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FORM 10-K
| [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended April 30, 1999 | |
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from _____________ to ______________ |
MANATRON, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Michigan | 38-1983228 |
| (State or Other Jurisdiction of | (I.R.S. Employer Identification No.) |
| Incorporation or Organization) | |
| 2970 South 9th Street | |
| Kalamazoo, Michigan | 49009 |
| (Address of Principal Executive Offices) | (Zip Code) |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
(Title of Class)
The aggregate market value of the Common Stock held by nonaffiliates of the Registrant based on the last sale price on July 23, 1999, was approximately $10,281,276.
As of July 23, 1999, 3,313,238 shares of the Registrant's Common Stock, no par value, were outstanding.
General
Manatron, Inc. ("Manatron" or the "Company") originally was organized in 1969 as a partnership and later was incorporated in Michigan in 1972. Manatron initially provided in-house data processing services for local governmental units located in Michigan. Subsequently, the Company expanded its business into Indiana in 1972, into Illinois in 1975, and into Missouri in 1981. In 1982, Manatron's business was extended further to include advanced microcomputer-based "turn-key" data processing systems for governments. These "turn-key" data processing systems used both general purpose computer hardware produced by leading manufacturers and proprietary software developed or purchased by the Company.
In 1990, Manatron acquired PC-based tax and vehicle registration software developed for use in Georgia from Charter Micro Applications, Inc., of Savannah, Georgia. Enhanced versions of this software still are being used by a number of customers in Georgia. In March of 1992, Manatron acquired by merger all of the outstanding stock of Specialized Data Systems, Inc. ("SDS"), a then 10-year old computer software company located in Greenville, North Carolina. SDS had installed its PC-based software (primarily fund accounting, payroll, property tax billing, and utility billing) in approximately 300 cities and 50 counties in the Southeastern United States. Today, the Company still is serving 309 customers with enhanced versions of SDS software and with software products that Manatron and Sabre Systems and Service ("Sabre") have developed.
In July of 1993, Manatron acquired all of the outstanding stock of ATEK Information Services, Inc. ("ATEK"), a then 25-year old computer software company located in Canton, Ohio and Indianapolis, Indiana. Like Manatron, ATEK served local governments with a similar suite of products and services; however, ATEK's software primarily operated on Digital Equipment Corporation ("DEC") VAX or Alpha computers. ATEK, which had been Manatron's largest competitor in Indiana and Ohio before its acquisition, installed software in approximately 50 counties in Indiana and 20 counties in Ohio to perform various functions such as financial accounting, property tax billing, child support accounting, and court accounting. Today, 77 out of 92 counties in Indiana and 70 out of 88 counties in Ohio are utilizing enhanced versions of ATEK software in addition to the software products that Manatron and Sabre have developed.
In December of 1993, Manatron acquired substantially all of the assets of City Computer Solutions, Inc. ("CCS"), a small computer software company located in Birmingham, Alabama. CCS had marketed its software and services to 81 cities and counties in Alabama and other surrounding Southern states. CCS's software primarily operated on BTOS and UNIX based computers. Because of continued financial losses in this territory, Manatron sold CCS back to its original owner in January of 1998. As a result of a dealer agreement executed in connection with this sale, CCS' customers are still potential upgrade targets for new Manatron products and services.
In May of 1994, Manatron acquired
substantially all of the assets of Horizon Systems and
Software, Inc. of Farmington Hills, Michigan ("Horizon"), a small computer
software company which
focused on the judicial information system services business. At the time of
acquisition, Horizon had
18 customer sites in Eastern Michigan and Indiana. The Company has
discontinued support of the
In November of 1994, Manatron acquired substantially all of the assets of the Ohio-based Real Estate Services Division from Moore Business Forms, Inc., known as Sabre, which had been another major competitor of the Company. At that time, Sabre was the second largest provider of mass appraisal services to local governments in the country with a strong presence in Indiana and Ohio, one of Manatron's major market areas. In addition to Indiana and Ohio, Sabre also had a presence in Connecticut, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island, and more recently, South Carolina and Virginia. In addition, Sabre has developed property tax and appraisal software which it markets along with property mapping services, hardware, and support services. Sabre's software primarily functions on DEC VAX or Alpha hardware, although recent developmental efforts have been focused on providing appraisal systems which function in a client server environment.
In February of 1995, Manatron acquired substantially all of the assets of MSL Business Computers, Inc. of Harrisburg, Illinois ("MSL"), a small software company with approximately 10 county installations. MSL's software, which primarily consisted of fund accounting, payroll, taxes, and appraisal, operated on International Business Machine Corporation ("IBM") System 36 and AS/400 computers. In addition to expanding the Company's presence in Southern Illinois, this acquisition provided Manatron with three additional employees and the opportunity to sell Manatron and Sabre software to this new base of customers.
In June of 1999, Manatron acquired by merger all of the outstanding stock of ProVal Corporation ("ProVal"), a 26-year old computer software company with headquarters in Springfield, Ohio. ProVal has installed its PC-based software (primarily computer-assisted mass appraisal "CAMA," trademarked as ProVal®, and tax systems) in approximately 16 states and three Canadian provinces. Written in C++ code, ProVal® also is consistent with Manatron's focus on component-based software using MicroSoft's DCOM object technology and operates in a MicroSoft Windows NT client-server environment supporting multiple database engines (including Informix, MicroSoft SQL and Oracle). In addition to expanding the Company's presence in the Midwest (particularly Indiana), this acquisition provides Manatron with national recognition in the appraisal market.
As a result of all of these acquisitions, the Company has been focusing its efforts on upgrading its large customer base and consolidating the common software products into a single "Open Window" series of products that utilize emerging client/server standards, including MicroSoft Windows, relational databases, component-based standards such as MicroSoft DCOM, and that fully embrace the Internet. Currently, the Company serves over 1,600 customers in 29 states with concentration in the Midwest, Northeastern, and Southeastern regions of the United States, and three Canadian provinces.
Products
The Company designs, develops, markets, and
supports a family of Web-based and
client/server application software products for county, city, and municipal
governments. The products
support both back-office processes for government agencies as well as "virtual
courthouse" needs and
provide World Wide Web access to information for industry professionals and the
public. The
Company specializes in keeping its application software in compliance with the
varying requirements
The Company's software systems provide simplified data entry through the display of information on monitors and prompting messages. The security features of the software systems permit selected user access and generate user reports on demand.
The following is a general description of the features and functionality of the Company's major software product groups that it has developed or acquired. The Company anticipates providing additional capabilities as the products are enhanced. In connection with these anticipated enhancements, the Company is focused on combining similar products within each group that originally were developed by the companies that Manatron acquired.
Manatron Visual Property Products Connect (MVP-Connect) Series
The Company provides world-class Inter/Intranet products to local governments. These products provide a multi-platform, remotely accessible means of distributing property and recorder based information, 24 hours a day, without the need for training or high-end equipment. This product also provides real-time mapping and image conversion, enabling multiple governmental organizations to leverage their data with each other and greatly increase the value to the end user. The MVP-Connect series provides all of this through a browser-only interface and utilizes state-of-the art search capabilities. The Company currently hosts multiple sights totaling well in excess of 1 million parcels with a few customers in excess of 250,000 parcels each. All of the MVP-Connect series of products have minimal hardware and bandwidth requirements and install in minutes.
Property Tax Billing, Collection, and Appraisal with Mapping and Imaging
The Company has developed a unique approach to property tax billing, collection, and appraisal, which allows government officials to update property tax values and follow up with assessment rolls, tax rolls, tax bills, and tax distribution in conformance with applicable state laws. The Company works closely with state, county, and local officials to assure compliance with legislative changes at various levels. Manatron's computer assisted mass appraisal product ("CAMA") values property using various valuation methods, including market, cost, and income. CAMA also incorporates sketch, video imaging, and pen-based computers for field appraisers. The product has advanced features that allow it to be used in many states, thereby reducing the need for multiple appraisal products. This software, which can be integrated with imaging, facilitates the storage of photographs. In addition, the software permits reading of bar codes on property tax bills. Finally, when integrated with the Company's land information systems, the software allows for a visual inventory of land and improvements that are taxed by the governmental unit.
Financial Management
The Company has developed a comprehensive
fund accounting system consisting of subsystems
such as general ledger, accounts payable, accounts receivable, cost allocation,
receipt processing,
purchase order, cash information management, payroll, human resources,
inventory control, fixed
assets, equipment and vehicle maintenance, and report writer. The system,
which meets established
Utility Billing
The Company has developed utility billing software which encompasses an integrated system from engineering through meter reading, billing, and accounting. The system accommodates water, sewer, gas, electric, garbage collection, and other related services. Utility billing also allows for an unlimited number of services per customer and can accommodate complicated electric rate tables. This software also supports hand-held reading devices, peak-to-peak billing, budget billing, and demand meters. The system can be used by small rural districts which tend to bill few services, as well as larger municipal customers that bill many types of services.
Judicial Information
The Company has developed highly flexible and user definable judicial information systems which are available for all levels of government and consist of the following modules: (i) Case Management; (ii) Court Accounting; (iii) Prosecution Management; (iv) Probation Tracking; (v) Jury Management; (vi) Child Support; and (vii) Voter Registration. In addition, the Company has added the capability of searching court dates through the Internet. The Case Management module encompasses civil, criminal, traffic fine, and court docket functions. The Court Accounting module tracks all fines, court costs, and bonds in addition to providing necessary reports to a governmental unit. The Prosecution Tracking module is a management record keeping and financial module for prosecutors in trial courts. The Probation Tracking module is a case tracking, record keeping, and financial system for probation departments. The Jury Management module facilitates the selection of jurors as well as payments to jurors for jury duty. The Child Support module provides for a complete financial accounting of divorce, paternity, and alimony cases, including Title IV-D reporting. The Voter Registration module oversees the legal record keeping requirements, jury selection, and maintenance of an unlimited voting history and can be integrated with imaging which facilitates the storage of signatures. Each module can be used alone or can be interfaced with the other modules to produce a complete and thorough court management system.
Manatron Indexing, Recording, and Retrieval (MIRRS)
Manatron's indexing, recording, and retrieval system is a software solution developed for recording information from numerous types of documents, including deeds, mortgages, UCC financing statements, liens, vital records, and soldiers' discharges. The software allows immediate access to all database information and includes integrated microfilming and imaging, automatic receipting, index printing, and statistical reports. In addition, the software offers remote access which allows applicable documents to be faxed from the database to abstractors and title companies.
Land Information
The Company's land information system allows
governmental agencies to create and maintain
their own electronic maps, which replace time consuming manual maps. Overlay
maps can be plotted
in a matter of minutes incorporating, for example, property ownership, zoning,
and land use, either
individually or collectively. Data from a variety of sources, including aerial
photographs, census files,
Many of the software packages described above can be used in conjunction with software enhancement options, such as the use of a laser pen to decipher bar coding for efficient storage and retrieval of information. In addition, laser printing and CD-ROM storage services are provided by the Company and through alliances with other companies.
Laser printing and CD-ROM services reduce the amount of paper needed to store documents and, accordingly, save storage space. Laser printing produces copies that look like originals because data is printed electronically from magnetic computer tape onto paper which results in improved print quality, and offers the option of multiple fonts and graphics. Through the use of laser printing and CD-ROM storage, Manatron's customers are able to keep historical data in a user's department, which permits retrieval and printing, often within seconds of command.
Most of the above described Manatron systems originally were written in COBOL and installed at customer sites using the BTOS/CTOS operating system and network desktop microcomputers manufactured by Unisys Corporation ("Unisys"). Most of the ATEK and Sabre systems originally were written in BASIC, DIBOL, and ADMINS utilizing the VMS operating system and VAX minicomputers manufactured by DEC. Sabre also has a number of installations utilizing its FoxPro PC CAMA product. The SDS systems were written in CLIPPER and function on IBM compatible personal computers.
