<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 DECEMBER 31, 1997
OR
- ----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 0-19690
BARRA, INC.
(Exact name of registrant as specified in its charter)
California 94-2993326
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2100 Milvia Street
Berkeley, California 94704-1113
(Address, including zip code, of principal executive offices)
(510) 548-5442
(Registrant's telephone number, including area code)
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 the registrant's Common Stock outstanding as of
December 31, 1997 was 13,544,879.
Exhibit Index is located on page 23.
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INDEX
<TABLE>
<CAPTION>
PAGE
PART I FINANCIAL INFORMATION NUMBER
<S> <C> <C>
Item 1 Financial Statements: 3
Consolidated Balance Sheets as of December 31, 1997 (unaudited)
and as of March 31, 1997 3
Unaudited Consolidated Statements of Income for the Three and
Nine Months Ended December 31, 1997 and December 31, 1996 4
Unaudited Consolidated Statements of Cash Flows for the Nine
Months Ended December 31, 1997 and December 31, 1996 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PAGE
PART II OTHER INFORMATION NUMBER
Item 1 Legal Proceedings 20
Item 4 Submission of Matters to a Vote of Security Holders 20
Item 5 Other Information 20
Item 6 Exhibits and Reports on Form 8-K 20
Signatures 22
Exhibit Index 23
</TABLE>
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
BARRA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 (UNAUDITED) AND MARCH 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31 March 31
1997 1997
---------------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $14,713,493 $25,831,118
Accounts receivable:
Subscription and other (Less allowance for doubtful
accounts of $138,022 and $135,732) 17,902,393 13,414,937
Asset Management 12,645,407 2,107,638
Related parties 3,098,476 3,017,164
Short-term investments 7,794,042 5,421,841
Note Receivable 3,514,578 5,419,474
Investments in municipal debt securities - available for sale 6,213,362 10,323,459
Prepaid expenses 2,232,096 400,187
- -----------------------------------------------------------------------------------------
Total current assets 68,113,847 65,935,818
- -----------------------------------------------------------------------------------------
INVESTMENTS IN UNCONSOLIDATED COMPANIES 2,139,203 445,644
FURNITURE AND EQUIPMENT:
Computer and office equipment 16,158,828 12,421,668
Furniture and fixtures 5,038,109 3,028,968
Leasehold improvements 6,670,352 2,549,737
- -----------------------------------------------------------------------------------------
Total furniture and equipment 27,867,289 18,000,373
Less accumulated depreciation and amortization (13,660,609) (9,739,519)
- -----------------------------------------------------------------------------------------
14,206,680 8,260,854
DEFERRED TAX ASSETS 1,303,947 1,038,374
COMPUTER SOFTWARE
(Less accumulated amortization of $906,347 and $548,263) 1,646,224 536,442
OTHER ASSETS 2,017,608 1,219,350
GOODWILL
(Less accumulated amortization of $2,655,104
and $1,585,124) 26,033,638 6,764,619
- -----------------------------------------------------------------------------------------
TOTAL $115,461,147 $84,201,101
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $3,238,363 $2,748,572
Due to related party 1,366,004 707,266
Accrued expenses payable:
Accrued compensation 7,841,992 7,186,875
Accrued corporate income taxes 6,244,090 3,533,677
Other accrued expenses 7,284,489 5,761,211
Shareholder notes payable -- 239,611
Unearned revenues 20,939,418 12,427,274
- -----------------------------------------------------------------------------------------
Total current liabilities 46,914,356 32,604,486
- -----------------------------------------------------------------------------------------
OTHER LONG-TERM LIABILITIES:
Deferred tax liabilities 442,298 768,352
Shareholder notes payable -- 473,411
- -----------------------------------------------------------------------------------------
Total other long-term liabilities 442,298 1,241,763
- -----------------------------------------------------------------------------------------
MINORITY INTEREST IN EQUITY OF SUBSIDIARY 6,191,331 1,981,002
SHAREHOLDERS' EQUITY:
Preferred stock, no par; 10,000,000 shares authorized; none
issued and outstanding
Common stock, no par; 40,000,000 shares authorized; 13,544,879
shares and 12,625,971 shares issued and outstanding 23,656,369 12,878,186
Retained earnings 39,036,101 35,967,057
Foreign currency translation adjustment (779,308) (471,393)
- -----------------------------------------------------------------------------------------
Total shareholders' equity 61,913,162 48,373,850
- -----------------------------------------------------------------------------------------
TOTAL $115,461,147 $84,201,101
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to the Consolidated Financial Statements
3
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BARRA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTH PERIODS ENDED DECEMBER 31, 1997 AND 1996
(UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended December 31, Nine Months Ended December 31,
------------------------------- ------------------------------
1997 1996 1997 1996
------------------------------- ------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Subscription and consulting fees $25,897,179 $19,004,617 $69,944,897 $55,337,648
Electronic brokerage 2,890,158 2,573,056 8,600,929 7,279,543
Asset management 13,972,527 6,306,702 22,554,693 12,667,773
------------------------------- ------------------------------
Total operating revenues 42,759,864 27,884,375 101,100,519 75,284,964
------------------------------- ------------------------------
OPERATING EXPENSES:
Cost of subscription products 2,010,924 1,867,445 5,224,013 5,427,290
Compensation and benefits 16,954,164 13,153,782 45,105,388 37,260,274
Rent expense 1,397,947 1,000,976 3,948,129 2,970,214
Other operating expenses 7,874,916 4,879,185 18,796,226 13,757,247
One-time acquisition charges 9,914,000 1,756,189
------------------------------- ------------------------------
Total operating expenses 28,237,951 20,901,388 82,987,756 61,171,214
------------------------------- ------------------------------
INTEREST INCOME & OTHER 319,642 533,471 1,391,081 1,498,836
------------------------------- ------------------------------
INCOME BEFORE EQUITY IN NET INCOME AND LOSS OF
INVESTEES, MINORITY INTEREST AND INCOME TAXES 14,841,555 7,516,458 19,503,844 15,612,586
EQUITY IN NET INCOME AND LOSS OF INVESTEES (5,000) (147,213) (29,118) (256,330)
MINORITY INTEREST (5,132,980) 55,623 (6,915,748) 234,166
------------------------------- ------------------------------
INCOME BEFORE INCOME TAXES 9,703,575 7,424,868 12,558,978 15,590,422
INCOME TAXES (4,045,975) (3,210,760) (9,489,934) (6,671,854)
------------------------------- ------------------------------
NET INCOME $5,657,600 $4,214,108 $3,069,044 $8,918,568
------------------------------- ------------------------------
------------------------------- ------------------------------
NET INCOME PER SHARE:
BASIC $0.42 $0.34 $0.23 $0.71
------------------------------- ------------------------------
------------------------------- ------------------------------
DILUTED $0.39 $0.30 $0.22 $0.64
------------------------------- ------------------------------
------------------------------- ------------------------------
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES:
BASIC 13,489,852 12,533,433 13,201,177 12,499,776
------------------------------- ------------------------------
------------------------------- ------------------------------
DILUTED 14,509,595 14,018,163 14,182,470 13,959,237
------------------------------- ------------------------------
------------------------------- ------------------------------
</TABLE>
See Accompanying Notes to the Consolidated Financial Statements
4
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BARRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
--------------------------
1997 1996
--------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,069,044 $ 8,918,568
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in net income and loss of investees 84,118 256,330
Minority interest 6,915,748 (234,166)
Depreciation and amortization 3,830,644 2,517,788
Dividends received from investee - (226,583)
Gains on marketable securities (250,000) (315,353)
One-time acquisition charges 9,914,000 448,426
Other (267,172) 219,620
Changes in:
Accounts receivable - Subscription and other (3,007,352) (200,233)
Accounts receivable - Asset management (10,537,769) (5,523,949)
Due from related parties 501,795 (451,536)
Prepaid expenses (735,321) (398,083)
Other assets (997,174) 436,688
Accounts payable, due to related party and accrued expenses 514,384 3,434,123
Unearned revenues 1,137,761 (28,131)
- ---------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 10,172,706 8,853,509
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,016,956) (2,602,095)
Short-term investments - net (2,122,201) (465,857)
Sales (Purchases) of municipal debt securities - available for sale - net 4,110,097 (6,758,700)
Acquisitions, net of cash acquired (13,491,154) -
Investments in unconsolidated companies (1,803,559) (875,000)
Repayments on note receivable 2,105,836 -
Dividends received from investee - 226,583
Consolidation of Bond Express L.P. - cash acquired - 146,742
- ---------------------------------------------------------------------------------------------------------
Net cash used in investing activities (18,217,937) (10,328,327)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to minority shareholders (3,271,688) -
Repayments on notes payable and lines of credit (713,022) (2,698,628)
Proceeds from notes payable and lines of credit - 445,140
Proceeds from sale of common stock 1,695,216 530,105
Common stock repurchased (782,900) (601,973)
- ---------------------------------------------------------------------------------------------------------
Net cash used in financing activities (3,072,394) (2,325,356)
- ---------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (11,117,625) (3,800,174)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 25,831,118 22,493,363
- ---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $14,713,493 $18,693,189
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
OTHER CASH FLOW INFORMATION:
Cash paid during the period for:
Interest expense $44,210 $ 142,245
Income taxes $5,460,880 $ 4,351,990
Non-cash investing transactions during the period for:
Acquistions - See note 2
Exchange of equity interest in LBIC for debt $ 7,219,458
Consolidation of Bond Express L.P.:
Note receivable $(2,100,000)
Net assets acquired $ 1,139,726
Minority Interest $ 512,877
Goodwill $ 1,473,151
</TABLE>
See Accompanying Notes to the Consolidated Financial Statements
5
<PAGE>
BARRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
BARRA, Inc. (the "Company" or "BARRA") and its wholly-owned subsidiaries.
