<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one):
X Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
- --
Act of 1934
For the quarter ended June 30, 1996
or
__Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from __________ to __________.
Commission File Number 0-18674
-------
MARCAM CORPORATION
------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2711580
- ------------- ----------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.
95 Wells Avenue, Newton, Massachusetts 02159
- -------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (617) 965-0220
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
-- --
The number of shares outstanding of the registrant's Common Stock, $.01 Par
Value, as of July 31, 1996, was 11,429,868 shares.
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: Financial Statements
MARCAM CORPORATION
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
AS SETS ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,378 $ 27,312
Short-term investments 974 2,019
Accounts receivable, net of allowances of $2,584
at June 30, 1996 and $3,005 at September 30,
1995 55,426 60,327
Prepaid expenses and other current assets 5,617 4,834
-------- --------
Total current assets 72,395 94,492
-------- --------
Property and equipment, net 10,158 10,127
Computer software costs, net 31,505 30,183
MAPICS intangible costs, net 5,454 5,965
Other assets 5,108 6,085
-------- --------
Total assets $124,620 $146,852
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,753 $ 11,077
Accrued expenses and other current liabilities 40,101 44,542
Deferred revenue 43,632 38,228
-------- --------
Total current liabilities 95,486 93,847
-------- --------
Long-term debt 25,442 25,209
Deferred income taxes 617 1,150
-------- --------
Total liabilities 121,545 120,206
-------- --------
Commitments and contingencies (Note 2)
Stockholders' equity:
Preferred stock, $1.00 par value; 1,000 shares
authorized: Series D Convertible Preferred
Stock, 225 shares issued and outstanding at
June 30, 1996 and September 30, 1995
(liquidation preference of $22,500) 225 225
Common stock, $.01 par value; 30,000 shares
authorized; 11,430 and 11,271 shares issued
and outstanding at June 30, 1996 and
September 30, 1995 114 113
Additional paid-in capital 66,652 65,672
Accumulated deficit (60,659) (36,469)
Unamortized deferred compensation (881) (1,100)
Cumulative translation adjustment (2,376) (1,795)
-------- --------
Total stockholders' equity 3,075 26,646
-------- --------
Total liabilities and stockholders' equity $124,620 $146,852
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
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MARCAM CORPORATION
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Licenses $24,085 $24,003 $65,493 $75,927
Services 27,099 25,667 83,121 70,750
-------- -------- -------- --------
Total revenues 51,184 49,670 148,614 146,677
-------- -------- -------- --------
Operating expenses:
Cost of license revenues 3,484 4,631 11,870 12,780
Cost of services revenues 17,142 16,801 53,680 46,561
Selling and marketing 21,337 21,424 62,110 63,737
Product development 7,339 6,680 20,966 19,005
General and administrative 2,361 2,079 7,782 6,094
Restructuring charge (Note 2) 8,300 - 8,300 -
-------- -------- -------- --------
Total operating expenses 59,963 51,615 164,708 148,177
-------- -------- -------- --------
Operating loss (8,779) (1,945) (16,094) (1,500)
Litigation settlement (Note 3) - - (3,250) -
Interest and other income 260 180 1,195 427
Interest and other expense (953) (792) (2,890) (2,330)
-------- -------- -------- --------
Loss before income tax expense (9,472) (2,557) (21,039) (3,403)
Income tax expense 1,110 355 3,151 68
-------- -------- -------- --------
Net loss $(10,582) $ (2,912) $(24,190) $ (3,471)
-------- -------- -------- --------
Net loss per share $ (0.93) $ (0.26) $ (2.13) $ (0.31)
-------- -------- -------- --------
Weighted average number of
shares outstanding 11,429 11,218 11,382 11,188
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
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MARCAM CORPORATION
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(24,190) $ (3,471)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 11,643 9,237
Provision for restructuring charge, non-cash portion 3,800 -
Provision for bad debts 1,801 -
Deferred income taxes (533) (36)
Changes in operating assets and liabilities, net of
effects of divestitures:
Accounts receivable (114) (7,539)
Prepaid expenses and other assets (1004) (1,885)
Accounts payable 804 (4,884)
Accrued expenses and other current liabilities (4,188) 11,112
Deferred revenue 7,703 9,473
-------- ---------
Net cash provided by (used for) operating activities (4,278) 12,007
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (4,445) (2,230)
Additions to computer software costs (9,088) (10,033)
Purchases of short-term investments (6,909) -
Proceeds from sale of short-term investments 7,954 -
Proceeds from sale of subsidiary, net of cash divested (461) -
Other assets (130) (1,174)
-------- --------
Net cash used for investing activities (13,079) (13,437)
--------- ---------
Cash flows from financing activities:
Principal payments on debt and capital lease obligations (312) (1,037)
Proceeds from stock option exercise 611 -
Common stock issued under Employee Stock Purchase Plan 369 412
--------- ---------
Net cash provided by (used for) financing activities 668 (625)
Effect of exchange rate changes on cash and cash
equivalents (245) 2
--------- ---------
Net decrease in cash and cash equivalents (16,934) (2,053)
Cash and cash equivalents at beginning of the period 27,312 10,463
--------- ---------
Cash and cash equivalents at end of the period $ 10,378 $ 8,410
--------- ---------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
MARCAM CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. As permitted by the rules of the Securities and
Exchange Commission applicable to quarterly reports on Form 10-Q, these notes
are condensed and do not contain all disclosures required by generally accepted
accounting principles. In the opinion of management, these financial statements
contain all adjustments (consisting of only normal, recurring adjustments)
necessary to present fairly the Company's financial position, results of
operations and cash flows as of the dates and for the periods indicated. While
the Company believes that the disclosures presented are adequate to make these
financial statements not misleading, these financial statements should be read
in conjunction with the Company's audited financial statements and related notes
included in the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, as amended.
