<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
0-16096
(Commission File Number)
INPRISE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 94-2895440
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 ENTERPRISE WAY
SCOTTS VALLEY, CALIFORNIA
95066-3249
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (831) 431-1000
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO |_|
The number of shares of common stock outstanding as of July 31, 2000,
the latest practicable date prior to the filing of this report, was 61,476,846.
================================================================================
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
at June 30, 2000 and December 31, 1999..................................... 1
Condensed Consolidated Statements of Operations for the
three and six months ended June 30, 2000 and 1999.......................... 2
Condensed Consolidated Statements of Comprehensive Income for
for the three and six months ended June 30, 2000 and 1999.................. 3
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 2000 and 1999.................................... 4
Notes to Condensed Consolidated Financial Statements....................... 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations........................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk................. 26
PART II OTHER INFORMATION
Item 1. Legal Proceedings.......................................................... 29
Item 2. Changes in Securities and Use of Proceeds.................................. 29
Item 4. Submission of Matters to a Vote of Security Holders........................ 30
Item 5. Other Information.......................................................... 30
Item 6. Exhibits and Reports on Form 8-K........................................... 32
Signatures................................................................. 34
</TABLE>
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INPRISE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUE AND SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
--------------- ------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................ $ 238,522 $ 192,013
Short-term investments ........................... 5,428 5,680
Accounts receivable, net ......................... 29,842 27,303
Other current assets ............................. 15,336 8,139
--------------- ------------------
Total current assets ....................... 289,128 233,135
Property and equipment, net ............................. 21,934 75,002
Other non-current assets ................................ 6,401 4,879
--------------- ------------------
$ 317,463 $ 313,016
=============== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ............ $ 44,557 $ 41,733
Income taxes payable ............................. 4,608 5,808
Deferred revenue ................................. 15,808 12,273
Other ............................................ 12,060 18,083
--------------- ------------------
Total current liabilities .................. 77,033 77,897
Long-term debt and other ................................ 19,056 19,462
Preferred stock: Series C convertible, $.01 par
value; 625 shares authorized; 625 shares
issued and outstanding ..................... - -
Common stock: $.01 par value; 100,000,000
shares authorized; 61,463,971 and 60,672,547
shares issued and outstanding .............. 614 607
Additional paid-in capital ....................... 469,839 464,527
Accumulated deficit .............................. (228,947) (229,572)
Cumulative comprehensive income .................. 5,073 5,300
--------------- ------------------
246,579 240,862
Less common stock in treasury, at cost - 4,473,800
shares...................................... (25,205) (25,205)
--------------- ------------------
$ 317,463 $ 313,016
=============== ==================
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
1
<PAGE> 4
INPRISE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ------------------------
2000 1999 2000 1999
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Licenses and other revenues............................ $40,000 $ 34,217 $79,774 $ 72,137
Service revenues....................................... 6,716 6,022 13,442 11,517
--------- ----------- ----------- -----------
Net revenues.................................... 46,716 40,239 93,216 83,654
--------- ----------- ----------- -----------
Cost of licenses and other revenues.................... 2,867 4,568 6,930 10,318
Cost of service revenues............................... 4,880 5,876 9,816 11,302
--------- ----------- ----------- -----------
Cost of revenues................................. 7,747 10,444 16,746 21,620
--------- ----------- ----------- -----------
Gross profit .......................................... 38,969 29,795 76,470 62,034
--------- ----------- ----------- -----------
Research and development .............................. 10,509 9,807 21,562 20,713
Selling, general and administrative ................... 25,447 30,503 52,668 63,480
Restructuring and merger-related charges .............. 2,014 - 3,556 6,959
Other non-recurring charges ........................... - - - 8,193
--------- ----------- ----------- -----------
Total operating expenses ....................... 37,970 40,310 77,786 99,345
--------- ----------- ----------- -----------
Operating income (loss) ............................... 999 (10,515) (1,316) (37,311)
Income from patent cross-license agreement
and other ..................................... - 105,065 - 105,065
Interest income, net, and other........................ 2,392 1,195 4,607 3,430
--------- ----------- ----------- -----------
Income before income taxes ............................ 3,391 95,745 3,291 71,184
Income tax provision .................................. 1,389 8,225 2,435 9,253
--------- ----------- ----------- -----------
Net income ............................ $ 2,002 $ 87,520 $ 856 $ 61,931
========= =========== =========== ===========
Net income per share:
Basic ................................................. $ 0.03 $ 1.61 $ 0.01 $ 1.21
========= =========== =========== ===========
Diluted ............................................... $ 0.03 $ 1.47 $ 0.01 $ 1.10
========= =========== =========== ===========
Weighted average number of common shares
outstanding:
Basic ................................................. 61,464 54,343 61,209 51,048
========= =========== =========== ===========
Diluted ............................................... 69,165 59,634 71,481 56,011
========= =========== =========== ===========
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
2
<PAGE> 5
INPRISE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ----------------------
2000 1999 2000 1999
-------- ------- --------- -------
<S> <C> <C> <C> <C>
Net income............................ $2,002 $87,520 $ 856 $61,931
Other comprehensive loss:
Foreign currency translation
adjustments........................... (95) (330) (227) (2,295)
-------- ------- --------- --------
Comprehensive income.................. $1,907 $87,190 $ 629 $59,636
======== ======= ========= ========
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
3
<PAGE> 6
INPRISE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------ ------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................. $ 856 $ 61,931
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................ 5,239 7,814
Gain on sale of long-term investment................. - (1,263)
(Gain) loss on sale of fixed asset................... 1,540 (20)
CHANGE IN ASSETS AND LIABILITIES:
Accounts receivable.................................. (3,390) 8,883
Other assets......................................... (3,311) (3,814)
Accounts payable and accrued expenses ............... 3,153 (5,480)
Income taxes payable................................. (2,375) 9,053
Other (primarily deferred revenue and restructuring). 3,421 1,352
------------ ------------
Cash provided by operating activities................ 5,133 78,456
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment.................... (731) (4,327)
Proceeds from sale of property ....................... 39,651 20
Net change in short-term investments ................. 252 141
Long-term investment, net............................. (2,700) 529
------------ ------------
Cash provided by (used in) investing activities...... 36,472 (3,637)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Common Stock, net........... 5,089 1,761
Proceeds from the issuance of preferred stock, net ... - 25,000
Repurchase of Common Stock............................ - (4,871)
Repayment of capital lease obligations and other debt
activity (87) (66)
------------ ------------
Cash provided by financing activities................ 5,002 21,824
Effect of exchange rate changes on cash ................... (98) (1,977)
------------ ------------
Net change in cash and cash equivalents.................... 46,509 94,666
Cash and cash equivalents at beginning of period........... 192,013 81,137
------------ ------------
Cash and cash equivalents at end of period................. $ 238,522 $ 175,803
============ ============
</TABLE>
See Notes to the Condensed Consolidated Financial Statements.
4
<PAGE> 7
INPRISE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--TERMINATION OF MERGER AGREEMENT WITH COREL CORPORATION
On May 15, 2000, Inprise Corporation (the "Company or "Inprise"),
Corel Corporation ("Corel") and Carleton Acquisition Co. ("Sub"), a wholly owned
subsidiary of Corel, entered into a Termination Agreement and Release (the
"Termination Agreement"), pursuant to which the Merger Agreement (the "Merger
Agreement"), dated as of February 6, 2000, by and among Inprise, Corel and Sub,
the Stock Option Agreement, dated as of February 6, 2000, between Inprise and
Corel, pursuant to which Corel granted to Inprise an option to acquire up to
13,000,000 of the shares of common stock of Corel, and the Stock Option
Agreement, dated as of February 6, 2000, between Inprise and Corel, pursuant to
which Inprise granted to Corel an option to acquire up to 12,000,000 of the
shares of common stock of Inprise (both such Stock Option Agreements, the "Stock
Option Agreements"), were terminated and canceled by mutual agreement without
payment of any termination fees. As a result of the Termination Agreement, the
proposed merger between Inprise and Corel was terminated and Inprise and Corel
agreed to release each other from all liabilities arising from, relating to or
in connection with the Merger Agreement and the Stock Option Agreements.
For the three and six month period ended June 30, 2000, Inprise
incurred approximately $2.0 million and $3.6 million, respectively, in costs
associated with the transactions contemplated by the Merger Agreement.