Also included in the accompanying consolidated financial statements are the
accounts of 1) Bond Express, L.P. ("Bond Express"), in which the Company
determined it had controlling financial interest beginning June 1, 1996; 2)
Symphony Asset Management, LLC ("Symphony LLC"), a 50%-owned joint venture;
and 3) Global Advanced Technology Corporation ("GAT") and approximately 62%
of Innosearch Corporation ("Innosearch") which the Company acquired on June
24, 1997 (See Note 2). All significant intercompany transactions and balances
have been eliminated. Certain reclassifications have been made to prior year
financial statements to conform to current year presentation.
In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments (consisting of normal recurring
entries) necessary to present fairly the financial position of BARRA as of
December 31, 1997 and the results of its operations and cash flows for the
periods presented in conformity with generally accepted accounting
principles. The results of operations for the interim periods are not
necessarily indicative of results of operations for a full year. The March
31, 1997 consolidated balance sheet is derived from the audited consolidated
financial statements included in BARRA's Annual Report on Form 10-K for the
fiscal year ended March 31, 1997, filed with the Securities and Exchange
Commission on June 24, 1997 (the "Form 10-K"), but does not include all
disclosures required by generally accepted accounting principles. It is
suggested that these consolidated financial statements be read in conjunction
with the audited consolidated financial statements and related notes included
in the Form 10-K and Management's Discussion and Analysis of Financial
Condition and Results of Operations included in this Form 10-Q.
2. BUSINESS COMBINATIONS
On June 24, 1997 the Company completed the acquisition of GAT and a majority
ownership interest in Innosearch, an affiliate of GAT. GAT is a leading provider
of fixed income analytics and related consulting services. The total purchase
price of approximately $20 million included 704,589 shares of unregistered BARRA
common stock valued at approximately $10 million, liabilities assumed of
approximately $6 million, and
6
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cash and transaction costs of approximately $4 million. Under terms of the
acquisition, an additional $1 million of contingent consideration is payable
if certain conditions are met within specified time frames. The acquisition
has been accounted for as a purchase, and the results of GAT and Innosearch
are included in the accompanying consolidated financial statements from the
date of acquisition only.
The cost of the GAT/Innosearch acquisition has been allocated on the basis of
the estimated fair value of assets acquired and liabilities assumed. This
allocation resulted in capitalized software of approximately $1 million,
purchased in-process technology of approximately $10 million and goodwill of
approximately $5 million. As required under generally accepted accounting
principles, the amount allocated to purchased in-process technology was
immediately expensed. Goodwill from the acquisition will be amortized over 10
years.
On October 9, 1997, BARRA (U.K.), Ltd., a wholly-owned subsidiary of the
Company, completed the acquisition of the assets of two businesses from
Edinburgh Financial Publishing Limited and two of EFP's affiliates ("EFP")
for a total purchase price of approximately $17.5 million. The two businesses
are The Estimate Directory ("TED"), a database of analysts' earnings
estimates, and Directus ("Directus"), a corporate directors equity trading
information service. The total purchase consisted of approximately $12
million in cash, liabilities assumed of $5 million and transaction costs of
$.5 million. The acquisition has been accounted for as a purchase and the
results of BARRA (U.K.), Ltd. are included in the accompanying consolidated
financial statements from the date of acquisition only.
The cost of the TED/Directus acquisition has been allocated on the basis of
the estimated fair value of assets acquired and liabilities assumed and
resulted in goodwill of approximately $15 million which will be amortized
over 20 years.
The following summary, prepared on a pro-forma basis, combines the unaudited
consolidated results of operations as if these acquisitions had been
completed as of the beginning of the periods presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1997 1996
---- ----
<S> <C> <C>
Operating revenues $42,920,986 $31,549,592
Net income $5,654,934 $3,867,582
Net income per share (diluted) $.39 $.26
</TABLE>
7
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<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
------------------------------
1997 1996
---- ----
<S> <C> <C>
Operating revenues $106,204,931 $85,875,108
Net income $ 2,090,836 $7,550,318
Net income per share (diluted) $.15 $.51
</TABLE>
The pro-forma financial information is presented for informational purposes
only and is not necessarily indicative of the operating results that would
have occurred had these acquisitions been completed as of the beginning of
the periods presented. In addition, the pro-forma results are not intended
to be a projection of future results and do not necessarily reflect the
financial impact of combining these acquired operations with BARRA's.
8
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3. NET INCOME PER SHARE
On August 23, 1997, the Company's Board of Directors authorized a 3-for-2 stock
split payable on October 13, 1997 to stockholders of record on September 22,
1997. All references in these financial statements to average number of shares
outstanding and per share amounts have been restated to reflect the split.
In February, 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). SFAS
128 requires a dual presentation of basic and diluted earnings per share. Basic
earnings per share excludes dilution and is computed by dividing net income by
the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock (e.g. stock options) were
exercised and converted into stock. For all periods presented, the only
difference between basic and diluted earnings per share for the Company is the
inclusion of dilutive stock options in the denominator for purposes of
calculating diluted earnings per share.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with the
BARRA, Inc. ("BARRA" or the "Company") unaudited financial statements and
related notes presented in this Form 10-Q. The discussion of results, causes
or trends should not be construed to imply that such results, causes or
trends will necessarily continue in the future. Each statement made in this
discussion and analysis and elsewhere in this report containing any future
verb tense or form of the words "anticipate", "estimate", "expect,"
"believe," "future" or "forward" is a forward-looking statement that may
involve a number of risk factors and uncertainties. Among other factors that
could cause actual results to differ materially are the following: business
conditions and other changes in the Company's industry; competitive factors
such as rival products and price pressures both domestically and
internationally; availability of adequate third-party data on reasonable
terms and at reasonable prices; significant delays or excessive costs
associated with product research, development and/or introduction; the loss
of a large single revenue source; the investment performance and the timing
of performance fee determination dates for the Company's asset management
subsidiary; significant changes in trading volumes on the Portfolio System
for Institutional Trading ("POSIT") trading system; the ability of software
and data to accommodate date changes after December 31, 1999; the adoption of
the Euro Currency; and fluctuations in U.S. dollar exchange rates for
non-U.S. currencies. Further information and potential risk factors that
could affect the Company's financial results are included in the Company's
Form 10-K for the fiscal year ended March 31, 1997.
A. GENERAL
Certain of the information required by this item has been previously reported
under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Form 10-K.
BUSINESS COMBINATIONS
As discussed in Note 2 to the financial statements, on June 24, 1997, BARRA
acquired substantially all of the ownership of GAT and a majority interest in
Innosearch. The acquisition was accounted for as a purchase and the
unaudited financial information presented here reflects the results of GAT
and Innosearch only since the date of acquisition. The minority
shareholder's interest in Innosearch's net assets and results of operations
has been included in minority interest in the
10
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accompanying unaudited consolidated balance sheet and statement of
operations.