The results of operations for the three and nine months ended June 30, 1996
are not necessarily indicative of the results to be expected for the full year.
Certain amounts have been reclassified to conform with current period
presentation.
(2) Restructuring Charge
--------------------
During the third fiscal quarter of 1996, the Company recorded a restructuring
charge of $8,300,000 related to the Company's divestiture of the MXP product
line, the conversion of certain direct sales operations in Asia Pacific and
Latin America to affiliate distribution channels, and other staffing reductions
in Europe.
The restructuring charge includes $4,000,000 associated with the Company's
decision to divest itself of the MXP product line, represented by its Foresight
Software, Inc. subsidiary. The amount represents the net loss incurred in
connection with the disposition of the stock of Foresight Software, Inc. in a
sale, effective June 30, 1996, which closed on July 16, 1996. In exchange for
the stock, the Company received a promissory note in the amount of $2,775,000.
Principal payments are due monthly beginning April 1997 and will continue
through June 2001. In addition, the Company may be entitled to royalties based
on the attainment of certain future revenue levels. The Company will recognize
proceeds from the note and any future royalties as cash payments are received,
due to the uncertainty of collection.
The charge also includes $4,300,000 for the conversion of certain direct sales
operations in Asia Pacific and Latin America to affiliate distribution channels
and other staffing reductions in Europe. Components of the charge comprised
approximately $1,600,000 for the severance costs of 60 employees, $600,000
related to customer commitments, $300,000 related to the write-off of associated
fixed assets, $1,000,000 related to the write-off of associated capitalized
software translation costs, and $800,000 related to lease cancellations and
other costs.
5
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Approximately, $4,500,000 of the total restructuring charge has or is expected
to result in cash expenditures, and the Company expects that nearly all of the
restructuring actions will be completed by the end of fiscal 1996.
(3) Commitments and Contingencies
-----------------------------
On May 20, 1996, the Company entered into a definitive agreement to settle the
shareholder class action litigation brought against the Company and certain of
its former officers. An Order of Final Approval and Final Judgment and an Order
of Dismissal has been issued by the Federal District Court in Massachusetts.
The litigation, which was brought in August 1994, alleged violations of federal
securities law. Of the $5,750,000 settlement, the Company contributed
$2,750,000 from its own funds, with the remainder provided by insurance. The
Company recorded a charge of $3,250,000 in the second quarter of fiscal 1996 to
cover the settlement and other expenses incurred in connection therewith.
The Company is subject to legal proceedings and claims which arise in the
normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these legal matters will have a material adverse effect on the Company's future
financial position or results of operations.
(4) Supplementary Cash Flow Information
-----------------------------------
Capital lease obligations of approximately $930,000 were incurred in the nine
month period ended June 30, 1996, when the Company entered into leases for new
equipment.
(5) Subsequent Event
----------------
In July 1996, the Company issued and sold 100,000 shares of Series E
Convertible Preferred Stock, par value $1.00 per share, for an aggregate
purchase price of $9,500,000 and warrants to purchase an aggregate of 1,000,000
shares of common stock, $.01 par value per share, of the Company for an
aggregate purchase price of $500,000. Each share of Series E Convertible
Preferred Stock is convertible at any time at the option of the holder into 10
shares of the Company's common stock, subject to adjustment in the event of
certain reorganizations or reclassifications of the Company's capital stock.
The warrants are exercisable at any time during the period commencing on July
23, 1996 and ending July 23, 2003, at an exercise price of $15.36 per share of
common stock.
6
<PAGE>
PART I.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
- --------
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in the section entitled "Risk Factors" contained in the
Company's Post-Effective Amendment No. 1 to Registration Statement on Form S-3
(Reg. No. 33-90670).
The Company's revenues are derived from licensing its Protean, PRISM, MAPICS
XA, and MXP products. Each of these product lines support different customers'
technology strategies. PRISM and MAPICS XA support host technology implemented
on the IBM AS/400. MXP supports open client-server computing. Marcam's new
Protean products, which are based on advanced object technology tools and
databases, are platform independent and offer improved user productivity and
return on investment through ease-of-use, advanced functionality and
implementation flexibility.
Marcam also derives revenue from the sale of product support and related
services. Product support is offered to licensed customers, generally based on
agreements that are renewed annually. Related services include assisting with
customer implementation of licensed software, providing custom programming, and
providing educational material and instruction in the use of licensed software.
For the quarter ended June 30, 1996, the Company recorded a net loss of
$10,582,000. The net loss included a loss from ongoing operations of
approximately $1,000,000, a loss of approximately $1,300,000 from the operations
of the Company's Foresight Software, Inc. subsidiary which was divested
effective June 30, 1996, and a restructuring charge of $8,300,000. The principal
reason for the Company's loss of $1,000,000 from ongoing operations was the
Company's continued investment in the Protean product line, which has not yet
yielded commensurate revenues. While the Company's AS/400 based businesses were
profitable overall, these profits were insufficient to cover investments made in
the Protean business.
During the quarter, the Company completed a review of its operating expense
structure and overall operations. As a result, the Company committed to the
divestiture of the MXP product line, the conversion of certain direct sales
operations in Asia Pacific and Latin America to affiliate distribution channels,
and other staffing reductions in Europe. The actions initiated in the third
quarter resulted in a restructuring charge of $8,300,000. Due to the timing of
certain related actions, the Company anticipates that approximately $3,000,000
of additional expenses will be recorded in the fourth quarter, primarily
associated with headcount reductions implemented in July 1996.