NOTE 2--BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements as of
June 30, 2000 and for the three and six months ended June 30, 2000 and 1999 are
unaudited. The unaudited interim condensed consolidated financial statements
have been prepared on the same basis as the annual consolidated financial
statements and, in the opinion of management, reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly Inprise's
financial position, results of operations and cash flows as of June 30, 2000 and
for the three and six months ended June 30, 2000 and 1999. The preparation of
consolidated 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 disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
These condensed consolidated financial statements and notes should be read in
conjunction with our audited financial statements included in our Annual Report
on Form 10-K for the fiscal year ended December 31, 1999 as filed with the
Securities and Exchange Commission ("SEC") on April 4, 2000.
5
<PAGE> 8
NOTE 3--RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the SEC issued Staff Accounting Bulletin No. 101
("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101 summarizes
certain of the SEC's views in applying generally accepted accounting principles
to revenue recognition in financial statements. In June 2000, the SEC issued SAB
No. 101B to defer the effective date of implementation of SAB No. 101 until the
fourth quarter of fiscal 2000. Inprise does not expect the adoption of SAB 101
to have a material effect on its financial position or results of operations.
In March 2000, the FASB issued Interpretation No. 44, ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of APB 25." This Interpretation clarifies (a) the definition of
employee for purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. While FIN 44 is effective July 1, 2000,
certain conclusions in this Interpretation cover specific events that occur
after either December 15, 1998 or January 12, 2000. To the extent that this
Interpretation covers events occurring during the period after December 15, 1998
or January 12, 2000, but before the effective date of July 1, 2000, the effects
of applying this Interpretation are recognized on a prospective basis from July
1, 2000. We are currently assessing the impact, if any, of adopting this
interpretation.
NOTE 4--NET INCOME PER SHARE
We compute net income per share in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128 "Earnings per Share." Under the
provisions of SFAS No. 128, basic net income per share is computed by
dividing the net income available to common stockholders for the period
by the weighted average number of common shares outstanding during the period.
Diluted net income per share is computed by dividing the net income for the
period by the weighted average number of common and common equivalent shares
outstanding during the period. Common equivalent shares consist of incremental
shares issuable upon exercise of stock options and warrants and upon conversion
of the Series C Convertible Preferred Stock, are included in diluted net income
per share to the extent such shares are dilutive.
The following table sets forth the computation of basic and diluted
net income per share for the periods indicated (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- -------------------------
2000 1999 2000 1999
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Numerator:
Net income before accretion
charges......................... $ 2,002 $87,520 $ 856 $61,931
Accretion charges to preferred
stock........................... 219 41 438 68
-------- ------- ------- -------
Income available to common
Stockholders for basic
earnings per share............ $ 1,783 $87,479 $ 418 $61,863
-------- ------- ------- -------
Denominator:
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Denominator for basic income
per share
- weighted average shares..... 61,464 54,343 61,209 51,048
Effect of dilutive securities... 7,701 5,291 10,272 4,963
-------- ------- ------- -------
Denominator for dilutive income
per share....................... 69,165 59,634 71,481 56,011
-------- ------- ------- -------
Net income per share - basic.... $ 0.03 $ 1.61 $ 0.01 $ 1.21
======== ======= ======= =======
Net income per share - diluted.. $ 0.03 $ 1.47 $ 0.01 $ 1.10
======== ======= ======= =======
</TABLE>
Options to purchase approximately 4,971,000 and 2,207,000 were not
included in the net income per share calculation for the quarter and six months
ended June 30, 2000, as the inclusion of such options would have been
antidilutive. Options to purchase approximately 11,839,000 and 12,311,000 were
not included in the net income per share calculation for the quarter and six
months ended June 30, 1999, as the inclusion of such options would have been
antidilutive. The 308,000 warrants to purchase common stock outstanding at June
30, 2000 and 1999 were not included in the computation of diluted EPS for any
periods presented, as the inclusion of the warrants would have been
antidilutive.
NOTE 5--RESTRUCTURING
The following table summarizes our restructuring activity for the six
months ended June 30, 2000:
<TABLE>
<CAPTION>
SEVERANCE OTHER
AND ASSET
BENEFITS FACILITIES CHARGES OTHER TOTAL
---------- ---------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Accrual at December 31,
1999 $3,003 $ 997 $ 4,764 $1,204 $9,968
Accrual 269 - (181) - 88
Cash payments (1,602) (267) - (176) (2,045)
Non-cash costs - - (4,139) (459) (4,598)
---------- ---------- --------- ------- ---------
Accrual at June 30, 2000 $1,670 $ 730 $ 444 $ 569 $3,413
========== ========== ========= ======= =========
</TABLE>
Subsequent to December 31, 1999, there have not been any changes to our estimate
of the total costs for prior restructuring activities.
NOTE 6--INCOME TAXES
We have significant net operating loss and tax credit carryforwards in
the U.S. and a number of non-U.S. jurisdictions in which we conduct business.
These losses and credit carryforwards are used to offset our tax liability. In
addition, we incur withholding taxes in a number of non-U.S. jurisdictions that
are imposed regardless of the profitability of Inprise in that jurisdiction. We
anticipate our tax provision for 2000 to be comprised principally of non-U.S.
income taxes and non-U.S. withholding taxes. The principal difference between
the 2000 and 1999 tax provisions is the U.S. tax provision related to the income
from a patent cross-license agreement, dated as of June 2, 1999, between Inprise
and Microsoft Corporation which recorded in the quarter ended June 30, 1999, and
the utilization of a portion of our loss carryforwards.
NOTE 7--INVESTMENT
On March 17, 2000, Inprise entered into a Share Purchase Agreement
with Troll Tech AS ("Troll Tech"). Troll Tech, which is headquartered in Oslo,
Norway, is a leading provider of software used for the development of graphical
user interfaces in software applications. Under the terms of the Share Purchase
Agreement, Inprise purchased a minority interest in Troll Tech. This investment
is recorded at cost.
7
<PAGE> 10
NOTE 8--LOAN TO AN OFFICER
On June 26, 2000, Inprise extended a loan to an executive officer in
the amount of $1,000,000 for the purpose of purchasing a residence. The loan is
secured by the purchased residence and bears interest at a fixed rate of 7% per
annum. The loan will be forgiven over a five year period, provided that such
executive officer remains employed by Inprise over this five year period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The matters discussed throughout this Quarterly Report that are not
historical facts are forward-looking statements and accordingly, involve
estimates, projections, goals, forecasts, assumptions and uncertainties that
could cause actual results or outcomes to differ materially from those expressed
in the forward-looking statements.
These forward-looking statements may relate to, but are not limited to,
future capital expenditures, acquisitions, future revenues, earnings, margins,
costs, product release dates, demand for our products, market trends in the
software industry, interest rates and inflation and various economic and
business trends. You can identify forward-looking statements by the use of words
such as "expect," "estimate," "project," "budget," "forecast," "anticipate,"
"plan" and similar expressions. Forward-looking statements include all
statements regarding expected financial position, results of operations, cash
flows, dividends, financing plans, business strategies, operating efficiencies
or synergies, budgets, capital and other expenditures, competitive positions,
markets and growth opportunities for existing or proposed products or services,
plans and objectives of management, and markets for stock of Inprise and
conditions or trends in the securities markets where shares of Inprise common
stock are traded.
These forward-looking statements are found at various places throughout
this Quarterly Report. We caution you not to place undue reliance on these
forward-looking statements, which unless otherwise indicated, speak only as of
the date they were made. Inprise does not undertake any obligation to release
publicly any revisions to these forward-looking statements to reflect events or
circumstances after the date of this Quarterly Report or to reflect the
occurrence of events that we do not currently anticipate.
You may read and copy any reports, statements or other information
filed by Inprise at SEC Public Reference Rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at any of the SEC's other public reference rooms in
New York and Chicago. Please call the SEC at 1-800-SEC-0330 for further
information on public reference rooms. Inprise's filings with the SEC are also
available to the public from commercial document-retrieval services and at the
Internet web site maintained by SEC at www.sec.gov. In addition, any reports,
statements or other information filed by Inprise with the SEC may also be
obtained for free from Inprise by directing such request to: Inprise
Corporation, 100 Enterprise Way, Scotts Valley, California 95066-3249,
Attention: Investor Relations, telephone: (831) 431-1000, e-mail:
[email protected].
OVERVIEW
8
<PAGE> 11
Inprise is a leading provider of Internet-enabling software and
services designed to reduce the complexity of application development for
corporations and individual programmers. We develop and provide integrated,
scalable and secure solutions, distinguished for their ease of use, performance
and productivity. Committed to most major computing platforms as well as the
open standards of the Internet, we provide service and support for software
developers worldwide through our online developer community and E-commerce site
- community.borland.com - offering a range of technical information, value-added
services and third-party products. Our product lines and services are designed
to assist software developers and business enterprises in their development and
deployment of software in the desktop, client/server, distributed objects and
Internet and corporate intranet environments.