As also discussed in Note 2 to the financial statements, on October 9, 1997,
BARRA (U.K.), Ltd., a wholly-owned subsidiary of the Company, completed the
acquisition of the assets of two businesses from Edinburgh Financial
Publishing Limited and two of EFP's affiliates ("EFP") . The two businesses
are The Estimate Directory ("TED"), a database of analysts' earnings
estimates, and Directus ("Directus"), a corporate directors equity trading
information service. The acquisition has been accounted for as a purchase
and the results of BARRA (U.K.), Ltd. are included in the accompanying
consolidated financial statements from the date of acquisition only.
FOREIGN CURRENCY AND BUSINESS IN ASIA
BARRA, as an international corporation, generates revenues from clients
throughout the world, maintains sales and representative offices world-wide and
holds certain deposits and accounts in foreign currencies. BARRA's revenues are
generated from both United States and foreign currencies. BARRA's subscriptions
in the United Kingdom and the European Community are priced in British pounds
sterling ("pounds") and European Currency Units ("ECUs"), respectively.
Additionally, BARRA's consolidated subsidiary, BARRA International (Japan), Ltd.
("BARRA Japan"), generates revenues, has expenses and has assets and liabilities
in Japanese yen.
The Company has customers and three sales and client support offices in Asia.
For the nine months ended December 31, 1997, revenues from Asia totaled
approximately $10.5 million ($8.0 million in Japan) or approximately 10% of
total revenues. Excluding Japan, the Company bills its customers in Asia in
US dollars and has nominal expenses in local currencies. Recent volatility
in Asian and Japanese capital markets has negatively impacted yen denominated
revenues and could adversely impact future subscription renewals and related
revenues for customers throughout Asia.
All other things being equal, weakening of the U.S. dollar has a positive
impact on profits, and strengthening of the U.S. dollar has a negative impact
on profits. The Company has considered its exposures to foreign currency
fluctuations and to this point has decided not to engage in hedging or
managing exposures to foreign currency fluctuations through contracts for the
purchase, sale or swapping of currencies.
For the three and nine month periods ended December 31, 1997, when compared
to the same periods a year ago, the U.S. dollar strengthened against the yen
and ECU and was relatively unchanged against the pound - all of which had
the effect of
11
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reducing net revenues by approximately $300,000 and $750,000 compared to the
three and nine months periods ended December 31, 1996, respectively. The
impact of exchange rate changes decreased net income by approximately $50,000
and $100,000 for the three and nine month periods ended December 31, 1997,
respectively, as compared to the same periods a year ago.
Because the functional currency of BARRA Japan is the yen, the translation gains
and losses associated with the consolidation of its balance sheets at points in
time are reported as part of shareholders' equity.
Under current operating arrangements in the countries in which BARRA does
business, there are no restrictions upon the flow of funds from BARRA's
foreign subsidiary to the parent company. There are currently no commitments
or requirements for material capital expenditures outside of the United
States.
B. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The dollar and percentage increases or decreases set forth below in this
discussion and analysis of BARRA's consolidated financial condition result
from a comparison of BARRA's balance sheet at December 31, 1997 (unaudited)
to the balance sheet at March 31, 1997. All amounts have been rounded to the
nearest $1,000.
FINANCIAL CONDITION
Total assets increased $31,260,000 or 37%.
Total current assets increased $2,178,000 or 3%. This net increase consists
primarily of decreased cash and equivalents as a result of investing
activities completed during the period offset by increases in trade
receivables from the acquisitions of GAT, TED and Directus and asset
management activities - see the accompanying unaudited consolidated statement
of cash flows for more information.
Investments in unconsolidated companies increased $1,694,000 representing two
investments: 1) 272.7 shares of Series A Convertible Preferred Stock of Data
Downlink Corporation; and 2) an additional 46,368 shares of Series C
Convertible Preferred Stock of QuoteCom, Inc.
Furniture and equipment increased $6,467,000, excluding approximately
$3,400,000 in furniture and equipment from acquisitions. This increase
reflects expenditures for leasehold improvements and new office furniture
associated with moving the Company's headquarters in June 1997, as well as
12
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further office expansions in the Company's San Francisco, New York and
Connecticut locations.
Increases in computer software and goodwill of $1,110,000 and $19,269,000,
respectively, are primarily the result of purchase price allocations for the
acquisitions of GAT, Innosearch, TED and Directus, net of related
amortization.
Total current liabilities increased $8,910,000, excluding approximately $5.4
million in unearned revenue associated with acquired product subscriptions.
This increase reflects growth in BARRA product subscriptions, higher current
taxes payable and other increases associated with higher levels of incentive
compensation and general business growth.
Minority interest in equity of subsidiary represents minority shareholders'
interests in the net assets of Bond Express, Symphony LLC and Innosearch.
Shareholders' equity in common stock increased $10,778,000 as a result of
issuing 704,589 common shares for the acquisition of GAT and Innosearch, as
well as the issuance of BARRA common stock for exercises of stock options
under the Company's employee stock option plans and shares purchased under the
Employee Stock Purchase Plan.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents, short-term investments and investment in municipal
debt securities available-for-sale totaled $28,721,000 at December 31, 1997. In
addition, the Company has a commitment from a bank for an unsecured short-term
line of credit of up to $5 million - of which, no amounts have been, or are
presently anticipated to be, drawn down.
BARRA believes that its cash flow from operations (including prepaid
subscription fees), together with existing cash balances, will be sufficient
to meet its cash requirements for capital expenditures and other cash needs
for ongoing business operations. Other than commitments described in this
discussion and analysis and in the financial statements and notes, the
Company has no present binding understandings or commitments with respect to
any significant expenditures.
PRINCIPAL FINANCIAL COMMITMENTS. The Company's principal financial
commitments consist of obligations under operating leases and contracts for
the use of computer and office facilities.
13
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C. RESULTS OF OPERATIONS
References to the dollar and percentage increases or decreases set forth
below in this discussion and analysis of BARRA's results of operations are
derived from comparisons of BARRA's consolidated statements of income for the
three and nine month periods ended December 31, 1997 and December 31, 1996.
Results of operations for the three and nine month periods ended December
31, 1997, include the results of GAT and Innosearch which were acquired on
June 24, 1997, and TED and Directus which were acquired on October 9, 1997.
All amounts, except per share amounts, have been rounded to the nearest
$1,000.
NET INCOME
Net income for the three month period ended December 31, 1997, was $5,657,000 or
$0.39 per share (diluted), compared to net income of $4,214,000 or $0.30 per
share (diluted) for the same quarter a year ago.
Net income for the nine month period ended December 31, 1997 was $3,069,000
or $.22 per share (diluted) compared to net income of $8,919,000 or $.64 per
share (diluted) for the same period a year ago. One time acquisition charges
included in net income and diluted per share amounts for the nine month
periods ended December 31, 1997 and 1996 were $9,914,000 or $.70 per share
and $1,756,000 or $.07 per share, respectively.
OPERATING REVENUES. Total operating revenues increased $14,875,000 or 53%
over the same quarter a year ago and $25,816,000 or 34% over the same nine
month period a year ago. Operating revenues from GAT, TED and Directus
included in the three and nine month periods ended December 31, 1997 were
$3,148,000 and $5,230,000, respectively.