7
<PAGE>
The restructuring charge includes $4,000,000 associated with the Company's
decision to divest itself of the MXP product line, represented by its Foresight
Software, Inc. subsidiary, continuing its focus on Protean, MAPICS XA and PRISM
Host products. The amount represents the net loss incurred in connection with
the disposition of the stock of Foresight Software, Inc. in a sale effective
June 30, 1996. In exchange for the stock, the Company received a promissory
note in the amount of $2,775,000 and may be entitled to future royalties. The
Company will recognize the proceeds from the note and any future royalties as
cash payments are received, due to the uncertainty of collection.
Management also decided that the cost structure was too high given expected
revenue levels and therefore reductions in staffing were needed and that certain
of its global operations required restructuring. This resulted in a headcount
reduction of approximately 60 employees, the conversion of certain direct sales
operations in Asia Pacific and Latin America to affiliate distribution channels
and the write-off of certain related fixed assets and intangibles. The charges
for these actions totaled approximately $4,300,000. Of this amount,
approximately $1,600,000 related to employee severance payments, approximately
$600,000 related to customer commitments, approximately $300,000 related to the
write-off of fixed assets, approximately $1,000,000 related to the write-off of
intangibles and approximately $800,000 related to lease cancellations and other
costs.
Approximately $4,500,000 of the total third quarter restructuring charge has
resulted or is expected to result in cash expenditures, and the Company expects
that nearly all of the restructuring actions will be completed by the end of
fiscal 1996.
The Company also took action to raise additional capital to meet its short-
term objectives. This included the addition of $10,000,000 in equity capital in
the form of preferred stock and warrants which was completed in July 1996.
In the second quarter, the Company announced a delay in the delivery of
certain modules of its Protean product line, particularly the customer order
management module. The Company continues to work with its customers to address
the impact of this change on their business plans and operations. The Company
will record the financial impact of these delivery changes as incurred. The
Company does not believe that the financial impact will be material.
In June 1996, the Company delivered Protean Release 2.0, on schedule, which
contains improved functionality and significant enhancements that the Company
believes will accelerate and expand market acceptance.
In the quarter ended September 30, 1995, the Company recorded a restructuring
charge of $28,756,000. As of June 30, 1996, a balance of $1,464,000 associated
with this charge remains in accrued liabilities. Management believes that this
remaining balance is adequate to cover future expenditures associated with the
1995 restructuring actions.
Results of Operations
- ---------------------
Total revenues increased 3.0% to $51,184,000 from $49,670,000 and 1.3% to
$148,614,000 from $146,677,000 for the three- and nine-month periods ended June
30, 1996, respectively, as compared to the same periods in 1995. License fee
revenue increased 0.3% to $24,085,000 from $24,003,000 and decreased 13.7% to
$65,493,000 from $75,927,000 for the three- and nine-month
8
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periods ended June 30, 1996, respectively, as compared to the same periods in
1995. The increase in license fee revenue for the three-month period ended June
30, 1996 as compared to the same period in 1995 was primarily due to strong
MAPICS and PRISM license revenue, which more than offset lower MXP revenue.
During the three months ended June 30, 1996, MAPICS sales were strong around the
world, while PRISM sales were particularly strong in North America. The decline
in license fee revenue for the nine-month period ended June 30, 1996 as compared
to the same period in 1995 was due to the decline in license fee revenue for the
PRISM, Protean and MXP products which more than offset continued growth for the
MAPICS products during this period.
Services revenue increased 5.6% to $27,099,000 from $25,667,000 and 17.5% to
$83,121,000 from $70,750,000 for the three- and nine-month periods ended June
30, 1996, respectively, as compared to the same periods in 1995. The increase
in services revenue for both the three- and nine-month periods ended June 30,
1996, was primarily from increased consulting and customer support revenue.
Cost of license revenues represented 14.5% and 18.1% of license revenues for
the three- and nine-month periods ended June 30, 1996, respectively, as compared
to 19.3% and 16.8% for the same periods in 1995. The decrease in cost of
license revenues as a percentage of license revenues for the three-month period
ended June 30, 1996 as compared to the same period in 1995, was due primarily to
a decrease in third party royalty costs. The increase in cost of license
revenues as a percentage of license revenues for the nine-month period ended
June 30, 1996 as compared to the same period in 1995, was due primarily to
higher amortization of software development costs associated with newly-released
products and lower license revenues.
Cost of services revenues represented 63.3% and 64.6% of services revenues for
the three- and nine-month periods ended June 30, 1996, respectively, as compared
to 65.5% and 65.8% for the same periods in 1995. The improvement in cost of
services revenues as a percentage of services revenues for the three- and nine-
month periods ended June 30, 1996 as compared to the same periods in the prior
year were due primarily to price increases and greater efficiencies.
Selling and marketing expense decreased $87,000, or 0%, and $1,627,000, or
2.6%, for the three- and nine-month periods ended June 30, 1996, respectively,
as compared to the same periods in 1995. These decreases were primarily related
to declines in payroll and marketing programs.
Gross research and product development expenditures for the three- and nine-
month periods ended June 30, 1996 were $9,851,000 and $30,054,000, respectively,
as compared to $10,141,000 and $29,038,000 for the same periods in 1995. Gross
research and product development expenses for the three-months ended June 30,
1996 as compared to the same period in 1995 remained fairly constant. This
reflects the Company's continued commitment to invest in the development of its
core products replacing spending on certain development projects discontinued at
the end of fiscal 1995, primarily those related to the PRISM Client/Server
products. The increase for the nine-month period ended June 30, 1996 as
compared to the same period in 1995 was primarily the result of increased
investment in the development of its Protean products and increased spending to
translate and localize software products for international sale.
Computer software costs capitalized were $2,512,000 and $9,088,000 for the
three- and nine-month periods ended June 30, 1996, respectively, representing
25.5% and 30.2% of gross research and development expenditures. Computer
software costs capitalized during the three- and nine-
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month periods ended June 30, 1995 were $3,461,000 and $10,033,000, respectively,
representing 34.1% and 34.6% of gross research and development expenditures.
