<PAGE>
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1997
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _________ to __________
Commission file number: 0-15264
A. Full title of the plan and the address of the plan,
if different from that of the issuer named below: Manatron,
Inc. Employee Stock Ownership and Salary Deferral Plan
B. Name of issuer of the securities held pursuant to
the plan and the address of its principal executive office:
Manatron, Inc., 2970 South 9th Street, Kalamazoo, Michigan
49009
=============================================================================
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
FINANCIAL STATEMENTS AND SCHEDULES
AS OF DECEMBER 31, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT
-2-
<PAGE>
Report of Independent Public Accountants
To the Administrative Committee of the
Manatron, Inc. Employee Stock Ownership
and Salary Deferral Plan:
We have audited the accompanying statements of net assets available
for benefits of the Manatron, Inc. Employee Stock Ownership and
Salary Deferral Plan as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for benefits for
the years then ended. These financial statements and the supplemental
schedules referred to below are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements and supplemental schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits
as of December 31, 1997 and 1996, and the changes in net assets available
for benefits for the years then ended, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedules of assets held for investment purposes and reportable
transactions are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements
taken as a whole.
/s/Arthur Andersen LLP
Grand Rapids, Michigan,
June 10, 1998
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<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
ASSETS:
Participant directed investments (Note 1):
Manatron, Inc. Common Stock Fund $ 250,765 $ 85,203
Guaranteed Investment Contract Fund 330,207 272,869
Munder Intermediate Bond Fund 26,076 13,564
Fidelity Magellan Fund 729,836 553,425
Fidelity Puritan Fund 585,091 451,333
Fidelity Worldwide Fund 438,240 351,134
Munder Small Company Growth Fund 399,316 267,200
Munder Balanced Fund 121,901 81,896
Munder Index 500 Fund 626,002 412,564
Participant loans receivable 21,254 8,000
Contributions receivable 58,618 -
------------- -----------
Total participant directed investments 3,587,306 2,497,188
------------- -----------
Employee Stock Ownership Plan investments:
Unallocated Shares of Manatron, Inc. common stock 77,524 150,009
Shares of Manatron, Inc. common
stock allocated to participants 154,620 64,278
------------- -----------
Total Employee Stock Ownership Plan investments 232,144 214,287
Total assets 3,819,450 2,711,475
------------- -----------
LIABILITIES:
Loan payable to bank 250,000 350,000
------------- -----------
Total liabilities 250,000 350,000
------------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 3,569,450 $ 2,361,475
============= ===========
</TABLE>
The accompanying notes to financial statements are
an integral part of these statements.
-4-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------
GUARANTEED
MANATRON INVESTMENT MUNDER FIDELITY FIDELITY FIDELITY MUNDER
STOCK INVESTMENT INTERMEDIATE MAGELLAN PURITAN WORLDWIDE SMALL COMPANY
FUND FUND BOND FUND FUND FUND FUND GROWTH FUND
--------- ---------- ------------ -------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair
value of investments $ 1,662 $ - $ 245 $ 98,927 $ 57,092 $ 10,312 $ 14,964
Interest and dividends - 17,473 1,315 45,987 45,767 32,172 65,429
Other receipts 127,200 2,359 25 2,760 3,801 2,381 1,832
-------- --------- -------- -------- -------- -------- ---------
Total investment income 128,862 19,832 1,585 147,674 106,660 44,865 82,225
-------- --------- -------- -------- -------- -------- ---------
Contributions:
Employee 25,833 48,698 6,894 107,353 79,278 70,833 70,086
Employer 4,226 6,985 926 15,790 10,513 9,690 7,626
-------- --------- -------- -------- -------- -------- ---------
Total contributions 30,059 55,683 7,820 123,143 89,791 80,523 77,712
-------- --------- -------- -------- -------- -------- ---------
Total additions 158,921 75,515 9,405 270,817 196,451 125,388 159,937
-------- --------- -------- -------- -------- -------- ---------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments (9,063) (36,701) (443) (43,727) (26,772) (17,138) (34,408)
Interest expense - - - - - - -
-------- --------- -------- -------- -------- -------- ---------
Total deductions (9,063) (36,701) (443) (43,727) (26,772) (17,138) (34,408)
-------- --------- -------- -------- -------- -------- ---------
INTERFUND TRANSFERS 18,676 23,638 4,306 (38,138) (27,306) (13,217) 14,024
ALLOCATION OF 52,299 SHARES - - - - - - -
-------- --------- -------- -------- -------- -------- ---------
-5-
<PAGE>
Net increase 168,534 62,452 13,268 188,952 142,373 95,033 139,553
-------- --------- -------- -------- -------- -------- ---------
NET ASSETS AVAILABLE FOR BENEFITS -
Beginning of year 85,203 272,869 13,564 553,425 451,333 351,134 267,200
-------- --------- -------- -------- -------- -------- ---------
End of year $ 253,737 $ 335,321 $ 26,832 $ 742,377 $ 593,706 $ 446,167 $ 406,753
======== ========= ======== ========= ========= ========= =========
</TABLE>
The accompanying notes to financial statements are an integral part of
this statement.