We market and distribute our products worldwide primarily through
independent distributors, dealers, value-added resellers ("VARs") and
independent software vendors ("ISVs"). We also market and sell to corporations,
governments, educational institutions and other end-user customers through
direct sales and through the Internet.
RESULTS OF OPERATIONS
REVENUE
Our revenue is derived from software licenses, customer support,
training and consulting services.
LICENSES AND OTHER REVENUE
License revenue represents amounts earned from granting customers
licenses to use our software products. Licenses and other revenue totaled $40.0
million for the quarter ended June 30, 2000; an increase of 17% from the same
quarter of 1999. Revenue during the three months ended June 30, 2000 was
favorably affected by the continuing strong sales of JBuilder(TM) 3.5, which was
released during the first quarter. JBuilder revenue has grown approximately 20%
over the same quarter a year ago, when we released JBuilder(TM) 3.0.
Additionally, the revenues from Inprise's enterprise products, including
Visibroker(R), Application Server(TM) and AppCenter(TM), have increased by
approximately 32% over the same quarter a year ago. Revenue from the Inprise's
non-strategic products declined approximately 9% from the year ago quarter.
Revenues from non-strategic products represented approximately 9% and 11% of the
Inprise's overall revenue for the quarters ended June 30, 2000 and 1999,
respectively.
SERVICE REVENUE
Service revenue represents amounts earned from customer support,
training, consulting and education services related to our software products.
Service revenue increased to $6.7 million for the quarter ended June 30, 2000
compared to $6.0 million for the quarter ended June 30, 1999. This increase is
primarily related to increased consulting and technical support revenue as
Inprise focuses on support offerings for its enterprise products.
INTERNATIONAL REVENUE
9
<PAGE> 12
International revenue represented 61% of our total net revenue for the
quarter ended June 30, 2000 compared to 53% for the quarter ended June 30, 1999.
We expect that our international operations will continue to provide a
significant portion of our total revenue.
10
<PAGE> 13
The following table presents our total revenue by geographic area:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- --------------------------
2000 1999 2000 1999
------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
United States $ 18,390 $ 18,755 $ 35,595 $ 38,285
Europe 16,126 13,042 32,025 28,501
Japan 5,815 4,866 13,537 9,564
Other 6,385 3,576 12,059 7,304
------------ ------------- ----------- -------------
Net revenues $ 46,716 $ 40,239 $ 93,216 $ 83,654
============ ============= =========== =============
</TABLE>
COST OF REVENUE
COST OF LICENSES AND OTHER REVENUE
Cost of licenses revenue consists primarily of production costs,
product packaging, and royalties paid to third-party vendors. Cost of licenses
and other revenue was $2.9 million and $4.6 million for the quarters ended June
30, 2000 and 1999, respectively. The decrease in cost of licenses revenue during
the quarter was due to the decrease in direct production costs, as enterprise
sales increased as a percentage of overall license revenue. Enterprise sales
typically have a lower overall direct production cost. In addition, Inprise
lowered the cost of inventory through better inventory management. Cost of
licenses revenue may vary in future periods due to changes in royalty
obligations to third-party technology providers, certain manufacturing costs as
well as the number of new products and product upgrades introduced in any
respective quarter.
COST OF SERVICE REVENUE
Cost of service revenue consists primarily of salaries and benefits,
third-party contractor costs, and related expenses incurred in providing
customer support, training and education. Cost of service revenue was $4.9
million and $5.9 million for the quarters ended June 30, 2000 and 1999,
respectively. This decrease in costs was primarily due to lower employee related
expenses, as Inprise reduced the headcount within its professional service group
during the fourth quarter of 1999. Cost of service revenue as a percentage of
service revenue may also vary between periods due to the combination of services
that we provide to customers and the extent to which employees or contractors
are used to provide those services.
OPERATING EXPENSES
RESEARCH AND DEVELOPMENT
Research and development expenses consist primarily of salaries and
other personnel-related expenses, facilities costs and fees and expenses of
third-party consultants. Research and development expenses were 22% and 24% of
net revenues for the quarters ended June 30, 2000 and 1999, respectively.
Research and development expenses, in absolute dollars, for
11
<PAGE> 14
the quarter ended June 30, 2000 increased when compared with the quarter ended
June 30, 1999, primarily due to an increase in employee related costs.
SALES, GENERAL AND ADMINISTRATIVE
Sales, general and administrative (SG&A) expenses consist primarily of
salaries, benefits, sales commissions, the cost of product marketing programs,
and facility and information system costs. SG&A expenses decreased by 17% this
quarter compared to the same quarter of last year and represented 54% and 76% of
net revenue for the quarters ended June 30, 2000, and 1999, respectively. This
decrease was principally due to decreased employee costs and a reduction in
depreciation costs, resulting from the disposal of our Scotts Valley facility
and certain information systems capital assets during the quarter ended March
31, 2000 and December 31, 1999, respectively.
During December 1999, we recorded a restructuring charge of $34.8
million. The restructuring charge consists primarily of a loss on sale of our
Scotts Valley facility of $29.7 million; a $3.1 million charge for
discontinuation of our European information system implementation; severance
costs associated with organizational changes of $3.0 million and other
miscellaneous restructuring related costs of $3.1 million. These charges were
offset, in part, by the reversal of prior restructuring charges totaling $4.1
million.
During the six months ended June 30, 2000, Inprise paid approximately
$2.0 million for severance, facility and other costs as part of the December
1999 restructuring.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, cash, cash equivalents and short-term investments
totaled $244.0 million up from $197.7 million at December 31, 1999. Working
capital increased to $212.1 million, up from $155.2 million at December 31,
1999, primarily due to the $39.6 million in cash received from the sale of our
Scotts Valley facility. We expect that our current working capital will be
sufficient to finance our working capital requirements at least through the next
twelve months.
LEGAL PROCEEDINGS
Inprise and certain of its former officers and directors were named
defendants in two lawsuits, Kaplan, et al vs. Kahn, et al, and Crook, et al vs.
Kahn, et al, originally filed in the United States District Court for the
Northern District of California in 1993 and 1995, respectively. The lawsuits
alleged certain securities law violations during the periods between 1991 and
1994. In 1996, the parties entered into an agreement to settle both lawsuits.
The agreement was submitted to the Court for approval and monies were deposited
in escrow to fund the settlement. At the time, we recorded an expense for the
amount of our contribution to the settlement. On September 3, 1999, the Court
approved the settlement agreements in both lawsuits, together with a revised
plan of allocation of the settlement proceeds. On March 20, 2000, the Court
entered a final order certifying the settlement class and a final order
certifying the settlement class and dismissing both lawsuits. This order became
final on April 19, 2000.
On April 14, 2000, a complaint was filed by Management Insights, Inc.,
a stockholder of Inprise and a company controlled by C. Robert Coates, a former
director of
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Inprise, and members of his family, against Inprise, each of the members of the
Inprise board, Corel and Corel's merger subsidiary in the Court of Chancery of
the State of Delaware, in a lawsuit captioned, Management Insights, Inc. v.
Inprise Corporation, Dale Fuller, William F. Miller, William Hooper, David
Heller, Corel Corporation and Carleton Acquisition Co. In its complaint,
plaintiff sought, among other things, a preliminary and permanent injunction
against consummation of the merger of Inprise and Corel, rescission or other
equitable relief in event that the merger was consummated and other unspecified
damages. On May 12, 2000, Inprise and Messrs. Fuller, Miller, Hooper and Heller
filed a Motion to Dismiss and supporting brief asserting, among other things,
that the complaint failed to state a claim against them. Following termination
of the merger agreement with Corel, the parties entered into a stipulation
agreeing that the claims asserted in the complaint had become moot since the
merger had been abandoned and agreed that the suit should be dismissed with
prejudice. In connection with such stipulation, Inprise agreed to pay the fees
and expenses incurred by plaintiffs' counsel in connection with the lawsuit in
an aggregate amount of $35,000. On June 5, 2000, the Court entered a final
order dismissing the case on the terms provided in the parties' stipulation.
