<PAGE>
UNITED STATES
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 quarterly period ended March 31, 1996
or
[ ] Transition report pursuant to Section 13 or 15(d)of the Securities Exchange
Act of 1934
For the transistion period from ____________ to ____________
Commission File Number: 0-22712
-----------
VERITAS SOFTWARE CORPORATION
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2823068
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1600 Plymouth Street, 94043
Mountain View, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 415/335-8000
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. X YES NO
Indicate the number of shares outstanding of each of the registrant's classes of
Common Stock as of March 31, 1996:
Common Stock, No Par Value 8,874,476 shares
<PAGE>
VERITAS SOFTWARE CORPORATION
INDEX
-----
PART I. FINANCIAL INFORMATION Page no.
- - ------------------------------ --------
Item 1. Financial Statements
Condensed Balance Sheets at March 31, 1996
and December 31, 1995 3
Condensed Statements of Income for the three
months ended March 31, 1996 and 1995 4
Condensed Statements of Cash Flows for the
three months ended March 31, 1996 and 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VERITAS Software Corporation
Condensed Balance Sheets
(IN THOUSANDS)
March 31, December 31,
1996 1995
--------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . $ 3,745 $ 2,345
Short-term investments. . . . . . . . . . 27,870 27,409
Accounts receivable, net. . . . . . . . . 3,034 2,003
Notes receivable, net . . . . . . . . . . 463 --
Prepaid expenses. . . . . . . . . . . . . 577 391
------- -------
Total current assets. . . . . . . . . 35,689 32,148
Property and equipment, net. . . . . . . . . 2,231 2,163
Notes and other assets . . . . . . . . . . . 287 697
------- -------
$38,207 $35,008
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . $ 897 $ 653
Other accrued liabilities . . . . . . . . 1,904 2,228
Deferred revenue. . . . . . . . . . . . . 1,404 1,339
Current obligations under capital leases. 67 116
------- -------
Total current liabilities . . . . . . 4,272 4,336
Accrued rent . . . . . . . . . . . . . . . . 705 594
Shareholders' equity:
Common stock. . . . . . . . . . . . . . . 67,514 66,976
Accumulated deficit . . . . . . . . . . . (34,284) (36,898)
------- -------
Total shareholders' equity. . . . . . 33,230 30,078
------- -------
$38,207 $35,008
------- -------
------- -------
See accompanying notes to condensed financial statements.
3
<PAGE>
VERITAS Software Corporation
Condensed Statements of Income
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
March 31,
------------------
1996 1995
------ ------
User license fees. . . . . . . . . . . . . . $ 6,693 $ 4,396
Source license fees. . . . . . . . . . . . . 215 262
Services and training. . . . . . . . . . . . 421 488
Porting. . . . . . . . . . . . . . . . . . . 135 502
------- -------
Net revenues. . . . . . . . . . . . . . . 7,464 5,648
Operating expenses:
Cost of revenues. . . . . . . . . . . . . . 598 803
Product development . . . . . . . . . . . . 2,048 1,320
Selling, general and administrative . . . . 2,193 1,962
------- -------
Total operating expenses. . . . . . . . . 4,839 4,085
------- -------
Operating income . . . . . . . . . . . . . . 2,625 1,563
Interest income, net. . . . . . . . . . . . 380 263
Gain on sale of ViSTA operations. . . . . . - 1,726
------- -------
Income before taxes. . . . . . . . . . . . . 3,005 3,552
Provision for income taxes. . . . . . . . . 391 249
------- -------
Net income . . . . . . . . . . . . . . . . . $ 2,614 $ 3,303
------- -------
------- -------
Net income per share . . . . . . . . . . . . $0.28 $0.37
------- -------
------- -------
Shares used in per share computation . . . . 9,419 8,786
------- -------
------- -------
See accompanying notes to condensed financial statements.