Therefore, product development expenses were $7,339,000 and $20,966,000 for
the three- and nine-month periods June 30, 1996, respectively, representing
14.3% and 14.1% of total revenues. For the three- and nine-month periods ended
June 30, 1995, product development expenses were $6,680,000 and $19,005,000,
respectively, representing 13.4% and 13.0% of total revenues. The increases for
the three- and nine-month periods ended June 30, 1996, respectively, as compared
to the same periods in 1995 were primarily related to the continuing investment
in the Protean products and lower amounts of capitalization.
General and administrative expenses, which include the Company's finance,
accounting and corporate administrative functions, increased by $282,000 and
$1,688,000 for the three- and nine-month periods ended June 30, 1996,
respectively, as compared to the same periods in 1995. The increase for the
three-month period ended June 30, 1996 as compared to the same period in 1995
was due to increased legal costs and investments in internal systems. The
increase in the nine-month period ended June 30, 1996 as compared to the same
period in prior years was primarily the result of a $1,000,000 charge taken for
additional contract claims and legal costs.
During the quarter, the Company recorded a restructuring charge of $8,300,000.
As described above, this charge is related to restructuring of the Company's
operations and the divestiture of the Company's MXP product line. See
"Overview".
During the second quarter of fiscal 1996, the Company reached an agreement in
principle to settle the shareholder class action litigation which was brought
against the Company in August 1994. Of the $5,750,000 settlement, the Company
contributed $2,750,000 from its own funds, with the remainder provided by
insurance. The Company recorded a charge of $3,250,000 to cover the settlement
and other expenses.
Interest and other income increased $80,000 and $768,000 for the three-and
nine-month periods ended June 30, 1996, respectively, as compared to the same
periods in 1995. These increases were primarily related to interest earned on
higher cash balances which resulted from the financing activities undertaken
during the quarter ended September 30, 1995.
The income tax expense for the three- and nine-month periods ended June 30,
1996 of $1,110,000 and $3,151,000, respectively, was primarily due to foreign
withholding taxes and income taxes on income generated in foreign jurisdictions,
for which U.S. tax credit utilization is currently uncertain. The income tax
expense for the three- and nine-month periods ended June 30, 1995 was $355,000
and $68,000, respectively. There was no tax benefit recorded in 1995 for losses
generated during that period due to the uncertainty of realizing such benefits.
Liquidity and Capital Resources
- -------------------------------
The Company has funded its activities primarily from cash generated from
operations, from borrowings and from equity financings.
Current assets decreased $22,097,000 at June 30, 1996 to $72,395,000 from
$94,492,000 at September 30, 1995. This decrease was primarily due to lower
cash and accounts receivable balances.
10
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Current liabilities increased $1,639,000 at June 30, 1996 to $95,486,000 from
$93,847,000 at September 30, 1995. The increase was primarily due to the
increase in deferred revenue, which was partially offset by a decrease in
accrued expenses and other current liabilities. As a result, working capital
decreased by $23,736,000 from $645,000 at September 30, 1995 to a working
capital deficit of $23,091,000 at June 30, 1996.
At June 30, 1996, the Company had outstanding $25,000,000 in aggregate
principal amount of 9.82% unsecured subordinated notes due April 30, 2001. The
terms of the subordinated debt contain financial covenants which, among other
things, require the maintenance of certain financial ratios, limit the Company's
ability to incur additional debt, and preclude the payment of dividends.
As of March 29, 1996, the Company obtained from the note holders a waiver of
certain covenants that require the maintenance of certain financial ratios,
which was in effect through July 15, 1996. On July 16, 1996, the Company and
the note holders amended certain of the covenants, and the Company is in
compliance with such amended covenants.
In addition, the Company has a revolving credit line of $7,500,000, with
borrowing availability equal to 80% of qualifying accounts receivable.
Borrowings under this facility bear interest at a designated prime rate plus 3%
per annum. This credit facility expires August 31, 1997. Upon completion of
certain filings, the maximum availability will be increased to $12,000,000. The
Company's obligations under this credit facility are secured by liens on
substantially all of the Company's assets. Additionally, this credit facility
contains covenants which, among other things, impose certain limitations or
prohibitions on the Company with respect to additional indebtedness, liens and
capital leases; the payment of dividends on, and the redemption or repurchase
of, capital stock of the Company; investments and acquisitions; the merger or
consolidation of the Company with any person or entity; and the disposition of
any of the Company's property or assets. At June 30, 1996, the Company had the
ability to borrow $7,500,000, but had no borrowings under this credit facility.
In July 1996, the Company issued and sold to entities affiliated with General
Atlantic Partners, 100,000 shares of Series E Convertible Preferred Stock, par
value $1.00 per share, for an aggregate price of $9,500,000 and warrants to
purchase an aggregate of 1,000,000 shares of Common Stock, $.01 par value per
share, of the Company for an aggregate purchase price of $500,000. Each share
of Series E Convertible Preferred Stock is convertible at any time at the option
of the holder into 10 shares of the Company's common stock, subject to
adjustment in the event of certain reorganizations or reclassifications of the
Company's capital stock. The warrants are exercisable at any time during the
period commencing on July 23, 1996 and ending July 23, 2003, at an exercise
price of $15.36 per share of common stock.
In the quarter ended June 30, 1996, the Company recorded a restructuring
charge of $8,300,000. Of this amount, $4,500,000 is expected to result in cash
expenditures. Nearly all of these restructuring activities will be completed by
the end of fiscal 1996. Due to the timing of some of these actions, the Company
anticipates that approximately $3,000,000 of additional expenses will be
recorded in the fourth quarter. Of this amount, approximately, $2,000,000 is
expected to result in cash expenditures.