On April 19, 2000, a complaint was filed by a purported stockholder, on
his own behalf and purportedly on behalf of the other stockholders of Inprise,
against Inprise and its directors in the Court of Chancery of the State of
Delaware, in a lawsuit captioned, Paul Berger v. Dale Fuller, William F. Miller,
William Hooper, David Heller and Inprise Corporation. The complaint alleged,
among other things, breaches of fiduciary duties by the directors of Inprise in
connection with their approval of the Merger Agreement. In his complaint, the
plaintiff sought, among other things, a preliminary and permanent injunction
against consummation of the merger of Inprise and Corel, rescission or other
equitable relief in the event that the merger was consummated and other
unspecified damages. On May 12, 2000, Inprise and Messrs. Fuller, Miller, Hooper
and Heller filed a Motion to Dismiss and supporting brief asserting, among other
things, that the complaint filed failed to state a claim. On June 15, 2000, the
parties to the suit entered into a stipulation agreeing that the claims asserted
in the suit had become moot since the merger had been abandoned and agreed that
the suit should be dismissed with prejudice. In connection with such
stipulation, (i) Inprise agreed to pay the fees and expenses incurred by
plaintiff's counsel in connection with the lawsuit in an aggregate amount of
$35,000; and (ii) plaintiff agreed to release all claims, rights, causes of
action, suits, matters and issues, known or unknown, that have been or could
have been asserted by plaintiff or his attorneys in the suit, either directly or
individually, derivatively, representatively or in any other capacity, against
defendants, or their respective present or former officers, directors, agents,
employees, attorneys, representatives, advisors, heirs, executors,
administrators, successors and assigns, and anyone else, in connection with or
that arise out of or relate in any way to the litigation or any matters,
transactions or occurrences referred to in the complaint, including any claim
for plaintiffs' attorneys' fees and expenses, with prejudice as to plaintiff and
his counsel. The Court has not yet entered a final order dismissing the case on
the terms provided in the parties' stipulation.
We are also involved in various other legal actions arising in the
normal course of our business. We believe that it is unlikely that any of these
actions will have a material adverse impact on our operating results. However,
because of the inherent uncertainties of litigation, the outcome of any of these
actions could be unfavorable and could have a material adverse effect on our
financial condition or results of operations.
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FACTORS THAT MAY AFFECT FUTURE RESULTS AND MARKET PRICE OF STOCK
Inprise operates in a rapidly changing environment that involves many
risks, some of which are beyond our control. The following is a discussion that
highlights some of these risks.
WE DEPEND ON KEY PERSONNEL
We believe that our future success will depend, in large part, on our
ability to recruit and retain qualified employees, particularly highly skilled
software engineers and management personnel. Competition for such personnel is
intense, particularly in Northern California where our operations are based, and
we may not be successful in retaining or recruiting such personnel.
Our Interim President and Chief Executive Officer, Dale L. Fuller,
entered into an employment agreement dated April 9, 1999, the term of which
expired on October 9, 1999. There is no assurance that he will continue in his
position or that we would be able to find a replacement should he leave our
employment.
We have experienced the loss of a significant number of management
personnel and other key employees. As a result, we have instituted retention
programs to retain key employees. We have increased compensation, bonuses, stock
options and other fringe benefits in order to attract and retain management and
other key personnel. We may be required to further increase such compensation
and benefits. We are not certain that these efforts will succeed in retaining
our key employees, and failure to attract and retain key personnel could
significantly harm our business.
UNPREDICTABILITY OF FUTURE REVENUES: POTENTIAL FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS AND SEASONALITY
Our quarterly operating results have varied significantly in the past.
We expect that our operating results will continue to vary significantly from
time to time. We believe that these variations may result from many factors
already described and may include, but may not be limited to, any of the
following factors:
- introduction of new products;
- the overall level of demand for our products;
- the size and timing of significant orders and their fulfillment;
- the number, timing and significance of product enhancements
and new product announcements by us and our competitors;
- changes in pricing policies by us or our competitors;
- customer order deferrals in anticipation of enhancements or
new products offered by us or our competitors;
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- deferral of customer orders based on their uncertainty about
our short-term and long-term prospects;
- product release cycles of existing products;
- product defects and other product quality problems;
- seasonal trends; and
- general domestic and international economic and political
conditions.
An additional risk factor is the lengthening of our sales cycle. We
expect that a significant percentage of our future revenue will be from large
orders. These large sales typically contain multiple elements, including
licenses for development and deployment products, technical support,
maintenance, consulting and training services. The revenue from a large order is
typically recognized over time, instead of all at the time that order is placed.
For example, when the contract is signed, the license and deployment fees may be
recognized as revenue. However, revenue related to further services, such as
technical support and consulting services, must be deferred until the services
are rendered. The timing of recognition of revenue associated with larger sales
may have a material adverse effect on our business, operating results and
financial position.
Furthermore, many customers place orders toward the end of a given
quarter. Therefore revenues can be difficult to predict. Costs are based on
projected revenues and are relatively fixed in the short term. Therefore, if
revenue levels fall below projections, net income may be significantly reduced
or we may experience a loss.
We cannot be certain that we will be able to maintain profitability on
a quarterly or annual basis. It is likely that in some future quarters, our
operating results will be below our expectations as well as those of public
market analysts and investors. In such case, the price of our common stock may
be materially and adversely affected.
RISKS IN TRANSITION TO DIRECT SALES, LENGTHY SALES CYCLES AND SYSTEMS
IMPLEMENTATION SELLING
Selling enterprise software products directly to our customers entails
sales cycles that are substantially more lengthy and more uncertain than those
associated with our traditional business of selling desktop software through
retail channels. Customers for enterprise products are predominately larger
companies, institutions and governmental entities. These customers generally
commit significant time and resources to evaluating enterprise software, and
they require us to expend substantial time, effort and money educating them
about our software products and solutions. As a result, sales to these types of
customers generally require an extensive sales effort throughout the customer's
organization, and they often require final approval by an executive officer or
senior level employee. All of these factors substantially extend the sales cycle
and increase the uncertainty of whether a sale will be made. We have experienced
and expect to continue to experience delays and uncertainty in the sales cycle
as well as increased expenses for these sales.
We need to extensively train and effectively manage our sales
personnel, invest additional resources in the sales effort, and educate our
authorized resellers in international
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markets. Because we recently began making enterprise sales in non-U.S. markets,
there can be no assurance that we will successfully complete our transition to
the direct sales model outside of the U.S. Our failure to do so could
significantly harm our business.
We have added trained technical personnel to assist our customers in
implementing our enterprise software products. Personnel with sufficient
expertise and experience for these positions are in great demand, and we may not
be able to attract or retain a sufficient number of qualified personnel. Our
failure to do so could significantly harm our business.
We have made changes to our sales compensation programs in recent years
in an effort to increase sales. There can be no assurance, however, that they
will be successful in achieving this result in the long-term, and such changes
could significantly harm our revenues and sales-related expenses.
RISKS RELATED TO NEW PRODUCT INTRODUCTIONS; RAPID TECHNOLOGICAL AND MARKET
CHANGES
The market for our products is highly competitive and is characterized
by continuous technological advancement, evolving industry standards and
changing customer requirements. Our future ability to generate revenue will
depend substantially on our ability to successfully design and market new
products and upgrades of our current products for existing and new computer
platforms and operating environments that anticipate the requirements of this
market.
We face a number of inherent risks in the current market environment,
including, but not limited to, the following:
- we may introduce products later than we expect or later
than competitors' introductions;
- competitors may introduce competing products at lower
prices;
- product upgrades, which enable users to upgrade from
earlier versions of our products or competitors'
products, have lower prices and margins than new
products; and/or
- the acceptance of our new products is highly dependent,
in part, on the continued adoption of the Internet as a
new computing paradigm, the increased use of the Java
programming language; and the adoption of the Linux
operating system.
From time to time, we announce when we expect to begin shipping a new
product. In the past, some of our products have shipped later, and sometimes
substantially later, than when we originally expected. The loss of key employees
may increase the risk of these delays. Some of our products are based on
technology licensed from third parties. We have limited control over when and
whether these technologies are upgraded. The failure or delay in enhancements of
technology licensed from third parties could have a material adverse effect on
our ability to develop and enhance our products. Due to these uncertainties
inherent in software development, it is likely that these risks will materialize
from time to time in the future. We could lose customers as a result of
substantial delays in the shipment of new
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products or product upgrades. Substantial delays could also render our products
technologically obsolete and significantly harm our business.
RISKS OF ENTERING A NEW BUSINESS AREA
Our strategy is to focus on enterprise customers, software developers,
and the Internet and corporate Intranet markets. Our sales are dependent on
these enterprise customers' adopting distributed object technology for
information processing and the Internet and corporate Intranets for commerce and
communications. Concerns about the Internet and corporate intranets, including
security, reliability, cost, ease of use and access and quality of service, may
inhibit the adoption of this technology by potential customers, thereby harming
our business.
Our distributed object software products are based on several
standards, including the Common Object Request Broker Architecture, or CORBA(R),
and Extended Markup Language, or XML. These standards guide the development and
management of applications created in object oriented programming languages such
as C++ and Java. These new standards are just beginning to gain widespread
acceptance, and they compete with proprietary solutions such as Microsoft's
ActiveX and DCOM. The distributed object software market is relatively young,
and there are few proven products. Some of our VisiBroker(R) products are
designed specifically for use in applications for the Internet and corporate
Intranets. If CORBA is not adopted, or is adopted more slowly than anticipated,
or if our potential customers select products based on other standards, our
business would be harmed.