4
<PAGE>
VERITAS Software Corporation
Condensed Statements of Cash Flows
(Unaudited)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
Three Months Ended
March 31,
------------------
1996 1995
------ ------
OPERATING ACTIVITIES
Net income. . . . . . . . . . . . . . . . $ 2,614 $ 3,303
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization . . . . . . 374 397
Accrued rent. . . . . . . . . . . . . . . 111 -
Gain on sale of ViSTA operations. . . . . - (1,726)
Changes in operating assets and
liabilities:
Accounts receivable . . . . . . . . . (1,031) 360
Prepaid expenses . . . . . . . . . . (186) (279)
Other assets. . . . . . . . . . . . . (3) (8)
Accounts payable . . . . . . . . . . 244 228
Other accrued liabilities . . . . . . (324) (632)
Deferred revenue. . . . . . . . . . . 65 (210)
-------- --------
Net cash provided by operating
activities. . . . . . . . . 1,864 1,433
INVESTING ACTIVITIES
Purchases of short-term investments, net (461) (2,500)
Purchase of equipment. . . . . . . . . . (442) (1,064)
Proceeds from sale of ViSTA operations. . - 2,172
Payment received on note. . . . . . . . . 188 -
Issuance of note to ACSC. . . . . . . . . (238) -
-------- --------
Net cash used in investing
activities. . . . . . . . . (953) (1,392)
FINANCING ACTIVITIES
Principal payments under capital lease
obligations . . . . . . . . . . . . (49) (83)
Proceeds from sale of common stock, net . 538 248
-------- --------
Net cash provided by financing
activities. . . . . . . . . 489 165
-------- --------
Net increase in cash and cash equivalents. . 1,400 206
Cash and cash equivalents at beginning of
period . . . . . . . . . . . . . . . . 2,345 8,686
-------- --------
Cash and cash equivalents at end of period . $ 3,745 $ 8,892
-------- --------
-------- --------
See accompanying notes to condensed financial statements.
5
<PAGE>
VERITAS Software Corporation
Notes to Condensed Financial Statements
March 31, 1996
(Unaudited)
1. Basis of presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. The following information should be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1995.
2. Use of estimates.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. Net income per share.
Net income per share has been computed using the weighted average number
of common shares outstanding, after giving effect to dilutive common stock
equivalents. Common stock equivalents consist of the dilutive shares issuable
upon the exercise of stock options and warrants (using the treasury stock
method).
4. Acquisition of ACSC.
On April 1, 1996, the Company purchased for cash 100% of the capital
stock of Advanced Computing Systems Company ("ACSC"). ACSC develops media
management software. The Company will pay the outstanding liabilities of ACSC
and pay the shareholder of ACSC an additional amount of cash such that the total
liabilities and cash paid to the shareholder equals $3,000,000. The Company has
agreed to pay the shareholder of ACSC a royalty on certain product revenue
derived from the assets acquired. The royalty will apply to revenue recognized
according to the Company's standard revenue recognition policy starting the
fifth quarter after the quarter in which the acquisition is completed.
Royalties will be payable over five years up to an amount where total royalties
paid, plus the initial cash purchase of $3,000,000, equals $5,500,000. The
Company is expecting that a portion, yet to be determined, of the purchase price
will be allocated to in-process research and development which will be expensed
in the second quarter of 1996.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. The following information should be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1995.
The following discussion contains forward-looking statements. There are
certain important factors that could cause results to differ materially from
those in the forward-looking statements contained in the following discussion.
Among such important factors are (i) the Company's timely development and market
acceptance of new non-OEM products, (ii) the timely creation of versions of the
Company's products for the Microsoft Windows NT operating system, (iii) the
impact of Windows NT and other operating systems on the UNIX market which the
Company's current products are dependent, (iv) the reliance on OEMs to continue
porting and shipping the Company's products, (v) the ability of the Company to
successfully expand the distribution of its products through new and unproven
channels, including resellers, integrators, distributors and end-users, (vi) the
uncertainty of the labor market and local regulations in India, (vii) the
Company's ability to hire and retain research and development personnel with
appropriate skills in a highly competitive Santa Clara Valley labor market, and
(viii) such risks and uncertainties as are detailed from time to time in the
Company's SEC reports and filings, including the Form 10-K for the 1995 fiscal
year.