With the Company's movement toward open architecture capabilities, many of the above described systems are now installed at customer sites using MicroSoft Windows, Novell Netware, or Windows NT in a stand alone or client server environment using a variety of personal computers manufactured by DEC, IBM, Unisys, or Concentric Systems. The new Open Window series products also utilize the scalable, client server architecture which makes use of industry standard relational databases. In addition, a number of the Company's larger software installations are now functioning in a UNIX environment in which the IBM RS6000 Series, DEC Alpha Series, and Unisys U6000 Series computers are utilized.
Services
In connection with the installation of its "turn-key" systems, the Company provides ongoing hardware integration and maintenance, software support, training, and other customer services through regional offices described under the caption "Properties" below. The Company has established a regional office in each state where it has a significant nucleus of customers to respond to its customers' needs. Each regional office includes customer service personnel who are able to assist with the installation of the Company's "turn-key" systems and provide technical support on site before and after installation. In addition, Company personnel respond on a daily basis to customer telephone inquiries regarding the use of Manatron systems. A number of regional offices also are staffed with employees who are trained to identify and respond to customers' hardware and other technical problems.
In April of 1998, the Company received a contract to reappraise every property in Allegheny County (Pittsburgh), Pennsylvania over the next two and a half years. The contract was valued at approximately $24 million, making it the largest ever for the Company and one of the largest for the assessment services industry. Under the terms of the agreement, the Company's appraisal division (Sabre) originally was contracted to locate and appraise approximately 600,000 parcels of residential, agricultural, commercial, industrial, and exempt properties and install its CAMA system to maintain and access the information. The Company also will assist in supporting these new appraised values to the public through a hearing process. As of April 30, 1999, the Company has completed approximately 40% of this project.
The Company also provides services for governments at its Illinois, Michigan, and Ohio facilities, such as the creation of digital maps, and preparation and/or printing of property tax bills.
Marketing and Sales
The Company primarily markets its products through its regional offices in Georgia, Illinois, Indiana, Michigan, Missouri, North Carolina, Ohio, and Rhode Island. Manatron plans the opening of each new office based on a review of marketing opportunities and financial analysis within a particular region. The Company also markets its products through nonexclusive dealer arrangements.
The Company's sales and marketing personnel approach various governments with Manatron-specific solutions to their data processing and property valuation needs and also respond to governments' proposal requests. The Company's customer service personnel also assist with product demonstrations in connection with these sales efforts.
Manatron's marketing efforts involve, among other things, developing and distributing product brochures and a bimonthly newsletter, direct mailings, telemarketing, attending conventions and conferences, forming user groups for the purpose of determining customer needs and expectations, conducting seminars for the purpose of demonstrating products and services, and advertising in trade journals.
The Company is also a value-added reseller for a number of leading hardware manufacturers such as DEC, IBM, and Unisys. In turn, the sales forces of these manufacturers often work closely with the Company's sales and marketing personnel in an effort to promote sales of the Company's services and products in conjunction with sales of the hardware.
The Company's customers are primarily city, township, and county governments. The Company's sales are highly dependent on city, township, and county governments' demand for its products and services. Although the Company does not believe that the loss of any single customer, other than the April 1998 contract with Allegheny County (Pittsburgh), Pennsylvania, would have a materially adverse effect on the Company, a material decline in the Company's sales to various governments could have such an effect.
Competition
Competition for the Company's data processing systems, related services, and mass appraisal services is intense. The Company competes primarily on the basis of name recognition, financial stability, range of products, and reputation for providing good customer service.
The Company's major competitors for client-server and Inter/Intranet related systems and services are generally small local software and service firms, which often are able to offer less expensive solutions or to develop long-term relationships with key governmental officials. Generally, these smaller firms can sell hardware and services at reduced amounts because of their small amount of overhead. The Company also competes with national software developers such as Business Records and Systems, Tyler Technologies, Inc., and Computer Technologies which have greater financial, technical, and human resources than the Company. The manufacturers of the computer hardware distributed by the Company may begin to expand the marketing of their applications software to compete with the Company. The Company could be adversely affected if a large computer manufacturer associates itself solely with a third-party software supplier and targets the local government data processing market, or if any large property services or database company acquires, merges, or associates itself with a competing firm.
Furthermore, applications software also is developed periodically by or for public agencies for use by governments. If the funding and distribution of governmentally developed or funded software becomes more widespread, such products could compete with the Company's products.
Competition in mass appraisal services comes from a number of small local firms and only one other national firm, Cole Layer and Trumble of Dayton, Ohio, a division of Day & Zimmerman, Inc. Small local firms often can offer less expensive mass appraisal services and products than the Company or can develop long-term relationships with key governmental officials.
Although state and local governments traditionally have lagged behind both the federal government and the private sector in computer automation, the application of microcomputer and personal computer technology to local governmental units recently has been subject to rapid development and change. The ability of the Company to develop new applications software programs utilizing modern technology is critical to its ability to compete successfully. Manatron reviews and updates its software programs to meet the needs of its customers and to ensure that the programs can be utilized on newer models of personal computers, minicomputers, and UNIX computers.
The most significant barriers to entry into
the Company's market are time, expense, expertise,
and personnel needed to develop software. As software development and the sale
of mass appraisal
Research and Development
Manatron's success depends on its ability to respond quickly to changing technology, market demands, and the needs of its customers. Manatron emphasizes research and development and commits significant resources to support and further its role as a leader in the markets it serves. The Company's research and development expenditures relate primarily to computer software development costs. Systems programming and support expenses were approximately $3.7 million, $3.3 million, and $2.6 million for the fiscal years ended April 30, 1999, 1998, and 1997, respectively. Certain of these expenses are capitalized in accordance with Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed" as described in the Notes to Consolidated Financial Statements contained in this Form 10-K.
During fiscal 1999, the Company continued to focus on the development of its Open Window® series financial and payroll product. The Company shipped the second major release of this product during fiscal 1998. Version 2 contains significant functionality enhancements, new modules, and numerous technical improvements including a robust end-user reporting environment. These products run on the latest 32-bit MicroSoft Windows operating systems and support the Company's effort to replace its many legacy financial products with a state of the art, client/server suite to meet the market demand and improve efficiency. The products contain additional features gleaned from the Company's customer base, existing products, and other financial packages and represent a significant improvement for the Company's customers. More importantly, as these products are introduced to its customers, the Company will strive to reduce some of the redundancies which currently occur because its support staff has often been supporting multiple financial and payroll systems previously developed and sold by the different companies the Company has acquired.
During fiscal 1999, the Company continued a major retooling effort for its product development. MiRiAD, the Company's product development methodology, represents a shift to component-based development based upon industry standards such as Microsoft Distributed Component Object Model (DCOM). This new methodology is expected to reduce software development costs and support costs while resulting in "best-in-class" products. The Company completed development of its first product, Visual Tax® for Illinois Mobile Homes, using this new methodology. In addition, significant progress was made on the Company's new, MVP (Manatron Visual Property) Tax product. Initially, this product is targeted for customers in Indiana and Ohio. Subsequent releases are expected to focus on additional states. The component-based architecture will allow the Company's customers to integrate its products with other tools such as word processors, spreadsheets, and GIS (mapping) applications specifically due to the Company's adherence to industry standards.
In fiscal 1998, the Company released its
first "Connect Series," Internet-based products.
MVP-Connect is a completely web-centric public inquiry product for the
Company's property tax and
appraisal software customers. The first customer went live on the Internet
during the third quarter of
1998 experiencing over 1,000 distinct users per day during the initial weeks.
This product continues
to generate tremendous excitement both as an Internet site and as an Intranet
site for customers who
During fiscal 2000, the Company will continue its focus on building industry-leading products based on component-based technology. Specifically, the Company expects to release version 3 of its MVP-Connect Internet product in the fall of 1999. This version will include support for a subscription model, which provides enhanced security and e-commerce capabilities. In addition, the new version will provide enhanced functionality and multi-lingual support (up to five languages). The Company also recently introduced its second major Internet-based product, MIRRS®-Connect. Also, recently acquired ProVal Corporation historically has invested approximately 30% of its annual revenues on development and upgrading of its products. Through the conjunction of effort between ProVal and SMDA 2000 development terms the Company will continue the development of a new component-based CAMA product. These efforts will form a completely integrated property management system, MVP-Connect, comprised of property tax, appraisal, recording/indexing, and other modules. Finally, the Company expects to complete the year 2000 coding for its legacy products in the remainder of 1999. This process has been underway for much of the past two and one-half years and has seen substantial progress.
Suppliers
The Company generally maintains a minimum of three alternate suppliers. All computers, peripherals, disks, printers, plotters, digitizers, operating system software, office automation software, and other equipment required by the Company presently are available from at least three sources. Hardware is purchased on original equipment manufacturer or distributor terms at discounts from retail. The Company has not experienced any significant supply problems.
Backlog
At April 30, 1999, the Company's backlog of orders for hardware, software, and services (including mass real estate appraisal) was approximately $34.2 million, compared with approximately $39 million at April 30, 1998. This decrease primarily was due to the approximate 40% execution of the previously mentioned Allegheny contract. Backlog can fluctuate significantly from quarter to quarter primarily because of the seasonality of government ordering patterns. Accordingly, a comparison of backlog from quarter to quarter is not necessarily instructive and may not be indicative of eventual actual shipments.
Patents and Trademarks
The Company currently does not have patent protection for its products or services. While Manatron in the future may apply for a patent or patents to protect its rights to certain software and related products, no assurance can be given that such patents would be granted. The Company treats certain proprietary materials as trade secrets, and employs and will continue to employ procedures, techniques, and contractual arrangements to help protect such confidential matters.
The Company incorporates programming on software disks to make unauthorized duplication of the software more difficult.
Employees
As of July 1, 1999, the Company had 380 full-time employees, 214 duration employees, 43 temporary employees, and six part-time employees. For assistance on specific mass appraisal projects, the Company hires duration and temporary employees, whose employment generally lasts for the duration of a project. Duration and temporary employees generally do not receive the same benefits as regular full-time employees.
The majority of the Company's employees are not represented by a labor union. There are, however, approximately 122 employees working on the Allegheny County project who are represented by the Service Employers International Union, AFL-CIO. No work stoppages have been experienced and management presently considers its relations with employees to be positive.
An approximate breakdown of the Company's employees is as follows:
| Executive | 3% |
| Administrative | 7% |
| Development | 7% |
| Sales and Marketing | 3% |
| Service and Support | 20% |
| Appraisal | 60% |
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| Total | 100% |
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The principal executive and administration offices are located in a building owned by Manatron in Kalamazoo, Michigan, which consists of approximately 12,300 square feet. The Company also rents office and/or warehouse space in Georgia, Illinois, Indiana, Michigan, Missouri, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, and South Carolina. Rental payments for the Company's leased office and warehouse space for the fiscal year ended April 30, 1999, amounted to approximately $834,000.
Management considers all of its offices to be well maintained, in good operating condition, and suitable and adequate for their intended purposes.
The Company is not a party to any pending legal proceedings other than routine litigation incidental to its business. In the opinion of management, the outcome of any litigation currently pending will not materially affect the Company's financial condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders .
No matter was submitted during the fourth quarter of the fiscal year covered by this Annual Report to a vote of security holders, through the solicitation of proxies or otherwise.
Supplemental Item . Executive Officers of the Registrant .
Executive officers of the Company are elected by the Board of Directors at its organizational meeting following the annual meeting of shareholders and serve until their successors are elected and qualified.
The following information includes the names and ages of the executive officers of the Company who are not directors as of the date of this Annual Report on Form 10-K, the officers' present position with the Company, and the business experience of the officers during the past five years.
J. Wayne Moore (age 58) joined the Company in 1999 when the Company acquired ProVal Corporation. Mr. Moore was President of ProVal Corporation before its acquisition and was named President of Manatron ProVal Corporation, the Company's new appraisal software products subsidiary. Mr. Moore has 26 years experience developing computer assisted mass appraisal systems. Mr. Moore is chief architect and designer of the trademarked ProVal® software system.
Daniel P. Muthard (age 50) joined the Company in 1994 when the Company acquired Sabre. Mr. Muthard was Vice President of the Company's appraisal operations until June of 1998, at which time he was named President of the Appraisal Division following the death of Melvin J. Trumble, the Company's previous leader of the Appraisal Division.