SUBSCRIPTION AND CONSULTING FEES consist of annual subscription fees for
BARRA's software products, revenues from other sources related to the
institutional analytics business and consulting services to pension plan
sponsors and investment managers. A summary of the components and related
changes is as follows (amounts in $000's):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
% %
1997 1996 CHANGE 1997 1996 CHANGE
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Analytics subscriptions 19,304 13,631 42 51,479 38,248 35
Other analytics related 1,319 1,135 16 3,616 3,661 (1)
Consulting 5,274 4,238 24 14,850 13,428 11
- -----------------------------------------------------------------------------
TOTAL 25,897 19,004 36 69,945 55,337 26
- -----------------------------------------------------------------------------
</TABLE>
14
<PAGE>
ANALYTICS SUBSCRIPTIONS are for BARRA's software products and related
updates. The Company generally bills and collects fees on an annual basis,
but recognizes the income 1/12th per month over each year of the subscription
period. The growth in annual subscription fees continues to be generated
from a combination of obtaining new clients, increasing revenues from
existing customers through the introduction of new products and services and
acquisitions. Analytics subscription revenue for the three and nine month
periods ended December 31, 1997 includes $2,632,000 and $4,079,000,
respectively, of GAT, TED and Directus product subscription revenue. For the
three month period ended December 31, 1997 compared to the same quarter a
year ago, annual subscription fee revenue (including GAT, TED and Directus
revenue for 1997) for the U.S and non-U.S. markets increased approximately
56% and 33%, respectively. Excluding the impact of the newly acquired
subscription revenue, the increase was 27% for U.S. and 18% for Non-U.S.
subscription revenues. For the nine month period ended December 31, 1997
compared to the same period a year ago, annual subscription fee revenue
(including GAT, TED and Directus revenue for 1997) for the U.S and non-U.S.
markets increased approximately 48% and 27%, respectively, and approximately
26% and 21%, respectively, excluding newly acquired revenue.
Excluding acquired revenues from GAT, TED and Directus, revenue growth
primarily came from equity models and related data reflecting the continued
success of the BARRA Aegis System-TM-. Various new single country and global
versions of this equity analytics system have been introduced continuously
since July 1995. Fixed income product sales also contributed, primarily to
the non-US revenue increase, as a result of sales of the BARRA COSMOS
System-TM-. Increases in subscription revenues continue to come most
significantly from net increases in the number of subscriptions and less
significantly from changes in the prices of subscriptions.
REVENUES FROM OTHER SOURCES RELATED TO THE INSTITUTIONAL ANALYTICS BUSINESS
include timesharing revenues, seminar revenues and other recurring fees.
Fluctuations in these revenue sources result primarily from the timing of
seminars and the amount of timesharing billed to clients.
CONSULTING FEES
Consulting fees consist of: fixed income consulting (acquired in the
acquisition of GAT); Services to pension plan sponsors ("Sponsor Services")
which are usually recurring retainer-based fee arrangements; and consulting
to money managers ("Strategic Services"), which are usually non-recurring,
project engagements that are completed in phases. Also included in Strategic
Services revenues are fees related to consulting work done in connection with
strategic transactions involving clients. Accordingly, Strategic Services
revenues are susceptible to a
15
<PAGE>
large degree of variability depending on the ability to source new projects
and the unpredictable nature and significance of fees associated with
strategic transactions. Consulting fees from fixed income consulting
amounted to $516,000 and $1,151,000 for the three and nine month periods
ended December 31, 1997. Excluding the impact of fixed income consulting fees,
revenues from consulting services were only slightly higher compared to the
same periods a year ago reflecting modest growth in these business offset by
declines in non-recurring strategic transaction fees and one specific BARRA
custom product development fee.
ELECTRONIC BROKERAGE
Electronic brokerage revenues increased $317,000 or 12% compared to the same
quarter a year ago and $1,321,000 or 18% compared to the same nine month
period a year ago. This component of revenue consists principally of license
fees from POSIT, which increased $226,000 or 10% compared to the same quarter
a year ago and $846,000 or 13% compared to the same nine month period a year
ago. BARRA's revenues from POSIT are derived from commissions generated by
the trading volume in the system. POSIT revenue increases reflect higher
trading volumes during the quarter as well as greater usage of the system by
its major participants. Revenues from Bond Express L.P. accounted for $91,000
and $475,000 of the increase in total electronic brokerage revenues from the
same quarter and nine month periods a year ago. These increases are due in
part to the inclusion of Bond Express' results of operations for only one
month in the June 30, 1996 quarter.
ASSET MANAGEMENT
Asset management revenues increased $7,666,000 or 122% compared to the same
quarter a year ago and $9,887,000 or 78% compared to the same nine month
period a year ago. Asset management revenues consist of fees generated from
active management of investor accounts by Symphony LLC and fees earned by
Rogers Casey Asset Services, Inc. from management of customized multi-manager
programs.
Symphony LLC's revenues consist primarily of asset management fees which are a
fixed percentage of asset value and performance fees that are based on the
performance over a benchmark for each account. Total revenues were
$13,648,000 for the current quarter compared to $5,795,000 for the same quarter
a year ago, and $21,436,000 for the nine months ended December 31, 1997 compared
to $11,061,000 for the same period a year ago. The increase in total revenues
for the three and nine month periods ended December 31, 1997 compared to the
same periods a year ago was the result of substantial increases in both base and
performance fees due to growth in
16
<PAGE>
assets under management. As of December 31, 1997, Symphony LLC had
approximately $2.0 billion under direct management. Of the funds under direct
management, approximately $1.3 billion are managed under agreements that
provide for performance fees in addition to a base management fee.
Performance fees included in total revenues were $10,683,000 for the current
quarter compared to $4,084,000 for the same quarter a year ago and
$12,897,000 for the nine months ended December 31, 1997 compared to
$6,232,000 for the same period a year ago. Performance fees are recognized
only at the measurement date for determining performance of an account, which
typically is at the end of each year of the contract. The increase in
performance fee revenues for the December 1997 quarter over the same quarter
a year ago is the result of an increase in the number and value of investor
account anniversaries. Assets under management subject to performance fees
have increased approximately $700 million or 112% from December 31, 1996. The
pattern of anniversaries can change from quarter to quarter because of the
addition, termination and re-negotiation of account agreements. There is
also, of course, no assurance that the investment performance will continue
at historical levels. It is presently estimated that approximately 17% and
12% of the performance based funds under management will have performance fee
determination dates in the quarters ended March, 31, 1998 and June 30, 1998,
respectively.
Symphony LLC's future revenues will depend on the performance of the funds it
manages and the timing of anniversary fee determination dates for performance
based funds.
OPERATING EXPENSES. Total operating expenses increased $7,337,000 or 35%
compared to the same quarter a year ago. For the nine month period ended
December 31, 1997 compared to the same period a year ago, total operating
expenses, including one-time acquisition charges, increased $21,817,000 or
36%. Excluding one-time acquisition charges from both periods, total
operating expenses increased $13,659,000 or 23%.
COST OF SUBSCRIPTION PRODUCTS
Cost of subscription products consists of computer access charges, data and
software acquisition expenses, BARRA's computer leasing expenses, and seminar
expenses. This component of expense increased $143,000 or 8% compared to the
same quarter a year ago and decreased $203,000 or 4% compared to the same
nine month period a year ago. These decreases reflect lower seminar costs,
which are principally a result of timing and lower data costs as a result of
certain non-recurring, project-related data fees included in the June 1996
quarter - offset in part by data costs for GAT and TED.
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<PAGE>
COMPENSATION AND BENEFITS
Compensation and benefits increased $3,800,000 or 29% compared to the same
quarter a year ago and increased $7,845,000 or 21% compared to the same nine
month period a year ago. Compensation and benefit costs from current year
acquisitions were approximately $2.2 million and $3.7 million for the three
and nine months ended December 31, 1997, respectively. Excluding these costs,
the increases from the same quarter and nine month periods a year ago are
primarily the result of wage increases that take effect on July 1 within each
fiscal year, an increase in average headcount and increases in related
employee benefit costs. These increases were offset in part by lower
incentive compensation expenses due to the Symphony LLC principal's share of
profits being reported in minority interest this year as opposed to
compensation and benefits in the same periods a year ago.
OTHER OPERATING EXPENSES
Other operating expenses increased $2,996,000 or 61% compared to the same
quarter a year ago and increased $5,039,000 or 37% compared to the same nine
month period ended a year ago. Other operating expenses include travel,
office, maintenance, depreciation, amortization, data costs related to
non-subscription services, marketing, advertising, outside legal and
accounting services and other corporate expenses. The increases from the
same three and nine month periods a year ago reflect expenses of current year
acquirees of approximately $1,295,000 and $1,863,000, respectively. Excluding
expenses from acquired operations, other operating expenses increased
$1,701,000 or 35% and $3,176,000 or 23% for the three and nine month periods
ended December 31, 1997, respectively, as compared to the same periods a year
ago. These increases primarily reflect higher data costs associated with
asset management activities, which represent $977,000 and $1,173,000 of the
total increase for the three and nine months periods ended December 31, 1997,
respectively, as compared to a year ago. Data costs for asset management
activities will vary in relation to asset management revenues. Increases in
travel, foreign currency losses, advertising and marketing, amortization of
goodwill and leasehold improvements also contributed to the increase in other
operating expenses. These increases are consistent with the general growth of
BARRA's business and the move to a new headquarters facility during the year.
