . . . . . . . . . . . . . . . . 43,436 35,364 116,981 102,176
Cost of revenues:
Cost of software product sales . . . . . . . . . . 2,774 1,465 6,851 4,560
Cost of hardware product sales . . . . . . . . . . 6,683 6,443 19,293 19,301
Cost of maintenance and other . . . . . . . . . . . 7,025 6,428 21,054 17,725
Bad debt expense . . . . . . . . . . . . . . . . . 350 300 1,103 1,155
-------- -------- -------- --------
Total cost of revenues . . . . . . . . . . . . . 16,832 14,636 48,301 42,741
-------- -------- -------- --------
Gross profit . . . . . . . . . . . . . . . . . 26,604 20,728 68,680 59,435
Operating expenses:
Research and development . . . . . . . . . . . . . 4,788 4,177 13,360 13,337
Selling, marketing and administrative . . . . . . . 14,516 11,539 40,301 33,007
Acquired research and development costs . . . . . . 3,700 - 3,700 -
Merger costs . . . . . . . . . . . . . . . . . . . - 13,567 1,153 13,567
Restructuring charges and non-recurring costs . . . - - 1,809 -
-------- -------- -------- --------
Total operating expenses . . . . . . . . . . . . 23,004 29,283 60,323 59,911
-------- -------- -------- --------
Income (loss) from operations . . . . . . . . . . . . 3,600 (8,555) 8,357 (476)
Other, net . . . . . . . . . . . . . . . . . . . . . 881 440 2,500 1,296
-------- -------- -------- --------
Income (loss) before income taxes . . . . . . . . . . 4,481 (8,115) 10,857 820
Provision for income taxes . . . . . . . . . . . . . 1,195 762 3,042 2,461
-------- -------- -------- --------
Net income (loss) . . . . . . . . . . . . . . . . . . $ 3,286 $ (8,877) $ 7,815 $ (1,641)
======== ======== ======== ========
Income (loss) per common and common
equivalent share . . . . . . . . . . . . . . . . $ 0.20 $ (0.56) $ 0.47 $ (0.11)
======== ======== ======== ========
Weighted average common and common equivalent shares
outstanding . . . . . . . . . . . . . . . . . . . . . 16,716 15,809 16,762 14,750
Pro forma information:
Net loss as reported . . . . . . . . . . . . . . . $ (8,877) $ (1,641)
Pro forma charge in lieu of income taxes . . . . . 379 1,264
-------- --------
Pro forma net loss . . . . . . . . . . . . . . . . $ (9,256) $ (2,905)
======== ========
Pro forma loss per share . . . . . . . . . . . . $ (0.59) $ (0.20)
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE 4 OF 18
<PAGE> 5
LANDMARK GRAPHICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------
MARCH 31,
-----------------------
1995 1994
------- ----------
(RESTATED)
<S> <C> <C>
Cash flows from:
Operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,815 $(1,641)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,998 5,470
Acquired research and development costs . . . . . . . . . . . . . . . . . . . 3,700 -
Adjustment to reduce net income of Advance Geophysical
Corporation to a six month amount . . . . . . . . . . . . . . . . . . . . . - (393)
Compensation related to acquired company's Phantom Stock Plan . . . . . . . . - 6,608
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . 773 27
Amortization of other assets . . . . . . . . . . . . . . . . . . . . . . . . . 131 73
Amortization of capitalized software development costs . . . . . . . . . . . . 2,324 1,672
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . 1,103 1,155
Amortization of field service and lease inventory . . . . . . . . . . . . . . 491 821
Provision for product upgrade costs/inventory obsolescence . . . . . . . . . . 266 377
Net loss on disposal of property and equipment . . . . . . . . . . . . . . . . 100 152
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (79)
Changes in assets and liabilities, net of the effects of purchased business:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,614) (1,675)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,836) 16
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 (727)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (627) (726)
Accounts payable/accrued liabilities . . . . . . . . . . . . . . . . . . . . . . 3,334 6,151
Deferred maintenance fees . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,245) 3,531
Deferred income taxes/income taxes payable . . . . . . . . . . . . . . . . . . . 1,052 63
------- -------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . 20,903 20,875
Investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,072) (21,637)
Payment for purchased businesses acquired, net of cash acquired of $466 . . . . (19,203) -
Capitalized software development costs . . . . . . . . . . . . . . . . . . . . . (2,439) (1,740)
Investment in equity securities . . . . . . . . . . . . . . . . . . . . . . . . (6) (400)
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . 160 229
------- -------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . (31,560) (23,548)
Financing activities:
Additions to debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14,132
Reductions of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,443) (2,026)
Proceeds from sale of common stock, net of registration costs . . . . . . . . . - 45,300
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . 1,430 3,279
Distributions to S Corporation stockholders . . . . . . . . . . . . . . . . . . - (3,777)
Issuance costs related to stock-based financing activities . . . . . . . . . . . (97) -
------- -------
Net cash provided by (used in) financing activities . . . . . . . . . . . . . (110) 56,908
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . (10,767) 54,235
Cash and cash equivalents at beginning of period, as restated . . . . . . . . . . . . 73,840 20,511
------- -------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . $63,073 $74,746
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE 5 OF 18
<PAGE> 6
LANDMARK GRAPHICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of Landmark
Graphics Corporation and subsidiaries (the "Company") have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial
statements should be read in conjunction with the audited financial statements
and accompanying notes included in the Company's 1994 Annual Report on Form
10-K.
The consolidated financial statements for the periods ended March 31, 1994
and as of June 30, 1994 have been restated to include the accounts of
Stratamodel Inc. ("Stratamodel"). On September 28, 1994, the Company acquired
all of the equity interests of Stratamodel in a transaction accounted for as a
pooling of interests.
The unaudited consolidated financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which the Company considers
necessary for a fair presentation of the interim periods. Results for the
interim periods are not necessarily indicative of results for the year. All
significant intercompany balances and transactions have been eliminated.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current
year presentation.
ACQUISITIONS
Stratamodel
Stratamodel's reservoir characterization and modeling software products are
designed to aid geoscientists in oil and gas exploration and production. In
connection with the acquisition, the Company issued a total of 413,911 shares
of its common stock, in exchange for all of the equity interests of
Stratamodel, which included common stock, stock options and warrants. In
addition, the Company retired all of Stratamodel's outstanding debt of
approximately $510,000 and paid certain acquisition-related expenses of
Stratamodel of approximately $293,000.
Stratamodel previously reported its financial results on a December 31
fiscal year-end basis. In connection with the acquisition, Stratamodel changed
its fiscal year-end from December 31 to June 30. As a result, the financial
statements presented combine both entities' financial results for the same
periods. In addition to the adjustments made to effect the change in fiscal
years, certain adjustments were made in order to conform Stratamodel's method
of accounting for software development costs and income taxes to the Company's
method.
PAGE 6 OF 18
<PAGE> 7
LANDMARK GRAPHICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company capitalizes software development costs when an operative
version of the product is ready for initial testing, whereas Stratamodel
capitalized costs at points prior to initial testing. Additionally, the Company
accounted for income taxes under Accounting Principles Board Opinion No. 11
until it was required to adopt Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("SFAS 109"). Stratamodel had applied
Statement of Financial Accounting Standards No. 96, "Accounting for Income
Taxes" until adopting SFAS 109. In connection with the acquisition, Stratamodel
conformed it's accounting policies to those of the Company. The effect of these
conforming adjustments increased Stratamodel's historical net income for the
three months and nine months ended March 31, 1994 by approximately $45,000 and
$12,000, respectively.
The Stratamodel acquisition was consummated on September 28, 1994. The
revenues and net income (loss) amounts included in the accompanying results of
operations are disclosed in the following table with Stratamodel's amounts for
the periods prior to the acquisition presented separately (in thousands)
(unaudited):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- -----------------------
1995 1994 1995 1994
------- ------- -------- --------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Revenues
Company . . . . . . $43,436 $34,516 $115,191 $97,789
Stratamodel . . . . - 848 1,790 4,387
------- ------- -------- --------
Combined . . . $43,436 $35,364 $116,981 $102,176
======= ======= ======== ========
Net income (loss)
Company . . . . . . $3,286 $(8,587) $8,256 $(1,692)
Stratamodel . . . . - (290) (441) 51
------- ------- -------- --------
Combined . . . $3,286 $(8,877) $7,815 $(1,641)
======= ======= ======== ========
</TABLE>
MGI Associates, Inc.
On September 29, 1994, the Company purchased all the issued and outstanding
capital stock of MGI Associates, Inc., ("MGA"). The acquisition was recorded
using the purchase method of accounting and, accordingly, the acquired
operations of MGA have been included in the results of operations since the
date of acquisition.
MGA, based in Dallas, Texas, develops personal computer-based economics and
reservoir engineering software products designed to aid geoscientists in oil
and gas exploration. The Company acquired MGA for consideration of
approximately $13.3 million which consisted of cash of $10.5 million paid to
acquire the stock, cash of $1.3 million paid to retire certain related party
debt and the payment of approximately $1.6 million of acquisition-related
costs. The acquisition was accounted for using the purchase method of
accounting and, accordingly, the purchase price has been allocated to the net
assets acquired based on estimated fair market values at the date of
acquisition.
PAGE 7 OF 18
<PAGE> 8
LANDMARK GRAPHICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DRD Corporation
On February 28, 1995 the Company purchased certain assets and assumed
certain liabilities of DRD Corporation ("DRD") of Tulsa, Oklahoma in exchange
for cash consideration of approximately $5.8 million. The Company also incurred
accounting, legal and investment banking costs of approximately $600,000
related to the acquisition. The assets acquired primarily consisted of drilling
and completion engineering software applications as well as in-process research
and development activities. The acquisition was recorded using the purchase
method of accounting and, accordingly, the acquired operations have been
included in the results of operations since the date of acquisition.