In the quarter ended September 30, 1995, the Company recorded a restructuring
charge of $28,756,000. As of June 30, 1996, a balance of $1,464,000 associated
with this charge remains in
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accrued liabilities. Management believes that this remaining balance is adequate
to cover future expenditures associated with the 1995 restructuring actions.
The Company has used cash during fiscal years 1996, 1995 and 1994 to fund
strategic investments, in particular substantial expenditures for new product
development, and operating losses. For the first three quarters of fiscal 1996
and for fiscal years 1995 and 1994, the Company's product development
expenditures were approximately $30,100,000, $41,100,000 and $36,400,000,
respectively. During the remainder of fiscal year 1996 and for fiscal 1997, the
Company currently intends to continue to make investments in product
development. The Company's objective is to fund these investments primarily
with cash from improved operations. The Company's timely ability to generate
cash from operations depends upon, among other things, revenue growth,
completion and market acceptance of new products, success in enhancing and
selling its current AS/400-based families of products, improvements in operating
productivity, and payment terms and collection of accounts receivable.
There can be no assurances that the Company's operations will generate
sufficient cash to finance these activities. Until operations improve to meet
its cash requirements, the Company will need to rely on cash available from its
September 1995 and July 1996 equity financings and borrowings under its credit
facility. The Company currently anticipates that its available cash and
borrowing capacity will be sufficient to fund operations at least through
December 1996. If, however, such sources prove insufficient, the Company will
be required to make changes in operations or seek additional debt or equity
financing. There can be no assurances that additional debt or equity financing
will be available or available with terms acceptable to the Company.
12
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PART II.
ITEM 1. Legal Proceedings
On May 20, 1996, the Company entered into a definitive agreement to settle the
shareholder class action litigation brought against the Company and certain of
its former officers. An Order of Final Approval and Final Judgment and an Order
of Dismissal has been issued by the Federal District Court in Massachusetts.
The litigation, which was brought in August 1994, alleged violations of federal
securities law. Of the $5,750,000 settlement, the Company contributed
$2,750,000 from its own funds, with the remainder provided by insurance. The
Company recorded a charge of $3,250,000 in the second quarter of fiscal 1996 to
cover the settlement and other expenses incurred in connection therewith.
The Company is subject to legal proceedings and claims which arise in the
normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these other legal matters will have a material adverse effect on the Company's
future financial position or results of operations.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amendment and Waiver Agreement dated as of July 16, 1996 by and among the
Registrant, The Northwestern Mutual Life Insurance Company, John Hancock Mutual
Life Insurance Company, John Hancock Life Insurance Company of America and
Barnett & Co.
10.2 Amendment dated July 23, 1996 to Loan and Security Agreement by and
between Greyrock Business Credit, a division of Greyrock Capital Group, and the
Registrant.
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended June 30, 1996.
13
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MARCAM CORPORATION
August 14, 1996 /s/ George A. Chamberlain, III
- --------------- ------------------------------
Date George A. Chamberlain, 3d
Chief Financial Officer
(Principal Financial and
Accounting Officer)
14
<PAGE>
EXHIBIT INDEX
- -------------
Exhibit Page
Number Description Number
- ------- ----------- ------
10.1 Amendment and Waiver Agreement dated as of
July 16, 1996 by and among the Registrant,
The Northwestern Mutual Life Insurance Company,
John Hancock Mutual Life Insurance Company,
John Hancock Life Insurance Company of America
and Barnett & Co.
10.2 Amendment dated July 23, 1996 to Loan and Security
Agreement by and between Greyrock Business Credit,
a division of Greyrock Capital Group, and the Registrant.
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
15
<PAGE>
AMENDMENT AND WAIVER AGREEMENT
AMENDMENT AND WAIVER AGREEMENT (this "Amendment"), dated as of July 16,
1996, among MARCAM CORPORATION (together with its successors and assigns, the;
Company"), and each of the holders of Notes (as such term is defined below)
whose name appears on the signature pages hereof (individually a "Holder" and,
collectively, the "Holders").
RECITALS:
WHEREAS the Company has entered into those certain several Note and Warrant
Purchase Agreements (collectively, the "Existing Note Agreement," and as
amended, the "Amended Note Agreement"), each dated as of May 12, 1994, with each
of the purchasers identified on Annex 1 thereto (the "Purchasers");
--------
WHEREAS, the Company has entered into those certain several Warrant
Agreements (collectively, the "Existing Warrant Agreement," and as amended, the
"Amended Warrant Agreement"), each dated May 12, 1994;
WHEREAS, the Company, pursuant to the Existing Note Agreement and the
Existing Warrant Agreement, issued the Notes and the Warrants to the Holders;
WHEREAS, each of the Holders is a holder of the Notes and Warrants set
forth on Annex 1 hereto;
------
WHEREAS, the Company has requested the Holders to amend and waive certain
provisions of the Amended Note Agreement and the Amended Warrant Agreement as
hereinafter provided; and
WHEREAS, the Holders are agreeable to such waivers, modifications and such
amendments, on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows;
1. DEFINITIONS
Capitalized terms used in this Amendment and not otherwise defined herein
shall have the respective meanings ascribed to them in the Amended Note
Agreement.
2. AMENDED NOTE AGREEMENT AMENDMENT AND WAIVER
Subject to the satisfaction of the conditions set forth in Section 4
hereof, the Holders hereby consent and agree to the amendments and waiver to the
Amended Note Agreement set forth below in this Section 2, as follows:
2.1 Amendment to Section 6.10. Section 6.10 of the Amended Note Agreement
is hereby amended and restated in its entirety to read as follows:
<PAGE>
"The Company will not at the end of any fiscal quarter permit Consolidated
Net Worth to be less than (i) One Million Dollars ($1,000,000) plus (ii) on
----
a cumulative basis, 50% of the Company's Consolidated Net Income, if
positive, for each fiscal quarter ending after March 31, 1996."