ONE-TIME ACQUISITION CHARGES
One-time acquisition charges of $9,914,000 for the nine month period ended
December 31, 1997 represent purchased in-process research and development in
connection with the acquisitions of GAT and Innosearch on June 24, 1997. As
required by generally accepted accounting principles, the portion of the
18
<PAGE>
purchase price allocated to purchased technology was immediately expensed.
One-time acquisition charges of $1,756,000 for the nine month period ended
December 31, 1996 relate to the Company's acquisition of Rogers, Casey &
Associates, Inc. in July, 1996.
INTEREST INCOME AND OTHER
Interest income and other for the three and nine month periods ended December
31, 1997 decreased over the same periods a year ago as a result of lower
average invested cash balances as result of investing activities completed
during the period.
MINORITY INTEREST
Minority interest primarily represents the share of profits from Symphony LLC
that is due to the Symphony LLC principals.
19
<PAGE>
PART II - OTHER INFORMATION
Each statement made in this Part II containing any future verb tense or any
form of the words "believe", "future", "forward", "estimate", "anticipate" or
"expect" is a forward looking statement that may involve a number of risk
factors and uncertainties. A discussion of those risk factors is located in
the first paragraph of Part I, Item 2.
ITEM 1. LEGAL PROCEEDINGS.
All information required by this item has been previously reported under the
heading "Business-Litigation" in the Form 10-K. There have been other material
developments in the legal proceedings of BARRA since the date of the Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
All information required by this item has been previously reported under Part
II, Item 4 in the Company's June 30, 1997 Form 10-Q. There have been no
other submission of matters to a vote of the security holders of BARRA since
the date of the June 30, 1997 Form 10-Q.
ITEM 5. OTHER INFORMATION.
As previously reported, on October 9, 1997 the Company completed the acquisition
of certain assets from Edinburgh Financial Publishing Limited and its
affiliates, Edinburgh Financial Publishing (Asia), Limited and Edinburgh
Financial Publishing (USA), Inc. For further details of these transactions see
Note 4 of the Notes to Consolidated Financial Statements and Item 2 of Part I of
this form.
At its January 29, 1998 quarterly meeting, the Board of Directors of the
Corporation amended the Corporation's Bylaws to change the date of the Annual
Meeting of the Corporation's shareholders from the last Thursday in July in
each year to a day (to be selected at the discretion of BARRA's Board of
Directors) during the first week of August in each year. The Board of
Directors then selected Wednesday, August 5th as the date of its 1998 Annual
Shareholders' Meeting.
Also at its January 29, 1998 quarterly meeting, for the purpose of having
shares of common stock available for issuance on the exercise of stock
options and on purchases made under its employee stock purchase plan, the
BARRA Board of Directors authorized BARRA's officers to use up to $3,000,000
to purchase additional shares of BARRA Common Stock on the NASDAQ National
Market.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) the following exhibits are required by Item 601 of the Regulation S-K:
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<PAGE>
Exhibit Sequential
Number Exhibit Description Page Number
------- ------------------- -----------
3.1 Bylaws of BARRA, Inc., dated as of 25
January 29, 1998, as amended.
(b) Reports on Form 8-K: None.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, BARRA
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
BARRA, Inc.
(Registrant)
Date: February 9, 1998 /s/ Andrew Rudd
-----------------------------
Andrew Rudd, Chairman of the
Board of Directors and Chief
Executive Officer
Date: February 9, 1999 /s/ James D. Kirsner
-----------------------------
James D. Kirsner, Chief
Financial Officer
22
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Exhibit Description Page Number
- ------- ------------------- -----------
3.1 Bylaws of BARRA, Inc., dated as of 25
January 29, 1998, as amended.
23
<PAGE>
EXHIBIT 3.1
24
<PAGE>
BYLAWS
OF
BARRA, INC.
ARTICLE I - OFFICES
Section 1.1 PRINCIPAL OFFICE. The Board of Directors shall fix the
location of the principal executive office of the corporation at any place
within or outside the State of California. If the principal executive office is
located outside this State, the Board of Directors shall fix and designate a
principal business office in the State of California.
Section 1.2 OTHER OFFICES. The Board of Directors may at any time
establish branch or subordinate offices at any place or places where the
corporation is qualified to do business.
ARTICLE II - SHAREHOLDERS
Section 2.1 PLACE OF MEETINGS. Meetings of shareholders shall be held
at any place designated by the Board of Directors. In the absence of
designation, shareholders' meetings shall be held at the principal executive
office of the corporation.
Section 2.1A CHAIRMAN AND SECRETARY OF SHAREHOLDER MEETINGS. The
chairman of the board shall preside at each meeting of the shareholders. In the
absence or disability of the chairman of the board, the meeting shall be chaired
by an officer of the corporation in the following order: president, executive
vice president, senior vice president and vice president. In the absence of all
such officers, a person chosen by the vote of a majority in interest of the
shareholders present in person or represented by proxy and entitled to vote
thereat shall act as chairman. The secretary or in his/her absence an assistant
secretary or in the absence of the secretary and all assistant secretaries a
person whom the chairman of the meeting shall appoint shall act as secretary of
the meeting and keep a record of the proceedings thereof.
Section 2.1B REGULATION AND CONDUCT OF SHAREHOLDER MEETINGS. The Board
of Directors of the corporation shall be entitled to make such rules or
regulations for the conduct of meetings of the shareholders as it shall deem
necessary, appropriate or convenient. Subject to such rules and regulations of
the Board of Directors, if any, the chairman of the meeting shall have the right
and authority to
25
<PAGE>
prescribe such rules, regulations and procedures and to do all such acts as
in the judgment of such chairman, are necessary, appropriate or convenient
for the proper conduct of the meeting, including, without limitation,
establishing an agenda or order of business for the meeting, rules and
procedures for maintaining order at the meeting and for the safety of those
present, limitations on participation in such meeting to shareholders of
record of the corporation and their duly authorized and constituted proxies,
and such other persons as the chairman shall permit, restrictions on entry
into the meeting after the time fixed for commencement thereof, limitations
on the time allotted to questions or comments by participants and regulation
of the opening and closing of the polls for balloting on matters which are to
be voted on by ballot, unless, and to the extent determined by the Board of
Directors or the chairman of the meeting, meetings of the shareholders shall
not be required to be held in accordance with the rules of parliamentary
procedure.
Section 2.2 ANNUAL MEETING. The annual meeting of shareholders shall be
held during the first week of August in each year at 2:00 p.m. on such day
during that week as shall be chosen by the Board of Directors; PROVIDED,
HOWEVER, that if (a) the Board of Directors fails to select a day during the
first week of August, the annual meeting of the shareholders shall be held on
the first Tuesday of August; and if (b) this day falls on a legal holiday, then
the meeting shall be held at the same time and place on the next succeeding
business day. At the annual meeting directors shall be elected and any other
proper business may be transacted.
Section 2.3 SPECIAL MEETINGS. Special meetings of the shareholders may
be called for any purpose at any time by the president, the Board of Directors
or the chairman of the board, or by one or more shareholders holding not less
than ten percent (10%) of the shares entitled to vote at that meeting. If a
special meeting is called by any person or persons other than the Board of
Directors, a written request to notice the meeting, specifying the time of the
meeting and the general nature of the business to be transacted, shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the corporation. The officer receiving the request
shall cause notice to be given promptly to the shareholders entitled to vote, in
accordance with the provisions of Section_2.4, that a meeting will be held at
the time requested by the person or persons calling the meeting, not less than
thirty-five (35) nor more than sixty (60) days after the receipt of the request.
If the notice is not given within twenty (20) days after receipt of the request,
the person or persons requesting the meeting may give the notice.