James W. Sanderbeck (age 49) joined the Company in 1993 when the Company acquired ATEK. Mr. Sanderbeck was President of ATEK before its acquisition by the Company and from 1993 to 1996, Mr. Sanderbeck was involved in sales management. In April of 1996, Mr. Sanderbeck was named Chief Operating Officer of the Company and is primarily responsible for overseeing the national sales and delivery of services to the Company's customers through its regional offices.
Early L. Stephens (age 36) joined the Company in 1986 and worked as a programmer/analyst. From 1988 until July 1997, Mr. Stephens was Project Manager-Management Information Systems at Western Michigan University and was responsible for the implementation of client server applications in LAN environments. In June 1996, Mr. Stephens returned to the Company and was named Chief Technology Officer and is responsible for software product development, establishment of technology standards for the Company's products and services, and development of strategic plans.
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters .
Manatron's Common Stock is traded over-the-counter and is regularly quoted on The Nasdaq SmallCap Market under the symbol "MANA."
The following table shows the range of high and low sales price quotations reported by The Nasdaq SmallCap Market for the years ended April 30, 1999 and 1998:
| 1999 | 1998 | |||||||
|---|---|---|---|---|---|---|---|---|
| Quarter | Low | High | Low | High | ||||
| May - July | $3.000 | $5.625 | $1.5000 | $2.2500 | ||||
| August - October | 3.375 | 4.750 | 1.8125 | 2.1250 | ||||
| November - January | 3.375 | 5.875 | 1.5000 | 2.0625 | ||||
| February - April | 4.375 | 6.125 | 1.4375 | 7.5000 | ||||
As of July 1, 1999, the Company's Common Stock was held by approximately 1,200 shareholders, 238 of which were registered.
Item 6. Selected Financial Data .
The following table sets forth selected financial data of the Company for the periods indicated and has been derived from and should be read in connection with the Company's Consolidated Financial Statements, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Form 10-K. The annual income statement and balance sheet data set forth below for the years 1995 through 1999 have been derived from the Consolidated Financial Statements of the Company audited by Arthur Andersen LLP, independent auditors.
| Five-Year Operating and Financial Summary | |||||||||
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| Years Ended April 30, | |||||||||
| 1999 | 1998 | 1997 | 1996(1) | 1995 | |||||
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| Operating Results: | |||||||||
| Net revenues | $37,549,264 | $24,791,881 | $22,016,988 | $23,946,243 | $24,768,515 | ||||
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| Gross profit | 13,005,142 | 9,473,074 | 8,636,635 | 8,427,625 | 9,564,453 | ||||
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Income (loss) from
operations |
1,251,840 | 402,840 | (160,000) | (2,870,606) | 1,010,162 | ||||
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Other income
(expense), net |
52,730 | (89,069) | (246,659) | (368,808) | (245,755) | ||||
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| Net income (loss) | 1,304,570 | 313,771 | (406,659) | (3,039,414) | 437,407 | ||||
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Basic earnings (loss)
per share |
.45 | .11 | (.14) | (1.03) | .15 | ||||
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Diluted earnings
(loss) per share |
.41 | .11 | (.14) | (1.03) | .15 | ||||
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| At Year-end: | |||||||||
| Cash and equivalents | 6,511,266 | 1,613,669 | 457,691 | 352,074 | 437,327 | ||||
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| Total assets | 23,228,429 | 15,863,076 | 14,854,268 | 16,583,187 | 20,988,190 | ||||
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| Long-term debt | 50,000 | 125,000 | 1,110,000 | 3,500,000 | 4,784,000 | ||||
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| Book value per share | $ 2.28 | $ 1.80 | $ 1.68 | $ 1.80 | $ 3.06 | ||||
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Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
.
The following section provides a narrative
discussion about Manatron's financial condition and
results of operations. The comments that follow should be read in conjunction
with the Company's
Results of Operations: Fiscal Year 1999 Compared to Fiscal Year 1998
Net revenues of $10,890,655 for the three months ended April 30, 1999 have increased by 64% compared to the $6,647,412 of net revenues that were reported for the fourth quarter in the prior fiscal year. Annual net revenues of $37,549,264 for fiscal 1999 are 51% higher than the $24,791,881 of net revenues that were reported for the prior fiscal year. These amounts include revenues from computer hardware and software shipments, sales of computer forms and supplies, and various related services such as mass real estate appraisal, software support, training, hardware maintenance, and forms processing and printing.
In general, the net revenue increase is primarily due to the execution of major appraisal service contracts and increased software and hardware sales as a result of year 2000 compliance. Specifically, service revenues have increased by 51% over the prior year primarily because of revenues received from the revaluation contracts signed with Allegheny County (Pittsburgh), Pennsylvania, Dauphin County (Harrisburg), Pennsylvania, and Hamilton County (Cincinnati), Ohio. These contracts which totaled approximately $33.5 million had a major impact on the financial results for fiscal 1999 and will continue to do so in fiscal 2000. As of April 30, 1999, approximately $14 million has been recognized as revenue on these projects. As of April 30, 1999 the Company's backlog for appraisal services was approximately $23.2 million compared to $31.8 million at April 30, 1998.
Revenues from hardware, Company software, third party software, and supply sales have increased by 53% over the prior year primarily because of additional upgrades by existing and new customers in the Midwest. Many of the orders are a result of year 2000 upgrades. These increases also are due to the tax accounting and Internet contract that was signed with Franklin County, Ohio in the fall of 1998 as well as the recognition of revenue on approximately six other counties that purchased the Company's Internet (MVP-Connect) product. Finally, the Company completed a special project for the Ohio Office of Criminal Justice Services to provide hardware and software for electronic reporting of criminal dispositions in 50 of its sites in Ohio.
Cost of revenues for the three months ended April 30, 1999 increased 83% to $7,233,964 compared to $3,942,741 for the fourth quarter in the prior fiscal year. Annual cost of revenues increased by 60% from $15,318,807 in the prior fiscal year to $24,544,122 for the year ended April 30, 1999. These increases are primarily due to the improvement in net revenues noted above. The prior fiscal year gross margins were approximately 41% for the fourth quarter and 38% for the year while the current fiscal year margins were 34% and 35%, respectively. These margin fluctuations are due to changes in the mix of revenues. For example, margins on hardware, third party software, and services typically are lower than the margins on licenses of Company software.
Selling, general, and administrative expenses have increased by 25% to $3,202,386 for the three months ended April 30, 1999 compared to $2,570,569 for the fourth quarter in the prior fiscal year. Annual selling, general, and administrative expenses have increased 30% from $9,070,234 in fiscal 1998 to $11,753,302 in fiscal 1999. These increases are primarily due to annual salary adjustments and additional software development staff needed for ongoing development and rollout of the Company's new software products in conjunction with year 2000 compliance work.
Interest expense has decreased from $140,794 in fiscal 1998 to $50,199 in fiscal 1999 because the Company reduced its average outstanding debt by approximately $1 million. Currently the Company does not have an outstanding balance on its $3 million line of credit.
The Company's provision for federal income taxes generally fluctuates with the level of pretax income. In addition, the effective tax rate generally is impacted because of non-deductible goodwill amortization related to the Company's acquisitions of ATEK and SDS. However, as more fully described in the accompanying Notes to Consolidated Financial Statements, the Company has not recorded a provision for federal income taxes for the year ended April 30, 1999 because a portion of its valuation allowance has been utilized to offset it.
As a result of the factors noted above, the Company reported net income of $504,368 or $.16 per share for the three months ended and $1,304,570 or $.41 per share for the year ended April 30, 1999, compared to net income of $137,862 or $.05 per share and $313,771 or $.11 per share for the comparable periods in the prior fiscal year. All per share amounts are diluted. This equates to an improvement over the prior year of 266% for the comparable quarter and 316% for the comparable fiscal year. Weighted average shares outstanding have increased primarily because the Company issued restricted stock to a number of technical employees and because a number of other employees have exercised stock options.
Results of Operations: Fiscal Year 1998 Compared to Fiscal Year 1997
Net revenues of $6,647,412 for the three months ended April 30, 1998 increased by 20% compared to the $5,549,496 of net revenues that were reported for the fourth quarter in fiscal 1997. Annual net revenues of $24,791,881 for fiscal 1998 were 13% higher than the $22,016,988 of net revenues that were reported for fiscal 1997. The components of revenue and the nature of the Company's business for these two years is similar to the previous description for fiscal 1999.
Service revenues increased by 14% over fiscal 1997 primarily because of the new revaluation contracts that were signed with Allegheny County (Pittsburgh), Pennsylvania and Hamilton County (Cincinnati), Ohio during fiscal 1998, totaling $30 million. As a result, the Company's backlog for appraisal services at April 30, 1998 was more than twice the amount it was at April 30, 1997.
Revenues from hardware, software, and supply sales increased by 7% over fiscal 1997 primarily because of additional software license fees from new and legacy products. Hardware sales decreased because of increased competition and reduced prices industry wide. While software license fees increased, the Company's revenues in this area were relatively flat while the Company made further efforts toward the development, reengineering, and deployment of the new property tax, appraisal, financial, and MIRRS products.
Cost of revenues for the three months ended
April 30, 1998 increased 19% to $3,942,741
compared to $3,324,509 for the fourth quarter in fiscal 1997. Annual cost of
revenues increased by
Selling, general, and administrative expenses increased by 16% to $2,570,569 for the three months ended April 30, 1998 compared to $2,214,658 for the comparable period in fiscal 1997. Annual selling, general, and administrative expenses increased 3% from $8,796,635 in fiscal 1997 to $9,070,234 in fiscal 1998. These increases were primarily due to annual salary adjustments and additional software development staff.
As a result of the factors noted above, the Company reported operating income of $134,102 for the three months ended and $402,840 for the year ended April 30, 1998. This reflected significant improvement over the reported amounts of operating income of $10,329 for the three months ended April 30, 1997 and an operating loss of $160,000 for the year ended April 30, 1997.
Interest expense decreased from $305,632 in fiscal 1997 to $140,794 in fiscal 1998 because the Company's average borrowings under its line of credit were approximately $2 million lower in fiscal 1998 than they were in fiscal 1997.
The Company's provision for federal income taxes generally fluctuates with the level of pretax income. In addition, the effective tax rate generally was impacted because of non-deductible goodwill amortization related to the Company's acquisitions of ATEK and SDS. However, as described in the accompanying Notes to Consolidated Financial Statements, the Company did not record a provision for federal income taxes for the year ended April 30, 1998 because a portion of its valuation allowance was utilized to offset it.
As a result of the factors noted above, the Company reported net income of $137,862 or $.05 per share for the three months ended and $313,771 or $.11 per share for the year ended April 30, 1998, versus net losses of $34,101 or $.01 per share and $406,659 or $.14 per share for the comparable periods in the prior fiscal year. Weighted average shares outstanding decreased from 2,867,711 to 2,821,547 primarily because the Company repurchased 95,200 shares of its common stock in fiscal 1998 and purchases were made by employee stock plans throughout fiscal 1998.
The following table sets forth selected unaudited quarterly financial data for the eight quarters ended April 30, 1999:
| Fiscal 1998 | Fiscal 1999 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
||||||||||||||
|
July 31,
1997 |
October 31,
1997 |
January 31,
1998 |
April 30,
1998 |
July 31,
1998 |
October 31,
1998 |
January 31,
1999 |
April 30,
1999 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
| Net revenues | $5,963,985 | $5,917,284 | $6,263,200 | $6,647,412 | $8,803,056 | $9,220,221 | $9,355,332 | $10,890,655 | |||||||
| Gross profit | 2,141,435 | 2,190,600 | 2,436,368 | 2,704,671 | 2,830,092 | 2,984,329 | 3,534,030 | 3,656,691 | |||||||
| Operating income | 56,475 | 74,002 | 138,261 | 134,102 | 202,739 | 279,137 | 315,659 | 454,305 | |||||||
|
Other income
(expense), net |
(35,884) | (25,714) | (31,231) | 3,760 | 349 | (4,935) | 7,253 | 50,063 | |||||||
| Net income | 20,591 | 48,288 | 107,030 | 137,862 | 203,088 | 274,202 | 322,912 | 504,368 | |||||||
|
Basic earnings
per share |
.01 | .02 | .04 | .05 | .07 | .09 | .11 | .17 | |||||||
|
Diluted earnings
per share |
.01 | .02 | .04 | .05 | .06 | .09 | .10 | .16 | |||||||
Working capital of $1,977,406 at April 30, 1999 has increased compared to $876,891 at April 30, 1998. These levels reflect current ratios of 1.12 and 1.08, respectively. The increase in working capital is due primarily to the Company's increases in revenues and profitability.