RESULTS OF OPERATIONS
NET REVENUES
Net revenues increased from $5,648,000 in the three months ended March
31, 1995 to $7,464,000 in the three months ended March 31, 1996, an increase of
$1,816,000, or 32%. This increase reflects primarily a growth in user license
fees. ViSTA operations contributed net revenues of $677,000 in the first
quarter of 1995, compared to no revenue in the same quarter of 1996. ViSTA was
sold to CenterLine on March 31, 1995. Excluding ViSTA, net revenues increased
$2,493,000, or 50%, in the first three months of 1996 compared to the same
period of 1995.
USER LICENSE FEES
User license fees increased from $4,396,000 in the first quarter of 1995
to $6,693,000 for the same period of 1996, an increase of $2,297,000, or 52%.
This increase primarily reflects the growth in the volume of sales by OEMs, new
OEMs commencing to ship product and an increase in the sales of shrink-wrap
versions of the Company's products in non-OEM sales channels, including
FirstWatch high availability products acquired from Tidalwave in April 1995.
There can be no assurance that user license fees will increase at the same rate
in the future since the Company has limited experience in the non-OEM channel
and there is no assurance that the OEMs will continue to license the Company's
products. ViSTA user license fees were $522,000 in the first quarter of 1995,
compared to no license fees in the same period of 1996.
SERVICES AND TRAINING
Services and training revenue, primarily derived from annual maintenance
agreements and training, decreased from $488,000 in the first quarter of 1995 to
$421,000 in the same period of 1996, a decrease of $67,000, or 14%. ViSTA
services and training revenue was $120,000 in the first three months of 1995,
compared to no service and training revenue in the first three months of 1996.
Excluding ViSTA,
7
<PAGE>
service and training revenues increased $53,000, or 14%, in the first three
months of 1996 compared to the same period of 1995.
PORTING
Porting revenue decreased from $502,000 in the first quarter of 1995 to
$135,000 in the first quarter of 1996, a decrease of $367,000, or 73%. The
Company generally does not seek porting or any other custom work, but the
Company does enter into agreements which it believes would result in useful
extensions to current products and result in the growth of user license fees.
COST OF REVENUES
Cost of revenues includes cost of porting and other non-recurring
engineering services, the costs of providing support services to the Company's
customers, and the costs associated with user and source license fees. Cost
of revenues decreased from $803,000 in the quarter ended March 31, 1995 to
$598,000 in the quarter ended March 31, 1996, an decrease of $205,000, or 26%,
primarily due to a decrease in porting activities. Cost of porting decreased
from $430,000 in the first quarter of 1995 to $126,000 in the same period of
1995, a decrease of $304,000, or 71%. This decrease was due to the completion
of projects. Cost of license fees increased $81,000 in the first quarter of
1996 compared to the same period of 1995 primarily due of higher sales volumes
and resulting royalties paid to third parties.
PRODUCT DEVELOPMENT
Product development increased from $1,320,000 in the quarter ended
March 31, 1995 to $2,048,000 in the quarter ended March 31, 1995, an increase
of $728,000, or 55%. This increase in product development expenses were
primarily attributable to increased headcount related to new product
development activities. Total product development headcount increased from 40
at March 31, 1995 to 63 at March 31, 1996, including 16 contract employees
based in India as part of the Company's development agreement with Frontier
Software Development (India) Pvt. Ltd. ("Frontier").
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased from $1,962,000
in the quarter ended March 31, 1995 to $2,193,000 in the quarter ended March
31, 1996, an increase of $231,000, or 12%. The increases during these periods
were primarily a result of an increase in the number of sales representatives
and marketing personnel as the Company continues to invest in the development
of non-OEM channels. Selling, general and administrative expenses as a
percentage of total net revenues decreased from 35% in the first quarter of
1995 to 29% in the first quarter of 1996. This decrease was primarily a
result of increased revenues from user license fees, which did not require a
corresponding increase in selling, general and administrative expenses. Since
a large portion of the Company's sales and marketing efforts for its storage
management products is incurred by OEMs, the Company was able to increase
revenues from user license fees without proportionately increasing selling,
general and administrative expenses. However, the Company expects selling,
general and administrative expenses will increase as a percentage of revenues
as non-OEM revenues become a larger percentage of the Company's revenues.
INTEREST INCOME
Interest income increased for $263,000 in the first quarter of 1995 to
$380,000 in the same quarter of 1996, an increase of $117,000, or 44%. This
increase reflects higher average investment balances through the first three
months of 1996, compared to the same period of 1995.