INVENTORY
Inventory is recorded at the lower of cost or market on a first-in,
first-out basis. Inventory consists of the following (in thousands)
(unaudited):
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1995 1994
------ ------
(RESTATED)
<S> <C> <C>
Component parts . . . . . . . . . . . . . . . . $4,086 $1,958
Field service parts . . . . . . . . . . . . . . 74 775
Lease units . . . . . . . . . . . . . . . . . . 430 509
Finished goods . . . . . . . . . . . . . . . . 120 180
Work in progress . . . . . . . . . . . . . . . - 22
------ ------
$4,710 $3,444
====== ======
</TABLE>
SOFTWARE DEVELOPMENT COSTS
In addition to the $2.4 million of software development costs capitalized
during the nine months ended March 31, 1995, the Company recorded approximately
$1.8 million of software development costs in connection with the MGA and DRD
acquisitions. The amounts recorded in connection with the acquisitions reflect
the estimated fair market value of the software acquired.
GOODWILL
Goodwill represents the cost in excess of the fair market value of the net
assets of companies acquired and is being amortized on a straight-line basis
over eight years. During the current fiscal year, the Company recorded goodwill
in connection with the MGA and DRD acquisitions of $13.2 million.
PAGE 8 OF 18
<PAGE> 9
LANDMARK GRAPHICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INCOME TAXES
The Company recorded the following additional net deferred tax assets in
connection with the acquisition of MGA (in thousands) (unaudited):
<TABLE>
<S> <C>
Deferred tax assets:
Deferred revenue . . . . . . . . . . . . . . . . . . . $223
Foreign net operating loss . . . . . . . . . . . . . 148
Other . . . . . . . . . . . . . . . . . . . . . . . 359
----
Total deferred tax assets . . . . . . . . . . . 730
Valuation allowance for deferred tax assets . . . . . . . (265)
----
Net deferred tax assets . . . . . . . . . . . . . . . . . $465
</TABLE> ====
The valuation allowance is offset against the total deferred tax assets to
reflect the net deferred tax assets. The net deferred tax assets reflect the
portion which the Company believes there is a greater than 50 percent
probability of realization.
ACQUIRED RESEARCH AND DEVELOPMENT COSTS
Acquired research and development costs relate to in-process research and
development activities acquired in connection with the DRD purchase. The
Company evaluated the status of the in-process development activities and
determined that certain projects had not reached technological feasibility and
did not have alternative future use. The Company performed a separate valuation
of the replacement cost of these activities and determined the replacement cost
approximated $3.7 million. In accordance with generally accepted accounting
principles, this amount was expensed at the date of acquisition.
MERGER COSTS
Merger costs included in the Consolidated Statements of Operations consist
primarily of accounting, legal and investment banking costs related to the
completion of the Stratamodel acquisition.
RESTRUCTURING CHARGES AND NON-RECURRING COSTS
In connection with the Stratamodel acquisition, the Company adopted a
restructuring plan designed to eliminate redundancies and consolidate
operations. Under the plan, the Company recorded approximately $1.2 million in
restructuring charges consisting of severance costs for terminated employees
and lease costs associated with duplicate facilities. Additionally,
non-recurring costs of approximately $600,000 were incurred in connection with
the acquisition including relocation and other acquisition-related costs.
PAGE 9 OF 18
<PAGE> 10
LANDMARK GRAPHICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OTHER, NET
Other, net consists of the following (in thousands) (unaudited):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- --------------------
1995 1994 1995 1994
------ ----- ------ ------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Foreign currency gains (losses) . . . . $ 48 $ (72) $ (97) $ (43)
Interest income . . . . . . . . . . . . 1,024 788 3,083 1,807
Interest expense . . . . . . . . . . . . (248) (216) (782) (683)
Other . . . . . . . . . . . . . . . . . 57 (60) 296 215
------ ----- ------ ------
$ 881 $ 440 $2,500 $1,296
====== ===== ====== ======
</TABLE>
INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Income per common and common equivalent share is computed using the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period. Common stock equivalents include the number of
shares issuable upon exercise of stock options, less the number of shares that
could have been repurchased with the exercise proceeds using the treasury stock
method. In the case of a net loss, no shares are assumed to be issued upon
exercise of stock options because such shares would be antidilutive.
For purposes of the income per share computation, the shares issued in
exchange for the equity interests of pooled entities have been treated as if
they had been issued and outstanding for all periods presented.
The number of shares used in the computation was determined as follows (in
thousands) (unaudited):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- -------------------
1995 1994 1995 1994
------ ------ ------ ------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding . . . . . . . . . . . . 16,362 15,809 16,329 14,750
Common stock equivalents . . . . . . . . . . . 354 - 433 -
------ ------ ------ ------
Shares used in computing income per share . . . 16,716 15,809 16,762 14,750
======= ====== ====== ======
</TABLE>
PAGE 10 OF 18
<PAGE> 11
LANDMARK GRAPHICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PRO FORMA PROVISION FOR INCOME TAXES
Prior to the merger, Advance Geophysical Corporation ("Advance"), a
wholly-owned subsidiary acquired on March 25, 1994, had elected S Corporation
status for federal income tax purposes; therefore, the tax liability associated
with its income was the responsibility of the shareholders. To reflect the
earnings of Advance on an after-tax basis, an unaudited pro forma provision for
income taxes has been included in the accompanying Consolidated Statements of
Operations for the three months and nine months ended March 31, 1994. This
provision was computed as if Advance were a C Corporation and responsible for
its federal and state income taxes.
CASH FLOW INFORMATION
Net cash provided by operating activities reflects cash payments for
interest and income taxes as follows (in thousands) (unaudited):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
----------------------
1995 1994
------ ----------
(RESTATED)
<S> <C> <C>
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . $1,358 $747
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 771 679
</TABLE>
The following schedule summarizes investing activities, as adjusted,
related to the current year acquisitions of MGA and of DRD (in thousands)
(unaudited):
<TABLE>
<S> <C>
Adjusted total assets, after purchase
price allocation, net of cash acquired . . . . . . . . $18,425
Acquired research and development . . . . . . . . . . . 3,700
Less: Total liabilities assumed . . . . . . . . . . . . 2,922
-------
Cash paid, net of cash acquired. . . . . . . . . . . . . $19,203
=======
</TABLE>
There were non-cash operating activities during the nine month period ended
March 31, 1994 of approximately $8.7 million. This amount relates to common
stock issued to satisfy obligations due to Advance's Phantom Stock performance
unit holders.
During the nine month period ended March 31, 1994, there were non-cash
investing activities of approximately $1.5 million relating to stock issued in
connection with the purchase of the corporate headquarters.
During the nine month periods ended March 31, 1995 and 1994, there were
non-cash financing activities of $356,000 and $578,000 respectively, relating
to tax benefits received from the exercise of non-qualified stock options by
employees.
PAGE 11 OF 18
<PAGE> 12
LANDMARK GRAPHICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONTINGENCIES
Under the terms of the MGA acquisition agreement, the Company may be
obligated to make earn-out payments over a period of four years with a net
present value (as of July 1, 1994) of up to $6.0 million. The amount of
earn-out payments made, which is dependent upon the operating income of MGA in
each of the twelve month periods ending June 30, 1995 through 1998, may range
from zero to approximately $8.7 million. Under the terms of the agreement, the
Company has the option to prepay the earn-out payments at any time at their net
present value, computed as defined in the agreement.
Additionally, in connection with the MGA transaction, the Company acquired
an option to purchase the equity interests of a related party in exchange for a
line of credit guarantee. The option is exercisable no later than October 31,
1997 at an exercise price which is based upon the related party's financial
results. In no event will the net present value of the option price be less
than $8.0 million.
PAGE 12 OF 18
<PAGE> 13
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Management's Discussion and Analysis of Financial Condition and Results of
Operations is the Company's analysis of its financial performance and of
significant trends which may impact future performance. It should be read in
conjunction with the consolidated financial statements of the Company and the
related notes thereto. The financial statements for the fiscal 1994 periods
presented have been restated to account for the acquisition of Stratamodel,
Inc. ("Stratamodel") on a pooling-of-interests basis.
A significant portion of the Company's revenue is derived from sales into
certain geographic or market sectors which, due to regulatory requirements and
other constraints, may have lengthy sales cycles. Accordingly, the timing of
revenue recognition on these transactions may have a noticeable effect on the
quarter-to-quarter and year-to-year financial performance.
RESULTS OF OPERATIONS
Total revenues. Total revenues for the third quarter of fiscal 1995
increased approximately 21% compared to the same quarter in the prior year.
Sales for the first nine months of fiscal 1995 were up approximately $14.8
million, or 14% over the comparable period in fiscal 1994. The increase in
total revenues was due to the growth experienced in software maintenance
revenues and the impact of the MGA acquisition. Decreased domestic spending by
customers combined with continued expansion into developing markets in Europe,
Asia and Latin America has resulted in international revenues increasing from
54% of total revenues for the first nine months of fiscal 1994 to 59% for the
same period in fiscal 1995.
Software product sales. Software product sales consist of licensing fees
for the Company's proprietary and third party software. Software product sales
increased approximately $4.3 million and $5.9 million during the third quarter
and first nine months of fiscal 1995, respectively, an increase of 25% and 12%
over the comparable periods in fiscal 1994. The growth was primarily
attributable to the addition of MGA software revenues, however software
revenues related to a large international order also contributed to the
increase. These increases were somewhat offset by reduced customer spending
experienced in the domestic market. Software product sales as a percentage of
total revenues, or software mix, continues to remain a significant percentage
of the Company's revenues. Management expects this trend to continue; however,
future revenue growth is, in part, dependent on the Company's ability to bring
innovative software products to the market ahead of its competitors. The
Company intends to release several new software products during the fourth
quarter of fiscal 1995; however, there can be no assurance that these new
products will result in significant revenue growth.
