<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, 1998
OR
[ ] 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, 1998 AND 1997
TOGETHER WITH AUDITORS' REPORT
<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, 1998 and 1997, 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, 1998 and 1997, 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.
Grand Rapids, Michigan,
May 13, 1999
<PAGE>
<TABLE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998 AND 1997
<CAPTION>
1998 1997
------------- ------------
<S> <C> <C>
ASSETS:
Participant directed investments (Note 1):
Manatron, Inc. Common Stock Fund $ 945,592 $ 250,765
Guaranteed Investment Contract Fund 382,774 330,207
Munder Intermediate Bond Fund 54,571 26,076
Fidelity Magellan Fund 1,094,749 729,836
Fidelity Puritan Fund 748,818 585,091
Fidelity Worldwide Fund 508,443 438,240
Munder Small Company Growth Fund 419,614 399,316
Munder Balanced Fund 142,422 121,901
Munder Index 500 Fund 877,103 626,002
Participant loans receivable 27,415 21,254
Contributions receivable 70,779 58,618
------------- -----------
Total participant directed investments 5,272,280 3,587,306
------------- -----------
Employee Stock Ownership Plan investments:
Unallocated Shares of Manatron, Inc. common stock 235,786 116,087
Shares of Manatron, Inc. common
stock allocated to participants 749,205 154,620
------------- -----------
Total Employee Stock Ownership Plan investments 984,991 270,707
Total assets 6,257,271 3,858,013
------------- -----------
LIABILITIES:
Loan payable to bank 150,000 250,000
------------- -----------
Total liabilities 150,000 250,000
------------- -----------
-2-
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS $ 6,107,271 $ 3,608,013
============= ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
-3-
<PAGE>
<TABLE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------
MANATRON GUARANTEED
COMMON INVESTMENT MUNDER FIDELITY FIDELITY FIDELITY MUNDER
STOCK CONTRACT INTERMEDIATE MAGELLAN PURITAN WORLDWIDE SMALL COMPANY
FUND FUND BOND FUND FUND FUND FUND GROWTH FUND
--------- ---------- ------------ -------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
in fair value of investments $634,646 $ -- $ 128 $216,727 $ 28,135 $ 12,680 $ (53,870)
Interest and dividends (1) 20,260 2,142 49,531 74,631 16,046 27,480
Other receipts -- 1,594 -- -- -- -- --
-------- --------- -------- ---------- -------- -------- ---------
Total investment income (loss) 634,645 21,854 2,270 266,258 102,766 28,726 (26,390)
-------- --------- -------- ---------- -------- -------- ---------
Contributions:
Employee 8,715 32,537 2,017 29,087 17,553 14,216 13,620
Employer 34,269 37,404 8,484 113,567 72,241 60,590 64,095
-------- --------- -------- ---------- -------- -------- ---------
Total contributions 42,984 69,941 10,501 142,654 89,794 74,806 77,715
-------- --------- -------- ---------- -------- -------- ---------
Total additions 677,629 91,795 12,771 408,912 192,560 103,532 51,325
-------- --------- -------- ---------- -------- -------- ---------
Benefit payments (14,885) (30,366) (13) (49,345) (25,848) (20,891) (15,815)
Interest expense -- -- -- -- -- -- --
-------- --------- -------- ---------- -------- -------- ---------
Total deductions (14,885) (30,366) (13) (49,345) (25,848) (20,891) (15,815)
-------- --------- -------- ---------- -------- -------- ---------
INTERFUND TRANSFERS 31,801 14,067 15,820 7,142 (5,068) (15,638) (17,778)
-4-
<PAGE>
ALLOCATION OF 28,568 SHARES -- -- -- -- -- -- --
-------- --------- -------- ---------- -------- -------- ---------
Changes in net assets available
for benefits 694,545 75,496 28,578 366,709 161,644 67,003 17,732
-------- --------- -------- ---------- -------- -------- ---------
NET ASSETS AVAILABLE FOR BENEFITS -
Beginning of year 253,737 335,321 26,832 742,377 593,706 446,167 406,753
-------- --------- -------- ---------- -------- -------- ---------
End of year $948,282 $ 410,817 $ 55,410 $1,109,086 $755,350 $513,170 $ 424,485
======== ========= ======== ========== ======== ======== =========
</TABLE>
The accompanying notes to financial statements are an integral part of
this statement.