PROVISION FOR INCOME TAXES
Provision for income taxes increased from $249,000 in the quarter ended
March 31, 1995 to $391,000 in the quarter ended March 31, 1996, an increase
of $142,000, or 57%. This increase reflects the
8
<PAGE>
Company's full utilization of its California loss carryforwards in the first
quarter of 1996. The Company had an effective tax rate of 13% in the quarter
ended March 31, 1996 compared to 7% for the same period of 1995.
The Company's tax rate reflects the benefits of federal loss and credit
carryforwards. The federal tax loss carryforwards expire in 1996 through 2009.
The federal tax laws impose limitations on loss and credit carryforwards in the
event that changes in a company's stock ownership over a three year period
exceed a specified threshold (a "Change in Ownership"). Based on its analysis
of prior stock ownership changes, the Company believes that it has not incurred
a Change of Ownership. However, stock ownership changes have caused the
percentage of stock ownership change to be slightly below that which results in
a Change of Ownership, and sales of shares by shareholders of record prior to
the initial public offering within three years after the initial public offering
may cause a Change of Ownership to occur. In addition, the Company's analysis
of its stock ownership changes, which requires numerous assumptions, is subject
to review by the Internal Revenue Service (the "IRS"). If the IRS were to
maintain that the Company incurred a Change of Ownership, the Company would be
subject to an annual limitation on the utilization of its net operating loss and
certain tax credit carryforwards. However, given the Company's current fair
market value, such limitation, if any, is not expected to have a significant
effect on the Company's utilization of its net operating loss and tax credit
carryforwards.
GAIN ON SALE OF VISTA OPERATION
During the quarter ended March 31, 1995, the Company recognized a gain
of $1,726,000 on the sale of substantially all of the operating assets of its
ViSTA testing tools operation. Under the terms of the agreement, the Company
received cash of $2,172,000 in 1995, a subordinated promissory note for $750,000
payable in quarterly installments over a two year period and the right to
receive royalties on ViSTA related products payable over three years.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity during the first quarters
of 1996 and 1995, respectively, have been equity financing from its 1993
initial public offering of Common Stock and cash generated from operating
activities. At March 31, 1996, The Company had $31,615,000 in cash, cash
equivalents and short-term investments, compared to $29,754,000 at December
31, 1995, an increase of $1,861,000, or 6%. At March 31, 1996, the Company
had working capital of $31,417,000 compared to $27,812,000 at December 31,
1995. The ratio of current assets to current liabilities at March 31, 1996
was 8.35 to one compared to 7.41 to one at December 31, 1995.
CASH FLOWS FROM OPERATING ACTIVITIES
Cash provided by operating activities was $1,864,000 for the three
months ended March 31, 1996 compared to $1,433,000 provided by operating
activities in the same period of 1995. Accounts receivable increased
$1,031,000 in the first quarter of 1996 compared to a decrease of $360,000 of
in the first quarter of 1995. These increases primarily reflect increased
income from operations in the first quarter of 1996 compared to the same
period of 1995.
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used for investing activities in the first quarter of 1996 was
$953,000, including $461,000 used for the net purchase of short-term
investments, $442,000 used for the purchase of equipment, and $238,000 used
for the issuance of a note to ACSC. The note issued to ACSC was applied to
the purchase price of ACSC in the second quarter of 1996. In the second
quarter of 1996, the Company paid the outstanding liabilities of ACSC and paid
the shareholder of ACSC an additional amount of cash such that the total
liabilities and cash paid to the shareholder equaled $3,000,000. Cash
provided by investing activities included $188,000 received on the note
receivable from Centerline. Expenditures for capital equipment are expected
to approximate $2,000,000 for 1996.
9
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
Cash provided by financing activities in the first quarter of 1996 was
$489,000, primarily provided by the exercise of stock options and the issuance
of common stock under the employee stock purchase plan.