We are investing time and resources in developing products for the
Linux operating system. Linux is a new operating system and has yet to be
adopted on a widespread basis. At this time, there are few commercially viable
products that operate on the Linux operating system. If Linux is not adopted, or
is adopted more slowly than anticipated, our investments in Linux technology may
not generate the anticipated return, and as a result our business could be
materially adversely affected. As a newcomer to these markets, we face a number
of risks including:
- the new and evolving nature of the markets themselves;
- our need to make choices regarding the operating systems,
database management systems and server software on which
to focus;
- the ongoing transition and investment of our resources
for this segment;
- our limited experience in this area; and
- the presence of several very large and well-established
businesses, as well as a number of smaller successful
companies, which are already competing in this market.
There can be no assurance that we will be successful in these new markets.
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EXTREMELY COMPETITIVE INDUSTRY
The computer software industry is an intensely competitive industry.
Rapid change, new and emerging technologies and fierce competition characterize
the industry. The pace of change has accelerated due to the emergence of the
Internet and corporate Intranets, programming languages, such as Java, and
operating systems such as Linux.
Our development tools and distributed objects products compete with
products offered by a number of companies, including but not limited to Computer
Associates International, Inc., Microsoft Corporation, Oracle Corporation, Sun
Microsystems, Inc., Sybase Inc., Symantec Inc. and International Business
Machines Corporation. In the standards-based distributed object market, we
compete primarily with BEA Systems and Iona Technologies PLC. These products
also compete against existing or proposed distributed object solutions from
hardware vendors such as Hewlett-Packard Company, IBM and Sun Microsystems.
In addition, we are dependent upon and in competition with operating
systems vendors. To the extent that we are unable to obtain information
regarding existing and future operating systems from the developer of such
systems, the release of our products for such systems may be delayed or may not
be competitive. For example, Microsoft, a significant competitor, is the
developer of the Windows operating environments. Microsoft has announced that it
intends to include certain middleware functionality in future versions of its
Windows 2000 operating system. Microsoft has also introduced a product that
includes certain basic application server functionality. The bundling of
competing functionality in versions of Windows products requires us to compete
with Microsoft in the Windows marketplace where Microsoft has certain inherent
advantages due to its significantly greater financial, technical, marketing and
other resources, greater name recognition, substantial installed base and the
integration of its middleware functionality with Windows. We need to
differentiate our products from Microsoft's, based on scalability,
functionality, interoperability with non-Microsoft platforms, performance and
reliability as well as to establish that our products provide more effective
solutions to customers' needs. There can be no assurance that we will be able to
differentiate our products successfully from those offered by Microsoft, or that
Microsoft's entry into the middleware market will not harm this portion of our
business.
Some of our competitors have substantially greater financial,
management, marketing and technical resources than we have. Many of our
competitors have well-established relationships with our current and potential
customers. They also have extensive knowledge of the markets, extensive
development, sales and marketing resources, and they are capable of offering
single vendor solutions. In particular, operating system vendors such as
Hewlett-Packard, IBM, Microsoft and Sun Microsystems may offer similar products
bundled with their own operating systems. For example, Microsoft has introduced
DCOM for Microsoft operating systems. In the past, some of our competitors have
utilized their greater resources to provide substantial signing bonuses and
other inducements to lure away our management and other key personnel.
Some of our products are targeted at the emerging market for
standards-based distributed object software products. These markets are
intensely competitive. We believe that our product quality, performance and
price, vendor and product reputation, product architecture and quality of
support make us competitive in these markets. However, because
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there are relatively low barriers to entry in these markets, we expect
additional competition from other established and emerging companies. Increased
competition could result in price reductions, fewer customer orders, reduced
gross margins and loss of market share. Any one of these results could
materially adversely affect our business, operating results and financial
condition.
It is possible that current and new competitors may form alliances to
gain significant market share. Some of our competitors have offered to license
software for free to gain competitive advantage. This kind of competition could
materially adversely affect our ability to sell additional licenses and
maintenance and support renewals on profitable terms. Competitive pressures
could require us to reduce the price of our products and related services. We
are not certain that we will be able to compete successfully against current and
future competition. The failure to compete successfully would have a material
adverse effect on our business, operating results and financial condition.
We need to differentiate our products from our competitors' products
based on functionality, interoperability, developer productivity, performance
and reliability. There can be no assurance that we will be able to successfully
differentiate our products from our competitors.
Commercial acceptance of our products and services is also dependent on
the perception of Inprise. Successful marketing of our products and promotion of
Inprise are important to our success. There can be no assurance that our efforts
will be successful. In addition, critical or negative statements made by
brokerage firms, industry and financial analysts, and industry periodicals about
Inprise, our products, or our business could negatively impact customer
perception. Similarly, negative advertising or marketing efforts conducted by
our competitors could affect customer perception. If the customers' perception
of us becomes negative, this could have an adverse impact on our business,
operating results and financial condition.
We face intense competition in the development and marketing of
Internet and corporate Intranets, middleware and development software. We are
not certain that we will be able to compete effectively for Internet and
corporate Intranets, on-line services, electronic commerce business
opportunities as they arise.
DEPENDENCE ON THIRD PARTY LICENSES
We are dependent on licenses from third party suppliers for some
elements of our products. If any of these licenses were terminated or were not
renewed, or these third parties failed to develop new or updated products in a
timely manner, we might not be able to ship some of our products. We would then
have to develop an alternative to the third party's product. This could result
in delays, increased costs or reduced functionality of our products and could
have a material and adverse effect on our business, operating results and
financial condition.
PROTECTING OUR INTELLECTUAL PROPERTY RIGHTS
As a software company, our intellectual property rights are among our
most valuable assets. We rely on a combination of patent, copyright, trademark,
trade secret laws, contractual arrangements, domain name registrations and other
methods to protect our
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intellectual property rights. The protective steps we have taken may be
inadequate to deter misappropriations of our intellectual property rights. In
addition, it may be possible for an unauthorized third party to reverse engineer
our software products. We may be unable to detect the unauthorized use of, or
take appropriate steps to enforce, our intellectual property rights. In
addition, the intellectual property laws of some foreign countries are not as
protective as the laws of the United States. Accordingly, we cannot be certain
that we will be able to protect our intellectual property rights against
unauthorized third party copying or use that could materially and adversely
affect our competitive position.
From time to time, we receive a notice claiming that we have infringed
a third party's patent or other intellectual property right. We expect that
software products in general will increasingly be subject to such claims as the
number of products and competitors increase and the functionality of products
overlap. Regardless of the merit of a claim, responding to any claim can be time
consuming and costly and divert our efforts of Inprise's technical and
management personnel from productive tasks and/or enter into royalty and
licensing agreements that might not be offered or available on acceptable terms.
In the event of a successful claim against us, Inprise may be required to pay
significant monetary damages, discontinue use and sale of the infringing
products, expend significant resources to develop non-infringing technology
and/or enter into royalty and licensing agreements that might not be offered or
available on acceptable terms. If a successful claim were made against us and we
failed to commercially develop or license a substitute technology, our business
could be harmed.
WE HAVE A HISTORY OF DECLINING REVENUE AND OPERATING LOSSES
We have had operating losses in five of the past six fiscal years. Our
ability to achieve revenue growth and profitability in the future is dependent
on our success in selling our products and services while, at the same time,
reducing our operating expenses. Our future profitability is dependent, among
other things, upon our ability to:
- introduce new products and services successfully;
- achieve market acceptance of our products and services;
- implement restructuring and cost control measures from
time to time; and
- integrate the products and operations of acquired
companies successfully.
If we are unable to accomplish these objectives, we will be unable to achieve
revenue growth and profitability in future periods.
RISKS WITH NEW BUSINESS PRACTICES, PROCESSES AND INFORMATION SYSTEMS
In order to remain competitive, we are continually seeking to improve
our business processes and information systems. During 1998 and 1999, we began a
company-wide implementation of new business processes and new information
systems in an effort to optimize usage of system capabilities, enhance user
skills surrounding system features, and reduce runtime errors. The complexity of
the new systems will require us to invest in
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substantial employee training. There may also be delays or unexpected costs
during the implementation. Delays in training or implementation or unexpected
costs associated with our new systems could adversely affect our business.