-6-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Continued)
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED ESOP INVESTMENTS
--------------------------------------- -------------------------------------------
MUNDER MUNDER PARTICIPANT
BALANCED INDEX 500 LOANS
FUND FUND RECEIVABLE ALLOCATED UNALLOCATED TOTAL
--------- --------- ------------ --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair
value of investments $ 3,728 $ 80,527 $ - $ 11,894 $ 5,963 $ 285,314
Interest and dividends 12,683 63,016 1,473 - - 285,315
Other receipts 226 1,580 - - - 142,164
---------- ---------- ------------ ---------- ---------- ----------
Total investment income 16,637 145,123 1,473 11,894 5,963 712,793
---------- ---------- ------------ ---------- ---------- ----------
Contributions:
Employee 25,674 95,839 - - - 530,488
Employer 4,009 12,603 - - 126,050 198,418
---------- ---------- ------------ ---------- ---------- ----------
Total contributions 29,683 108,442 - - 126,050 728,906
---------- ---------- ------------ ---------- ---------- ----------
Total additions 46,320 253,565 1,473 11,894 132,013 1,441,699
---------- ---------- ------------ ---------- ---------- ----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefit payments (4,779) (34,643) - - - (207,674)
Interest expense - - - - (26,050) (26,050)
---------- ---------- ------------ ---------- ---------- ----------
Total deductions (4,779) (34,643) - - (26,050) (233,724)
---------- ---------- ------------ ---------- ---------- ----------
INTERFUND TRANSFERS 1,164 5,072 11,781 - - -
ALLOCATION OF 52,299 SHARES - - - 78,448 (78,448) -
---------- ---------- ------------ ---------- ---------- ----------
Net increase 42,705 223,994 13,254 90,342 27,515 1,207,975
---------- ---------- ------------ ---------- ---------- ----------
-7-
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS -
Beginning of year 81,896 412,564 8,000 64,278 (199,991) 2,361,475
---------- ---------- ------------ ---------- ---------- ----------
End of year $ 124,601 $ 636,558 $ 21,254 $ 154,620 $ (172,476) $ 3,569,450
========== ========== ============ ========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of
this statement.
-8-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
GUARANTEED
MANATRON INVESTMENT MUNDER FIDELITY FIDELITY FIDELITY MUNDER
STOCK INVESTMENT INTERMEDIATE MAGELLAN PURITAN WORLDWIDE SMALL COMPANY
FUND FUND BOND FUND FUND FUND FUND GROWTH FUND
--------- ---------- ------------ -------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income (loss):
Net appreciation (depreciation) in fair
value of investments $ (27,888) $ - $ (381) $ (16,282) $ 7,712 $ 38,628 $ 25,824
Interest and dividends - 13,560 770 71,322 50,584 11,900 34,090
Other receipts 28,611 - - - - - -
---------- ---------- ---------- --------- ---------- --------- ---------
Total investment income (loss) 723 13,560 389 55,040 58,296 50,528 59,914
Contributions:
Employee 20,245 45,556 3,842 126,742 73,360 63,972 48,899
Employer 4,113 7,866 628 18,193 11,517 9,850 6,597
Rollovers into Plan - 1,239 - - - - 620
Comerica reimbursement of investment loss 905 1,777 115 5,879 6,096 3,864 1,351
---------- ---------- ---------- --------- ---------- --------- ---------
Total contributions 25,263 56,438 4,585 150,814 90,973 77,686 57,467
Total additions 25,986 69,998 4,974 205,854 149,269 128,214 117,381
---------- ---------- ---------- --------- ---------- --------- ---------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments (1,176) (17,830) (3,580) (20,723) (42,642) (16,719) (13,584)
Interest expense - - - - - - -
Total deductions (1,176) (17,830) (3,580) (20,723) (42,642) (16,719) (13,584)
---------- ---------- ---------- --------- ---------- --------- ---------
INTERFUND TRANSFERS 15,138 (15,127) (1,324) (20,184) (5,140) (7,156) 21,085
ALLOCATION OF 28,568 SHARES - - - - - - -
Net increase (decrease) 39,948 37,041 70 164,947 101,487 104,339 124,882
---------- ---------- ---------- --------- ---------- --------- ---------
-9-
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS -
Beginning of year 45,255 235,828 13,494 388,478 349,846 246,795 142,318
---------- ---------- ---------- --------- ---------- --------- ---------
End of year $ 85,203 $ 272,869 $ 13,564 $ 553,425 $ 451,333 $ 351,134 $ 267,200
========== ========== ========== ========= ========== ========= =========
</TABLE>
The accompanying notes to financial statements are an integral part of
this statement.