Shareholders' equity at April 30, 1999 increased by $1,673,230 to $6,783,845 from the balance reported at April 30, 1998, primarily because of the $1,304,570 of net income for the year, $237,573 of stock that was issued, and $206,567 of deferred compensation expense. As a result, book value per share has increased to $2.28 as of April 30, 1999 from $1.80 at April 30, 1998.
The nature of the Company's business is not property or equipment intensive. Net capital expenditures, which were approximately $622,000 for the year ended April 30, 1999, are 15% higher than the comparable prior fiscal year amount of $542,000. These expenditures relate primarily to the purchase of additional or new computer hardware and software for the Company's technical and support personnel. With the exception of the $1.3 million purchase of a new corporate office in July of 1999, capital expenditures for future periods are not anticipated to be significantly different from those incurred in the current period.
As the Company's revenues are generated from contracts with local governmental entities, it is not uncommon for certain of its accounts receivable to remain outstanding for approximately three to four months, thereby having a negative impact upon cash flow. On October 9, 1998, the Company entered into a new loan agreement with Comerica Bank which replaces its Revolving Credit Agreement dated as of November 11, 1994. This new agreement provides a $3 million line of credit to the Company at prime through November 1, 2000. As of April 30, 1999, no borrowings were outstanding under this line of credit. In addition, as of April 30, 1999, the Company owed $80,000 on acquisition- related debt and $125,000 on its ESOP loan. The Company anticipates that the revolving line of credit, together with existing cash balances, and cash generated from future operations will be sufficient for the Company to finance the acquisition of ProVal Corporation and the new corporate office and to meet its working capital requirements for at least the next 12 months.
The Company cannot determine precisely the effect of inflation on its business. The Company continues, however, to experience relatively stable costs for its inventory as the computer hardware market is very competitive. The Company anticipates that inflationary price increases related to labor and overhead will have a negative effect on cash flow and net income to the extent that the increases cannot be offset through improved productivity and price increases.
Year 2000 Readiness Disclosure
This Year 2000 Readiness Disclosure is based upon and partially repeats information provided by the Company's outside consultants and others regarding the year 2000 readiness of the Company and its customers, suppliers, financial institutions, and other parties. Although the Company believes this information to be accurate, it has not independently verified such information.
The Company is currently in the process of
addressing a potential problem that is facing all
users of automated information systems. The problem is that many computer
systems and applications
process dates using only two digits for the year. These systems may recognize
a date using "00" as the
The Company has developed and is implementing plans to prepare itself and its customers for the year 2000. The Company's plan is regularly updated and monitored by technical personnel and is reviewed by management of the Company on a periodic basis. Specifically, the plan addresses the Company's internal data processing systems, its software products, its third party products, and communications with its customers as follows:
Internal Data Processing
The Company's internal data processing systems include hardware and software that facilitates its business operations. The internal systems include:
|
|
customer information systems |
|
|
accounting, human resource, and payroll systems |
|
|
customer support systems |
The Company's Software Products
A core strategy of the Company is to develop and market turnkey software systems for local government. Most of these products have some dependency on dates. As such, the Company has been working to update them to properly handle years after 1999. Of the Company's 93 major products, only 71 are targeted for compliance. The others are either being discontinued or replaced by more modern products. As of April 30, 1999, this effort is estimated to be approximately 90% complete. For comparison, as of July 31, 1998 this effort was estimated to be approximately 60% complete. As of April 30, 1999, the breakdown is as follows:
|
|
products that are compliant | 66% |
|
|
products in QA phase | 24% |
|
|
products in programming phase | 6% |
|
|
products with analysis completed | 1% |
|
|
products not yet started | 3% |
The Company's software products run on industry standard hardware and operating systems. To facilitate the deployment of its software, the Company acts as a value-added reseller for a wide variety of hardware manufacturers, installing and supporting both the hardware and software for its customers. The Company's technical services department is spearheading the effort to document the year 2000 compliance status of third party hardware and software and to identify those products that need to be upgraded or replaced. This identification effort is also substantially complete; however, this information changes as vendors release more information about and options for managing the year 2000 issue.
Significant third parties with which the Company interfaces with regard to the year 2000 problem include those identified above and other customers, technology vendors and service providers, financial institutions, and companies that provide utility infrastructure (power, delivery services, telecommunications). Unreadiness by these third parties would expose the Company to the potential for loss and impairment of business processes and activities. The Company is assessing these risks and is considering the need for contingency plans intended to address perceived risks. The Company cannot predict what effect the failure of such a third party to address, in a timely manner, the year 2000 problem would have on the Company.
Communication with Customers
Another important aspect of the Company's year 2000 strategy is to coordinate its efforts with those of its customers. Communication of the Company's strategy to its customers also has been substantially completed. The communication includes the compliance plans for specific software products and the year 2000 services offered by the Company. This communication will continue throughout 1999 as the Company works with its customer base to upgrade or replace those software and hardware systems. To support this effort, the Company has launched a year 2000 area on its web site to make relevant information available to both Company personnel and customers.
Contingency Plan
The Company believes its plans will support the year 2000 rollover both internally and for its installed customer base. However, the Company is presently preparing contingency plans to further reduce the risk associated with the year 2000 issues. Internally, the Company has purchased year 2000 compliant capacity for its current financial software even though it intends to implement a new system before the end of 1999.
In addition, for both internal and external purposes, the Company is planning staffing levels and resource commitments so that adequate technical resources will be available to quickly address issues that may arise. This staffing plan will be comprehensive with the objective of addressing customer issues and internal staff support requirements.
The Company will continue to assess the impact of, and work on, the year 2000 issues throughout 1999. The Company's goal is to upgrade its customers' systems and applications during 1999 and to have all remaining targeted systems and applications compliant with the century change by September 1999, which would allow the Company to have time to address any last minute issues.
Based on currently available information, management does not presently anticipate that the costs to address the year 2000 issues will have a material adverse impact on the Company's financial conditions, results of operations, or liquidity. However, the extent to which the computer operations and other systems of the Company's important third parties are adversely affected could, in turn, affect the Company's ability to communicate with such third parties and could materially affect the Company's results of operations in any period or periods. The costs have had a negative effect on the Company's earnings and the future costs associated with the year 2000 issue are expected to have a similar effect.
The costs of the project and the date on which the Company believes it will complete the year 2000 modifications are based on management's best estimates. There can be no guarantee that these estimates will be achieved and actual results could differ from those anticipated. Specific factors that might cause differences include, but are not limited to, the ability of other companies on which the Company's systems rely to modify or convert their systems to be year 2000 compliant, the ability of all third parties who have business relationships with the Company to continue their businesses without interruption, the ability to locate and correct all relevant computer codes, and similar uncertainties. As a result, the Company is continuing to evaluate the possible internal and external scenarios that might have an adverse effect on the Company, so that it can plan accordingly.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995
Certain information contained in this Form
10-K may constitute or include forward-looking
statements. Such forward-looking information involves important known and
unknown risks and
uncertainties and other factors that may cause the actual results, performance,
or achievements of the
Company to be materially different from any future results, performance, or
achievements expressed or
implied by such forward-looking statements. These risks and uncertainties
include, but are not limited
to, uncertainties relating to economic conditions; possible future acquisitions
and divestitures;
technological changes and developments in the competitive environment in which
the Company
operates; the effect of the year 2000 on the Company's business; spending
patterns of the Company's
customers; success of the Company in negotiations with its lenders; size,
timing, and recognition of
revenue from significant orders; ability of the Company to successfully
implement its business strategy
of developing and licensing client/server decision support applications
software designed to address
specific industry markets; new product introductions and announcements by the
Company's
competitors; changes in Company strategy; product life cycles, cost, and
continued availability of third
party software and technology incorporated into the Company's products;
cancellations of maintenance
and support agreements; potential obsolescence of the Company's existing
products or services; pricing
and availability of equipment, materials, inventories, and programming; success
in and expense
Item 7A. Quantitative and Qualitative Disclosures About Market Risk .
The Company's primary market risk exposure is a potential change in interest rates in connection with its line of credit. As of April 30, 1999, no borrowings were outstanding under this line of credit. Accordingly, the Company's market risk sensitive instruments did not subject the Company to market risk exposures as of April 30, 1999.
Item 8. Financial Statements and Supplementary Data .
The response to this Item is set forth in Appendix A of this Annual Report on Form 10-K and is incorporated herein by reference.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
.
None.
Item 10. Directors and Executive Officers of the Registrant .
The information regarding directors of the Company contained under the captions "Board of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the definitive Proxy Statement of the Company for its annual meeting of shareholders to be held October 7, 1999, is incorporated by reference. The information regarding executive officers is provided in the Supplemental Item following Item 4 in Part I of the Annual Report.
The information contained under the captions "Compensation of Directors," "Executive Compensation," and "Compensation Committee Interlocks and Insider Participation" in the definitive Proxy Statement of the Company for its annual meeting of shareholders to be held October 7, 1999, is incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management .
The information contained under the caption "Voting Securities," "Ownership of Common Stock," and "Securities Ownership of Management" in the definitive Proxy Statement of the Company for its annual meeting of shareholders to be held October 7, 1999, is incorporated by reference.
Item 13. Certain Relationships and Related Transactions .
The information under the captions "Compensation Committee Interlocks and Insider Participation" and "Certain Relationships and Related Transactions" in the definitive Proxy Statement of the Company for its annual meeting of shareholders to be held October 7, 1999, is incorporated by reference.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K .