EXTREME VOLATILITY OF STOCK PRICE
Like the publicly-traded securities of other high technology companies,
the market price of our common stock has experienced significant fluctuations
and may continue to be extremely volatile. During the 52-week period prior to
August 9, 2000, the price of Inprise common stock has fluctuated from $3.43
per share to $20 per share. The market price of our common stock may be
significantly affected by factors such as the following:
- announcements of new products or product enhancements by
us or our competitors;
- technological innovation by us or our competitors;
- quarterly variations in our results of operations or
those of our competitors;
- changes in the prices of our products or those of our
competitors;
- changes in revenue and revenue growth rates for us as a
whole or for specific geographic areas, business units,
products or product categories;
- changes in our earnings estimates by market analysts;
- speculation in the press or analyst community;
- actual or anticipated changes in interest rates; and
- general market conditions or market conditions specific
to particular industries.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against the company. The institution of similar litigation against us
could result in substantial costs and a diversion of our management's attention
and resources, which could materially adversely affect our business, results of
operations and financial condition.
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RISKS OF REGULATION OF THE INTERNET AND ELECTRONIC COMMERCE
We intend to expand our business through, among other channels,
e-commerce on the Internet. The electronic commerce market is new and rapidly
evolving. Currently, there are relatively few laws or regulations that directly
apply to access or commerce on the Internet. Changes in laws or regulations
governing the Internet and electronic commerce, including, without limitation
those governing an individual's privacy rights, could have a material adverse
effect on our business, operating results and financial condition.
RISKS ASSOCIATED WITH OUR DEPENDENCE ON JAVA AND ENCRYPTION TECHNOLOGY
Some of our products are based on Java, an object-oriented software
programming language developed by Sun Microsystems. Java was developed primarily
for Internet and corporate Intranet applications. It is still too early to
determine whether Java will become a widely adopted technology. At this time,
there are a limited number of Java-based products. Alternatives to Java have
been announced by several companies, including Microsoft. If Java is not adopted
widely, or is adopted more slowly than anticipated, there could be a material
adverse effect on our business.
We will use encryption technology in some of our future products to
provide security for the exchange of confidential information. Encryption
technologies have been breached in the past. There can be no assurance that
there will not be a compromise or breach of our security technology. If any such
breach were to occur, it could have a material adverse effect on our business.
RISKS OF USING RETAIL DISTRIBUTION CHANNELS
A significant portion of our sales are made through retail distribution
channels. Demand in these channels fluctuate based on customer demand. Our
retail distributors also carry the products of competitors. Some of our retail
distributors have limited capital to invest in inventory. Their decision to
purchase our products is based on a combination of demand for our products, our
pricing, terms and special promotions we offer.
Our net revenues and earnings may be affected by a practice called
"channel fill." Channel fill occurs when a distributor purchases more products
than it expects to sell in anticipation of price changes, sales promotions or
incentives. After we announce a new version or new product and prior to the date
of product availability, distributors, dealers and end users often delay
purchases, cancel orders or return products in anticipation of the availability
of the new version or product. We try to mitigate the negative effect of this
pattern by deferring recognition of revenue associated with distributors' and
resellers' inventories that are in excess of appropriate levels. However,
channel fill may still affect our net revenues, particularly during periods
where we announce several new products at the same time.
When we introduce new versions of our products, our distributors return
their inventories of the older versions. Our return policy allows our
distributors, with some limitations, to return products in exchange for credit
or toward new products. Similarly, end users may return products through dealers
and distributors within a reasonable period from the date of purchase for a full
refund. Retailers may then return the older versions to us. We
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estimate and maintain reserves for product returns. However, future product
returns could exceed our reserves, and this could have a material adverse effect
on our business.
RISKS OF RELIANCE ON VARS & ISVS
A part of our strategy is to embed and bundle our technology in the
products offered by value-added-resellers, or VARs and independent software
vendors, or ISVs, such as Cisco Systems, Inc., Hewlett-Packard Company, Hitachi,
Microsoft Corporation, Netscape, Novell, Inc., and Oracle Corporation. In the
past, a small number of VAR and ISV customers accounted for a significant
percentage of VisiBroker or enterprise product sales and revenue.
For these sales, the pricing and discount terms and conditions of our
license agreements are negotiated and vary among our customers. Most of our
license agreements with these customers are non-exclusive and do not require
them to recommend or offer our products exclusively. Many of our agreements do
not require our customers to make a minimum number of purchases. We have
virtually no control over the shipping dates or volumes of systems shipped by
our customers. Many of the markets for the VAR and ISV products are new and
evolving. Therefore, we cannot predict that these customers will purchase our
technology for their products in the future. If we are not successful with our
current customers or in continuing to secure license agreements with additional
VARs and ISVs on profitable terms, our business, financial condition and results
of operations could be materially adversely affected.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND SALES
A substantial portion of our revenue is from international sales. There
are inherent risks in doing business internationally. Some of these risks
include the following:
- general economic conditions in each country;
- seasonal reductions in business activity during the
summer months in Europe and certain other parts of the
world;
- the difficulty of managing an organization spread over
various countries;
- fluctuations in currency exchange rates;
- longer payment cycles in certain countries;
- export restrictions, tariffs and other trade barriers;
- changes in regulatory requirements;
- compliance with different laws and regulations;
- overlap of different tax structures; and
- political instability.
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One or more of these risk factors could have a material adverse effect
on our future international operations and, consequently, on our business,
operating results and financial condition. In addition, our subsidiaries
generally operate in local currencies, and their results are translated monthly
into U.S. dollars. If the value of the U.S. dollar increases significantly
relative to foreign currencies, our business, operating results and financial
condition could be materially adversely affected.
RISKS OF SOFTWARE DEFECTS AND LIABILITY CLAIMS
Software products occasionally contain errors or defects, especially
when they are first introduced or when new versions are released. We have not
experienced any substantial problems to date from potential defects and errors.
We routinely test our new products and new versions for defects and errors. We
cannot be certain, however, that our products are completely free of defects and
errors. The discovery of a defect or error in a new version or product may
result in the following:
- delayed shipping of the product;
- immediate loss of revenue;
- delay in market acceptance;
- diversion of development resources;
- damage to our reputation; and
- increased service and warranty costs.
These factors could materially and adversely affect our business, operating
results and financial condition.
Most of our license agreements contain provisions designed to limit our
liability for potential product liability claims. It is possible, however, that
these provisions may not protect us because of existing or future federal, state
or local laws or ordinances or judicial decisions. A successful product
liability claim for large damages brought against us could have a material
adverse effect on our business, operating results and financial condition.
RISKS OF ANTI-TAKEOVER PROVISIONS
In December 1991, we implemented a stockholder rights plan to protect
our stockholders in the event of a proposed takeover that has not been
recommended or approved by our Board of Directors. Our stockholder rights plan
and certain provisions of our Certificate of Incorporation may discourage or
prevent an actual or potential change in control of Inprise even if such a
change in control would be beneficial to our stockholders. These limitations may
limit our stockholders' ability to approve transactions that they may deem to be
in their best interests. In addition, our Board of Directors has the authority
to fix the rights and preferences of, and issue shares of, preferred stock
without action by our stockholders. This may have the effect of delaying or
preventing a change in control of Inprise.
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Under our stockholder rights plan, each share of our outstanding common
stock has attached to it one preferred share purchase right. Each preferred
share purchase right entitles the holder, under certain circumstances, to
purchase shares of our common stock at a 50% discount from its then current
market price. The preferred share purchase rights are redeemable at a nominal
price and expire in 2001.
POTENTIAL DILUTIVE EFFECT OF CONVERSION AND ADDITIONAL ISSUANCE OF SERIES C
PREFERRED STOCK ("SERIES C STOCK")
Each share of our Series C Stock is convertible, at the option of the
holder, after a two year holding period, or, automatically, when the business
liquidates or in the event of a transaction such as the merger. The shares are
convertible, based on a fixed conversion ratio, into fully paid and
non-assessable shares of common stock. The conversion ratio is subject to
adjustments for stock splits or other capital reorganizations. As of June 30,
2000, 6,720,430 shares of our common stock were reserved for issuance upon the
conversion of the Series C Stock to shares of common stock.
RISKS ASSOCIATED WITH POTENTIAL BUSINESS COMBINATIONS
As a part of our business strategy, we may make acquisitions of
businesses, products or technologies in the future. We will review potential
acquisition prospects with the following goals in mind:
- complement our existing product offerings;
- augment our market coverage;
- enhance our technological capabilities; or
- offer growth opportunities.