-10-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Continued)
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED ESOP INVESTMENTS
--------------------------------------- -------------------------------------
MUNDER MUNDER PARTICIPANT
BALANCED INDEX 500 LOANS
FUND FUND RECEIVABLE ALLOCATED UNALLOCATED TOTAL
--------- --------- ------------ --------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income (loss):
Net appreciation (depreciation) in fair
value of investments $ 2,284 $ 57,962 $ - $ (21,426) $ (50,003) $ 16,430
Interest and dividends 5,766 13,426 - - - 201,418
Other receipts - - - - - 28,611
---------- -------- ------- --------- ---------- ---------
Total investment income (loss) 8,050 71,388 - (21,426) (50,003) 246,459
---------- -------- ------- --------- ---------- ---------
Contributions:
Employee 20,982 86,999 - - - 490,597
Employer 3,817 12,502 - - 134,657 209,740
Rollovers into Plan 620 620 - - - 3,099
Comerica reimbursement of investment loss 667 3,411 - - - 24,065
Total contributions 26,086 103,532 - - 134,657 727,501
Total additions 34,136 174,920 - (21,426) 84,654 973,960
---------- -------- ------- --------- ---------- ---------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments (4,863) (44,426) - - - (165,543)
Interest expense - - - - (34,657) (34,657)
---------- -------- ------- --------- ---------- ---------
Total deductions (4,863) (44,426) - - (34,657) (200,200)
INTERFUND TRANSFERS (5,850) 10,558 8,000 - - -
ALLOCATION OF 28,568 SHARES - - - 57,136 (57,136) -
---------- -------- ------- --------- ---------- ---------
Net increase (decrease) 23,423 141,052 8,000 35,710 (7,139) 773,760
-11-
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS -
Beginning of year 58,473 271,512 - 28,568 (192,852) 1,587,715
---------- -------- ------- --------- ---------- ---------
End of year $ 81,896 $ 412,564 $ 8,000 $ 64,278 $ (199,991) $ 2,361,475
========== ========= ======= ========== ========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of
this statement.
-12-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF PLAN
The following description of the Manatron, Inc. Employee
Stock Ownership and Salary Deferral Plan (the "Plan") provides only
general information. Participants should refer to the Plan agreement,
as amended, for a more complete description of the Plan's provisions.
GENERAL
The Plan was established in 1988 by Manatron, Inc. (the
"Company" or "Sponsor") as the Manatron, Inc. Salary Deferral Plan.
In 1995, the Company amended the Plan to include a leveraged employee
stock ownership plan ("ESOP") feature, and renamed the Plan the
Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan. The
Plan is designed to comply with specific sections and regulations of
the Internal Revenue Code of 1986, as amended (the "Code"), and is
therefore subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
In connection with the amendment, the Plan purchased 142,858
shares of the Company's common stock for $500,000 from Allen F. Peat,
former Chairman and Chief Executive Officer of the Company; using the
proceeds of a bank borrowing (see Notes 3 and 5). The stock is held
by the Plan in a trust established under the Plan. The bank borrowing
is to be repaid quarterly over a period of five years by fully
deductible Company contributions to the trust fund. As the Plan makes
each payment of principal, an appropriate percentage of stock will be
allocated to eligible employees' accounts in accordance with
applicable regulations under the Code.
Effective January 1, 1995, the Company also merged the
previously existing ATEK Information Services, Inc. Retirement Savings
Plan into the Plan. As a result of the merger, the investment assets
of the ATEK plan were liquidated and transferred to the Plan's
trustee, Comerica, Inc. (the "Trustee") for reinvestment by the Plan.