Section 2.4 NOTICE OF MEETINGS. Notice of meetings of the shareholders
of the corporation shall be given in writing to each shareholder entitled to
vote, either personally or by first-class mail or other means of written
communication, addressed to the shareholder at the shareholder's address
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose
26
<PAGE>
of notice. Such notice shall be sent not less than ten (10) nor more than
sixty (60) days before the meeting. Said notice shall state the place, date
and hour of the meeting and (a) in the case of special meetings, the general
nature of the business to be transacted, and no other business may be
transacted, or (b) in the case of annual meetings, those matters which the
Board of Directors, at the time of the mailing of the notice, intends to
present for action by the shareholders, and (c) in the case of any meeting at
which directors are to be elected, the names of the nominees intended at the
time of the mailing of the notice to be presented by the board for election.
Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.
Section 2.5 WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of shareholders, however called and noticed, shall
be as valid as though done at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy, and if, either before or
after the meeting, each of the persons entitled to vote at the meeting, not
present in person or by proxy, signs a written waiver of notice or a consent to
the holding of the meeting or an approval of the minutes thereof. All such
waivers, consents and approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section 2.6 QUORUM. The presence in person or by proxy of the holders
of a majority of the shares entitled to vote shall constitute a quorum at a
meeting of the shareholders for the transaction of business. The shareholders
present at a duly called or held meeting at which a quorum is present may
continue to transact business until adjournment notwithstanding the withdrawal
of enough shareholders to leave less than a quorum, if any action taken (other
than adjournment) is approved by at least a majority of the shares required to
constitute a quorum. Any shareholders' meeting, whether or not a quorum is
present, may be adjourned from time to time by the vote of a majority of the
shares represented in person or by proxy at that meeting, and in the absence of
a quorum no other business may be transacted at such meeting, except as provided
above. When any shareholders' meeting is adjourned for forty-five (45) days or
more or, if after the adjournment, a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each shareholder
entitled to vote at the adjourned meeting in accordance with the provisions of
Section 2.4.
Section 2.7 VOTING.
(a) PROCEDURES. The shareholders entitled to vote at any
meeting of shareholders shall be determined in accordance with the provisions of
Section 2.9. The shareholders' vote may be by voice vote or by ballot;
provided, however, that any election for directors must be by ballot if demanded
by any shareholder at the meeting and before the voting has begun. Except as
provided in
27
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Section 2.6 or in this Section 2.7, the affirmative vote of the majority of
the shares represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a
majority of the required Quorum) shall be the act of the shareholders.
(b) CUMULATIVE VOTING. Shareholders entitled to vote at
any election of directors shall have the right to cumulate their votes and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which their shares are normally
entitled, or to distribute their votes on the same principle among as many
candidates as they shall think fit; PROVIDED, HOWEVER, that such candidates'
names shall have been placed in nomination prior to the voting and that at
least one shareholder shall have given notice at the meeting prior to the
voting of that shareholder's intention to vote cumulatively. If there are
more candidates for than vacancies on the board, the vacancies shall be
filled by the candidates receiving the highest number of affirmative votes.
(c) PROXIES. Every person entitled to vote shall have
the right to do so either in person or by written proxy signed by such person
and filed with the secretary of the corporation. A proxy shall be deemed
signed if the shareholder's name is placed on the proxy, (whether by manual
signature, typewriting, telegraphic transmission, or otherwise) by the
shareholder or the shareholder's attorney-in-fact. A validly executed proxy
which does not state that it is irrevocable shall continue in full force and
effect unless (i) revoked by the person executing it prior to the vote
pursuant to that proxy by a writing delivered to the corporation stating that
the proxy is revoked, or by a subsequent proxy executed by, or attendance at
the meeting and voting in person by, the person executing the proxy; or (ii)
written notice of the death or incapacity of the maker of that proxy is
received by the corporation before the vote pursuant to that proxy is
counted; PROVIDED, HOWEVER, that no proxy shall be valid after the expiration
of eleven (11) months from the date of the proxy unless otherwise provided in
the proxy.
Section 2.8 ACTION WITHOUT MEETING. Except as otherwise provided in
this Section 2.8, any action which may be taken at any meeting of shareholders
may be taken without a meeting and prior notice, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of the
outstanding shares having no less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any shareholder giving a written consent may revoke the
consent by a writing received by the secretary of the corporation before written
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
28
<PAGE>
(a) Unless consents of all shareholders entitled to vote
have been solicited in writing, prompt notice, in accordance with the
provisions of Section 2.4 of actions taken without a meeting by less than
unanimous written consent, shall be given to those shareholders entitled to
vote who have not consented in writing. Notice of any shareholder approval
obtained without a meeting by less than unanimous written consent with
respect to any matter falling within California General Corporation Law
Section 310 (approval of contracts or transactions with an interested
director), Section 317 (indemnification of agents of the corporation),
Section 1201 (reorganization) or Section 2007 (plan of distribution on
dissolution other than in accordance with the rights of outstanding preferred
shares) shall be given at least ten (10) days before the consummation of the
action authorized by such approval.
(b) Directors may not be elected by written consent
except by unanimous written consent of all shares entitled to vote at their
election; PROVIDED, HOWEVER, that when filling a vacancy not filled by the
directors, except for a vacancy created by removal, a director may be elected
by written consent of a majority of the outstanding shares entitled to vote.
Section 2.9 RECORD DATE.
(a) ESTABLISHED BY THE BOARD OF DIRECTORS. In order that
the corporation may determine the shareholders entitled to notice of, or to
vote at, any meeting or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights
in respect of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
(b) ESTABLISHED BY OPERATION OF LAW. If no record date
is fixed:
(i) the record date for determining shareholders
entitled to notice of, or to vote at, a meeting of shareholders shall be at
the close of business on the business day next preceding the day on which
notice is given or, if the notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held;
(ii) the record date for determining shareholders
entitled to give consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors has been taken, shall be the
day on which the first written consent is given; and
29
<PAGE>
(iii) the record date for any other purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto, or the sixtieth (60th) day prior to the date
of such other action, whichever is later.
(c) EFFECT OF DETERMINATION OF RECORD DATE. Shareholders
of record at the close of business on the record date are entitled to notice
and to vote, or to receive the dividend, distribution or allotment of rights,
or to exercise the rights, as the case may be, notwithstanding any transfer
of any shares on the books of the corporation after the record date, except
as otherwise provided by agreement or in the California General Corporation
Law.
ARTICLE III - DIRECTORS
Section 3.1 POWERS. Subject to the provisions of the California
General Corporation Law and to any limitations in the Articles of
Incorporation or these Bylaws requiring shareholder authorization or approval
of a particular action, the business and affairs of the corporation shall be
managed, and all corporate powers shall be exercised, by or under the
direction of the Board of Directors. The Board of Directors may delegate the
management of day-to-day operation of the business of the corporation to a
management company or other person; PROVIDED, HOWEVER, that the business and
affairs of the corporation shall be managed, and all corporate powers shall
be exercised, under the ultimate direction of the Board of Directors.
Section 3.2 NUMBER AND QUALIFICATION OF DIRECTORS. The authorized
number of directors of this corporation shall be not less than four (4)
persons and not more than seven (7), until changed by an amendment to the
Articles of Incorporation, or by an amendment to this Section 3.2, adopted by
approval of a majority of the outstanding shares entitled to vote. The exact
number of directors shall be fixed at six (6), until changed, within the
limits specified above, by the amendment to this Section 3.2 adopted by the
Board of Directors or a majority of the outstanding shares entitled to vote;
PROVIDED, HOWEVER, that an amendment to the articles or this Section 3.2
reducing either the fixed number or the minimum number of directors to a
number less than five (5) cannot be adopted if the votes cast against its
adoption at a meeting or the shares not consenting in the case of an action
by written consent are equal to more than sixteen and two-thirds percent
(16-2/3%) of the outstanding shares entitled to vote. The directors need not
be shareholders of this corporation.
Section 3.3 NOMINATION, ELECTION AND TERM OF OFFICE.