-5-
<PAGE>
<TABLE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
(Continued)
<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>
Investment income:
Net appreciation (depreciation)
in fair value of investments $ (4,183) $ 169,585 $ -- $ 498,162 $ 166,121 $1,668,131
Interest and dividends 18,652 17,086 2,839 -- -- 228,666
Other receipts -- -- -- -- -- 1,594
---------- ---------- ------------ ---------- ---------- ----------
Total investment income (loss) 14,469 186,671 2,839 498,162 166,121 1,898,391
---------- ---------- ------------ ---------- ---------- ----------
Contributions:
Employee 6,136 27,271 -- -- -- 151,152
Employer 23,056 109,300 -- 50,000 118,037 691,043
---------- ---------- ------------ ---------- ---------- ----------
Total contributions 29,192 136,571 -- 50,000 118,037 842,195
---------- ---------- ------------ ---------- ---------- ----------
Total additions 43,661 323,242 2,839 548,162 284,158 2,740,586
---------- ---------- ------------ ---------- ---------- ----------
Benefit payments (18,045) (41,956) (6,127) -- -- (223,291)
Interest expense -- -- -- -- (18,037) (18,037)
---------- ---------- ------------ ---------- ---------- ----------
Total deductions (18,045) (41,956) -- -- (18,037) (241,328)
---------- ---------- ------------ ---------- ---------- ----------
INTERFUND TRANSFERS (10,129) (29,666) 9,449 -- -- --
ALLOCATION OF 28,568 SHARES -- -- -- 46,423 (46,423) --
---------- ---------- ------------ ---------- ---------- ----------
Changes in net assets
available for benefits 15,487 251,620 6,161 594,585 219,698 2,499,258
---------- ---------- ------------ ---------- ---------- ----------
-6-
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS -
Beginning of year 124,601 636,558 21,254 154,620 (133,913) 3,608,013
---------- ---------- ------------ ---------- ---------- ----------
End of year $ 140,088 $ 888,178 $ 27,415 $ 749,205 $ 85,785 $6,107,271
========== ========== ============ ========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of
this statement.
-7-
<PAGE>
<TABLE>
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
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------
MANATRON GUARANTEED
COMMON INVESTMENT MUNDER FIDELITY FIDELITY FIDELITY MUNDER
STOCK CONTRACT INTERMEDIATE MAGELLAN PURITAN WORLDWIDE SMALL COMPANY
FUND FUND BOND FUND FUND FUND FUND GROWTH FUND
--------- ---------- ------------ -------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
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 (loss) 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
-------- --------- -------- -------- -------- -------- ---------
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
-8-
<PAGE>
ALLOCATION OF 28,568 SHARES -- -- -- -- -- -- --
-------- --------- -------- -------- -------- -------- ---------
Changes in net assets available
for benefits 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.
-9-
<PAGE>
<TABLE>
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)
<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>
Investment income:
Net appreciation (depreciation)
in fair value of investments $ 3,728 $ 80,527 $ -- $ (2,509) $ 8,929 $ 273,877
Interest and dividends 12,683 63,016 1,473 -- -- 285,315
Other receipts 226 1,508 -- -- -- 142,164
---------- ---------- ------------ ---------- ---------- ----------
Total investment income (loss) 16,637 145,123 1,473 (2,509) 8,929 701,356
---------- ---------- ------------ ---------- ---------- ----------
Contributions:
Employee 25,674 95,839 -- -- -- 530,488
Employer 4,009 12,603 -- 50,000 126,050 248,418
---------- ---------- ------------ ---------- ---------- ----------
Total contributions 29,683 108,442 -- 50,000 126,050 778,906
---------- ---------- ------------ ---------- ---------- ----------
Total additions 46,320 253,565 1,473 47,491 134,979 1,480,262
---------- ---------- ------------ ---------- ---------- ----------
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 28,568 SHARES -- -- -- 42,851 (42,851) --
---------- ---------- ------------ ---------- ---------- ----------
Changes in net assets
available for benefits 42,705 223,994 13,254 90,342 66,078 1,246,538
---------- ---------- ------------ ---------- ---------- ----------
-10-
<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 $ (133,913) $3,608,013
========== ========== ============ ========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of
this statement.
-11-
<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.
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., Sabre
-12-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(1) DESCRIPTION OF PLAN (Continued)
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. The Company made discretionary
contributions of 12,500 and 23,731 shares to the Plan in 1998 and
1997, respectively.
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, $10,000 in 1998. The
Company's matching contribution (currently 25% of participant's
contribution up to 5% of eligible pay) is set forth in the Plan
document and may be changed by resolution of the Company. The
Company's matching contributions during 1998 and 1997 were
approximately $90,000 and $72,000, respectively.
-13-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(1) DESCRIPTION OF PLAN (Continued)
VESTING - Participants are 100% vested in rollovers, direct
transfers, elective salary deferral contributions, 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% annually 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:
MANATRON INC. COMMON STOCK FUND - This fund invests in common
stock of the Company which currently trades on The Nasdaq Stock
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.
-14-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(1) DESCRIPTION OF PLAN (Continued)
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.
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.
The following investments represent 5% or more of the Plans' net
assets as of December 31,:
<TABLE>
<CAPTION>
1998 1997
---------- --------
<S> <C> <C> <C>
Manatron Stock Fund $ 948,282 $253,737
Guaranteed Investment
Contract Fund 410,817 335,321
Fidelity Magellan Fund 1,109,086 742,377
Fidelity Worldwide Fund 513,170 446,167
Fidelity Puritan Fund 755,350 593,706
Munder Small Company Fund
Growth Fund 424,485 406,753
Munder Index 500 Fund 888,178 636,558
ESOP investment in Manatron
Common Stock 785,720 232,144
</TABLE>
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
-15-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(1) DESCRIPTION OF PLAN (Continued)
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 $27,415.