There may be substantial costs associated with acquisitions including
the potential dilution to our earnings per share, the incurrence or assumption
of debt, the assumption of contingent liabilities, and the amortization of
expenses related to goodwill and other intangible assets. Acquisitions entail
numerous risks, including difficulty in the assimilation of operations,
technologies and products. Acquisitions divert the attention of management from
other business concerns. An acquisition in a new area risks entering markets
where we have no or limited prior experience as well as potential loss of key
employees of the acquired organization. Any one of these risks if realized,
could negatively impact our operating results and/or the market price of our
common stock. We cannot be certain of our ability to successfully integrate any
businesses, products, technologies or personnel acquired. Failure to do so in an
acquisition could negatively affect our business, financial condition and
operating results.
IMPACT OF YEAR 2000 DATE TRANSITION
This section is a Year 2000 Readiness Disclosure pursuant to the Year
2000 Information and Readiness Disclosure Act of 1998.
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<PAGE> 28
We currently know of no significant year 2000-related failures
occurring in either our products or our internal systems as a result of the date
change from December 31, 1999 to January 1, 2000.
Costs for our efforts to address Year 2000 readiness have not been
substantial and are largely absorbed within our existing engineering
expenditures. To date, these costs have not been reported separately and have
not been material. Our estimate of future costs is based on expectations of
future events. The actual costs could differ materially from our estimates.
There can be no assurance that our expectations will be accurate, and
substantial increases in these costs could have a material adverse effect on our
business.
We generally believe that the most of our newly introduced products are
Year 2000 ready. Some of our older products are not Year 2000 ready or will not
be tested. Where possible, we encouraged our customers to migrate to current
product versions. However, despite our analysis and review, it is possible that
our products may contain undetected errors or defects associated with Year 2000
date functions, that may result in material costs. Furthermore, use of our
products in connection with other products, that may or may not be Year 2000
ready, including hardware, software and firmware, may result in the inaccurate
exchange of date data resulting in performance issues and system failures. To
the extent that our products or third party products that include our products,
prove not to be Year 2000 ready or in the event of disputes with customers
regarding whether our products are ready, our business, results of operations
and financial condition could be materially adversely affected.
RISK OF NATURAL DISASTERS
Our corporate headquarters, including most of our research and
development operations, are located in Scotts Valley, California, an area known
for significant seismic activity. Seismic activity, such as a major earthquake,
could have a material adverse effect on our business, financial condition and
operating results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risks relating to our operations result primarily from changes
in interest rates and foreign exchange rates, as well as credit risk
concentrations. To address the foreign exchange rate risk we enter into various
hedging transactions as described below. We do not use financial instruments for
trading purposes.
FOREIGN CURRENCY RISK
We conduct business in a number of foreign countries. We have
established a foreign currency program utilizing foreign currency forward
exchange contracts to minimize intercompany balances and other monetary assets
denominated in foreign currencies. A forward foreign exchange contract obligates
us to exchange predetermined amounts of specified foreign currencies at
specified exchange rates on specified dates or to make an equivalent U.S. Dollar
payment equal to the value of such exchange. We do not use foreign currency
forward exchange contracts for trading purposes. The goal of the program is to
offset the earnings impact of foreign denominated balances. At the end of a
given month, the foreign denominated balances and the forward exchange contracts
are marked-to-market, and unrealized gains and losses are included in current
period net income.
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<PAGE> 29
During the six months ended June 30, 2000, we recorded foreign exchange
losses on intercompany receivables due to the dollar strengthening against
certain foreign currencies. To the extent that Inprise has entered into a
hedging contract for the receivables denominated in these currencies, the losses
have been offset by our foreign exchange contracts. We cannot be certain that
these currency trends will continue. If the U.S. dollar continues to strengthen
against these or other foreign currencies, we may experience foreign exchange
losses to the extent that we have not limited our exposure with foreign currency
forward exchange contracts. Future foreign exchange losses could have a material
adverse effect on our operating results and cash flows.
The table below sets forth information about financial instruments,
that are comprised of foreign currency forward exchange contracts outstanding as
of June 30, 2000. The information is provided in U.S. Dollar equivalent amounts,
as presented in our financial statements. For foreign currency forward exchange
contracts, the table presents the notional amounts (at the contract exchange
rates) and the weighted average contractual foreign currency exchange rates. All
instruments mature within a period of twelve months or less.
<TABLE>
<CAPTION>
JUNE 30, 2000
------------------------------------------------------
NOTIONAL AVERAGE ESTIMATED
AMOUNT CONTRACT RATE FAIR VALUE
-------- ------------- ----------
<S> <C> <C> <C>
Foreign currency forward exchange contracts:
Australian Dollar $ 6,337,982 1.67 (7,977)
Canadian Dollar 1,192,089 1.48 (3,301)
Italian Lira 785,249 2033.3 (8,489)
Hong Kong Dollar 1,968,803 7.80 1,386
Dutch Guilder (3,499,111) 2.31 31,240
New Taiwan Dollar 1,908,607 30.85 10,517
Singapore Dollar 5,916,507 1.73 (21,904)
Others (270,933) (11,370)
--------- ---------
Total $14,339,193 $ (9,898)
============= ===========
</TABLE>
INTEREST RATE RISK
Our exposure to market risk for changes in interest rates relates
primarily to our investment portfolio. We do not use derivative financial
instruments in our investment portfolio. We place our cash equivalents and
short-term investments in a variety of financial instruments such as commercial
paper. Our investment policy limits the amount of our credit exposure to any one
financial institution or commercial issuer.
We mitigate default risks by investing in only investment grade credit
quality securities and by positioning our portfolio to respond appropriately to
a significant reduction in the credit rating of any investment issuer. Our
portfolio includes only marketable securities with active secondary and resale
markets to ensure portfolio liquidity.
We have no interest rate exposure from rate changes for our fixed rate
long-term debt obligations. We primarily enter into debt and capital lease
obligations to finance capital expenditures. Such debt and capital lease
obligations have a fixed rate of interest.
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<PAGE> 30
The table below presents principal (or notional) amounts (in thousands)
and related weighted average interest rates by year of maturity for our
investment portfolio and debt obligations.
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 THEREAFTER TOTAL
---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Cash equivalents............... $ 238,522 $ 238,522
Fixed rate................... 5.8% 5.8%
Short-term investments......... $ 5,428 $ 5,428
Fixed rate................... 1.0% 1.0%
Long-term debt:
Debt........................... $ 125 $180 $200 $222 $247 $ 8,094 $ 9,068
Fixed Rate................... 10.75% 10.75%
</TABLE>
The short-term investment balances include required compensating balance
accounts invested in Japanese securities.
CREDIT RISKS
Our financial instruments that are exposed to concentrations of credit
risk consists primarily of cash, cash equivalents, investments and trade
receivables. We position our cash equivalents in high quality securities placed
with major banks and financial institutions. With respect to receivables, our
risk is limited due to the large number of customers and their dispersion across
geographic areas. We perform periodic credit evaluations of our customers'
financial condition and generally do not require collateral. Currently, one
customer located in the United States accounts for approximately 14% of net
accounts receivable. No other single group or customer represents greater than
10% of net accounts receivable.
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<PAGE> 31
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information with respect to this item is incorporated by reference to
Part I - Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations-Legal Proceedings, of this Quarterly Report.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
AMENDMENT OF RIGHTS AGREEMENT
On May 15, 2000, Inprise Corporation, Corel Corporation, a corporation
organized under the laws of Canada ("Corel"), and Carleton Acquisition Co., a
Delaware corporation and a wholly owned subsidiary of Corel ("Corel Sub"),
entered into a Termination Agreement and Release (the "Termination Agreement"),
pursuant to which the Merger Agreement (the "Merger Agreement"), dated as of
February 6, 2000, by and among Inprise, Corel and Corel Sub, the Stock Option
Agreement, dated as of February 6, 2000, between Inprise and Corel, pursuant to
which Corel granted to Inprise an option to acquire up to 13,000,000 of the
shares of common stock of Corel, and the Stock Option Agreement, dated as of
February 6, 2000, between Inprise and Corel, pursuant to which Inprise granted
to Corel an option to acquire up to 12,000,000 of the shares of common stock of
Inprise (both such Stock Option Agreements, the "Stock Option Agreements"), were
terminated and canceled by mutual agreement without payment of any termination
fees. As a result of the Termination Agreement, the proposed merger between
Inprise and Corel was terminated and Inprise and Corel agreed to release each
other from all liabilities arising from, relating to or in connection with the
Merger Agreement and the Stock Option Agreements.
As previously reported, effective as of February 6, 2000, the Rights
Agreement, dated as of December 20, 1991 (the "Rights Agreement"), between
Inprise, and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company and the successor in interest to Manufacturers Hanover Trust
Company of California, was amended ("Amendment No. 1") to, among other things,
prevent the execution of the Merger Agreement and the Stock Option Agreements
from causing a separation of the rights under the Rights Agreement. As the
Merger Agreement and the Stock Option Agreements have now been terminated,
effective as of June 28, 2000, the Rights Agreement was amended ("Amendment No.