The Company anticipates that its current cash, cash equivalents and
short-term investments will be sufficient to fund operating expenses through
fiscal 1997, including anticipated capital expenditures and future
acquisitions. The Company's long-term liquidity will be affected by numerous
factors, including its ability to generate cash from operations, its capital
requirements, future acquisitions and or dispositions, and the Company's
product development activities. The Company expects to continue to fund these
future activities from cash flows from operations and from future financings
as required. The Company may seek additional equity or debt financing to
satisfy future liquidity and capital resource needs, however, there can be no
assurance that capital will be available when needed or, if available, that
the terms for obtaining such funds will be favorable to the Company.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The exhibits listed in the accompanying exhibit index are filed or
incorporated by reference as a part of this Quarterly Report on Form 10-Q.
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter
ended March 31, 1996.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MOUNTAIN
VIEW, STATE OF CALIFORNIA.
VERITAS Software Corporation
-----------------------------
(Registrant)
May 8, 1996 /s/ Mark Leslie
- - ----------- ---------------
(Date) Mark Leslie President, Chief
Executive Officer and Director
May 8, 1996 /s/ Chris L. Dier
- - ----------- -----------------
(Date) Chris L. Dier
Vice President Finance, Chief
Financial Officer, Secretary and
Treasurer (principal financial
and accounting officer)
10
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT TITLE PAGE
- - ------- ------------- ----
2.01 Technology Acquisition Agreement dated March 31, 1995
between the Registrant and CenterLine Software, Inc.
(incorporated herein by reference to Exhibit 2.01 of the
Registrant's Report on Form 8-K filed with the Securities
and Exchange Commission (the "SEC") on April 14, 1995)
2.02 Agreement and Plan of Reorganization between the
Registrant and Tidalwave Technologies, Inc. dated April
10, 1995 (incorporated herein by reference to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995).
3.01 Registrant's Amended and Restated Articles of
Incorporation (incorporated herein by reference to Exhibit
3.01 of the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993 (the "1993 Form 10-K"))
3.02 Registrant's Amended Bylaws (incorporated herein by
reference to Exhibit 3.03 of the Registrant's Registration
Statement on Form S-1 (File No. 33-70726) filed with the
SEC on October 22, 1993, as amended (the "Form S-1"))
4.01 Form of Specimen Certificate for Registrant's Common Stock
(incorporated herein by reference to Exhibit 4.01 to the
Form S-1)
4.02 Registration Rights Agreement dated April 6, 1995 between
Registrant and certain Investors as defined therein
(incorporated by reference to Exhibit 4.02 of the
Registrant's Registration Statement on Form S-3 (file No.
33-95558) filed with the SEC on August 9, 1995, as amended
10.01 Registrant's 1985 Stock Option Plan, as amended, and
related documents (incorporated herein by reference to
Exhibit 10.01 to the Form S-1)
10.02 Registrant's 1991 Executive Stock Option Plan, as amended,
and related documents (incorporated herein by reference to
Exhibit 10.02 to the Form S-1)*
10.03 Registrant's 1993 Equity Incentive Plan, as amended, and
related documents (incorporated herein by reference to
Exhibit 10.03 of the Registrant's Quarterly report on Form
10-Q for the quarter ended June 30, 1995 filed with the
SEC on August 10, 1995 (the "Form 10-Q"))*
10.04 Registrant's 1993 Directors Stock Option Plan, as amended,
and related documents (incorporated herein by reference to
Exhibit 10.04 to the Form 10-Q)*
10.05 Registrant's 1993 Employee Stock Purchase Plan, as amended
(incorporated herein by reference to Exhibit 10.05 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 filed with the SEC on March 29, 1995
(the "Form 10-K"))*
10.06 Registrant's 401(k) Plan (incorporated herein by reference
to Exhibit 10.06 to the Form 10-Q)*
10.07 Form of Indemnification Agreement (incorporated herein by
reference to Exhibit 10.07 to the Form S-1)
10.08 Lease Agreement, dated September 29, 1989, by and between
the Registrant and Equitable American Property Company,
Inc., including amendments one through five thereto
(incorporated herein by reference to Exhibit 10.08 to the
Form S-1)
10.09 Office Building Lease, dated September 2, 1994, as
amended, by and between the Registrant and John Arriliaga
and Richard T. Peery regarding property located in
Mountain View, California (incorporated herein by
reference to Exhibit 10.09 of the Form 10-K)
10.10 Software Modification and Colabeling Agreement, dated
January 1, 1991, including amendments one through four
thereto, between the Registrant and UNIX System
Laboratories, Inc. (incorporated herein by reference to
Exhibit 10.11 to the Form S-1)**
10.11 Amendment No. 5, dated August 30, 1994, to the Software
Modification and Colabeling Agreement, between the
Registrant and Novell, Inc., as successor to UNIX System
Laboratories, Inc. (incorporated herein by reference to
Exhibit 10.11 of the Form 10-K)
10.12 Amendment No. 6, dated January 16, 1995, to the Software
Modification and
<PAGE>
Colabeling Agreement, between the Registrant and Novell,
Inc., as successor to UNIX System Laboratories, Inc.