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.
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 $13,000 and $14,000 in
1998 and 1997, respectively.
-16-
<PAGE>
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(1) DESCRIPTION OF PLAN (Continued)
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 provisions 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.
INVESTMENTS
The quoted market price, as reported by the Trustee, was used to
approximate the current value for all investments reported at fair
value as reported by the trustee. Net appreciation (depreciation)
in fair value of investments included in the Statement of Changes
in Net Assets Available for Benefits is comprised of unrealized
gains or losses resulting from changes in market prices and
realized gains and losses on sales of investments.
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.
RECLASSIFICATIONS
Certain amounts in the financial statements as of December 31,
1997, have been reclassified to conform to the current year
presentation.
-17-
<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 five
years. The loan bears interest at the prime rate of the lender,
which at December 31, 1998 was 7.75%. A summary of future debt
maturities is as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
------- --------
<S> <C> <C>
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, $3.50 per share. 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.
-18-
<PAGE>
<TABLE>
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, 1998
<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 (171,879 shares) $ 376,568 $ 945,592
<F*>Comerica, Inc. Guaranteed Investment Contract
Fund (382,774 units) 382,774 382,774
Munder Intermediate
Bond Fund (5,702 shares) 54,635 54,571
Fidelity Magellan
Fund (9,061 shares) 795,015 1,094,749
Fidelity Puritan
Fund (37,310 shares) 651,335 748,818
Fidelity Worldwide
Fund (30,758 shares) 454,214 508,443
Munder Small Company Growth
Fund (24,005 shares) 411,427 419,614
Munder Balanced Fund
(11,655 shares) 148,676 142,422
Munder Index 500 Fund
(33,426 shares) 822,186 877,103
Contributions Receivable Employer and Employee
Contributions Receivable 70,779 70,779
-19-
<PAGE>
Participant Loan
Balances: Participant Loans Receivable,
<F*>Comerica, Inc. interest at rates ranging
from 10.627% to 9.25%,
maturing at various dates
through 2003. 27,415 27,415
---------- ----------
Total Participant
Directed Investments 4,195,024 5,272,280
---------- ----------
Employee Stock Ownership
Plan Investments:
<F*>Comerica, Inc. Manatron, Inc. Common
Stock (179,089 shares) 600,000 984,991
---------- ----------
Total plan investments $4,795,024 $6,257,271
========== ==========
<FN>
<F*> Indicates a party-in-interest.
</FN>
</TABLE>
-20-
<PAGE>
<TABLE>
SCHEDULE II
MANATRON, INC.
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN
EIN: 38-1983228 PLAN NUMBER: 002
ITEM 27a - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
AMOUNTS RECEIVED DURING
REPORTING YEAR UNPAID AMOUNT OVERDUE
IDENTITY OF ISSUER AND ORIGINAL ----------------------- BALANCE AT DESCRIPTION ---------------------
DESCRIPTION OF OBLIGOR AMOUNT OF LOSS PRINCIPAL INTEREST DECEMBER 31, 1998 OF LOAN PRINCIPAL INTEREST
- ---------------------- -------------- ----------- ---------- ----------------- --------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert Smith $8,000 $1,343 $523 $5,176 12/1/96 open date $117 $67
11/11/01 maturity
9.25% interest rate
</TABLE>
-21-
<PAGE>
<TABLE>
SCHEDULE III
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, 1998
<CAPTION>
PURCHASES SALES
---------------------------------- -------------------------------------------------
IDENTITY OF ISSUER AND NUMBER OF PURCHASE NUMBER OF COST OF
DESCRIPTION OF INVESTMENT TRANSACTIONS PRICE TRANSACTIONS PROCEEDS ASSET NET GAIN
------------------------- ------------------ -------- ------------ -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Participant Directed Investments:
<F*>Comerica, Inc.
Fidelity Magellan Fund 84 $227,915 32 $ 74,098 $64,370 $ 9,728
Fidelity Puritan Fund 69 181,137 32 44,235 39,327 4,908
Munder Small Company Growth Fund 82 199,244 28 59,279 56,578 2,701
Munder Index 500 Fund 83 205,673 37 122,972 93,862 29,110
<FN>
<F*>Indicates a party-in-interest.
</FN>
</TABLE>
-22-
<PAGE>
Exhibits:
23 Consent of Arthur Andersen LLP dated June 29, 1999.
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 29, 1999 MANATRON, INC. EMPLOYEE STOCK OWNERSHIP AND
SALARY DEFERRAL PLAN
By: /S/ PAUL R. SYLVESTER
Paul R. Sylvester
President and Chief Executive Officer
and Member of the Administrative
Committee of the Manatron, Inc. Salary
Deferral and Employee Stock Option Plan
-23-
<PAGE>
EXHIBIT INDEX
EXHIBIT DOCUMENT
23 Consent of Arthur Andersen LLP dated June 29, 1999
<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 May 13, 1999, 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 29, 1999