2") to rescind the changes made to the Rights Agreement by Amendment No. 1.
Amendment No. 2 also amended the Rights Agreement to eliminate the provisions
which required the concurrence of the Continuing Directors (as defined in the
Rights Agreement) in certain circumstances and the provisions otherwise
referring to Continuing Directors. In addition, Amendment No. 2 amended the
Rights Agreement to change certain provisions relating to the obligations of the
Rights Agent. Amendment No. 2 was filed as Exhibit 8 to Inprise's Form 8-A/A
which was filed with the SEC on June 29, 2000.
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<PAGE> 32
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of Inprise stockholders held on July 25, 2000 at
Inprise's corporate headquarters at 100 Enterprise Way, Scotts Valley,
California (the "Annual Meeting") the following matters were voted upon:
1) The following individuals were elected to serve as Class II directors on
the Inprise Board of Directors:
<TABLE>
<CAPTION>
Nominee: For Withheld
-------- ----------- -----------
<S> <C> <C>
Dale L. Fuller 49,530,629 2,804,008
William K. Hooper 49,736,109 2,598,528
</TABLE>
In addition to the two Class II directors elected at the Annual Meeting, the
following individuals continued in their term of office as directors following
the Annual Meeting:
Class III Directors Serving a Three-year Term Expiring at the 2001 Annual
Meeting:
William F. Miller (Chairman)
David Heller
Class I Directors Serving a Three-year Term Expiring at the 2002 Annual
Meeting:
Robert H. Kohn (Vice-Chairman)
Robert Dickerson
The following additional proposals were considered at the Annual Meeting and
were approved by the vote of the stockholders, in accordance with the tabulation
shown below.
2) Proposal to approve an amendment to the Inprise Corporation 1997 Stock
Option Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 2,000,000 shares.
<TABLE>
<CAPTION>
For Against Abstained
---------- ---------- ---------
<S> <C> <C>
46,958,106 5,173,713 202,818
</TABLE>
3) Proposal to approve an amendment to the Inprise Corporation 1999 Employee
Stock Purchase Plan, to reserve an additional 500,000 shares of Common
Stock thereunder.
<TABLE>
<CAPTION>
For Against Abstained
---------- ---------- ----------
<S> <C> <C>
50,903,211 1,648,640 148,105
</TABLE>
4) Proposal to ratify the selection of PricewaterhouseCoopers LLP as the
independent auditors for Inprise for the calendar year ending December 31,
2000.
<TABLE>
<CAPTION>
For Against Abstained
--------- -------- ---------
<S> <C> <C>
51,903,211 312,505 118,921
</TABLE>
There were no broker non-votes cast at the Annual Meeting.
ITEM 5. OTHER INFORMATION.
EXPIRATION OF WAIVER OF CERTAIN PROVISIONS OF INVESTOR RIGHTS AGREEMENT
WITH MICROSOFT
As previously reported, on April 7, 2000, Inprise agreed to waive
certain provisions of an Investor Rights Agreement, dated as of June 7, 1999,
between Inprise and Microsoft Corporation. The waiver related to an agreement
between Microsoft and the Antitrust Division of the United States Department of
Justice in connection with the proposed merger
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<PAGE> 33
between Inprise and Corel. Upon termination of the proposed merger with Corel,
the waivers granted by Inprise to Microsoft expired in accordance with their
terms.
REVISED COMPENSATORY PLAN FOR INPRISE'S INTERIM PRESIDENT AND CEO
On June 29, 2000, upon recommendation of its Compensation Committee,
the Inprise Board of Directors approved a new compensatory plan to compensate
Dale L. Fuller for serving as Inprise's Interim President and Chief Executive
Officer. Pursuant to such arrangement, commencing on July 1, 2000, Mr. Fuller
receives a base salary of $50,000 per month, plus a bonus of up to 100% of such
base salary. The bonus is based upon a number of factors and is paid at the
discretion of the Compensation Committee.
ADDITIONS TO MANAGEMENT TEAM
Since April 1, 2000, Inprise has enhanced its existing management team
with the hiring of the following individuals to the positions listed adjacent to
their names:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Douglas Barre Senior Vice President and Chief Operating Officer
Keith E. Gottfried Senior Vice President, General Counsel and Corporate
Secretary
Edward Shelton Senior Vice President - Business Development
Roger A. Barney Senior Vice President and Chief Administrative Officer
Frank Slootman Vice President and General Manager - Software Products
</TABLE>
Each of the above-named individuals has executed an employment
agreement with Inprise. A copy of each such employment agreement has been filed
as an Exhibit to this Quarterly Report.
LOAN TO DOUGLAS BARRE
In connection with hiring Douglas Barre to serve as Inprise's Senior
Vice President and Chief Operating Officer, on June 26, 2000, Inprise extended a
loan to Mr. Barre and his spouse in the amount of $1,000,000 for the purpose of
purchasing a residence. The loan is secured by the purchased residence and bears
interest at a fixed rate of 7% per annum. The loan will be forgiven over a five
year period, provided that Mr. Barre remains employed by Inprise over this
five-year period. A copy of the secured promissory noted executed on June 26,
2000 by Mr. Barre and his spouse has been filed as Exhibit 10.9 to this
Quarterly Report.
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<PAGE> 34
TERMINATION OF DISCUSSIONS TO DISPOSE OF INTERBASE(R) PRODUCT LINE
On July 28, 2000, Inprise announced that it had terminated negotiations
with Ann Harrison regarding the sale of the InterBase product line to a start-up
venture led by Ms. Harrison. Inprise is not currently in discussions with any
party, and presently has no plans, with respect to the disposition of the
InterBase product line.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
The following exhibits are filed as part of, or incorporated by reference into,
this Quarterly Report.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
4.1 Amendment No. 2, dated as of June 28, 2000, to the
Rights Agreement, dated as of December 20, 1991,
between Inprise and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (incorporated by
reference to Exhibit 8 to Amendment No. 2 to
Inprise's Registration Statement on Form 8-A filed
with the Commission on June 28, 2000).
10.1 Termination Agreement and Release, dated as of May
15, 2000, by and among Inprise Corporation, Corel
Corporation and Carleton Acquisition Co.
(incorporated by reference to Exhibit 99.1 to
Inprise's Current Report on Form 8-K filed with the
Commission on May 18, 2000).
10.2 Written description of compensatory plan for Dale L.
Fuller, approved by the Inprise Board of Directors
on June 29, 2000 (included in Item 5 - Other
Information of this Quarterly Report).++
10.3 Letter Agreement between Frederick A. Ball and
Inprise Corporation dated as of May 30, 2000
(amending Mr. Ball's employment agreement with
Inprise Corporation dated as of September 16,
1999).* ++
10.4 Employment Agreement between Douglas Barre and
Inprise Corporation dated as of May 17, 2000.* ++
10.5 Employment Agreement between Keith E. Gottfried and
Inprise Corporation dated as of May 16, 2000.* ++
</TABLE>
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<PAGE> 35
<TABLE>
<S> <C>
10.6 Employment Agreement between Edward Shelton and
Inprise Corporation dated as of May 15, 2000.* ++
10.7 Employment Agreement between Roger A. Barney and
Inprise Corporation dated as of June 5, 2000.* ++
10.8 Employment Agreement between Frank Slootman and
Inprise Corporation dated as of July 7, 2000.* ++
10.9 Secured Promissory Note, dated June 26, 2000, from
Douglas Barre and his spouse to Inprise
Corporation.*++
27.1 Financial Data Schedule*
</TABLE>
--------------------
* Filed herewith.
++ Management contract or compensatory plan or arrangement.
A copy of any exhibit will be furnished (at a reasonable cost) to any
stockholder of Inprise upon receipt of a written request. Such request should be
sent to Inprise Corporation, 100 Enterprise Way, Scotts Valley, California
95066-3249, Attention: Corporate Secretary.
B. Reports on Form 8-K
1. On May 18, 2000, Inprise filed a Current Report on Form 8-K with
the Securities and Exchange Commission. The purpose of the filing was to report
that Inprise and Corel Corporation had entered into a Termination Agreement on
May 15, 2000 to mutually terminate the merger that had previously been agreed to
by both parties.
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<PAGE> 36
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.
INPRISE CORPORATION
(Registrant)
Date: August 11, 2000
/s/ FREDERICK A. BALL
--------------------------------------
Frederick A. Ball
Senior Vice President - Finance and
Chief Financial Officer
(Principal Financial Officer and Duly
Authorized Officer)
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<PAGE> 37
Exhibit 27 - Financial Data Schedule
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INPRISE CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
35