Hardware product sales. Hardware product sales relate to the resale of
third party computer hardware. Hardware product sales increased approximately
$800,000 and $500,000 during the third quarter and first nine months of fiscal
1995, respectively, an increase of 11% and 2% over the comparable periods in
fiscal 1994. A large international order which occurred during the current
quarter and contained a significant hardware component contributed to the
increase over the prior year amounts.
PAGE 13 OF 18
<PAGE> 14
Maintenance and other. Maintenance and other revenues relate to
maintenance and support of the Company's hardware and software products as well
as revenues from other services, including consulting, offered to customers.
Maintenance and other revenues increased approximately $2.9 million and $8.4
million during the third quarter and first nine months of fiscal 1995,
respectively, an increase of 28% and 29% over the comparable periods in fiscal
1994. The increase is a result of higher software maintenance revenues, which
continue to increase as the installed base of applications under service
contracts grow. This increase was partially offset by decreased processing
services revenues, which result from the Company's decision to discontinue
offering processing services in fiscal 1994.
Cost of software product sales. Cost of software product sales, as a
percentage of software product sales, increased from 8% for the third quarter
and 9% for the first nine months of fiscal 1994 to 13% and 12%, respectively,
in fiscal 1995. Increased royalty costs resulting from higher sales of third
party applications and increased embedding of third party applications in the
Company's products has negatively impacted the current year's software product
margins. As customers demand a broader range of applications, including those
offered by third party vendors, royalty costs and the resulting impact on
software product margins may continue.
Cost of hardware product sales. Cost of hardware product sales, as a
percentage of hardware product sales, decreased from 85% and 84% for the third
quarter and nine months of fiscal 1994, respectively, to 80% and 82% for the
third quarter and nine months of fiscal 1995, respectively. The significant
percentage decrease in the current quarter is primarily a result of closing
several large international orders with higher than average hardware margins.
Although the hardware margin was positively impacted by these orders,
management believes price competition in the computer hardware industry has
negatively impacted the hardware product margins and anticipates future
hardware margins will be somewhat lower. Although hardware has become less
profitable as a result of price competition, the Company will continue to offer
hardware to accommodate sales of software and services to customers who desire
comprehensive CAEX solutions.
Cost of maintenance and other. Cost of maintenance and other has decreased
as a percentage of the related revenues from 62% in the both the third quarter
and the first nine months of fiscal 1994 to 53% and 57% in the current quarter
and the first nine months of fiscal 1995, respectively. The expense reductions
resulting from management's decision to discontinue offering processing
services and outsource certain hardware maintenance services have positively
impacted the maintenance and other margin.
Research and development. Gross research and development costs increased
approximately 15% and 5% over the third quarter and first nine months of fiscal
1994, respectively. The increase over the prior year relates to the addition of
the MGA development function and the related costs. The Company believes that
continued investments in research and development are important to its future
growth and competitive position in the marketplace.
Selling, marketing and administrative. Selling, marketing and
administrative expenses increased approximately $3.0 million over the third
quarter of fiscal 1994; however, as a percentage of revenue the costs remained
constant. Selling, marketing and administrative costs for the first nine months
of fiscal 1995 have increased approximately $7.3 million over the amounts for
the first nine months of the previous fiscal year, and, as a percentage of
revenues increased slightly. The increases in absolute dollars relate to
incremental costs associated with the addition of the MGA operations and
increased selling costs associated with expanding the Company's
PAGE 14 OF 18
<PAGE> 15
international scope of the sales and distribution function. These increases
were somewhat offset by a decrease in the accrual of incentive compensation
amounts during fiscal 1995.
Acquired research and development costs. Acquired research and development
costs, which approximate 3% of total revenues for the first nine months of
fiscal 1995, relate to in-process research and development activities acquired
in connection with the DRD purchase. The Company reviewed the status of the
in-process development activities and, based upon the Company's method used to
account for software development costs, determined technological feasibility
had not been established for certain of these activities. In addition to
determining whether technological feasibility had been reached, the Company
evaluated whether these projects had alternative future use in research and
development projects or otherwise. This evaluation determined that certain
projects had not reached technological feasibility and did not have alternative
future use; therefore, a separate valuation of the replacement cost of these
activities was performed and resulted in a valuation of $3.7 million. In
accordance with generally accepted accounting principles, this amount was
expensed at the date of acquisition.
Merger costs. Merger costs, which approximate less than 1% of total
revenues for the first nine months of fiscal 1995, consist of accounting, legal
and investment banking costs related to the acquisition of Stratamodel. Merger
costs for the nine month period decreased approximately $10.6 million from
fiscal 1994 primarily due to the inclusion in the prior year of a compensation
charge related to an acquired company's Phantom Stock Plan.
Restructuring and other non-recurring charges. Restructuring and other
non-recurring charges, which approximate 2% of revenues for the first nine
months of fiscal 1995, relate to the Company's restructuring plan which was
designed to eliminate redundancies and consolidate the Stratamodel operations.
Under the plan, the Company accrued approximately $1.2 million of restructuring
charges consisting of approximately $500,000 of severance costs for terminated
employees and approximately $700,000 of lease costs associated with duplicate
facilities. Management expects this restructuring plan to result in reduced
spending for the Company. Additionally, non-recurring costs of approximately
$600,000 were accrued in connection with the Stratamodel acquisition. These
non-recurring costs include approximately $400,000 in relocation costs and
approximately $200,000 in other acquisition-related charges.
Other, net. Other, net increased approximately $441,000 and $1.2 million
for the third quarter and the first nine months of fiscal 1995, respectively,
from the same periods in fiscal 1994. The fluctuations are primarily
attributable to higher net interest income. Favorable fluctuations in currency
exchange rates compared to the third quarter of fiscal 1994 also contributed to
the current quarter increase.
Taxes. During the third quarter of fiscal 1995, the effective tax rate was
lower than the statutory rate and higher than the prior year's rate. The
provision increased primarily due to the application of pooling-of-interests
accounting to the acquisition of a Subchapter S Corporation in fiscal 1994.
This required the results of operations for the acquired company for periods
prior to the merger to be included in income before income taxes, however the
related income tax liability was excluded, as it was the responsibility of the
S Corporation's stockholders. In the current quarter the effective rate was
less than the statutory rate due mainly to the recognition of deferred tax
benefits.
PAGE 15 OF 18
<PAGE> 16
FINANCIAL CONDITION AND LIQUIDITY
Cash and cash equivalents decreased approximately $10.8 million from June
30, 1994. A substantial amount of this decrease relates to amounts used in
connection with fiscal 1995 acquisitions. After excluding the effect of cash
utilized for acquisitions during the nine month period, cash generated
internally exceeded the cash required to support the Company's operations by
approximately $10.7 million.
Trade accounts receivable increased by $2.9 million due primarily to the
higher revenues recognized in third quarter of fiscal 1995 as compared to the
fourth quarter of the previous fiscal year. Management continues the emphasis
on improving collections, which has impacted the trade accounts receivable
balance and reduced the significant fluctuations experienced in days sales
outstanding. Management intends to focus efforts on maintaining days sales
outstanding within the 95 to 105 day range.
Goodwill increased approximately $12.5 million from the balance at June 30,
1994. This amount relates to the MGA and DRD acquisitions and represents the
cost in excess of fair value of the net assets acquired. The goodwill recorded
will be amortized on a straight-line basis over a period of eight years.
Accounts payable and accrued liabilities increased approximately $4.1
million from June 30, 1994 due primarily to the timing of the receipt and
payment of vendor invoices. Based on the nature of this account, period to
period fluctuations can be expected to continue.
The Company's primary internal source of liquidity is cash flow generated
from operations. External sources of liquidity include debt and equity
financing. The Company believes funds generated from operations will be
sufficient to meet liquidity requirements in the foreseeable future. Although
the Company normally covers capital expenditures with funds generated
internally, long term financing vehicles may be used in connection with
unusually large capital expenditure programs.
Management regularly evaluates opportunities to acquire or license
products, technologies or businesses complimentary to the Company's business.
These acquisition opportunities, if they arise, may involve the use of cash or,
depending upon the size and terms of the acquisition, may require debt or
equity financing.
PAGE 16 OF 18
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Marlene Malek and Abraham Slomovics v. Landmark Graphics Corporation and C.
Eugene Ennis; The Registrant and C. Eugene Ennis, the Registrant's former chief
executive officer, have been named as defendants in a class action lawsuit
filed in the United States District Court for the Southern District of Texas,
Houston Division. The action is on behalf of those individuals who purchased
the Company's Common Stock between September 30, 1991 and March 10, 1992 and
alleges that the Company and Mr. Ennis violated the federal securities laws and
state law in connection with reporting the Company's financial information. The
Company and Mr. Ennis moved for summary judgment on all of the plaintiffs'
claims following the close of discovery. On July 12, 1994, the trial court
granted summary judgment on all of the state law claims and on some of the
federal claims. On March 16, 1995 the trial court approved the Class Notice,
which has been mailed to all record holders of Landmark common stock as of
March 10, 1992. Requests for exclusion from the Class must be received within
60 days from the date of the Class Notice. The claims which survived summary
judgment are set for trial after July 7, 1995. This matter was last discussed
in the Company's filing on Form 10-Q for the quarterly period ended December
31, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
(2) Plan of Acquisition, reorganization, arrangement, liquidation or
succession
2.1 The Asset Purchase Agreement dated as of February 22, 1995 by
and between Technologies Acquisition Corporation, DRD
Corporation and DRD (UK) Limited.
(27) Financial Data Schedule
27.1 Financial data schedule as of and for the nine months
ended March 31, 1995.
(b) Reports on Form 8-K.
There were no reports filed on Form 8-K during the three
months ended March 31, 1995.
PAGE 17 OF 18
<PAGE> 18
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.