Additionally, on the date of the merger, each participant in the ATEK
plan became fully vested in their matching contribution account.
-13-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(1) DESCRIPTION OF PLAN, continued
Overall responsibility for administering the Plan rests with
the Plan Administrative Committee (the "Committee"), which is
appointed by the Board of Directors of the Company. The Plan's
Trustee is responsible for the management and control of the Plan's
assets and has discretionary responsibility for the investment and
management of such assets.
ELIGIBILITY
The Plan is a defined contribution plan covering
substantially all employees of the Company, ATEK Information Systems,
Inc., and Specialized Data Systems, Inc. (together, the "Employers").
Generally, an employee may become a participant in the Plan on the
entry date following completion of one year of eligible service and
having attained age 21, as described in the Plan.
CONTRIBUTIONS AND VESTING
The Plan provides for three different types of
contributions:
ESOP CONTRIBUTION - As previously described, each plan
year, the Company will contribute the required loan payments
to the ESOP trust. At the time of each payment, 7,142
shares of Company common stock held by the ESOP trust will
be committed for release to plan participants. Released
shares will be allocated to individual participant accounts
based on the percentage of the individual participant's
compensation to all eligible participants compensation for
the plan year. Participants must be employed on the last day
of the plan year to be eligible for Company contributions. In
1997, the Company made a discretionary contribution of 23,731
shares to the Plan.
-14-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(1) DESCRIPTION OF PLAN, continued
PROFIT-SHARING CONTRIBUTION - Each year the Company
will decide whether to make a profit-sharing contribution to
the Plan and the amount to be contributed. Participants
must be employed on the last day of the plan year to be
eligible for the Company contribution. The amount credited
to a participant's profit-sharing account will be determined
in the same manner as the ESOP contributions.
ELECTIVE SALARY DEFERRAL CONTRIBUTIONS - Employees who
participate in the Plan can elect to make voluntary pre-tax
contributions in an amount between 1% and 15% of their
annual compensation. Annual participant contributions are
limited to the maximum amount permitted by the Code. The
Company matching contribution (currently 25 cents for each
dollar contributed by a participant up to 5% of eligible
pay) is set forth in the Plan document and may be changed by
resolution of the Company. The Company matching contributions
during 1997 and 1996 were approximately $72,000 and $75,000,
respectively.
VESTING - Participants are 100% vested in rollovers,
direct transfers, elective salary deferral contribution,
matching contributions and non-elective contribution
accounts. Vesting for ESOP and profit-sharing contribution
accounts is determined by the years of vesting service. One
year of vesting service is 1,000 hours or more of service in
the plan year. Participants become 20% vested after three
years of vesting service and continue to vest 20% a year
until they are 100% vested.
INVESTMENT OPTIONS
Participants may direct their elective salary deferral,
company matching and profit sharing contributions, in 5% increments,
in any of the following investment options:
-15-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(1) DESCRIPTION OF PLAN, continued
MANATRON INC. COMMON STOCK FUND - This fund invests in
common stock of the Company which currently trades on The
Nasdaq SmallCap Market.
GUARANTEED INVESTMENT CONTRACT FUND - An investment
fund that seeks to safeguard principal and offer a return
that will exceed the returns of money market funds.
MUNDER INTERMEDIATE BOND FUND - A broadly diversified
portfolio of high quality fixed income securities with maturities
from six to ten years.
FIDELITY MAGELLAN FUND - A common stock fund which
emphasizes growth potential. The fund may hold both foreign
and domestic stocks as well as debt securities.
FIDELITY PURITAN FUND - A balanced fund which invests
in both equity and fixed income investments. The fund may
invest in foreign holdings and the fixed income portion may
be of any quality or maturity.
FIDELITY WORLDWIDE FUND - An equity fund which invests
globally - both U.S. and non-U.S. stocks. A portion of the
fund will always be invested in the U.S. market.
MUNDER SMALL COMPANY GROWTH FUND - The fund invests in
equity securities which are issued by companies smaller than
those found on the major indices, such as the S&P 500.
MUNDER BALANCED FUND - A balanced portfolio utilizing
the three major asset groups: equity securities, fixed
income securities and cash equivalents.
-16-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(1) DESCRIPTION OF PLAN, continued
MUNDER INDEX 500 FUND - A fund which provides price
performance and income that is comparable to the performance
of the S&P 500.