Item 14(a)(1) . List of Financial Statements . The following report, Consolidated Financial Statements of the Company, and notes thereto are filed as a part of this report:
|
|
Report of Arthur Andersen LLP, Independent Public Accountants, dated July 12, 1999 |
|
|
Consolidated Balance Sheets as of April 30, 1999 and April 30, 1998 |
|
|
Consolidated Statements of Operations for the years ended April 30, 1999, 1998, and 1997 |
|
|
Consolidated Statements of Shareholders' Equity for the years ended April 30, 1999, 1998, and 1997 |
|
|
Consolidated Statements of Cash Flows for the years ended April 30, 1999, 1998, and 1997 |
|
|
Notes to Consolidated Financial Statements |
|
Exhibit
Number |
Description | |
|---|---|---|
| 3.1 | Restated Articles of Incorporation. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 3.2 | Bylaws. | |
| 4.1 | Restated Articles of Incorporation. See Exhibit 3.1 above. | |
| 4.2 | Bylaws. See Exhibit 3.2 above. | |
| 4.3 | Rights Agreement dated June 2, 1997 between Manatron, Inc. and Registrar and Transfer Company. Previously filed as an exhibit to the Company's Form 8-A filed on June 11, 1997, and incorporated herein by reference. | |
| 10.1 | Manatron, Inc. 1989 Stock Option Plan. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.2 | Manatron, Inc. 1995 Long-Term Incentive Plan. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.3 | Executive Employment Agreement with Randall L. Peat. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.4 | Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.5 | ATEK Information Services, Inc. Stock Purchase Agreement. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.6 | Stock Purchase Agreement between Ronald D. Stoynoff and Allen F. Peat dated March 15, 1994. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.7 | Agreement between Manatron, Inc. and Ronald D. Stoynoff effective as of April 1, 1994. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. |
| 10.8 | Asset Purchase Agreement between Manatron, Inc. and Moore Business Forms, Inc. dated November 11, 1994. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.9 | Manatron, Inc. 1994 Long-Term Incentive Plan. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.10 | Agreement between Manatron, Inc. and Allen F. Peat dated October 17, 1995. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.11 | Employment Agreement with Douglas A. Peat dated October 10, 1996. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.12 | Employment Agreement with Jane M. Rix dated October 10, 1996. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.13 | Employment Agreement with James W. Sanderbeck dated October 10, 1996. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.14 | Employment Agreement with Paul R. Sylvester dated October 10, 1996. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.15 | Employment Agreement with J. Wayne Moore dated May 28, 1999. * | |
| 10.16 | Manatron, Inc. Executive Incentive Plan for 1999. * Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended October 31, 1998, and here incorporated by reference. | |
| 10.17 | Form of Indemnity Agreement. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1998, and incorporated herein by reference. | |
| 10.18 | Property Revaluation Articles of Agreement for Allegheny County, Pennsylvania dated May 20, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended July 31, 1998, and here incorporated by reference. |
| 10.19 | Restricted Stock Plan of 1998. * Previously filed as an exhibit to the Company's Definitive Proxy Statement for its Annual Meeting of Shareholders held October 8, 1998, and here incorporated by reference. | |
| 10.20 | Employee Stock Purchase Plan of 1998. * Previously filed as an exhibit to the Company's Definitive Proxy Statement for its Annual Meeting of Shareholders held October 8, 1998, and here incorporated by reference. | |
| 10.21 | Letter Loan Agreement between Comerica Bank and Manatron, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.22 | Promissory Note between Comerica Bank and Manatron, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.23 | Guaranty between Comerica Bank and Manatron, Inc., dated October 9, 1998 regarding indebtedness of Manatron, Inc. Employee Stock Option and Salary Deferral Plan. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.24 | Guaranty between Comerica Bank and Specialized Data Systems, Inc., dated October 9, 1998 regarding indebtedness of Manatron, Inc. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.25 | Guaranty between Comerica Bank and Atek Information Systems, Inc., dated October 9, 1998 regarding indebtedness of Manatron, Inc. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.26 | Security Agreement between Comerica Bank and Manatron, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.27 | Security Agreement between Comerica Bank and Specialized Data Systems, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. |
| 10.28 | Security Agreement between Comerica Bank and Atek Information Systems, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 21 | Subsidiaries of Registrant. | |
| 23 | Consent of Independent Public Accountants. | |
| 24 | Powers of Attorney. | |
| 27 | Financial Data Schedule. |
The Company will furnish a copy of any exhibit listed above to any shareholder of the Company without charge upon request to Jane M. Rix, 2970 South 9th Street, Kalamazoo, Michigan 49009.
Item 14(b) Reports on Form 8-K .
No current reports on Form 8-K were filed by the Company during the last quarter of the period covered by this report.
Pursuant
to the requirements of Section 13 or 15(d) 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.
| MANATRON, INC. | |
| Dated: July 27, 1999 |
By /s/ Paul R. Sylvester |
| Paul R. Sylvester | |
| President, Chief Executive Officer, and | |
| Director |
|
/s/ Paul R. Sylvester |
Date: July 27, 1999 | |
| Paul R. Sylvester | ||
| President, Chief Executive Officer, and | ||
| Director (Principal Executive Officer) | ||
|
/s/ Joseph Zalewski |
Date: July 27, 1999 | |
| Joseph Zalewski | ||
| Vice President-Finance and Chief Financial | ||
| Officer (Principal Financial and Accounting | ||
| Officer) | ||
|
*
|
Date: July 27, 1999 | |
| Randall L. Peat, Vice President | ||
| and Director | ||
|
*
|
Date: July 27, 1999 | |
| Richard J. Holloman, Director |
|
*
|
Date: July 27, 1999 | |
| Douglas A. Peat, Vice President - | ||
| Marketing and Director | ||
|
*
|
Date: July 27, 1999 | |
| Jane M. Rix, Secretary and | ||
| Director | ||
|
*
|
Date: July 27, 1999 | |
| Stephen C. Waterbury, Director | ||
|
*
|
Date: July 27, 1999 | |
| Harry C. Vorys, Director | ||
|
|
Date: July __, 1999 | |
| Gene Bledsoe, Director | ||
|
*
|
Date: July 27, 1999 | |
| Allen F. Peat, Director | ||
|
*By /s/ Paul R. Sylvester
|
Date: July 27, 1999 | |
| Paul R. Sylvester | ||
| Attorney-in-Fact |
MANATRON, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
TOGETHER WITH AUDITORS' REPORT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Manatron, Inc.:
We have audited the accompanying consolidated balance sheets of MANATRON, INC. (a Michigan corporation) and Subsidiaries as of April 30, 1999 and 1998, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended April 30, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements 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 financial position of Manatron, Inc. and Subsidiaries as of April 30, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended April 30, 1999, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Grand Rapids, Michigan
July 12, 1999
| ASSETS | 1999 | 1998 | ||
|---|---|---|---|---|
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| CURRENT ASSETS: | ||||
| Cash and equivalents | $ 6,511,266 | $ 1,613,669 | ||
| Accounts receivable, less allowances of | ||||
| $1,298,000 in 1999 and $720,000 in 1998 | 4,646,911 | 5,017,523 | ||
| Revenues earning in excess of billings and | ||||
| retainages on long-term contracts | 3,920,928 | 2,723,571 | ||
| Current portions of notes receivable: | ||||
| Notes receivable | 636,349 | 610,898 | ||
| Net investment in sales type leases | 144,071 | 281,202 | ||
| Inventories | 415,341 | 296,420 | ||
| Deferred tax assets | 1,750,000 | 414,000 | ||
| Other current assets | 347,124 | 262,255 | ||
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| Total current assets | 18,371,990 | 11,219,538 | ||
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| NET PROPERTY AND EQUIPMENT | 1,207,140 | 1,310,096 | ||
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| OTHER ASSETS: | ||||
| Notes receivable, less current portions: | ||||
| Notes receivable | 955,037 | 424,222 | ||
| Net investment in sales type leases | 125,000 | 143,000 | ||
| Officers' receivable | 232,969 | 343,724 | ||
| Computer software development costs | ||||
| net of accumulated amortization | 1,507,178 | 1,461,437 | ||
| Goodwill, net of accumulated amortization | 715,503 | 900,334 | ||
| Deferred tax assets | 82,000 | -- | ||
| Other, net | 31,612 | 60,725 | ||
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| Total other assets | 3,649,299 | 3,333,442 | ||
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| $23,228,429 | $15,863,076 | |||
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| LIABILITIES AND SHAREHOLDERS' EQUITY | 1999 | 1998 | ||
|---|---|---|---|---|
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| CURRENT LIABILITIES: | ||||
| Current portion of long-term debt | $ 155,000 | $ 100,000 | ||
| Accounts payable | 1,726,397 | 1,099,365 | ||
| Billings in excess of revenues earned | ||||
| on long-term contracts | 3,308,140 | 1,343,490 | ||
| Billings for future services | 5,914,071 | 4,747,231 | ||
| Restructuring reserve | 189,942 | 250,834 | ||
| Accrued liabilities: | ||||
| Payroll and employee benefits | 2,563,195 | 1,748,514 | ||
| Income taxes | 1,835,320 | 465,002 | ||
| Accrued commissions | 511,996 | 438,484 | ||
| Other | 190,523 | 149,727 | ||
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| Total current liabilities | 16,394,584 | 10,342,647 | ||
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| DEFERRED INCOME TAXES | -- | 124,000 | ||
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| LONG-TERM DEBT, less current portion | 50,000 | 125,000 | ||
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| OTHER LONG-TERM LIABILITIES | -- | 160,814 | ||
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| SHAREHOLDERS' EQUITY: | ||||
| Preferred stock, no par value, | ||||
| 2,000,000 shares authorized, none issued | -- | -- | ||
| Common stock, no par value, 7,500,000 | ||||
| shares authorized, 2,973,970 and | ||||
| 2,831,941 shares issued and outstanding | ||||
| at April 30, 1999 and 1998, respectively | 5,672,530 | 5,275,130 | ||
| Retained earnings | 1,468,367 | 163,797 | ||
| Deferred compensation | (232,052) | (103,312) | ||
| Unearned ESOP shares | (125,000) | (225,000) | ||
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| Total shareholders' equity | 6,783,845 | 5,110,615 | ||
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| $23,228,429 | $15,863,076 | |||
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| 1999 | 1998 | 1997 | ||||
|---|---|---|---|---|---|---|
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| NET REVENUES: | ||||||
| Hardware, software, and supply sales | $ 9,026,170 | $ 5,894,325 | $ 5,508,705 | |||
| Service fees | 28,523,094 | 18,897,556 | 16,508,283 | |||
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| Total net revenues | 37,549,264 | 24,791,881 | 22,016,988 | |||
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| COST OF REVENUES: | ||||||
| Hardware, software, and supplies | 5,432,965 | 3,561,354 | 3,719,763 | |||
| Services | 19,111,157 | 11,757,453 | 9,660,590 | |||
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| Total cost of revenues | 24,544,122 | 15,318,807 | 13,380,353 | |||
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| Gross profit | 13,005,142 | 9,473,074 | 8,636,635 | |||
| SELLING, GENERAL, AND | ||||||
| ADMINISTRATIVE EXPENSES | 11,753,302 | 9,070,234 | 8,796,635 | |||
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| Income (loss) from operations | 1,251,840 | 402,840 | (160,000) | |||
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| OTHER INCOME (EXPENSE): | ||||||
| Interest expense | (50,199) | (140,794) | (305,632) | |||
| Other | 102,929 | 51,725 | 58,973 | |||
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| 52,730 | (89,069) | (246,659) | ||||
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| Income (loss) before provision | ||||||
| for federal income | ||||||
| taxes | 1,304,570 | 313,771 | (406,659) | |||
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| PROVISION FOR FEDERAL | ||||||
| INCOME TAXES | -- | -- | -- | |||
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| NET INCOME (LOSS) | $ 1,304,570 | $ 313,771 | $ (406,659) | |||
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| BASIC EARNINGS (LOSS) PER SHARE | $ .45 | $ .11 | $ (.14) | |||
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| DILUTED EARNINGS (LOSS) PER SHARE | $ .41 | $ .11 | $ (.14) | |||
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Common Stock |
Retained
(Deficit) Earnings |
Deferred Compensation |
Unearned
ESOP Shares |
Total
Shareholders' Equity |
|||||
|---|---|---|---|---|---|---|---|---|---|
| BALANCE AT APRIL 30, 1996 | $5,444,497 | $ 256,685 | $(131,812) | $(425,000) | $5,144,370 | ||||
| Net loss | -- | (406,659) | -- | -- | (406,659) | ||||
| Issuance of 11,806 shares under | |||||||||
| employee stock plans | 18,796 | -- | -- | -- | 18,796 | ||||
| Compensation expense | (45,090) | -- | 14,250 | 100,000 | 69,160 | ||||
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| BALANCE AT APRIL 30, 1997 | 5,418,203 | (149,974) | (117,562) | (325,000) | 4,825,667 | ||||
| Net income | -- | 313,771 | -- | -- | 313,771 | ||||
| Repurchase of 95,200 shares by | |||||||||
| the Company | (201,027) | -- | -- | -- | (201,027) | ||||
| Issuance of 52,814 shares under | |||||||||
| employee stock plans | 98,134 | -- | -- | -- | 98,134 | ||||
| Compensation expense | (40,180) | -- | 14,250 | 100,000 | 74,070 | ||||
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| BALANCE AT APRIL 30, 1998 | 5,275,130 | 163,797 | (103,312) | (225,000) | 5,110,615 | ||||
| Net income | -- | 1,304,570 | -- | -- | 1,304,570 | ||||
| Repurchase of 18,500 shares | |||||||||
| by the Company | (75,480) | -- | -- | -- | (75,480) | ||||
| Issuance of 160,529 shares under | |||||||||
| employee stock plans | 431,823 | -- | (194,250) | -- | 237,573 | ||||
| Compensation expense | 41,057 | -- | 65,510 | 100,000 | 206,567 | ||||
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| BALANCE AT APRIL 30, 1999 | $5,672,530 | $1,468,367 | $(232,052) | $(125,000) | $6,783,845 | ||||
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| 1999 | 1998 | 1997 | |||
|---|---|---|---|---|---|
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| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
| Net income (loss) | $1,304,570 | $ 313,771 | $ (406,659) | ||
| Adjustments to reconcile net income (loss) to net cash | |||||
| and equivalents provided by operating activities: | |||||
| Depreciation and amortization | 2,095,741 | 1,583,855 | 1,819,512 | ||
| Deferred income taxes | (1,542,000) | (3,000) | (130,000) | ||
| Deferred compensation expense | 206,567 | 74,070 | 69,160 | ||
| Decrease (increase) in current assets: | |||||
| Accounts and notes receivable | 482,292 | 8,735 | 589,319 | ||
| Revenues earned in excess of billings | |||||
| and retainages | (1,197,357) | 49,134 | (306,500) | ||
| Inventories | (118,921) | (21,278) | 111,838 | ||
| Other current assets | (84,869) | 58,176 | (138,264) | ||
| Increase (decrease) in current liabilities: | |||||
| Accounts payable and accrued liabilities | 2,926,339 | 716,318 | 728,553 | ||
| Billings in excess of revenues earned | 1,964,650 | (405,610) | 61,539 | ||
| Billings for future services | 1,166,840 | 1,519,366 | 506,298 | ||
| Restructuring reserve | (60,892) | 13,106 | 19,434 | ||
|
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|
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| Net cash and equivalents provided | |||||
| by operating activities | 7,142,960 | 3,906,643 | 2,924,230 | ||
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| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
| Decrease (increase) in long-term receivables | (402,060) | 81,091 | 661,116 | ||
| Net additions to property and equipment | (621,731) | (542,089) | (408,363) | ||
| Investments in computer software development | (1,103,956) | (1,010,188) | (492,758) | ||
| Decrease (increase) in other assets | (98,895) | 23,734 | (3,364) | ||
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| Net cash and equivalents used | |||||
| for investing activities | (2,226,642) | (1,447,452) | (243,369) | ||
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| 1999 | 1998 | 1997 | |||
|---|---|---|---|---|---|
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| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
| Repayments of long-term debt | $(20,000) | $(985,000) | $(2,390,000) | ||
| Repurchase of common stock | (75,480) | (201,027) | -- | ||
| Purchases of common stock by stock plans | 237,573 | 98,134 | 18,796 | ||
| Decrease in other long-term liabilities | (160,814) | (215,320) | (204,040) | ||
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| Net cash and equivalents used for | |||||
| financing activities | (18,721) | (1,303,213) | (2,575,244) | ||
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| CASH AND EQUIVALENTS: | |||||
| Increase | 4,897,597 | 1,155,978 | 105,617 | ||
| Balance at beginning of year | 1,613,669 | 457,691 | 352,074 | ||
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| Balance at end of year | $6,511,266 | $1,613,669 | $457,691 | ||
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The Company
Manatron, Inc. and its subsidiaries (the "Company" or "Manatron") design, develop, market, install, and support a family of web-based and client/server application software products for county, city, and municipal governments. The products support both back-office processes for government agencies as well as "virtual courthouse" needs providing Internet access to information for industry professionals and the public. The Company also provides mass appraisal services, assessing residential, commercial, and other types of properties to ensure updated and equitable property valuations. The Company's business primarily is concentrated in the Midwest and Southeast regions of the United States.
Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of Manatron and its wholly-owned subsidiaries, ATEK Information Services, Inc. ("ATEK") and Specialized Data Systems, Inc. ("SDS"). In addition, the accompanying Consolidated Financial Statements include the accounts of Sabre Systems and Service ("Sabre") which is a division of the Company. All significant intercompany accounts and transactions have been eliminated.
Revenue Recognition
Revenue and costs related to sales of computer hardware and supplies are recognized when title passes, which is normally the shipping or installation date. Revenue from software licensing fees is recognized when the license agreements are consummated, which generally is also the shipping or installation date. The Company's contracts typically do not contain a right of return. As of April 30, 1999 and 1998, the reserve for returns was not significant.
Revenue and costs related to leases of computer hardware are recognized in accordance with Statement of Financial Accounting Standards No. 13, "Accounting for Leases" (see Note 2).
Revenue from in-house data processing, maintenance contracts, and software support services normally is billed in advance on a monthly, quarterly, or annual basis. These billings are recognized as revenue on a straight-line basis over the periods covered by the agreements. At the end of a reporting period, the balance of billings not yet recognized as revenue are reflected as "Billings for Future Services" in the Company's consolidated balance sheets. Costs related to these services are expensed as incurred.
Revenue and costs under long-term mass real estate appraisal, mapping, and software development contracts, which typically range from one to three years, are recognized on a percentage of completion basis. Losses on these contracts, if any, are recognized when they become known. As of April 30, 1999 and 1998, the reserve for contract losses was not significant.
Cash and Equivalents
Cash and equivalents consist of money market funds and short-term time deposits with maturities of 90 days or less.
Inventories
The Company values its inventories at the lower of cost or market. Cost is determined using the first-in, first-out method. The Company's inventories consist of the following at April 30:
| 1999 | 1998 | ||
| Computer hardware and repair parts | $263,905 | $111,867 | |
| Data processing supplies and | |||
| purchased software products | 151,436 | 184,553 | |
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| $415,341 | $296,420 | ||
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Additions to property and equipment are recorded at cost. Net property and equipment consists of the following at April 30:
| 1999 | 1998 | ||
| Land | $25,650 | $25,650 | |
| Building and improvements | 465,768 | 465,767 | |
| Furniture and fixtures | 707,123 | 657,113 | |
| Rental equipment | 347,636 | 403,216 | |
| Office equipment and software | 4,379,657 | 3,913,741 | |
| Vehicles | 375,849 | 338,795 | |
|
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| 6,301,683 | 5,804,282 | ||
| Less-Accumulated depreciation | (5,094,543) | (4,494,186) | |
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| $1,207,140 | $1,310,096 | ||
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The estimated useful lives of the assets used to compute depreciation expense are as follows:
| Asset Description | Years |
| Building and improvements | 5-25 |
| Furniture and fixtures | 4-7 |
| Rental equipment | 3 |
| Office equipment and software | 3-7 |
| Vehicles | 3-5 |
At April 30, 1999 and 1998, the Company had $232,969 and $343,724 in receivables from certain of its officers and directors, which are primarily the result of certain stock purchases from Allen F. Peat in 1994. These receivables are non-interest bearing and are scheduled to be repaid by the end of fiscal 2000.
Software Development Costs
The Company capitalized approximately $1,104,000, $1,010,000, and $493,000 of computer software development costs during fiscal 1999, 1998, and 1997 respectively.
Amortization of software development costs is computed using the straight-line method over the estimated economic lives of the products which approximates three years. Accumulated amortization was approximately $4,555,000 and $3,497,000 as of April 30, 1999 and 1998, respectively. Amortization expense was approximately $1,058,000, $570,000, and $531,000 in fiscal 1999, 1998, and 1997, respectively, and is included in cost of revenues in the accompanying consolidated statements of operations.
Research and development costs incurred to establish technological feasibility were insignificant for fiscal 1999, 1998, and 1997, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Substantially all of the Company's research and development costs relate to computer software development.
Goodwill
In connection with certain acquisitions, the Company has recorded total goodwill of approximately $1,848,000. Goodwill is being amortized over 10-year periods starting with the acquisition dates, using the straight line method. Accumulated amortization was approximately $1,133,000 and $948,000 as of April 30, 1999 and 1998, respectively. Amortization expense was approximately $185,000 for each of the last three fiscal years.
The Company continually evaluates whether events and circumstances have occurred that indicate the remaining estimated useful lives of goodwill and other long-lived assets may warrant revision or that the remaining balances may not be recoverable. When factors indicate that such costs should be evaluated for possible impairment, the Company uses an estimate of the undiscounted cash flows over the remaining lives of the goodwill and other long-lived assets to evaluate whether the costs are recoverable.
Stock-Based Compensation
The Company accounts for stock-based compensation using the intrinsic value method presented in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of grant over the amount the employee must pay to acquire the stock. The Company has provided pro forma disclosure of the fair value at the date of grant of stock options granted during fiscal 1999 and 1998 in Note 7 in accordance with the requirements of Statement of Financial Accounting Standards Board No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123").
Earnings Per Share
Effective December 31, 1997, the Company adopted the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share." Accordingly, all prior period "earnings per share" amounts included in this report have been restated to conform to this standard. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding plus all potential common shares. Dilutive potential common shares include all shares which may become contractually issuable. For the Company, dilutive potential common shares primarily are comprised of shares issuable under employee stock plans.
The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share for each of the periods presented:
| 1999 | 1998 | 1997 | ||||
| Numerators: | ||||||
| Net income (loss) | $1,304,570 | $ 313,771 | $(406,659) | |||
| Denominators: | ||||||
| Denominator for basic earnings | ||||||
| (loss) per share, weighted | ||||||
| average outstanding | ||||||
| common shares | 2,922,240 | 2,821,547 | 2,867,711 | |||
| Potential dilutive shares | 257,922 | 82,408 | -- | |||
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| Denominator for diluted earnings | ||||||
| (loss) per share | 3,180,162 | 2,903,955 | 2,867,711 | |||
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| Earnings (loss) per share: | ||||||
| Basic | $ .45 | $ 0.11 | $ (0.14) | |||
| Diluted | $ .41 | $ 0.11 | $ (0.14) |
Options to purchase 2,204 shares of common stock at $5.25 per share were outstanding during the fourth quarter of 1999, but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common stock.
Options to purchase 15,750 of shares of common stock at $5.125 per share were outstanding during the fourth quarter of 1999, but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common stock.
Options to purchase 52,500 shares of common stock at $4.625 per share were outstanding during the fourth quarter of 1999, but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common stock.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to prior year statements to conform to the current year presentation.
(2) SALES TYPE LEASES AND OPERATING LEASES
Certain of the Company's leases meet the criteria of sales type leases as defined by Statement of Financial Accounting Standards No. 13, "Accounting for Leases." As a result, the difference between the normal selling price of the equipment and the cost is recognized as profit at the inception of the lease. The sum of the aggregate rental payments to be received plus the unguaranteed residual value, if any, minus the selling price of the equipment at the inception of a lease is amortized to income over the respective lease terms using the effective interest method. Residual values generally are not significant given that the computer hardware market is subject to rapid technological change.
The following are components of the net investment in sales type leases as reflected in the accompanying consolidated balance sheets at April 30:
| 1999 | 1998 | ||
| Future minimum rentals receivable | $306,545 | $493,925 | |
| Less- Unamortized unearned income | (37,474) | (69,723) | |
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| Net investment in sales type leases | $269,071 | $424,202 | |
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Substantially all future minimum rentals receivable on sales type leases are due in the next three to four fiscal years.
The Company also leases computer equipment to customers under operating lease agreements with various terms through fiscal 2001. The accumulated depreciation on rental equipment was $327,000 and $332,000 at April 30, 1999 and 1998, respectively.
Future minimum lease payments to be received under noncancelable operating leases at April 30, 1999, are approximately as follows:
| Fiscal Year | Amount | |
| 2000 | $125,000 | |
| 2001 | 23,000 |
The Company has notes receivable totaling $1,591,386 and $1,035,120 at April 30, 1999 and 1998, respectively, as a result of certain sales of hardware and software. The notes have various payment terms, generally bear interest at rates approximating prime, and have various maturity dates through 2003.
(4) LONG-TERM DEBT
The Company has a $3 million line of credit with a bank secured by substantially all assets of the Company, which matures on November 1, 2000. There were no borrowings outstanding under this agreement at April 30, 1999. Interest on borrowings is payable monthly at the bank's prime rate which was 7.75% at April 30, 1999.