2.2 Amendment to Section 6.11. Section 6.11 of the Amended Note Agreement
is hereby amended and restated in its entirety to read as follows:
"The Company will not, at the end of any fiscal quarter as measured during any
period set forth in the chart below, permit Consolidated Debt, determined at the
end of the applicable fiscal quarter, to exceed the percentage of Consolidated
Capitalization, determined at such time, set forth in the chart below opposite
the period during which such time of determination occurs:
<TABLE>
<CAPTION>
Period Beginning and Ending Percentage
-------------------------------------------------------
<S> <C> <C>
July 2, 1996 September 30, 1996 60%
October 1, 1996 September 30, 1997 55%
October l, 1997 Thereafter 50%"
</TABLE>
2.3 Waiver. The Holders hereby waive any and all defaults and Events of
Default, if any, existing as of the date hereof or that have occurred at any
time through the date hereof, if any, resulting from the Company's noncompliance
with Section 6.10 or 6.11 of the Amended Note Agreement.
2.4 Consent to Transactions.
(a) The Holders hereby agree that the sale by the Company to General
Atlantic Partners 32, L.P., GAP Coinvestment Partners, L.P. and their affiliates
of approximately 100,000 shares of the Company's Series E Convertible Preferred
Stock (the provisions of which shall be substantially similar to those of the
existing Series D Convertible Preferred Stock) and warrants to purchase
approximately 1,000,000 shares of the Company's Common Stock (having an exercise
price of more than $10 per share of Common Stock) for an aggregate price of
approximately $10 million shall not constitute a default under Section 6.4 of
the Amended Note Agreement.
(b) The Holders hereby agree that the following transactions shall not
constitute a default under the Amended Note Agreement: (i) the sale by the
Company of its interest in Foresight Software, Inc. and (ii) the sale by the
Company of substantially all the assets of Marcam Australia Pty. Limited
3. WAIVER TO AMENDED WARRANT AGREEMENT
Subject to the satisfaction of the conditions set forth in Section 4
hereof, the Holders hereby consent and agree to the following acknowledgment and
waiver to the Amended Warrant Agreement set forth below in this Section 3, as
follows:
3.1 Acknowledgment and Waiver. (a) Each of the Holders and the Company
acknowledge and agree that: (i) the Shelf Registration (as defined in the
Amended Warrant Agreement) was initially declared effective by the SEC on March
25, 1996 at 4:30 p.m. and a post-effective amendment to the Shelf registration
was declared effective by the SEC on June 4, 1996(such post-effective amendment,
the "Amended Shelf Registration"); (ii) notwithstanding the fact that the Shelf
Registration was not declared
2
<PAGE>
effective by the SEC as of the Target Effective Date (as defined in the Amended
Warrant Agreement) (A) the Company used its best efforts to have the Shelf
Registration declared effective by the SEC as of the Target Effective Date and
(B) the rights of each of the Holders to collect liquidated damages pursuant to
Section 5.1(c) of the Amended Warrant Agreement, if any, are hereby waived by
the Holders, provided, that the Holders shall continue to have the rights to
collect liquidated damages pursuant to Section 5.1(c) if a stop order is imposed
by the SEC after the date hereof.
(b) Each of the Holders hereby waives the requirement that the Company
use its reasonable best efforts to cause each of such Holders to receive, at the
time of the initial effectiveness of the Shelf Registration: (i) a letter
prepared in accordance with SAS 76 ("Amendments to Statement on Auditing
Standards No. 72, Letters for Underwriters and Certain Other Requesting
Parties") (the "Agreed-Upon Procedures Letter") from the Company's independent
certified public accountants covering such matters of the type customarily
covered by Agreed-Upon Procedures Letters delivered by certified public accounts
in connection with a shelf registration, pursuant to section 5.3(i)(i) of the
Amended Warrant Agreement and (ii) an opinion (the "Legal Opinion") favorable to
the requisite Holders in form and scope, from counsel for the Company in
customary form, pursuant to Section 5.3(j) of the Amended Warrant Agreement ;
and further, each of the Holders hereby acknowledges receipt, at the time of the
effectiveness of the Amended Shelf Registration, of the Legal Opinion in full
satisfaction of the Company's obligations under Section 5.3(j) of the Amended
Warrant Agreement. The waiver by each of the Holders of the requirement that the
Company cause each of the Holders to receive an Agreed-Upon Procedures Letter at
the time of the initial effectiveness of the Shelf Registration is subject to
the requirement that the Company shall use its reasonable best efforts to cause
the delivery of the Agreed- Upon Procedures Letter to each of the Holders,
within thirty (30) days after the filing with the SEC of the Company's report on
Form 10-Q for the quarter ended June 30, 1996; provided further, that if the
-------- -------
Agreed-Upon Procedures Letter shall not be delivered to each Holder within such
thirty (30) day period, the Company shall pay to each Holder of Registrable
Securities (as defined in the Amended Warrant Agreement) liquidated damages in
an amount equal to one and one-quarter cents ($0.0125) per week (or portion
hereof) per share of Registrable Securities held by each such Holder, beginning
with the week commencing on the expiration of such thirty (30) day period and
concluding with the week during which such Agreed-Upon Procedures Letter is
delivered to each such Holder, whichever is later.
4. CONDITIONS TO EFFECTIVENESS
The amendment and waiver set forth in Section 2 and Section 3 shall become
effective only upon the satisfaction in all respects of the conditions, set
forth below. The first date upon which all such conditions shall have been
satisfied is herein referred to as the "Effective Date."