LANDMARK GRAPHICS CORPORATION
Registrant
Date: May 12, 1995 By: /s/ Robert P. Peebler
------------ -----------------------------
Robert P. Peebler
President and
Chief Executive Officer
Date: May 12, 1995 By: /s/ William H. Seippel
------------ -----------------------------
William H. Seippel
Vice President, Finance and
Chief Financial Officer
(Principal Accounting Officer)
PAGE 18 OF 18
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(2) Plan of Acquisition, reorganization, arrangement, liquidation or
succession
2.1 The Asset Purchase Agreement dated as of February 22, 1995
by and between Technologies Acquisition Corporation, DRD
Corporation and DRD (UK) Limited.
(27) Financial Data Schedule
27.1 Financial data schedule as of and for the nine months
ended March 31, 1995.
</TABLE>
<PAGE> 1
ASSET PURCHASE AGREEMENT
BY AND AMONG
TECHNOLOGIES ACQUISITION CORP.,
A TEXAS CORPORATION,
AS PURCHASER
AND
DRD CORPORATION,
A RHODE ISLAND CORPORATION,
AND
DRD (UK) LIMITED,
A SCOTLAND CORPORATION,
AS SELLERS
DATED AS OF FEBRUARY 22, 1995
-i-
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Terms Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II - PURCHASE AND SALE; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Purchase and Sale of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Assignment and Assumption of Assumed Contracts . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Treatment of Other Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Instruments Delivered at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.8 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III - REPRESENTATIONS AND FURTHER AGREEMENTS OF SELLERS . . . . . . . . . . . . . . . . . . . . . 8
3.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Compliance with Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Adverse Agreements and Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Litigation and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Absence of Certain Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.18 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV - REPRESENTATIONS AND FURTHER AGREEMENTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . 14
4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Authorization of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Compliance With Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V - COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Employee and Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Noncompetition and Nonsolicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Indemnification of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 Indemnification of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Material Adverse Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Effect of Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.6 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.8 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.11 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
-iii-
<PAGE> 4
SCHEDULES:
Schedule 3.1 Jurisdictions in which each of the Sellers is Qualified
to do Business
Schedule 3.4(a) Assumed Contracts
Schedule 3.4(b) Other Contracts
Schedule 3.15 Employee Benefit Plans
Schedule 3.17 Equipment
Schedule 3.18 Affiliates Agreements
<PAGE> 5
EXHIBITS:
Exhibit "A" - Financial Statements
Exhibit "B" - Intellectual Property
Exhibit "C" - Software
Exhibit "D" - Subcontract Agreement
Exhibit "E" - Assignment and Assumption Agreement
Exhibit "F" - Assignment of Intellectual Property
Exhibit "G-1" - Assignment of Rights
Exhibit "G-2" - Assignment and Indemnity Agreement
Exhibit "H" - Noncompetition Agreement
Exhibit "I" - Bill of Sale and Assignment
Exhibit "J" - Lease Agreements
Exhibit "K" - Opinion(s) of Sellers' Counsel
Exhibit "L" - Opinion of Purchaser's Counsel
<PAGE> 6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 22nd day of February, 1995, by and among Technologies
Acquisition Corp., a Texas corporation ("Purchaser") and DRD Corporation, a
Rhode Island corporation ("DRD"), and DRD (UK) Limited, a Scotland corporation
(collectively, with DRD, referred to herein as the "Sellers").
R E C I T A L S:
A. Sellers are carrying on and conducting, among other
activities, a business of creating, distributing, licensing, maintaining and
servicing certain software referred to as "WELLPLAN" and products related
thereto intended for use in drilling, completions and well servicing operations
(such business sometimes hereinafter referred to as the "Business").
B. Sellers desire to sell the Assets (as hereinafter defined) to
Purchaser and Purchaser desires to acquire the Assets, subject to the terms and
conditions set forth herein.
A G R E E M E N T:
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Purchaser and Sellers hereby agree as follows:
I
DEFINITIONS
.1 TERMS DEFINED. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth below:
"Agreement" shall mean this Asset Purchase Agreement,
including all amendments hereto and all Exhibits and Schedules
attached hereto.
"Assets" shall mean certain assets of Sellers, existing as of
the Closing Date, pertaining to the Business, consisting of all of the
right, title and interest of Sellers in, to and under (i) the
Contracts, (ii) the Customer List, (iii) the Equipment, (iv) the
Intellectual Property, (v) the Software and (vi) the Records.
"Assumed Contracts" shall mean all contracts and agreements of
Sellers listed on Schedule 3.4(a).
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"Balance Sheet Date" shall mean December 31, 1994.
"Business" shall have the meaning set forth in Recital A
hereof.
"Closing" shall mean the consummation of the purchase and sale
of the Assets (excluding the Other Contracts) on the Closing Date.
"Closing Date" shall mean the date hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Contracts" shall mean all of the Assumed Contracts and the
Other Contracts.
"Customer List" shall have the meaning set forth in Section
3.8 hereof.
"Employee Benefit Plans" shall mean any employee benefit plan,
as defined in Section 3(3) of ERISA, together with any other plan,
program or arrangement to provide employee bonuses, incentive deferred
compensation or workers compensation, including without limitation,
any stock purchase or stock option plan, stock appreciation right,
retirement, savings, medical, vacation, or similar benefit plans,
trusts, agreements or arrangements, whether or not maintained pursuant
to a collective bargaining agreement, employment contract or
otherwise, maintained, sponsored or contributed to by Sellers or any
ERISA Affiliate of Sellers.
"Equipment" shall mean the items of computer hardware,
machinery, equipment, office furniture, fixtures and similar personal
property owned, used or leased by Sellers primarily in connection with
the operation of the Business, including, without limitation, the
items listed on Schedule 3.17 attached hereto, but excluding those
items specifically excluded on Schedule 3.17.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean any member of a controlled group
of corporations (as defined in Section 414(b) of the Code), a group of
trades or businesses (whether or not incorporated) which are under
common control (as defined in Section 414(c) of the Code, an affiliate
service group (as defined in Section 414(m) of the Code, or a group of
entities which is otherwise required to be aggregated with any entity
pursuant to Section 414(o) of the Code, and the regulations issued
thereunder, of which Seller is a member.
"Financial Statements" shall mean the Balance Sheet of Sellers
as of December 31, 1994 and the Statements of Operations of Sellers
for the 12-month period ending December 31, 1994, attached hereto as
Exhibit "A".
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"Intellectual Property" shall mean the Software and all
copyrights, patents, trademarks, service marks, trade names, slogans
and logos, mask works, trade secrets or proprietary rights of Sellers
pertaining directly to WELLPLAN or to any of the Software, and all
manuals and documentation, registrations, or applications to register
any of the foregoing, and all other rights of Sellers as listed
on Exhibit "B" hereto, but shall not include the name "DRD" or
derivatives thereof or the DRD company logo.
"IRS" shall mean the United States Internal Revenue Service.
"Liens" shall mean any lien, pledge, mortgage, deed of trust,
security interest, encumbrance, claim or restriction of any nature.
"Other Contracts" shall mean all contracts and agreements
listed on Schedule 3.4(b).
"Person" shall mean an individual, partnership, joint venture,
corporation, trust or other unincorporated entity or organization.
"Purchase Price" shall have the meaning set forth in Section
2.2 hereof.
"Records" shall mean originals of the files, customer lists,
vendor lists and other records and data of Sellers, including
accounting and tax records, relating solely to the Business and/or the
Assets, and copies of such files, lists and other records and data as
relate both to the Business and/or Assets and to other property,
activities and/or obligations of Sellers.
"Schedules" shall mean any referenced schedule which is
attached hereto and made a part hereof.
"Sellers' Customers" shall have the meaning set forth in
Section 3.8 hereof.
"Software" shall mean all computer software of Sellers known
as "WELLPLAN" or related to WELLPLAN, in source code format;
including, without limitation, the programs listed on Exhibit "C"
hereto, and all derivatives and enhancements thereto.
"Section" shall mean, unless otherwise noted, a section or
subsection in this Agreement.
.2 NUMBER AND GENDER. Whenever the context requires, references
in this Agreement to the singular number shall include the plural, and the
plural number shall include the singular, and words denoting gender shall
include the masculine, feminine and neuter.
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II
PURCHASE AND SALE; CLOSING
.1 PURCHASE AND SALE OF THE ASSETS. Subject to the terms and
conditions herein set forth, Sellers agree to convey, sell, transfer and assign
to Purchaser and Purchaser shall purchase and acquire from Sellers at the
Closing all of Sellers' right, title and interest in and to the Assets (other
than the Other Contracts), free and clear of any Liens. Subsequent to the
Closing, Sellers agree to convey, sell, transfer and assign to Purchaser all of
Sellers' right, title and interest in, under and to the Other Contracts,
without additional consideration, in accordance with the provisions of Section
2.4 below.
.2 PURCHASE PRICE. The purchase price which Purchaser agrees to
pay, and which Sellers agree to accept, for the Assets (the "Purchase Price")
is immediately available funds in the amount of $5,800,000, payable by Federal
Reserve System wire transfer, which shall be received on the Closing Date for
credit to an account designated by DRD.
.3 ASSIGNMENT AND ASSUMPTION OF ASSUMED CONTRACTS. Purchaser
shall be entitled to the rights and benefits of Sellers (or either of them)
under, and Purchaser shall assume and be responsible to perform the obligations
of Sellers (or either of them) under, the Assumed Contracts for and in respect
of all periods after the Closing Date. Sellers shall pay to Purchaser, from
time to time after the Closing, any amounts received by either of them after
the Closing with respect to the Assumed Contracts to the extent that such
amounts pertain to or are attributable to obligations performed or performable
after the Closing Date and Purchaser shall pay to DRD any amounts received by
Purchaser with respect to the Assumed Contracts to the extent that such amounts
pertain to or are attributable to obligations performed by Sellers on or prior
to the Closing Date. Purchaser assumes no obligations or liabilities of, or
claims against, either of the Sellers or any of their respective affiliates,
except for any liabilities or obligations of Sellers under the Assumed
Contracts which accrue and are required to be performed by Sellers after the
Closing Date.
.4 TREATMENT OF OTHER CONTRACTS.