Under this agreement, the Company is required to, among other things, collect specified levels of past due receivables, generate minimum levels of cash flow from operations, maintain a certain level of tangible net worth, a minimum debt-to-equity ratio, and minimum working capital. The Company was in compliance with these provisions of the debt agreement as of April 30, 1999.
Cash paid for interest for fiscal 1999, 1998, and 1997 is approximately equal to the amounts shown as interest expense in the accompanying consolidated statements of operations.
(5) RENTAL COMMITMENTS
The Company leases the majority of its office and warehouse space under operating lease agreements with various terms through fiscal 2001. Total rent expense reflected in the accompanying consolidated statements of operations was approximately $867,000, $714,000, and $656,000 for fiscal 1999, 1998, and 1997, respectively.
Future minimum rental payments under noncancelable operating leases at April 30, 1999, are approximately as follows:
| Fiscal Year | Amount | |
| 2000 | $751,000 | |
| 2001 | 420,000 | |
| 2002 | 154,000 | |
| 2003 | 119,000 | |
| 2004 | 119,000 |
The provision for federal income taxes consists of the following:
| 1999 | 1998 | 1997 | ||||
| Currently payable | $1,542,000 | $3,000 | $130,000 | |||
| Deferred credit | (1,542,000) | (3,000) | (130,000) | |||
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| $ 0 | $ 0 | $ 0 | ||||
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| 1999 | 1998 | 1997 | ||||
| Computed tax expense (credit) | ||||||
| using the 34% statutory rate | $444,000 | $107,000 | $(138,000) | |||
| Change in valuation allowance | (527,000) | (166,000) | 78,000 | |||
| Tax-exempt interest income | (7,000) | (9,000) | (17,000) | |||
| Non-deductible goodwill | ||||||
| amortization | 63,000 | 63,000 | 63,000 | |||
| Non-deductible meals and | ||||||
| entertainment | 38,000 | 32,000 | 30,000 | |||
| Other | (11,000) | (27,000) | (16,000) | |||
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| $ 0 | $ 0 | $ 0 | ||||
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The tax effect and type of significant temporary differences which gave rise to the future tax benefits and deferred income taxes as of April 30, 1999 and 1998, are approximately as follows:
| 1999 | 1998 | |||
| Deferred tax assets (liabilities): | ||||
| Valuation reserves not currently deductible | $ 980,000 | $424,000 | ||
| Accrued liabilities not currently deductible | 832,000 | 526,000 | ||
| Other | 177,000 | 187,000 | ||
| Alternative minimum tax credit carryforward | 163,000 | 99,000 | ||
| Lease accounting method differences | 83,000 | (56,000) | ||
| Restructuring reserves not currently deductible | 46,000 | 121,000 | ||
| Property and equipment depreciation | ||||
| and basis differences | 44,000 | 16,000 | ||
| Net operating loss carryforward | -- | 72,000 | ||
| Valuation allowance | (219,000) | (746,000) | ||
| Software development costs expensed | ||||
| for tax purposes | (274,000) | (353,000) | ||
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| Net deferred tax asset | $1,832,000 | $290,000 | ||
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(7) EMPLOYEE STOCK PLANS
The Manatron, Inc. Employee Stock Purchase Plan of 1998 (the "Purchase Plan") provides for eligible employees to authorize the Company to withhold up to 10% of their base compensation for the purchase of shares of Manatron common stock. Approximately 33 or 8% of the Company's employees participate in the Purchase Plan. The purchase price for each share is equal to 85% of the market value on the day of the purchase. Shares are purchased on the last day of each calendar quarter. A total of 100,000 shares were reserved for issuance under the Purchase Plan. No more than 5,000 shares may be purchased in any one quarter. In addition, the market value of shares purchased by a participant cannot exceed $25,000 in any one year. No amounts are charged to operations related to the Purchase Plan. Since the inception of the Company's first stock purchase plan in 1987, and through April 30, 1999, a total of 100,638 shares have been purchased by participants at prices ranging from $1.27 to $6.27 per share. As of April 30, 1999, 17,451 shares of Company common stock are available for purchase under the Purchase Plan.
The Manatron, Inc. Restricted Stock Plan of 1987 (the "1987 Restricted Plan") is intended to assist the Company in attracting, rewarding, and retaining well-qualified directors, executive personnel, and other key employees by offering them additional incentives to contribute to the long-term interests of the Company. The 1987 Restricted Plan provides for a committee appointed by the Board of Directors to grant up to 50,000 shares of common stock subject to certain restrictions. No restricted shares were granted in fiscal 1999, 1998 or 1997 under the 1987 Restricted Plan. As of April 30, 1999, 41,300 shares remain available for issuance under the 1987 Restricted Plan.
The Manatron, Inc. Restricted Stock Plan of 1998 (the "1998 Restricted Plan") is intended to assist the Company in attracting, rewarding, and retaining well-qualified key software developers and technical employees by offering them additional incentives to contribute to the long-term interests of the Company. The Restricted Plan provides for a committee appointed by the Board of Directors to grant up to 100,000 shares of common stock. In fiscal 1999, a total of 42,000 shares were granted under the 1998 Restricted Plan. No restricted shares were granted in fiscal 1998. Shares granted to employees under the 1998 Restricted Plan vest at the rate of 20% after one year, 50% after two years, and 100% after three years. As of April 30, 1999, 58,000 shares of restricted common stock are available for issuance under the 1998 Restricted Plan.
The Company has three stock option plans: the Manatron, Inc. 1989 Stock Option Plan, the Manatron, Inc. 1994 Long-Term Incentive Plan, and the Manatron, Inc. 1995 Long-Term Incentive Plan (the "Option Plans"). Under the Option Plans, 850,000 shares of common stock were reserved for issuance. The Option Plans provide for a committee appointed by the Board to grant to directors, officers, and other key employees up to 100,000 shares of common stock subject to certain restrictions and up to 750,000 options to purchase shares of the Company's common stock at a price which is at least equal to the fair market value of such shares on the date of grant. For employees of the Company owning stock with more than 10% of the voting rights, the exercise price of incentive stock options must be at least 110% of the fair market value of the shares on the date of grant. The aggregate fair market value of options granted to any employee in any calendar year cannot exceed $100,000. Options granted under the Option Plans generally are exercisable within limits specified at the time of grant and expire five to 10 years from the date of grant.
The Company accounts for these stock option plans under APB Opinion No. 25. As a result, no compensation cost has been recognized with respect to the authorization, grant, or exercise of these options. Had compensation costs for these plans been determined consistent with SFAS 123, the Company's net income and earnings per share would have been reduced to the following pro forma amounts:
| 1999 | 1998 | |||
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| Net Income | ||||
| As Reported | $1,304,570 | $313,771 | ||
| Pro Forma | 1,235,857 | 174,091 | ||
| Basic EPS | ||||
| As Reported | $.45 | $.11 | ||
| Pro Forma | .42 | .06 |
(7) EMPLOYEE STOCK PLANS (Continued)
A summary of the status of the Company's Option Plans at April 30, 1999, 1998, and 1997 and changes during the years then ended is presented in the table below.
| 1999 | 1998 | 1997 | |||||||
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| Shares |
Weighted Average Exercise Price |
Exercise
Prices |
Shares |
Weighted Average Exercise Price |
Exercise
Prices |
Shares |
Weighted Average Exercise Price |
Exercise
Prices |
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Outstanding at
beginning of year |
543,595 | $ 1.95 | $1.5625-$5.25 | 544,073 | $ 2.07 | $1.5625-$5.25 | 585,156 | $ 2.31 | $1.625-$5.25 |
| Granted | 104,500 | $ 4.25 | $3.625-4.625 | 64,000 | $ 1.93 | $1.8124-$2.00 | 40,000 | $ 1.67 | $1.5625-$2.3375 |
| Exercised | (101,000) | $1.652 | $1.625-2.125 | (18,500) | $1.625 | $1.625 | (1,000) | $1.625 | $1.625 |
| Forfeited | (2,000) | $4.625 | $4.625 | -- | -- | -- | (80,083) | $ 3.65 | $1.625-$5.125 |
| Expired | -- | $ -- | $-- | (45,978) | $ 3.51 | $1.625-$3.85 | -- | $ -- | -- |
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Outstanding at
end of year |
545,095 | $ 2.43 | $1.5625-5.25 | 543,595 | $ 1.95 | $1.5625-$5.25 | 544,073 | $ 2.07 | $1.5625-$5.25 |
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Exercisable at
end of year |
467,895 | $ 2.18 | 496,595 | $ 1.95 | 396,323 | $ 2.22 | |||
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Weighted average
of fair value of options granted during the year |
$ 2.58 | $0.695 | $ 1.27 | ||||||
For various price ranges, information for options outstanding and exercisable for the Option Plans at April 30, 1999 was as follows:
| Outstanding Options | Exercisable Options | |||||||||
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Range of Exercise Prices |
Shares |
Weighted
Average Remaining Life (Years) |
Weighted
Average Exercise Price |
Shares |
Weighted
Average Exercise Price |
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| $1.5625 - $2.50 | 383,500 | 7.28 | $1.69 | 370,300 | $1.67 | |||||
| 2.51 - 4.00 | 80,641 | 6.39 | 3.68 | 50,641 | 3.56 | |||||
| 4.01 - 5.25 | 80,954 | 8.00 | 4.69 | 46,954 | 4.74 | |||||
During fiscal 1999, the Company had outstanding 25,000 warrants for the purchase of its common stock which expired on May 3, 1998. These warrants were issued to a public relations firm retained during 1995 and were exercisable at $3.50 per share. As of April 30, 1999, the Company has no outstanding warrants.
(9) EMPLOYEE BENEFIT PLANS
The Company has an Employee Stock Ownership Plan ("ESOP"), profit sharing, and 401(k) plan covering substantially all of its employees. The Company's contribution to the profit sharing plan is subject to the discretion of the Board of Directors. No contributions were approved for the years ended April 30, 1999, 1998, and 1997, due to the reduced profitability levels of the Company.
The 401(k) plan allows eligible employees to withhold up to 15% of their pay on a pretax basis, subject to certain IRS limitations. This money is deposited into a trust in which the employee has a number of investment alternatives. The Company provides a matching contribution equal to 25% of employee contributions not to exceed 1.25% of an employee's gross pay. Company matching contributions charged to expense for the years ended April 30, 1999, 1998, and 1997, were approximately $97,000, $81,000, and $74,000, respectively.
On June 29, 1995, the ESOP purchased 142,858 common shares from Allen F. Peat, the Company's former Chairman, President, and Chief Executive Officer, for $3.50 per share. The ESOP borrowed $500,000 from a bank to finance the stock purchase. The Company has guaranteed the ESOP's loan and is obligated to make contributions sufficient to enable the ESOP to repay the loan, including interest. The loan is repayable in quarterly installments of $25,000 plus interest at the bank's prime rate. As of April 30, 1999, 15 quarterly installments have been made. The $125,000 balance is reflected as a liability and a like amount, considered deferred compensation, has been recorded as a reduction of shareholders' equity in the accompanying consolidated balance sheets.
As of April 30, 1999, 107,130 common shares have been committed to be released for allocation to ESOP participants. Allocations occur on December 31 of each year. The fair market value of these shares at the time they were committed for release, which aggregated approximately $141,000, $60,000, and $55,000 in 1999, 1998, and 1997, respectively, has been recorded as compensation expense in the accompanying consolidated statements of operations. The difference between these amounts and the original cost of the shares, which was approximately $41,000, $40,000, and $45,000 for 1999, 1998, and 1997, respectively, has been charged against common stock. The fair value of the unearned ESOP shares as of April 30, 1999 approximated $203,000.
The Board of Directors approved additional contributions of $50,000 to the ESOP for the years ended April 30, 1999, 1998, and 1997. The fiscal 1997 contribution was used to purchase 23,731 shares of Manatron common stock that were allocated to ESOP participants as of December 31, 1997. The fiscal 1998 contribution was used to purchase 12,500 shares of Manatron common stock that were allocated to ESOP participants at December 31, 1998. The fiscal 1999 contribution and related stock purchase will be made before December 31, 1999.