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<PAGE>
(a) NOMINATIONS. Nominations for the election of
directors may be made by the Board of Directors or by any shareholder
entitled to vote for the election of directors. Any shareholder entitled to
vote for the election of directors at a meeting may nominate persons for
election as directors only if written notice of such shareholder's intent is
given, either by personal delivery or by United States mail, postage prepaid,
to the Secretary of the corporation not later than (i) with respect to an
election to be held at an annual meeting of the shareholders, 90 days in
advance of such meeting, and (ii) with respect to an election to be held at a
special meeting of the shareholders for the election of directors, the close
of business on the seventh day following the date on which notice of such
meeting was first given to shareholders. Each such notice shall set forth:
(A) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated, (B) a representation
that such shareholder is a holder of record of stock of the corporation,
entitled to vote at such meeting, and intends to appear in person or by proxy
at the meeting to nominate the person or persons specified in the notice, (C)
a description of all arrangements or understandings between such shareholder
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by
such shareholder, (D) such other information regarding each nominee proposed
by such shareholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had each nominee been nominated, or intended to be nominated, by
the Board of Directors, and (E) the consent of each nominee to serve as a
director of the corporation, if elected. The chairman of a shareholders'
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
(b) ELECTION AND TERM OF OFFICE. Pursuant to the provisions
of Section 2.7, the directors shall be elected at the annual meeting of the
shareholders and shall hold office until the next annual meeting. Subject to
the provisions of Sections 3.5 and 3.6, each director shall hold office until
the expiration of the term for which elected and until a successor has been
elected and qualified.
Section 3.4 VACANCIES. Except for a vacancy created by the removal
of a director, vacancies in the Board of Directors may be filled by a
majority of the remaining directors, whether or not less than a quorum, or by
a sole remaining director, and each director so elected shall hold office
until the next annual meeting of the shareholders and until a successor has
been elected. The shareholders shall elect a director or directors to fill
any vacancy created by removal, and the shareholders may elect a director or
directors at any time to fill a vacancy not filled by the directors. Any
shareholder election of directors by written consent shall be pursuant to the
provisions of Section 2.8.
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Section 3.5 RESIGNATION. Any director may resign effective upon
giving written notice to the chairman of the board, the president, the
secretary or the Board of Directors, unless the notice specifies a later time
for that resignation to become effective. If the resignation is effective at
a future time, a successor may be elected to take office when the resignation
becomes effective.
Section 3.6 REMOVAL. The Board of Directors may declare vacant the
office of a director who has been declared of unsound mind by order of court,
or who has been convicted of a felony. Any or all of the directors may be
removed without cause by an affirmative vote of a majority of the outstanding
shares entitled to vote at an election of directors; PROVIDED, HOWEVER, that
unless the entire board is removed, no individual director may be removed
when the votes cast against removal, or not consenting in writing to such
removal, would be sufficient to elect such director if voted cumulatively at
an election at which the same total number of votes were cast (or, if such
action is taken by written consent, all shares entitled to vote were voted)
and the entire number of directors authorized at the time of the director's
most recent election were then being elected.
Section 3.7 PLACE OF MEETINGS. Meetings of the Board of Directors
may be held at any place which has been designated in the notice of the
meeting, or, if not stated in the notice or there is no notice, designated in
the Bylaws or by resolution of the Board of Directors. In the absence of
designation, meetings shall be held at the principal executive office of the
corporation.
Section 3.8 REGULAR MEETINGS. Immediately following, and at the same
place as, each annual meeting of shareholders, the Board of Directors shall
hold without call or notice other than this bylaw a regular meeting for the
purposes of organization, election of officers and the transaction of other
business. Other regular meetings of the Board of Directors shall be held
without notice at such time as from time to time may be fixed by the Board of
Directors.
Section 3.9 SPECIAL MEETINGS; NOTICE. Special meetings of the Board
of Directors may be called at any time by the chairman of the board or the
president or any vice president or the secretary or any two directors.
Notice of the time and place of all special meetings shall be given to each
director by any of the following means:
(a) By personal delivery, or by telephone or telegraph at
least 48 hours prior to the time of the meeting; or
(b) By first-class mail, postage prepaid, at least four
days prior to the time of the meeting.
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Section 3.10 WAIVER OF NOTICE. The transactions of any meeting of the
Board of Directors, however called and noticed and wherever held, are as
valid as though had at a meeting duly held after regular call and notice, if
a quorum is present and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice or a consent to
holding the meeting or an approval of the minutes thereof. All such waivers,
consents and approvals shall be filed with the corporate records or made a
part of the minutes of the meeting. Notice of a meeting shall also be deemed
waived by any director who attends the meeting without protesting before or
at its commencement the lack of notice.
Section 3.11 PARTICIPATION BY TELEPHONE. Members of the Board of
Directors may participate in a meeting through use of conference telephone or
similar communications equipment, as long as all members participating in
such meeting can hear one another. Participation in a meeting pursuant
hereto constitutes presence in person at such meeting.
Section 3.12 QUORUM AND ACTION AT MEETING. A majority of the
authorized number of directors shall constitute a quorum for the transaction
of business. Subject to the provisions of California General Corporation Law,
every act or decision done or made by a majority of the directors present at
a meeting duly held at which a quorum is present is the act of the Board of
Directors. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by the required quorum for that meeting.
Section 3.13 ACTION WITHOUT MEETING. Any action required or permitted
to be taken by the Board of Directors may be taken without a meeting, if all
members of the board individually or collectively consent in writing to the
action. Such written consent or consents shall be filed with the minutes of
the board. Actions by written consent shall have the same force and effect
as a unanimous vote of the directors.
Section 3.14 COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the authorized number of directors, designate one or
more committees, each consisting of two or more directors and each of which,
to the extent provided in the resolution and as limited by the California
General Corporation Law, shall have all the authority of the Board of
Directors. Further, the board may designate one or more directors as
alternate members of any committee, who may replace any absent member at any
meeting of the committee. Each committee shall serve at the pleasure of the
board.
Section 3.15 MEETINGS AND ACTION OF COMMITTEES. Meetings and action
of committees shall be governed by, and held and taken in accordance with,
the provisions of Article III of these Bylaws, with
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such changes in the context of these Bylaws as are necessary to substitute
the committee and its members for the Board of Directors and its members,
except that the time for regular meetings of committees may be determined
either by resolution of the Board of Directors or by resolution of the
committee. Special meetings of committees may also be called by resolution
of the Board of Directors. Notice of special meetings of committees shall
also be given to all alternate members, who shall have the right to attend
all meetings of the committee. Minutes shall be kept of each meeting of any
committee and shall be filed with the corporate records. The Board of
Directors may adopt such other rules for the governance of any committee as
are not inconsistent with the provisions of these Bylaws.
Section 3.16 COMPENSATION AND EXPENSES OF DIRECTORS. Directors and
members of committees shall not receive compensation for their services or
reimbursement for their expenses except in amounts fixed or determined by
resolution of the Board of Directors. This Section 3.16 shall not be
construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise, and receiving
compensation for those services.
ARTICLE IV - OFFICERS
Section 4.1 OFFICERS. The officers of the corporation shall be a
chief executive officer or a president, a chief financial officer or a
treasurer, and a secretary, all of whom shall be chosen by and serve at the
pleasure of the Board of Directors. The corporation may also have, at the
discretion of the Board of Directors, a chairman of the board, a chief
operating officer, one or more vice presidents and such other officers as may
be deemed expedient for the proper conduct of the business of the
corporation, each of whom shall have such authority and shall perform such
duties as the Board of Directors may from time to time determine. One person
may hold two or more offices.
Section 4.2 REMOVAL AND RESIGNATION. Subject to the rights, if any,
of an officer under any contract of employment, any officer may be removed at
any time, with or without cause, by the Board of Directors. Any officer may
resign at any time by giving written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to
which the officer is a party. Any resignation shall take effect at the date
of the receipt of the notice or at any later time specified in the notice,
and unless otherwise specified in the notice, the acceptance of the
resignation shall not be necessary to make it effective.
Section 4.3 CHAIRMAN OF THE BOARD. The Board of Directors may elect
a chairman, who shall preside, if present, at all board meetings and,
pursuant to the provisions of Section 2.1A of Article II of
34
<PAGE>
these Bylaws, all shareholder meetings and shall exercise and perform such
other powers and duties as may be assigned from time to time by the Board of
Directors.