(a) Each of the Sellers and Purchaser shall enter
into a Subcontract Agreement substantially in the form attached hereto
as Exhibit "D," under which Purchaser shall perform for each of the
Sellers the duties that accrue and are required to be performed by
either of the Sellers after the Closing Date under each of the Other
Contracts to which either of the Sellers is a party.
(b) Sellers agree to take, on and after the
Closing Date, for Purchaser's benefit, such reasonable actions as
Purchaser may from time to time request to enforce the obligations of
the other parties to the Other Contracts including, without
limitation, any agreements or provisions contained in such Other
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Contracts pertaining to payment, confidentiality, nondisclosure,
compliance with export laws and regulations or restrictions on the use
of the program(s) or other product(s) licensed to such other parties
provided that, if so requested by Seller(s), Purchaser shall reimburse
Seller(s) for the reasonable costs and expenses of any such actions.
(c) Sellers shall pay to Purchaser, from time to
time after the Closing Date (as defined in the Asset Purchase
Agreement) any amounts received by either of them after the Closing
Date with respect to the Other Contracts to the extent that such
amounts pertain to or are attributable to obligations performed or
performable after the Closing Date, and Purchaser shall pay to DRD any
amounts received by Purchaser with respect to the Other Contracts to
the extent that such amounts pertain to or are attributable to
obligations performed by Sellers on or prior to the Closing Date.
(d) As soon as practicable following the Closing
Date, each of the Sellers shall use commercially reasonable efforts to
obtain a written consent to the assignment to Purchaser of all of
Seller's right, title and interest in and to each of the Other
Contracts and to the transfer to Purchaser of all of Sellers' rights
and duties which accrue on or after the date of such assignment under
each such Other Contract. Sellers shall pay the costs and expenses of
the mailing of a single request for consent to each party to each
Other Contract, and Purchaser shall pay, or reimburse promptly to
Seller(s), the reasonable costs and expenses of any and all further
efforts.
(e) Immediately following receipt of any such
consent, Sellers shall deliver such consent to Purchaser and
thereupon, automatically and without the need for any further
documentation, (i) Purchaser shall be deemed to have assumed all of
the obligations of Sellers (or either of them) under the Other
Contract(s) to which such consent pertains, (ii) Purchaser shall be
deemed to have made all representations and warranties made herein on
the Closing Date as of the date of delivery of such consent to
Purchaser with respect to the Other Contract(s) to which such consent
pertains and (iii) all of Seller's(s') right, title and interest in
and to the Other Contract(s) to which such consent pertains shall be
deemed to have been assigned to Purchaser on the terms and in the
manner set forth in the form of Assignment and Assumption Agreement
attached hereto as Exhibit "E".
(f) Each of the Sellers shall terminate (or not
renew or cause to be renewed) any Other Contract which (i) requires
such Seller to perform ongoing obligations and (ii) is not assigned to
Purchaser, after the exercise by Sellers of their commercially
reasonable efforts as contemplated by subsection 2.4(d). Any
termination or nonrenewal of Other Contracts pursuant to this
Subsection 2.4(f) shall occur as soon as such action may be effected
without resulting in a breach of or default under such Other Contract.
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.5 CLOSING. The Closing shall take place at the
offices of Winstead Sechrest & Minick P.C., 5400 Renaissance Tower,
1201 Elm Street, Dallas, Texas 75270, or such other place as shall be
agreed upon by Purchaser and Sellers, at 10:00 a.m. on the Closing
Date.
.6 INSTRUMENTS DELIVERED AT CLOSING.
(a) At the Closing:
(i) Sellers shall execute and
deliver to Purchaser the Subcontract Agreement, substantially
in the form attached hereto as Exhibit "D";
(ii) Sellers shall execute and
deliver to Purchaser an Assignment and Assumption Agreement,
substantially in the form of Exhibit "E" attached hereto,
pursuant to which the Assumed Contracts will be conveyed to
and assumed by Purchaser and the other Assets and the Customer
List will be conveyed to Purchaser; together with all
necessary consents of third parties to such assignment;
(iii) Sellers shall execute and
deliver to Purchaser an Assignment of Intellectual Property,
substantially in the form of Exhibit "F" attached hereto;
(iv) Sellers shall deliver to
Purchaser an original of an Assignment of Rights,
substantially in the form of Exhibit "G-1" attached hereto,
and a Noncompetition Agreement substantially in the form of
Exhibit "H" attached hereto, executed by each of Stephen
Jordan, Michael C. Apostal, Charles J. Ritter and Dwight
Yoder;
(v) Sellers shall deliver to
Purchaser an original of an Assignment and Indemnification
Agreement substantially in the form of Exhibit "G-2" attached
hereto and a Noncompetition Agreement substantially in the
form of Exhibit "H" attached hereto, executed by Jordan,
Apostal, Ritter and Associates, Inc.
(vi) Sellers shall execute and
deliver to Purchaser a Bill of Sale and Assignment,
substantially in the form of Exhibit "I" attached hereto,
pursuant to which the Equipment will be conveyed to Purchaser;
(vii) Sellers shall execute and
deliver to Purchaser such other instruments of transfer as are
reasonably requested by Purchaser to convey to Purchaser good
and indefeasible title in and possessory rights to the Assets;
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(viii) Sellers shall deliver
possession of the Customer List to Purchaser;
(ix) Sellers shall deliver
possession of the Records (in place in the Tulsa Office of
DRD), the Equipment (in place), original executed copies of
each of the Assumed Contracts and any other documents
evidencing or pertaining to the Assets, including all tangible
manifestations of the Intellectual Property (all in place), to
Purchaser;
(x) Sellers shall cause JARY
Investment Partners to execute and deliver to Landmark
Graphics Corporation, a Delaware corporation ("Landmark"), the
Lease Agreements substantially in the form of Exhibit "J"
attached hereto;
(xi) Sellers shall cause to be
delivered to Purchaser the opinion(s) of Sellers' counsel
substantially in the form of Exhibit "K" attached hereto;
(xii) DRD shall deliver or shall
have delivered to Purchaser evidence of its written demand,
dated as of a recent date, to Antelope Engineering, Inc. that
it cease and desist using the mark "Cape Wellplanning
Systems"; and
(xiii) Sellers shall deliver to
Purchaser such other documents or instruments as are
contemplated hereby or reasonably requested by Purchaser to
consummate the transactions contemplated hereby.
(b) At the Closing, Purchaser shall:
(i) deliver the Purchase Price,
comprised of $5,800,000.00 of immediately available funds to
DRD by Federal Reserve System wire transfer in accordance with
the instructions provided by DRD to Purchaser prior to the
Closing and shall provide DRD a reference number reflecting
such transfer for credit on the Closing Date;
(ii) cause Landmark to execute and
deliver to JARY Investment Partners the Lease Agreements
contemplated by subsection 2.6(a)(x) above;
(iii) execute and deliver to
Sellers the Subcontract Agreement;
(iv) execute and deliver to
Sellers the Assignment and Assumption Agreement;
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(v) cause to be delivered to
Sellers the opinion of Purchaser's counsel substantially in
the form of Exhibit "L" attached hereto;
(vi) cause to be delivered to
Sellers the payment of costs associated with the sale of the
Assets to the extent billed by Sellers on or prior to the
Closing Date, as provided in Section 2.7 hereof; and
(vii) execute and deliver to
Sellers such other documents and instruments as are
contemplated hereby or reasonably requested by Sellers to
consummate the transactions contemplated hereby.
.7 CLOSING COSTS. At the Closing, Purchaser will pay to DRD, or
such third parties, as directed by DRD, up to $350,000 of Sellers' actual,
documented out-of-pocket legal, accounting, brokerage, finders and other costs
and expenses incurred in connection with the negotiation, execution and
performance of this Agreement and the consummation of the transactions
contemplated hereby. To the extent that such costs and expenses of Sellers
within the above limit of $350,000 are not billed to Purchaser by Sellers at or
prior to the Closing, Purchaser will pay such costs to, or as directed by, DRD
promptly after receipt of a statement therefor from DRD. Except as provided
above, all legal, accounting, brokerage, finders or other costs or expenses
incurred by Purchaser or Sellers in connection with the transactions
contemplated by this Agreement shall be borne by the party who incurs such
costs.
.8 ALLOCATION OF PURCHASE PRICE. Purchaser and Sellers shall, as
soon as practicable following the Closing, agree upon an allocation of the
Purchase Price among the Assets. Purchaser and Sellers hereby agree to furnish
such reports and returns to the Internal Revenue Service and the Secretary of
Treasury as may be required by Section 1060 of the Code and the treasury
regulations issued thereunder. All such reports and returns shall be
consistent with the allocation of the Purchase Price agreed upon by the
Purchaser and Sellers.
III
REPRESENTATIONS AND FURTHER AGREEMENTS OF SELLERS
Except as described in Schedule 3.0 hereto, each of the Sellers
represents and warrants, jointly and severally, to Purchaser the validity,
truth and accuracy of the following:
.1 ORGANIZATION AND GOOD STANDING. DRD is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Rhode Island. DRD (UK) Limited is a corporation duly organized, validly
existing and in good standing under the laws of Scotland. Each of the Sellers
has full corporate power and authority to carry on its business as presently
conducted and to own, lease and/or operate its properties as and in the places
where such business is now conducted or such properties are owned or leased.
Each of the Sellers is duly qualified as a foreign corporation to transact
business in
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each state or jurisdiction where its business, operations or activities require
such qualification, except for such jurisdictions where the failure to be so
qualified. Each of the Sellers is duly qualified as a foreign corporation in
each of such states or jurisdictions listed on Schedule 3.1 attached hereto.
.2 TITLE TO ASSETS. Each of the Sellers has good and
indefeasible title to the Assets, free and clear of any Liens.
.3 INTELLECTUAL PROPERTY.