The Company is self-insured for all employees' medical expenses incurred to a level of $30,000 per individual or family per year. Employees' medical expenses incurred beyond the $30,000 level are insured under a stop-loss coverage insurance plan. The Company does not provide health care or other post-employment benefits to retired employees.
(10) SEVERANCE AGREEMENT
The Company and Allen F. Peat entered into an agreement, effective as of October 17, 1995, setting forth the terms pursuant to which Mr. Peat retired as Chairman, President, and Chief Executive Officer. The agreement terminated Mr. Peat's five-year employment agreement and provided for severance compensation, deferred compensation, and other payments totaling approximately $1.3 million to be paid through December of 1999. The remaining obligations under this agreement as of April 30, 1999, have been appropriately classified as a current liability in the accompanying consolidated balance sheets.
On March 11, 1997, the Board of Directors declared a dividend distribution of one preferred stock purchase right ("Right") on each outstanding share of common stock of the Company. Each Right will, under certain circumstances, entitle the holder to buy one one-hundredth (1/100) of a share of Series A preferred stock, no par value ("Preferred Stock"), at an exercise price of $20 per share, subject to adjustment. Each share of Preferred Stock purchasable upon exercise of the Rights will have a minimum preferential quarterly dividend of $1 per share and will be entitled to an aggregate dividend of 100 times the dividend declared on the shares of common stock. In the event of liquidation, the holders of Preferred Stock will receive a minimum preferred liquidation payment of $10 per share and will be entitled to receive an aggregate liquidation payment equal to 100 times the payment made per share of common stock. Each share of Preferred Stock will have 100 votes, voting together with the common stock.
The Rights will be exercisable and transferable separately from the common stock only if a person or group who does not hold 15% or more of Manatron's outstanding common stock as of June 16, 1997, subsequently acquires 15% or more of Manatron's outstanding common stock or if a holder of 15% or more of Manatron's outstanding common stock as of June 16, 1997, subsequently acquires 20% or more of Manatron's outstanding common stock or if any person or group commences or announces an intention to commence a tender or exchange offer the consummation of which would give such person or group beneficial ownership of 30% or more of Manatron's outstanding common stock.
Additionally, if the Company subsequently engages in a merger or other business combination transaction in which the Company is not the surviving corporation, or in which the outstanding shares of the Company's common stock are changed or exchanged, or if 50% or more of the Company's assets or earning power is sold, proper provision shall be made so that each holder of a Right shall thereafter have the right to receive, upon exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction would have a market value of two times the exercise price of the Right. Alternatively, in the event that, anytime following exercise of the Rights, an Acquiring Person (as defined in the Rights Agreement between the Company and Registrar and Transfer Company (the "Rights Agreement")) were to acquire the Company by means of a reverse merger in which the Company and its stock survive, or were to engage in certain "self-dealing" transactions, or were to acquire 30% of the then outstanding shares of common stock (except pursuant to an offer for all outstanding shares of common stock deemed fair by the Company's Board of Directors as provided in the Rights Agreement), each Right not owned by such Acquiring Person (whose Rights would thereafter be void) would become exercisable for the number of shares of common stock which, at that time, would have a market value of two times the then exercise price of the Right. Prior to a person becoming an Acquiring Person, the Rights may be redeemed at a redemption price of $0.01 per Right, subject to adjustment. The Rights are subject to amendment by the Board and will expire on June 15, 2007. As of April 30, 1999, no rights have become exercisable.
The carrying amount of the Company's financial instruments included in current assets and current liabilities approximate their fair value due to their short-term nature. The fair value of the notes receivable is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to customers with similar credit ratings and remaining maturities. As of April 30, 1999 and 1998, the fair value of the notes receivable approximated the carrying value. The Company's long-term debt reprices frequently at the then-prevailing market interest rates. As of April 30, 1999 and 1998, the carrying value approximated the fair value of the Company's long-term debt.
(13) BUSINESS SEGMENTS
Effective in fiscal 1999, the Company adopted Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information" (SFAS 131). Under the provision of SFAS 131, the Company has two reportable segments: Information Software, Systems and Services and Property Mass Appraisal Services.
The Information Software, Systems and Services segment represents the sales of computing systems, peripherals, and associated services to municipal and county governments. These computing systems include Company developed software, third party hardware and software, and customer support of both Company and third party products.
The Property Mass Appraisal Services segment consists primarily of activities relating to the collection, processing, and reviews of residential, commercial, and open land properties within a local county or municipality. This segment of the business is purely labor intensive and all information collected is usually input into a software program that stores the property valuation information for tax assessment purposes. In most cases, this software program/system is provided by the Company's Information Software, Systems and Services segment described above. However, there were no intersegment transactions and thus no eliminations are necessary.
The Company's reportable segments are separately managed, as each business requires different marketing and distribution strategies. In addition, the Company derives a majority of its revenue from external domestic customers.
The primary financial measure that the Company uses for evaluating business segment performance is earnings before interest, taxes and depreciation ("EBITDA"). The Company defines EBITDA as net operating income before deductions for interest expense, depreciation and amortization expense, taxes, and other income.
The Company began transitioning to line of business management during fiscal year 1997 and, as a result, management has concluded that it is impractical to recreate data in a manner that allows for comparison of fiscal year 1997 to fiscal years 1998 and 1999. The following table summarizes information about the Company's reportable operating segments' profit and loss and the segments' assets as of April 30, 1999 and 1998 (in thousands):
| For the Fiscal Year Ended April 30, 1999 | |||||||
|---|---|---|---|---|---|---|---|
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Information
Software, Systems and Services |
Property Mass
Appraisal Services |
Corporate Overhead(1) |
Total
Combined Company(2) |
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| Revenues | $21,417 | $16,132 | $-- | $37,549 | |||
| Unallocated amounts | -- | -- | (3,732) | (3,732) | |||
| Amortization and | |||||||
| depreciation expense | (1,598) | (313) | (185) | (2,096) | |||
| EBITDA | 4,313 | 2,819 | (3,784) | 3,348 | |||
| Capital Expenditures | 526 | 96 | -- | 622 | |||
| Segment assets | 17,612 | 5,616 | -- | 23,228 | |||
| For the Fiscal Year Ended April 30, 1998 | |||||||
|---|---|---|---|---|---|---|---|
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Information
Software, Systems and Services |
Property Mass
Appraisal Services |
Corporate Overhead(1) |
Total
Combined Company(2) |
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| Revenues | $17,244 | $7,548 | $-- | $24,792 | |||
| Unallocated amounts | -- | -- | (2,691) | (2,691) | |||
| Amortization and | |||||||
| depreciation expense | (1,134) | (265) | (185) | (1,584) | |||
| EBITDA | 3,451 | 1,136 | (2,602) | 1,985 | |||
| Capital Expenditures | 455 | 87 | -- | 542 | |||
| Segment assets | 11,318 | 4,545 | -- | 15,863 | |||
(2) One customer accounted for approximately 26% of
total revenue in 1999.
No customer accounted for
more than 10% of total revenue in 1998 or 1997.
Subsequent to April 30, 1999, the Company acquired 100% of the outstanding capital stock of ProVal Corporation, a company based in Springfield, Ohio. ProVal was founded in 1973 and had developed a Computer Assisted Mass Appraisal product (ProVal®) which has been and will continue to be sold nationally. The aggregate purchase price of approximately $3.45 million consisted of $1.5 million in cash and 300,000 shares of the Company's common stock valued at approximately $1.95 million. The Company also is obligated to make additional payments to the seller based upon future revenues and net income associated with certain ProVal products. The acquisition will be accounted for under the purchase method of accounting, which will require the Company to recognize any excess of the aggregate purchase price over the fair value of the net assets acquired as goodwill.
(15) CONTINGENT LIABILITIES
At April 30, 1999, the Company and its subsidiaries were parties, both as plaintiff and defendant, to a number of lawsuits and claims arising out of the normal course of their business. In the opinion of management, the liabilities resulting from these proceedings, if any, will not be material to the Company's consolidated financial position or results of operations.
|
Exhibit
Number |
Description | |
|---|---|---|
| 3.1 | Restated Articles of Incorporation. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 3.2 | Bylaws. | |
| 4.1 | Restated Articles of Incorporation. See Exhibit 3.1 above. | |
| 4.2 | Bylaws. See Exhibit 3.2 above. | |
| 4.3 | Rights Agreement dated June 2, 1997 between Manatron, Inc. and Registrar and Transfer Company. Previously filed as an exhibit to the Company's Form 8-A filed on June 11, 1997, and incorporated herein by reference. | |
| 10.1 | Manatron, Inc. 1989 Stock Option Plan. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.2 | Manatron, Inc. 1995 Long-Term Incentive Plan. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.3 | Executive Employment Agreement with Randall L. Peat. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.4 | Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.5 | ATEK Information Services, Inc. Stock Purchase Agreement. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.6 | Stock Purchase Agreement between Ronald D. Stoynoff and Allen F. Peat dated March 15, 1994. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.7 | Agreement between Manatron, Inc. and Ronald D. Stoynoff effective as of April 1, 1994. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. |
| 10.8 | Asset Purchase Agreement between Manatron, Inc. and Moore Business Forms, Inc. dated November 11, 1994. Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.9 | Manatron, Inc. 1994 Long-Term Incentive Plan. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.10 | Agreement between Manatron, Inc. and Allen F. Peat dated October 17, 1995. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.11 | Employment Agreement with Douglas A. Peat dated October 10, 1996. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.12 | Employment Agreement with Jane M. Rix dated October 10, 1996. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.13 | Employment Agreement with James W. Sanderbeck dated October 10, 1996. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.14 | Employment Agreement with Paul R. Sylvester dated October 10, 1996. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1995, and incorporated herein by reference. | |
| 10.15 | Employment Agreement with J. Wayne Moore dated May 28, 1999. * | |
| 10.16 | Manatron, Inc. Executive Incentive Plan for 1999. * Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended October 31, 1998, and here incorporated by reference. | |
| 10.17 | Form of Indemnity Agreement. * Previously filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended April 30, 1998, and incorporated herein by reference. | |
| 10.18 | Property Revaluation Articles of Agreement for Allegheny County, Pennsylvania dated May 20, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended July 31, 1998, and here incorporated by reference. | |
| 10.19 | Restricted Stock Plan of 1998. * Previously filed as an exhibit to the Company's Definitive Proxy Statement for its Annual Meeting of Shareholders held October 8, 1998, and here incorporated by reference. |
| 10.20 | Employee Stock Purchase Plan of 1998. * Previously filed as an exhibit to the Company's Definitive Proxy Statement for its Annual Meeting of Shareholders held October 8, 1998, and here incorporated by reference. | |
| 10.21 | Letter Loan Agreement between Comerica Bank and Manatron, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.22 | Promissory Note between Comerica Bank and Manatron, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.23 | Guaranty between Comerica Bank and Manatron, Inc., dated October 9, 1998 regarding indebtedness of Manatron, Inc. Employee Stock Option and Salary Deferral Plan. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.24 | Guaranty between Comerica Bank and Specialized Data Systems, Inc., dated October 9, 1998 regarding indebtedness of Manatron, Inc. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.25 | Guaranty between Comerica Bank and Atek Information Systems, Inc., dated October 9, 1998 regarding indebtedness of Manatron, Inc. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.26 | Security Agreement between Comerica Bank and Manatron, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.27 | Security Agreement between Comerica Bank and Specialized Data Systems, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 10.28 | Security Agreement between Comerica Bank and Atek Information Systems, Inc., dated October 9, 1998. Previously filed as an exhibit to the Company's Form 10-Q Quarterly Report for the period ended January 31, 1999, and here incorporated by reference. | |
| 21 | Subsidiaries of Registrant. |
| 23 | Consent of Independent Public Accountants. | |
| 24 | Powers of Attorney. | |
| 27 | Financial Data Schedule. |
The Company will furnish a copy of any exhibit listed above to any shareholder of the Company without charge upon request to Jane M. Rix, 2970 South 9th Street, Kalamazoo, Michigan 49009.
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