(incorporated herein by reference to Exhibit 10.12 of the
Form 10-K)**
10.13 Agency Agreement, effective December 8, 1992, between the
Registrant and UNIX System Laboratories Pacific, Ltd.
(incorporated herein by reference to Exhibit 10.12 to the
Form S-1)**
10.14 Custom Computer Programming Agreement, dated as of April
30, 1992, between the Registrant and Frontier Software
Development (India) Pvt. Ltd. (the "Frontier Programming
Agreement") (incorporated herein by reference to Exhibit
10.13 to the Form S-1)**
10.15 Amendments one through seven to the Frontier Programming
Agreement (incorporated herein by reference to Exhibit
10.15 of the Form 10-K)**
10.16 Licensing Agreement, dated as of March 19, 1991, as
amended, between the Registrant and International Business
Machines Corporation (the "IBM Licensing Agreement")
(incorporated herein by reference to Exhibit 10.14 to the
Form S-1)**
10.17 Amendment No. 1, dated as of November 14, 1991, to the IBM
Licensing Agreement (incorporated herein by reference to
Exhibit 10.15 to the Form S-1)**
10.18 Amendment No. 2, dated October 21, 1992 to the IBM
Licensing Agreement (incorporated herein by reference to
Exhibit 10.16 to the Form S-1)**
10.19 Amendment No. 3, dated January 18, 1994 to the IBM
Licensing Agreement (incorporated herein by reference to
Exhibit 10.19 of the Form 10-K)**
10.20 Amendment No. 4, dated November 3, 1994 to the IBM
Licensing Agreement (incorporated herein by reference to
Exhibit 10.20 of the Form 10-K)**
10.21 Form of Source Distribution License Agreement
(incorporated herein by reference to Exhibit 10.18 to the
Form S-1)
10.22 Registrant's 1995 Chief Executive Officer Compensation
Plan (incorporated herein by reference to Exhibit 10.24 of
the Form 10-K)*
10.23 Registrant's 1995 Executive Officer Compensation Plan -
VSM (incorporated herein by reference to Exhibit 10.25 of
the Form 10-K)*
10.24 Registrant's 1995 Executive Officer Compensation Plan -
VISTA (incorporated herein by reference to Exhibit 10.26
of the Form 10-K)*
10.25 Development Agreement, dated as of July 8, 1995, between
the Registrant and Frontier Software Development (India)
Pvt. Ltd. (incorporated herein by reference to Exhibit
10.23 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994 filed with the SEC on
August 10, 1994, as amended)**
10.27 Financial Data Schedules 13
- - -------------------
* Management contract or compensatory plan or arrangements.
** Confidential treatment has been granted with respect to certain portions
of this document.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,745
<SECURITIES> 27,870
<RECEIVABLES> 3,372
<ALLOWANCES> 125
<INVENTORY> 0
<CURRENT-ASSETS> 35,689
<PP&E> 4,924
<DEPRECIATION> 2,693
<TOTAL-ASSETS> 38,207
<CURRENT-LIABILITIES> 4,272
<BONDS> 0
0
0
<COMMON> 67,514
<OTHER-SE> (34,284)
<TOTAL-LIABILITY-AND-EQUITY> 38,207
<SALES> 7,464
<TOTAL-REVENUES> 7,464
<CGS> 598
<TOTAL-COSTS> 598
<OTHER-EXPENSES> 4,241
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,005
<INCOME-TAX> 391
<INCOME-CONTINUING> 2,614
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,614
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.28
</TABLE>