MUNDER CASH INVESTMENT FUND - A money market portfolio
invested in high quality money market securities with an
average maturity of less than 90 days.
PARTICIPANT LOANS
Participants of the Plan may borrow from their accounts a
minimum of $1,000, up to a maximum equal to the lesser of $50,000 or
50% of their account balance. Loan transactions are treated as a
transfer to (from) the related investment fund from (to) the
Participant Loan Fund. Loan terms of the promissory notes range from
one to five years or a reasonable period for the purchase of a primary
residence. The promissory notes are secured by the balance in the
participant's account and bear interest at a reasonable rate
established at the time of the loan by the Plan administrator.
Principal and interest payments will be made ratably through payroll
deductions. Currently there are five loans outstanding with a total
face value of $21,254.
NET INVESTMENT INCOME
Investment income is allocated to participants based on the
ratio of a participant's balance in each investment fund to total
participant balances in the corresponding investment fund.
-17-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(1) DESCRIPTION OF PLAN, continued
FORFEITURES
After an employee terminates employment, any non-vested
amounts in the participant's account will be forfeited. Forfeited
amounts are allocated to all remaining participants in the same manner
as investment income.
DISTRIBUTIONS TO PARTICIPANTS
Distributions to participants generally occur upon a
participant's retirement or termination of employment. However,
participants may defer distribution of their benefits until reaching
age 70 1/2. Vested balances of retired or terminated participants
will be distributed in a lump sum payment, annuity, installments or
transfer.
ADMINISTRATIVE EXPENSE
The Plan is administered by the Company. Although not
obligated to do so, the Company paid administrative expenses and
trustee fees on behalf of the Plan totaling approximately $14,000 and
$10,000 in 1997 and 1996, respectively.
PLAN TERMINATION
Although it has no current intent to do so, the Company
reserves the right to terminate the Plan and trust, or to cease or
suspend further contributions, at any time, subject to plan provisions
and applicable provision of ERISA. Upon termination of the Plan, all
participant's accounts become fully vested and non-forfeitable.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements are presented on the
accrual basis of accounting.
-18-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
INVESTMENTS
The quoted market price, as reported by the Trustee, was
used to approximate the current value for all investments other than
the guaranteed investment contract value. The Guaranteed Investment
Contract Fund is fully benefit responsive, as described in AICPA
Statement of Position No. 94-4, "Reporting of Investments Contracts
Held by Health and Welfare Benefit Plans and Defined Contribution
Pension Plans" (SOP 94-4) and therefore, reported at contract values
as reported by the trustee. The market value of this fund does not
differ materially from the stated contract value. Net appreciation
(depreciation) in fair value of investments included in the Statement
of Changes in Net Assets Available for Plan Benefits is comprised of
unrealized gains or losses resulting from changes in market prices and
realized gains and losses on sales of investments.
CHANGE IN TRUSTEE
Effective January 1, 1995, the Plan changed trustees from
Principal Mutual Life Insurance Company to Comerica, Inc.
Accordingly, plan investments previously held by Principal Mutual Life
Insurance Company were liquidated and the resultant funds transferred
to Comerica, Inc. In 1996, the trustee reimbursed the Plan for funds
held and not invested for a period of time. Amounts are shown in the
financial statements as reimbursement for investment losses.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
-19-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(3) LOAN PAYABLE
In connection with the stock purchase described in Note 1,
the Plan entered into a $500,000 term loan agreement with the Trustee.
The borrowing is collateralized by the unallocated shares of ESOP
stock and is guaranteed by the Company. The lender has no rights
against shares once they are allocated under the ESOP. The loan
agreement provides for quarterly principal payments of $25,000 over
the next five years. The loan bears interest at the prime rate of the
lender, which at December 31, 1997 was 8.5%. A summary of future debt
maturities is as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
------- ------
<S> <C> <C>
1998 $100,000
1999 100,000
2000 50,000
</TABLE>
(4) TAX STATUS
On August 22, 1996, the Plan received a favorable
determination letter from the Internal Revenue Service stating that
the Plan, as amended, is in compliance with Section 401(a) of the Code
and, therefore, the Plan and underlying trust continue to be tax
exempt.
(5) RELATED PARTY TRANSACTIONS
As described in Note 1, in connection with the establishment
of the ESOP, the Plan purchased 142,858 shares from Allen F. Peat, the
Company's former Chairman and Chief Executive Officer, for $500,000.