(a) With respect to each item of Intellectual Property:
(i) Sellers are the sole and
exclusive owners thereof and have the sole and exclusive right
to use, license and convey the item in the conduct of the
Business, and no lease, license, sublicense, royalty, or
distribution agreement, or other agreement pertaining to the
item has been granted by either of the Sellers;
(ii) no proceedings are pending or,
to the knowledge of either of the Sellers, threatened against
either of the Sellers or against other persons which challenge
the validity, enforceability, use or ownership of the item;
(iii) the item (A) does not
infringe upon or otherwise violate the rights of others, (B)
to the knowledge of Sellers, is not being infringed upon by
others, and (C) is not subject to any outstanding order,
decree, judgment, stipulation or charge;
(iv) Neither of the Sellers has
received any claim or charge of interference or infringement
with respect to the item;
(v) Each of the Sellers has taken
steps which are commercially reasonable to protect its rights
in each item and has not disclosed such rights so as to
adversely affect the validity or enforceability of such rights
and will continue to use commercially reasonable efforts to
maintain those rights prior to the Closing so as to not
adversely affect the validity or enforcement of such rights;
and
(vi) Each of the Sellers has
supplied to Purchaser and its designated agents true and
complete copies of all written documentation evidencing its
ownership of the item and of all licenses and other contracts
related thereto or to which a reference is made in Schedule(s)
3.4(a) or 3.4(b) attached hereto.
(b) No infringement, misappropriation or
violation of the property rights of any third party will occur as a
result of the transfer of the Assets or the
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continued operation by Purchaser of the Business as now conducted or
as presently proposed to be conducted by Sellers.
(c) Each item of Software or circuity included
within the Intellectual Property is virus-free and contains no
undisclosed time control mechanisms.
.4 CONTRACTS.
(i) Schedule(s) 3.4(a) and 3.4(b) set forth, with
respect to each item of Intellectual Property, all licenses, leases,
sublicenses, sales, distributions, maintenance or service agreements
in effect with respect thereto;
(ii) Sellers have not defaulted on, breached or
violated, in any material manner, any of their agreements or
obligations with respect to the Contracts and, to the knowledge of
Sellers, the other parties to such Contracts have not defaulted on,
breached or violated, in any material manner, any of their agreements
or obligations under such Contracts and such Contracts are in full
force and effect and represent valid and binding obligations of
Sellers and the other parties thereto, enforceable against such
persons in accordance with their terms;
(iii) There have been no security deposits,
escrow payments, prepayments, advance payments or similar payments
made by any Persons with respect to the Contracts; and
(iv) Each of the Sellers has, prior to the date
hereof, delivered to Purchaser true and complete copies of each of the
Contracts in effect as of the date of this Agreement, including all
amendments or modifications thereof and all correspondence relating
thereto.
.5 AUTHORIZATION. This Agreement constitutes a valid and binding
obligation against each of the Sellers, enforceable in accordance with its
terms. Each of the Sellers has full power and authority to execute this
Agreement and all documents and instruments contemplated herein, and to perform
its obligations as required by the terms of this Agreement. The execution,
delivery and performance of this Agreement by Sellers and all transactions
contemplated hereby have been duly authorized by all necessary action. No
consent, approval, authorization or order of any Person is required in
connection with the execution, delivery or performance of the transactions
contemplated by this Agreement.
.6 COMPLIANCE WITH OBLIGATIONS. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will:
(a) conflict with or constitute a breach of or a
default under, the organizational documents of either of the Sellers;
(b) conflict with, constitute a breach of or a
default under, or give rise to any right of termination or
acceleration under, any agreement, contract,
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indenture, mortgage, deed of trust or other instrument or undertaking
to which either of the Sellers is a party, or by which any of the
Assets are bound;
(c) constitute a violation of any law,
regulation, judgment, order or decree applicable to either of the
Sellers or the Assets; or
(d) result in the creation or imposition of any
Lien upon any of the Assets.
.7 COMPLIANCE WITH LAW. Each of the Sellers has complied with
all, and is not in violation of any, (a) statutes, laws, regulations, decrees
and orders of the United States, all states, municipalities and agencies
(federal, state and local) and all foreign jurisdictions applicable to the
Business and/or the Assets and (b) safety, health and environmental statutes,
laws, regulations, decrees and orders of the United States, and all states,
municipalities and agencies (federal, state and local) applicable to the
Business and/or the Assets, except such failures to comply or violations which
would not, individually or in the aggregate, adversely affect the Assets or the
operations of either of the Sellers.
.8 CUSTOMER LIST. The list delivered to Purchaser as provided by
Section 2.6(a)(viii) hereof is a true and complete list (the "Customer List")
of all Persons who were, as of the Closing Date or at any time during the
preceding five (5) year period preceding the Closing Date, customers of Sellers
with respect to the Business. All Persons reflected on the Customer List or
who should have been so listed shall be collectively referred to herein as the
"Sellers' Customers."
.9 FINANCIAL STATEMENTS. The Financial Statements (a) have been
prepared in accordance with the books and Records of Sellers, and (b) present
fairly the financial condition of Sellers as of such dates and the results of
its operations and changes in financial position for such periods, subject to
normal recurring year end audit adjustments.
.10 ADVERSE AGREEMENTS AND CHANGES. Neither of the Sellers (i) is
a party to any agreement or instrument, or subject to any judgment, order,
writ, injunction, decree, rule or regulation which adversely affects the Assets
or the Business or (ii) is aware of any pending event or condition which will
have an adverse impact on the Assets or Business. Since December 31, 1994,
there has been no adverse change in the Assets, Business or results of
operations of either of the Sellers.
.11 LITIGATION AND CLAIMS. There is not (a) pending or, to the
knowledge of Sellers, threatened, any litigation, action, suit, arbitration,
investigation, inquiry, audit, complaint, charge or other proceeding to which
either of the Sellers is a party involving the Assets or Business, or to which
the Assets or the Business are subject, before or by any court or governmental
or regulatory agency or body, (b) to the knowledge of Sellers, any basis for
any litigation, action, suit, inquiry, audit, complaint, charge or proceeding
to which Sellers could be made a party before or by any court or governmental
or regulatory agency or body, which, if adversely determined, would have an
adverse effect, either individually or in the aggregate, on the Assets or
Business, or (c) any judgment, decree, injunction, rule or
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order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Sellers or enforceable
against the Assets or Business.
.12 ABSENCE OF CERTAIN DEVELOPMENTS. Since December 31, 1994,
Sellers have not:
(a) subjected any Asset, or permitted any Asset
to become subject to, any Lien;
(b) sold, assigned, leased, licensed or otherwise
transferred any Asset other than in the ordinary course of business;
(c) entered into any lease, license, sublicense,
royalty, distribution, maintenance or service agreement with respect
to the Intellectual Property other than in the ordinary course of
business;
(d) disclosed any proprietary or confidential
information to any Person except in connection with this Agreement or
in the ordinary course of business;
(e) operated the Business other than in the
ordinary course, consistent with past practices; or
(f) entered into any agreement or understanding
(other than this Agreement) to do or permit any of the foregoing.
.13 TAXES.
(a) All taxes, penalties, interest and
assessments, including, without limitation, income, withholding,
payroll, excise, unemployment, FICA, medicare, franchise, sales, use,
personal property, real property and ad valorem taxes, with respect to
Sellers, the Business and the Assets, have been paid in full.
(b) All tax returns and reports required to be
filed by Sellers have been prepared in accordance with applicable
rules and regulations and timely filed with all proper taxing
authorities. Such returns are correct in all respects and Sellers are
not required to pay any other taxes, in any amount, except as shown in
such returns. An extension of time within which to file any return or
report which has not been filed has not been requested or granted.
(c) Sellers have not granted any waivers or
extensions of time with respect to any audit or time to collect taxes.
To each of the Sellers' knowledge, no deficiency for any tax,
assessment or governmental charges against either of the Sellers has
been threatened, claimed, proposed or assessed.
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.14 BROKER'S OR FINDER'S FEES. No Person (other than Corum Group
Limited) is entitled, directly or indirectly, to compensation by reason of any
agreement or understanding with Sellers, as a broker or finder in connection
with the sale and purchase of the Assets. Sellers shall indemnify and hold
Landmark harmless from and against any and all claims by any Person as a broker
or finder in connection with the sale and purchase of the Assets, directly or
indirectly, by reason of an agreement or understanding with the Sellers but not
paid by Sellers, to the extent such claims, plus other closing costs paid by
Purchaser pursuant to Section 2.7 hereof, exceed $350,000.
.15 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.15 lists all Employee Benefit Plans.
(b) Neither of the Sellers nor any ERISA Affiliate
has, with respect to any Multiemployer Plan, as defined in Section
3(37) of ERISA, suffered or caused or will, as a result of the
consummation of the transactions contemplated herein, suffer or cause
a "complete withdrawal" or "partial withdrawal" as such terms are
respectively defined in Sections 4203 and 4205 of ERISA.
.16 LABOR MATTERS. Sellers have no collective bargaining
agreements with any labor union and there are no current negotiations with a
labor union. Sellers are in substantial compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor
practice. There is no unfair labor practice complaint against either of the
Sellers pending before the National Labor Relations Board. There is no labor
strike, dispute, slowdown or stoppage actually pending or, to the knowledge of
Sellers, threatened against or affecting either of the Sellers. No grievance
which might have an adverse effect on either of the Sellers, the Business or
the Assets is pending and no claim therefor exists.
.17 EQUIPMENT. Schedule 3.17 hereto sets forth a true and
complete list and brief description of all items of equipment. Each of such
items is in good operating condition and repair and no condition exists which
interferes with the economic value or use thereof to an extent material to the
Assets or the Business.
.18 AFFILIATE AGREEMENTS. Except as set forth on Schedule 3.18,
there are no contracts, agreements or understandings currently in effect,
whether verbal or written, between either of the Sellers and any Person
affiliated with either of the Sellers which pertain to the Business or the
Assets.