4.1 Execution and Delivery of this Amendment. Each of the Holders and the
Company shall have executed and delivered to each other this Amendment, and each
of the Amended Note Agreement, the Amended Warrant Agreement, the Notes and the
Warrant Certificates shall be in full force and effect.
4.2 Representations and Warranties True. The representations and warranties
set forth in Section 5 hereof shall be true and correct as of the date hereof
and as of the Effective Date; and no Default or Event of Default pursuant to the
Amended Note Agreement(as amended hereby and taking into account the waivers
provided herein) shall be existing on the Effective Date.
5. REPRESENTATIONS AND WARRANTIES
3
<PAGE>
The Company represents and warrants to each of the Holders as follows:
5.1 Organization, Existence, Etc. The Company:
(a) is a corporation duly organized and validly in good standing under the
laws of its state of incorporation;
(b) has all requisite power and authority and all necessary licenses and
permits to own and operate its Properties and to carry on its business as now
conducted and presently proposed to be conducted; and
(c) is duly qualified and is authorized to do business and is in good
standing, as a foreign corporation in each jurisdiction where the character of
its Properties or the nature of its activities makes such qualification
necessary.
5.2 Power and Authority. The Company has the corporate power and
authority:
(a) to authorize, execute, deliver and enter into this Amendment; and
(b) to perform its obligations under this Amendment, the Amended Note
Agreement (as amended hereby and taking into account the waivers provided
herein), the Notes, the Amended Warrant Agreement (taking into account the
waivers provided herein) and the Warrant Certificates.
5.3 Enforceability. This Amendment has been duly authorized, executed and
delivered by the Company. The Amended Note Agreement (as amended hereby and
taking into account the waiver provided herein), the Notes, the Amended Warrant
Agreement(taking into account the waivers provided herein) and the Warrant
Certificates constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as such
enforceability may be:
(a) limited by bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors' rights generally; and
(b) subject to the availability of equitable remedies.
The holders of the Notes and the Warrants are entitled to the benefits of the
Amended Note Agreement (as amended hereby and taking into account the waivers
provided herein) and the Amended Warrant Agreement (taking into account the
waivers provided herein), respectively.
5.4 No Conflicts. The authorization, execution and delivery by the Company
of this Amendment are not, and the performance by the Company of its obligations
under the Amended Note Amendment (as amended hereby and taking into account the
waiver provided herein), the Notes, the Amended Warrant Agreement (taking into
account the waivers provided herein) and the Warrant Certificates will not be,
inconsistent with its certificate of incorporation or by-laws, do not and will
not contravene any law, governmental rule or regulation, violate any judgment,
order or award of any arbitrator applicable to the Company, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which the Company is a party or by
which any of its Property is bound, the imposition of a Lien upon any Property
of the Company.
4
<PAGE>
6. COSTS AND EXPENSES
The Company shall pay all amounts which are payable pursuant to Section
11.5(d) of the Amended Note Agreement and Section 8.1 of the Amended Warrant
Agreement, and shall pay all out-of-pocket expenses of the Holders in connection
with the negotiation, preparation, execution and delivery of his Amendment,
including, without limitation, all the fees and expenses of special counsel
engaged by the Holders in connection therewith within in five (5) Business Days
after being presented with an invoice therefor.
7. MISCELLANEOUS
7.1 Successors and Assigns. All the provisions of this Amendment by or for
the benefit of the parties hereto shall bind and inure to the benefit of their
respective successors and assigns hereunder.
7.2 Execution in Counterparts. This Amendment may be executed in one or
more counterparts, all of which taken together shall constitute a single
instrument.
7.3 Governing Law. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED; IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF' NEW YORK.
7.4 No Other Amendments. Except as expressly provided herein:
(a) no other terms and provisions of the Amended Note Agreement and no
provisions of the Amended Warrant Agreement shall be modified or changed by
this Amendment; and
(b) the terms and provisions of the Amended Note Agreement and the Amended
Warrant Agreement shall continue in full force and effect. The Company hereby
acknowledges and reaffirms all of its obligations and duties under the Amended
Note Agreement (as amended hereby and taking into account the waiver provided
herein), the Notes, the Amended Warrant Agreement (taking into account the
waivers provided herein) and the Warrant Certificates.
7.5 Severability. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
MARCAM CORPORATION
By:_________________________
Name: George A. Chamberlain, 3d
Title: Chief Financial Officer
5
<PAGE>
THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY
By:__________________________
Name:
Title:
BARNETT & CO.
By:___________________________
Name:
Title:
JOHN HANCOCK LIFE INSURANCE
COMPANY OF AMERICA
By:____________________________
Name:
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By:______________________
Name:
Title:
6
<PAGE>
ANNEX 1
<TABLE>
<CAPTION>
HOLDERS OF NOTES AND WARRANTS
<S> <C> <C>
Name of Holder Note Registration Number Warrant Certificate
and Principal Amount and Number of Warrants
The Northwestern Mutual
Life Company R-l, $15,000,000 WR-1, 230,000 Warrants
John Hancock Mutual Life
Insurance Company of America -------- WR-2, 91,999 Warrants
John Hancock Mutual Life -------- WR-3, 30,667 Warrants
Insurance Company of America
John Hancock Life Insurance
Company of America R-4, $2,000,000 WR-4, 30,667 Warrants
Barnett & Co. R-5, $8,000,000 -------
</TABLE>
7
<PAGE>
Extension and Amendment
Borrower: Marcam Corporation
Address: 95 Wells Avenue
Newton, Massachusetts 02159
Date: July 23, 1996
THIS EXTENSION AND AMENDMENT ("Amendment") is entered into as of the above
date between GREYROCK BUSINESS CREDIT, a Division of NationsCredit Commercial
Corporation (formerly Greyrock Capital Group Inc.) ("GBC"), whose address is 300
North Continental Blvd., Suite 200, El Segundo, California 90245 and the
borrower named above ("Borrower") with respect to the Loan and Security
Agreement between GBC and Borrower, dated August 29, 1995 (as amended, the "Loan
Agreement"). (This Amendment, the Loan Agreement, any prior written amendments
to said agreements signed by GBC and the Borrower, and all other written
documents and agreements between GBC and the Borrower are referred to herein
collectively as the "Loan Documents". Capitalized terms used but not defined in
this Amendment, shall have the meanings set forth in the Loan Agreement.)