The Plan's management and Allen F. Peat intended this transaction to
be conducted at the current market value of the Company's stock on the
date of purchase. The actual market value on the date the transaction
occurred was $3.25 per share based on the "average" trade price.
Because the Company's stock is very thinly traded, and the average
trade price on that date was based on less than 1,000 traded shares,
management believes the transaction approximated fair market value.
-20-
<PAGE>
SCHEDULE I
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
EIN: 38-1983228 PLAN NUMBER: 002
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
IDENTITY OF DESCRIPTION OF FAIR
PARTY INVOLVED INVESTMENT COST VALUE
-------------------------- ---------- --------- --------
<S> <C> <C> <C>
Participant Directed
Investments:
<F*>Manatron, Inc. Manatron, Inc. Common Stock
Fund (151,393 shares) $ 292,719 $ 250,765
<F*>Comerica, Inc. Guaranteed Investment Contract
Fund (330,207 units) 330,207 330,207
Munder Intermediate
Bond Fund (2,744 shares) 25,770 26,076
Fidelity Magellan
Fund (7,640 shares) 632,112 729,836
Fidelity Puritan
Fund (30,121 shares) 510,334 585,091
Fidelity Worldwide
Fund (27,398 shares) 393,999 438,240
Munder Small Company Growth
Fund (19,332 shares) 360,666 399,316
Munder Balanced Fund
(9,516 shares) 112,261 121,901
Munder Index 500 Fund
(29,785 shares) 493,532 626,002
-21-
<PAGE>
Contributions Receivable Employer and Employee
Contributions Receivable 58,618 58,618
Participant Loan
Balances: Participant Loans Receivable,
<F*>Comerica, Inc. interest at rates 21,254 21,254
ranging from 9.4% ---------- ---------
to 11.8%, maturing at
various dates through
2003
Total Participant
Directed Investments 3,231,472 3,587,306
---------- ---------
Employee Stock Ownership
Plan Investments:
<F*>Comerica, Inc. Manatron, Inc. Common
Stock (151,393 shares) 500,000 232,144
---------- ---------
Total plan investments $ 3,731,472 $ 3,819,450
========== =========
<FN>
<F*> Indicates a party-in-interest.
</FN>
</TABLE>
-22-
<PAGE>
SCHEDULE II
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
EIN: 38-1983228
PLAN NUMBER: 002
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PURCHASES SALES
---------------------------------- -------------------------------------------------
IDENTITY OF ISSUER AND NUMBER OF PURCHASE NUMBER OF
DESCRIPTION OF INVESTMENT TRANSACTIONS PRICE TRANSACTIONS PROCEEDS COST OF ASSET NET GAIN
------------------------- ------------------ -------- ------------ -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Participant Directed Investments:
<F*>Comerica, Inc.
Guaranteed Investment Contract Fund 40 $ 108,113 15 $ 40,108 $ 40,108 $ -
Fidelity Magellan Fund 52 199,831 29 114,309 107,191 7,118
Fidelity Puritan Fund 36 142,214 26 60,909 51,175 9,734
Munder Small Company Growth Fund 52 127,876 24 60,380 49,669 10,711
Munder Index 500 Fund 50 203,282 22 64,676 50,233 14,443
Munder Cash Investment Fund 73 468,358 56 403,485 403,485 -
<FN>
<F*>Indicates a party-in-interest.
</FN>
</TABLE>
-23-
<PAGE>
Exhibits:
23 Consent of Arthur Andersen LLP dated June 30, 1998.
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 30, 1998 MANATRON, INC. EMPLOYEE STOCK OWNERSHIP
AND SALARY DEFERRAL PLAN
By: /s/Paul R. Sylvester
Paul R. Sylvester
President, Chief Financial Officer
Chief Financial Officer and Member of the
Administrative Committee of the Manatron,
Inc. Salary Deferral and Employee Stock
Option Plan
-24-
<PAGE>
EXHIBIT INDEX
EXHIBIT DOCUMENT
23 Consent of Arthur Andersen LLP dated June 30, 1998
<PAGE>
EXHIBIT 23
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated June 10, 1998, appearing in
this Annual Report on Form 11-K in the Form S-8 Registration Statement (No.
333-07519) for the Manatron, Inc. Employee Stock Ownership and Salary
Deferral Plan.
/S/ ARTHUR ANDERSEN LLP
Grand Rapids, Michigan
June 30, 1998