.19 DISCLOSURE. Neither this agreement nor any of the schedules,
exhibits, attachments, written statements, documents, filings, certificates or
other items delivered by Sellers in connection with or pursuant to this
Agreement or the Closing, contains any untrue statement of fact or omits to
state a fact necessary to make the statements contained herein or therein not
misleading.
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IV.
REPRESENTATIONS AND FURTHER AGREEMENTS OF PURCHASER
Purchaser represents and warrants to each of the Sellers the truth and
accuracy of the following:
.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Texas, with full corporate power and authority to carry on its
business as presently conducted and to own or lease or operate its properties
as and in the places where such businesses are now conducted or such properties
are owned or leased. Purchaser is duly qualified as a foreign corporation to
conduct business in the State of Oklahoma.
.2 AUTHORIZATION OF AGREEMENT. This Agreement constitutes the
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms. Purchaser has full power and authority to execute
this Agreement and all documents and instruments contemplated herein, and to
perform as required by the terms of this Agreement. The execution, delivery
and performance of this Agreement by Purchaser and all transactions
contemplated hereby have been duly authorized by all necessary action and will
not, as of the Closing Date, result in violation of any contract or agreement
binding upon Purchaser. No consent, approval, authorization or order of any
Person is required in connection with the execution, delivery or performance by
Purchaser of the transactions contemplated by this Agreement.
.3 BROKER'S OR FINDER'S FEES. Purchaser agrees to indemnify and
hold Sellers harmless from and against any claims for compensation or other
amounts to which any Person claims to be entitled, directly or indirectly, by
reason of any agreement or understanding with Purchaser, as a broker or finder
in connection with the sale and purchase of the Assets.
.4 COMPLIANCE WITH OBLIGATIONS. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will:
(a) conflict with or constitute a breach or a
default under, the organizational documents of Purchaser;
(b) conflict with, constitute a breach of or a
default under, or give rise to any right of termination or
acceleration under, any agreement, contract, indenture, mortgage, deed
of trust or other instrument or undertaking to which Purchaser is a
party; or
(c) constitute a violation of any law,
regulation, judgment, order or decree applicable to Purchaser.
14
<PAGE> 20
.5 DISCLOSURE. Neither this Agreement nor any of the schedules,
exhibits, attachments, written statements, documents, filings, certificates or
other items delivered by Purchaser in connection with or pursuant to this
Agreement or the Closing, contains any untrue statement of fact or omits to
state a fact necessary to make the statements contained herein or therein not
misleading.
V
COVENANTS AND AGREEMENTS
.1 EMPLOYEE BENEFIT PLANS. Each of the Sellers agrees that it
will, at its sole cost and expense, pay any amounts accrued, payable or arising
in connection with any Employee Benefit Plan, including, without limitation,
all obligations under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"). Purchaser is not obligated to succeed, nor shall
it be deemed to be a successor, to any Employee Benefit Plan. Sellers
acknowledge that Purchaser will establish or maintain such employee benefit
plans as it deems, in its sole discretion, necessary or appropriate, and that
Purchaser's obligation and liability, if any, to provide employee benefits in
connection with or as a result of the purchase of the Assets shall be limited
to those persons employed by Purchaser after the Closing Date.
.2 EMPLOYEE AND LABOR MATTERS. Each of the Sellers is and shall
remain solely liable for compensation and benefits, including, without
limitation, severance pay and accrued vacations, if any, to which its employees
are entitled, whether by operation of law, under employment contracts, or
pursuant to collective bargaining agreements or union agreements to which
either of the Sellers is a party or is bound, pursuant to any bargaining
obligation that Sellers may have incurred under any applicable federal or state
law or otherwise. Purchaser is not obligated to succeed, nor shall it be
deemed to be a successor, to any employment contract, whether express or
implied, written or oral, or any collective bargaining agreement or other
Employee Benefit Plan. Without limiting the generality of the foregoing, each
of the Sellers agrees that: (i) Purchaser shall not be bound by any contract
of employment or collective bargaining agreement that Sellers may have entered
into or be bound by, (ii) Sellers will, subject to Section 6.4 hereof,
indemnify Purchaser against and hold Purchaser harmless from any losses,
damages, liabilities or expenses (including attorneys' fees) arising out of or
attributable to claims made by any person or entity regarding alleged
obligations of Purchaser or Sellers under or with respect to contracts of
employment or collective bargaining agreements entered into or binding upon
Sellers, (iii) Sellers will be solely responsible for providing any notice to
Sellers' employees which may be required pursuant to the Federal Worker
Adjustment and Retraining Notification Act of 1988 ("WARN") or any similar
applicable law and (iv) Sellers will be solely responsible for any liability or
obligation which may accrue under WARN or such other law as a result of
improper or untimely notice by Sellers. Each of the Sellers authorizes
Purchaser to solicit the employment of and to employ such employees of Sellers
involved in the Business as Purchaser deems appropriate. Each of the Sellers
agrees to
15
<PAGE> 21
release any person previously employed by such Seller who is to be employed by
Purchaser from any employment obligation. To the extent requested by
Purchaser, Sellers will use its reasonable commercial efforts (but shall not be
obligated to incur any expense) to assist in the transition to the employ of
Purchaser of any employees of Sellers hired by Purchaser.
.3 NONCOMPETITION AND NONSOLICITATION.
(a) Each of the Sellers agrees that, for a period
of three (3) years following the Closing Date, neither of the Sellers,
nor any subsidiary or other entity (other than a natural person)
controlled by or under common control with either of the Sellers (a
"Seller Affiliate"), shall directly or indirectly, including, without
limitation, as an equity owner in any corporation, partnership, joint
venture, business trust or similar entity, engage in any business or
activity which competes, directly or indirectly, with the Business as
of the Closing Date.
(b) Each of the Sellers further agrees, for a
period of three (3) years following the Closing Date, not to provide,
directly or indirectly, to any of Sellers' Customers, any services or
products which compete with the software products or services for use
in drilling, completions and well servicing operations provided by
Purchaser as of the Closing Date or those provided pursuant to the
Business as of the Closing Date.
.4 CONFIDENTIALITY. Each of the Sellers agrees, from and after
the Closing Date, not to disclose to any Person or to use, in any manner, any
information, trade secrets, technical data, know-how or confidential
information constituting or pertaining directly to the Assets or the Business,
including, without limitation, the Intellectual Property. Purchaser agrees,
from and after the Closing Date, not to disclose to any Person, or to use in
any manner, any information, trade secrets, technical data, know how or
confidential information of Sellers which does not pertain directly to the
Business or the Assets.
.5 SPECIFIC PERFORMANCE. Each of the parties agrees that a
violation of the covenants set forth in Sections 5.3 and 5.4 above will cause
irreparable injury to the other party and that each of the parties shall be
entitled, in addition to any other rights and remedies it may have, to an
injunction enjoining and restraining the other party from any act, violation
or threatened violation of such Sections.
VI
INDEMNIFICATION
.1 INDEMNIFICATION OF PURCHASER. SUBJECT TO SECTION 6.4 HEREOF,
EACH OF THE SELLERS HEREBY AGREES, JOINTLY AND SEVERALLY, TO INDEMNIFY AND HOLD
PURCHASER AND ITS AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS AND AGENTS HARMLESS
16
<PAGE> 22
FROM AND AGAINST ANY ASSESSMENT, LOSS, DAMAGE, LIABILITY, COST, AND EXPENSE
(INCLUDING, WITHOUT LIMITATION, INTEREST, PENALTIES, AND REASONABLE ATTORNEYS'
FEES) IMPOSED UPON OR INCURRED BY PURCHASER OR ANY AFFILIATE OF PURCHASER, OR
ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS OR AGENTS, OR TO
WHICH ANY SUCH PARTIES MAY BE SUBJECT, RESULTING FROM (I) A BREACH OF ANY
AGREEMENT, COVENANT, REPRESENTATION OR WARRANTY OF EITHER OF THE SELLERS
CONTAINED HEREIN OR IN ANY OF THE DOCUMENTS OR AGREEMENTS CONTEMPLATED HEREIN
AND EXECUTED IN CONNECTION HEREWITH, (II) ANY ACT OR OMISSION, FACT OR
OCCURRENCE ARISING DIRECTLY OR INDIRECTLY FROM OR IN CONNECTION WITH THE
OPERATION OF THE BUSINESS AND/OR OWNERSHIP AND USE OF THE ASSETS BY THE SELLERS
OR THEIR PREDECESSORS ON OR PRIOR TO THE CLOSING DATE, INCLUDING, WITHOUT
LIMITATION, ANY ACT OR OMISSION UNDER OR WITH RESPECT TO THE ASSUMED CONTRACTS,
ARISING OR OCCURRING ON OR PRIOR TO THE CLOSING DATE AND (III) ANY
INDEBTEDNESS, OBLIGATION, LIABILITY, OR CLAIM OF ANY NATURE OF OR AGAINST
EITHER OF THE SELLERS NOT SPECIFICALLY ASSUMED BY PURCHASER HEREUNDER.
ASSERTION BY PURCHASER OR ANY OTHER INDEMNIFIED PARTY OF ITS RIGHT TO
INDEMNIFICATION UNDER THIS SECTION 6.1 SHALL NOT PRECLUDE THE ASSERTION BY
PURCHASER OR SUCH OTHER PARTY OF ANY OTHER RIGHTS OR THE SEEKING OF ANY OTHER
REMEDIES AGAINST SELLERS. PURCHASER AGREES TO PROMPTLY PROVIDE WRITTEN NOTICE
TO SELLERS OF THE EXISTENCE OF ANY FACTS GIVING RISE TO ANY CLAIM UNDER THIS
SECTION 6.1, PROVIDED THAT ANY SUCH FAILURE TO GIVE NOTICE IN A TIMELY MANNER
SHALL NOT LIMIT PURCHASER'S RIGHTS TO INDEMNIFICATION HEREUNDER, EXCEPT TO THE
EXTENT SELLERS ARE PREJUDICED AS A RESULT OF SUCH FAILURE.