The Parties agree as follows
1. Extension. Section 4 of the Schedule, which presently reads "August 31,
1996, subject to automatic renewal as provided in Section 6.1 above, and early
termination as provided in Section 6.2 above." is amended to read as follows:
"August 31, 1997, subject to automatic renewal as provided in Section 6.1
above, and early termination as provided in Section 6.2 above."
2. Renewal Fee. Borrower shall concurrently pay GBC a renewal fee in the
amount of $60,000, which shall be non-refundable and in addition to all interest
and other fees and charges. Said fee may be charged by GBC to Borrower's loan
account.
3. Float Days. Effective September 1, 1996, the first sentence of Section
9.1, which presently reads "During any period the Non-Streamlined Facility is in
effect, in computing interest on the Obligations, all checks, wire transfers and
other items of payment received by GBC (including proceeds of Receivables and
payment of the Obligations in full) shall be deemed applied by GBC on account of
the Obligations three Business Days after receipt by GBC of immediately
available funds." is amended by changing the words "three Business Days after
receipt" to read "on the date of receipt".
<PAGE>
4. Minimum Interest. Effective September 1, 1996, the following is hereby
deleted from Section 2 of the Schedule:
"and provided that the interest charged for each fiscal quarter shall be a
minimum of $15,000 (prorated for partial fiscal quarters at the beginning
and end of the term hereof, regardless of the amount of the Obligations
outstanding. In the event the interest paid for any fiscal quarter is less
than $15,000 (prorated for partial fiscal quarters at the beginning and end
of the term hereof), Borrower shall pay GBC the difference within ten days
after the end of the fiscal quarter (or, if earlier, on termination of this
Agreement)."
5. Representations True. Borrower represents and warrants to GBC that all
representations and warranties set forth in the Loan Agreement are true and
correct. With respect to the representation contained Section 3.8 of the
Agreement, Borrower makes the representation having reference to the matters
identified in the attached Schedule 3.8; with respect to Section 3.10 of the
Agreement, Borrower makes the representation having reference to the Litigation
Update dated May 7, 1996 which has previously been given to GBC.
6. General Provisions. The consents set forth above shall not be deemed to
be a consent to any other transfer of Collateral or guaranty, whether or not
similar to the foregoing. This Amendment, the Loan Agreement, and the other Loan
Documents set forth in full all of the representations and agreements of the
parties with respect to the subject matter hereof and supersede all prior
discussions, representations, agreements and understandings between the parties
with respect to the subject hereof. Except as herein expressly amended, all of
the terms and provisions of the Loan Agreement and the other Loan Documents
shall continue in full force and effect and the same are hereby ratified and
confirmed.
Borrower: GBC:
MARCAM CORPORATION GREYROCK BUSINESS CREDIT,
a Division of
NationsCredit Commercial Corporation
By By
------------------------------ -------------------------------------
President or Vice President Title
----------------------------------
By
------------------------------
Secretary or Ass't Secretary
<PAGE>
Exhibit 11
- ----------
MARCAM CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET LOSS $(10,582) $ (2,912) $(24,190) $ (3,471)
-------- -------- -------- --------
PRIMARY EARNINGS PER SHARE
- --------------------------
Weighted average common shares
outstanding 11,429 11,218 11,382 11,188
Dilutive common equivalent shares - - - -
-------- -------- -------- --------
11,429 11,218 11,382 11,188
-------- -------- -------- --------
Net loss per share $ (0.93) $ (0.26) $ (2.13) $ (0.31)
-------- -------- -------- --------
FULLY DILUTED EARNINGS PER SHARE
- --------------------------------
Weighted average common shares
outstanding 11,429 11,218 11,382 11,188
Dilutive common equivalent shares - - - -
-------- -------- -------- --------
11,429 11,218 11,382 11,188
-------- -------- -------- --------
Net loss per share $ (0.93) $ (0.26) $ (2.13) $ (0.31)
-------- -------- -------- --------
</TABLE>
The calculation of loss per share is based on the weighted average shares
outstanding in the three- and nine-months ended June 30, 1996 and 1995.
Dilutive stock options, warrants and convertible preferred stock assumed
converted are based on the treasury stock method using average market price in
calculating primary earnings per share, and the higher of the end of the period
or average market price in computing fully diluted earnings per share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 10,378
<SECURITIES> 974
<RECEIVABLES> 58,010
<ALLOWANCES> 2,584
<INVENTORY> 0
<CURRENT-ASSETS> 72,395
<PP&E> 27,802
<DEPRECIATION> 17,644
<TOTAL-ASSETS> 124,620
<CURRENT-LIABILITIES> 95,486
<BONDS> 25,442
0
225
<COMMON> 114
<OTHER-SE> 2,736
<TOTAL-LIABILITY-AND-EQUITY> 124,620
<SALES> 0
<TOTAL-REVENUES> 148,614
<CGS> 0
<TOTAL-COSTS> 65,550
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 687
<INTEREST-EXPENSE> 2,890
<INCOME-PRETAX> (21,039)
<INCOME-TAX> 3,151
<INCOME-CONTINUING> (24,190)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,190)
<EPS-PRIMARY> (2.13)
<EPS-DILUTED> (2.13)
</TABLE>