.2 INDEMNIFICATION OF SELLERS. SUBJECT TO SECTION 6.4 HEREOF,
PURCHASER HEREBY AGREES TO INDEMNIFY AND HOLD EACH OF THE SELLERS AND THEIR
RESPECTIVE AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS
AND AGENTS HARMLESS FROM AND AGAINST ANY ASSESSMENT, LOSS, DAMAGE, LIABILITY,
COST, AND EXPENSE (INCLUDING, WITHOUT LIMITATION, INTEREST, PENALTIES, AND
REASONABLE ATTORNEYS' FEES) IMPOSED UPON OR INCURRED BY SELLERS OR THEIR
RESPECTIVE AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS OR AGENTS, OR TO WHICH ANY SUCH PARTIES MAY BE SUBJECT, RESULTING
FROM (I) A BREACH OF ANY AGREEMENT, COVENANT, REPRESENTATION OR WARRANTY OF
PURCHASER CONTAINED HEREIN OR IN ANY OF THE DOCUMENTS OR AGREEMENTS
CONTEMPLATED HEREIN AND EXECUTED IN CONNECTION HEREWITH, (II) ANY ACT OR
OMISSION, FACT OR OCCURRENCE ARISING DIRECTLY OR INDIRECTLY FROM OR IN
CONNECTION WITH THE OPERATION OF THE BUSINESS AND OWNERSHIP AND USE OF THE
ASSETS BY PURCHASER AFTER THE CLOSING DATE (OTHER THAN ANY ASSESSMENT, LOSS,
DAMAGE, LIABILITY, COST AND EXPENSE ARISING OUT OF
17
<PAGE> 23
OR ATTRIBUTABLE TO ANY BREACH OF ANY REPRESENTATION, WARRANTY OR COVENANT MADE
BY SELLERS HEREIN), INCLUDING, WITHOUT LIMITATION, ANY ACT OR OMISSION UNDER OR
WITH RESPECT TO THE ASSUMED CONTRACTS, ARISING AFTER THE CLOSING DATE AND (III)
ANY INDEBTEDNESS, OBLIGATION, LIABILITY, OR CLAIM OF ANY NATURE OF OR AGAINST
SELLERS SPECIFICALLY ASSUMED BY PURCHASER HEREUNDER. ASSERTION BY SELLERS OR
ANY OTHER INDEMNIFIED PARTY OF ITS RIGHT TO INDEMNIFICATION UNDER THIS SECTION
6.2 SHALL NOT PRECLUDE THE ASSERTION BY SELLERS OR SUCH OTHER PARTY OF ANY
OTHER RIGHTS OR THE SEEKING OF ANY OTHER REMEDIES AGAINST PURCHASER. EACH OF
THE SELLERS AGREES TO PROMPTLY PROVIDE WRITTEN NOTICE TO PURCHASER OF THE
EXISTENCE OF ANY FACTS GIVING RISE TO ANY CLAIM UNDER THIS SECTION 6.2,
PROVIDED THAT ANY SUCH FAILURE TO GIVE NOTICE IN A TIMELY MANNER SHALL NOT
LIMIT SELLERS' RIGHTS TO INDEMNIFICATION HEREUNDER, EXCEPT TO THE EXTENT
PURCHASER IS PREJUDICED AS A RESULT OF SUCH FAILURE.
.3 MATERIAL ADVERSE BREACH. Breaches of representations,
warranties and covenants by either party hereto which (a) individually results
in damages to the other party (considering, for this purpose, DRD and DRD (UK)
as a single entity) in excess of $250,000 or (b) in the aggregate result in
damages to the other party in excess of $250,000, shall constitute, for
purposes of this Agreement, a "Material Adverse Breach."
.4 LIMITATION OF LIABILITY. Neither Purchaser nor Sellers shall
have any liability for breach of the representations, warranties and covenants
made by them and contained in this Agreement unless such breach is a Material
Adverse Breach or is a breach of a contractual obligation to pay (i) the
Purchase Price (as provided in Section 2.2 hereof), (ii) the Closing costs of
Sellers (as provided in Section 2.7 hereof) or (iii) the amounts received with
respect to the Assumed Contracts and the Other Contracts (as provided in
Sections 2.3 and 2.4 hereof). If a breach constitutes (either alone or with
one or more other breaches) a Material Adverse Breach or a breach of any of
such contractual obligations to pay, the breaching party will be liable for all
damages resulting from such breach or breaches.
The foregoing limitation of liability shall not apply to any breach or default
by sellers or Purchaser in connection with the performance of their duties or
obligations under the Assignment and Assumption Agreement or the Subcontract
Agreement, as to which the breaching or defaulting party shall be fully liable.
18
<PAGE> 24
VII
MISCELLANEOUS
.1 EFFECT OF DUE DILIGENCE. No investigation by Purchaser or
Sellers into the business, operations and condition of the other shall diminish
in any way the effect of any representations or warranties made by either party
in this Agreement or shall relieve such party of any of its obligations under
this Agreement.
.2 NOTICES. All approvals, consents, notices, requests, demands
and other communications shall be in writing and shall be deemed to have been
duly given upon delivery, if delivered in person or by any expedited delivery
service which provides proof of delivery or on the third business day after
mailing, if mailed by certified mail, postage prepaid, return receipt
requested:
(a) To Sellers:
DRD Corporation
Attn: President
35 Belver Avenue
North Kingstown, Rhode Island 02852
Telephone: 401/884-3014
Telecopy: 401/294-3826
With a copy (which shall not constitute notice) to:
Compliance Systems Legal Group
Attn: Kirk S. Jordan, Esq.
Suite 305 Summit West
300 Centerville Road
Warwick, Rhode Island 02886
Telephone: 401/738-3666
Telecopy: 401/732-0139
(b) To Purchaser:
Technologies Acquisition Corp.
c/o Landmark Graphics Corporation
Attn: Corporate Secretary
15150 Memorial Drive
Houston, TX 77079
Telephone: 713/560-1422
Telecopy: 713/560-1383
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<PAGE> 25
With a copy (which shall not constitute notice) to:
Winstead Sechrest & Minick P.C.
Attn: Robert E. Crawford, Esq.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Telephone: 214/745-5120
Telecopy: 214/745-5390
.3 ENTIRE AGREEMENT. This Agreement and the other instruments
and agreements contemplated herein contain the entire agreement of Sellers and
Purchaser with respect to the transactions contemplated herein and no
representation, promise, inducement or statement or intention relating to the
transactions contemplated by this Agreement has been made by any party which is
not set forth in this Agreement or in any schedule, exhibit, documents,
instrument or statement attached hereto or delivered in accordance herewith.
.4 AMENDMENTS. This Agreement may not be modified or amended
except by an instrument in writing signed by each of the Sellers and Purchaser.
.5 SURVIVAL. All representations and warranties made by Sellers
and Purchaser in this Agreement and all covenants and agreements contained
herein to be performed after the Closing Date shall survive without limitation
for a period of three (3) years after the Closing Date.
.6 ASSIGNMENTS. This Agreement may not be assigned by Purchaser
without the prior written consent of DRD, except that Purchaser may assign this
Agreement to one or more corporations or other entities which control it or
which it controls or which is under common control with Purchaser. This
Agreement may not be assigned by Sellers.
.7 COUNTERPARTS. This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
.8 SECTION HEADINGS. The Section headings are for convenience of
reference only and shall not constitute a part hereof.
.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES AND THE STATE OF
TEXAS AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE, BE DEEMED TO CALL FOR
PERFORMANCE IN HARRIS COUNTY, TEXAS. FEDERAL AND STATE COURTS IN HARRIS COUNTY
TEXAS WILL HAVE EXCLUSIVE JURISDICTION OVER DISPUTES WITH RESPECT TO THIS
AGREEMENT.
20
<PAGE> 26
.10 FURTHER ASSURANCES. At, and from time to time after the date
hereof, at the request of any party hereto, but without further consideration,
each party requested to do so shall execute and deliver such other instruments
of conveyance, assignment, transfer and delivery and take such other action as
any other party may reasonably request in order more effectively to consummate
the transactions contemplated hereby.
.11 NO THIRD PARTY BENEFICIARIES. Except as expressly provided in
Article VI hereof, no Person not a party to this Agreement shall be deemed to
be a third-party beneficiary hereunder or entitled to any rights hereunder.
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<PAGE> 27
IN WITNESS WHEREOF, this Agreement has been executed by Purchaser and
Sellers as of the day and year first set forth above.
PURCHASER
TECHNOLOGIES ACQUISITION CORP.,
a Texas corporation
By: \s\ J.R. Lovett
---------------------------------------
Name: James R. Lovett
Title: Vice President
SELLERS
DRD CORPORATION,
a Rhode Island corporation
By: \s\ Stephen Jordan
---------------------------------------
Name: Stephen Jordan
Title: President
DRD (UK) LIMITED,
a Scotland corporation
By: \s\ Stephen Jordan
---------------------------------------
Name: Stephen Jordan
Title: President
By: \s\ Dwight Yoder
---------------------------------------
Name: Dwight Yoder
Title: Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY FILING ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 63,073
<SECURITIES> 0
<RECEIVABLES> 46,657
<ALLOWANCES> 1,817
<INVENTORY> 4,710
<CURRENT-ASSETS> 128,094
<PP&E> 75,671
<DEPRECIATION> 30,837
<TOTAL-ASSETS> 199,339
<CURRENT-LIABILITIES> 32,965
<BONDS> 11,250
<COMMON> 819
0
0
<OTHER-SE> 150,086
<TOTAL-LIABILITY-AND-EQUITY> 199,339
<SALES> 79,849
<TOTAL-REVENUES> 116,981
<CGS> 26,144
<TOTAL-COSTS> 48,301
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,103
<INTEREST-EXPENSE> 782
<INCOME-PRETAX> 10,857
<INCOME-TAX> 3,042
<INCOME-CONTINUING> 7,815
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,815
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