Section 4.3A CHIEF EXECUTIVE OFFICER. The corporation's chief
executive officer, subject to the control of the Board of Directors, shall
have the general supervision, direction, and control over the corporation's
business and its officers. In addition to the general powers and duties of
the chief executive officer, such officer shall have all such other powers
and duties as prescribed by the Board of Directors and the Bylaws. In the
event that the corporation does not elect a president, the chief executive
officer shall exercise the powers and duties of the president enumerated in
Section 4.4 of the Bylaws.
Section 4.4 PRESIDENT. Except to the extent that these Bylaws or the
Board of Directors assign specific powers and duties to the chairman of the
board or the chief executive officer, the president shall be the
corporation's acting manager and, subject to the control of the Board of
Directors, shall be responsible for the quotidian supervision, direction, and
control of the corporation's business. In the absence or disability of the
chairman of the board and chief executive officer, the chairman of the board
and chief executive officer's duties and responsibilities shall be carried
out by the president. In addition to the general powers and duties of the
president, such officer shall have all such other powers and duties as
prescribed by the Board of Directors and the Bylaws.
Section 4.4A CHIEF OPERATING OFFICER. Subject to the control of the
Board of Directors, the chairman of the board, the chief executive officer
and the president, the chief operating officer shall be the corporation's
acting operations manager and shall be responsible for the quotidian
operation of the corporation's business. In addition to the general powers
and duties of the chief operating officer, such officer shall have all such
other powers and duties as prescribed by the Board of Directors and the
Bylaws.
Section 4.5 VICE-PRESIDENTS. In the absence or disability of the
president, the vice-presidents, if any, in order of their rank as fixed by
the Board of Directors or, if not ranged, a vice-president designated by the
Board of Directors, shall perform all the duties of the president, and when
so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice-presidents shall have such other
powers and perform such other duties as from time to time may be prescribed
for them respectively by the Board of Directors, the chairman of the board or
the president.
Section 4.6 SECRETARY. The secretary shall keep a book of minutes of
all meetings and actions of directors, committees of directors and
shareholders. The minutes of each meeting shall state the time and place that
it was held and such other information as shall be necessary to determine the
actions taken
35
<PAGE>
thereat and whether the meeting was held in accordance with the law and these
Bylaws. The secretary shall keep at the corporation's principal executive
office, or at the office of its transfer agent or registrar, a share register
showing the names and addresses of all shareholders and the number and class
of shares held by each. The secretary shall give notice of all meetings of
shareholders, directors and committees required to be given by these Bylaws.
The secretary shall keep the seal of the corporation in safe custody and
shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors, the chairman of the board or the
president.
Section 4.7 CHIEF FINANCIAL OFFICER. The chief financial officer
shall have the custody of all moneys and securities of the corporation and
shall keep regular books of account. The chief financial officer shall
disburse the funds of the corporation in payment of the just demands against
the corporation or as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Board of Directors
from time to time as may be required by the Board of Directors, an account of
all transactions as chief financial officer and of the financial condition of
the corporation. The chief financial officer shall perform all duties
incident to the office or which are properly required by the Board of
Directors, the chairman of the board or the president.
Section 4.8 SALARIES. The salaries of the officers may be fixed from
time to time by the Board of Directors, and no officer shall be prevented
from receiving such salary by reason of the fact that the officer is also a
director of the corporation.
ARTICLE V - MISCELLANEOUS
Section 5.1 RECORDS AND INSPECTION RIGHTS. The corporation shall
keep such records (including shareholders' lists, accounting books, minutes
of meetings and other records) as are required by the California General
Corporation Law, and these records shall be open to inspection by the
directors and shareholders of the corporation to the extent permitted by the
California General Corporation Law.
Section 5.2 ANNUAL REPORT TO SHAREHOLDERS. Pursuant to Section 1501
of the California General Corporation Law, the annual report to shareholders
referred to in that section is expressly waived and dispensed with.
Section 5.3 ANNUAL STATEMENT OF GENERAL INFORMATION. The
corporation, during the applicable filing period in each year, shall file
with the Secretary of State of the State of California, on the prescribed
form, a statement setting forth: the names and complete business or
residence addresses of all
36
<PAGE>
incumbent directors; the number of vacancies on the board, if any; the names
and complete business or residence addresses of the president, secretary and
chief financial officer; the street address of its principal executive office
or principal business office in this state; and the general type of business
constituting the principal business activity of the corporation; together
with a designation of the agent of the corporation for the purpose of service
of process. All of the requirements of this Section 5.3 shall be carried out
in compliance with Section 1502 of the California General Corporation Law.
Section 5.4 CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All checks,
drafts or other orders for payment of money, notes or other evidences of
indebtedness, issued in the name of, or payable to, the corporation, shall be
signed or endorsed by such person or persons and in such manner as, from time
to time, shall be determined by resolution of the Board of Directors.
Section 5.5 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.
Subject to restrictions on corporate loans and guarantees to directors,
officers, employees or shareholders as provided by Section 315 of the
California General Corporation Law, the Board of Directors may authorize any
officer or officers or agent or agents, or appoint an attorney or
attorneys-in-fact, to enter into any contract or execute any instrument in
the name of, and on behalf of, the corporation, and this authority may be
general or confined to specific instances; and unless so authorized or
appointed, or unless afterwards ratified by the Board of Directors, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.
Section 5.6 CERTIFICATES FOR SHARES. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the chairman of the board or the president or a vice-president
and by the chief financial officer or the secretary or an assistant
secretary, certifying the number of shares and the class or series of shares
owned by the shareholder. Any or all of the signatures on the certificate
may be facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same
effect as if such person were an officer, transfer agent or registrar at the
date of issue.
Section 5.7 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation
may issue a new share certificate or a new certificate for any other security
in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the corporation may require the owner of
the lost, stolen or destroyed certificate or the owner's legal representative
to give the corporation a bond (or other adequate security) sufficient to
indemnify it against any claim that may be made against it (including any
37
<PAGE>
expense or liability) on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
Section 5.8 CORPORATE SEAL. The corporation may have a corporate
seal in such form as shall be prescribed and adopted by the Board of
Directors.
Section 5.9 INDEMNIFICATION OF CORPORATE AGENTS. The corporation
shall indemnify each of its agents against expenses, judgments, fines,
settlements and other amounts, actually and reasonably incurred by such
person by reason of such person's having been made or having been threatened
to be made a party to a proceeding to the fullest extent permissible by the
provisions of Section 317 of the California General Corporation Law, and the
corporation shall advance the expenses reasonably expected to be incurred by
such agent in defending any such proceeding upon receipt of the undertaking
required by subdivision (f) of such Section. The terms "agent", "proceeding"
and "expenses" used in this Section 5.9 shall have the same meaning as such
terms in said Section 317. The corporation may purchase and maintain
insurance on behalf of any agent of the corporation against any liability
asserted against, or incurred by, the agent in such capacity or arising out
of the agent's status as such, whether or not the corporation would have the
power to indemnify the agent against that liability under the provisions of
Section 317 of the California General Corporation Law.
ARTICLE VI - AMENDMENTS
Section 6.1 AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or
these Bylaws may be amended or repealed by the affirmative vote of a majority
of the outstanding shares entitled to vote, or by written assent of
shareholders entitled to vote such shares, except as otherwise provided by
law or by the Articles of Incorporation.
Section 6.2 AMENDMENT BY DIRECTORS. Subject to the right of
shareholders as provided in Section 6.1, bylaws other than a bylaw or
amendment thereof changing the maximum or minimum number of authorized
directors or changing from a variable to a fixed number of directors or vice
versa may be adopted, amended or repealed by the Board of Directors.
38
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, certify that I am the presently elected and acting
Secretary of BARRA, Inc., a California corporation (the "Corporation"), and that
the above bylaws, consisting of fifteen (15) pages including this page, are the
Bylaws of the Corporation, as amended and adopted by resolution of the Board of
Directors of the Corporation on January 29, 1998.
Dated: February 9, 1998 /s/ MARIA HEKKER
Executed: Berkeley, California -----------------------------
Maria Hekker, Secretary
39
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
BARRA, INC CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE AND
NINE MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> MAR-31-1998 MAR-31-1998
<PERIOD-START> APR-01-1997 OCT-01-1997
<PERIOD-END> DEC-31-1997 DEC-31-1997
<CASH> 14,713,493 0
<SECURITIES> 14,007,404 0
<RECEIVABLES> 30,547,800 0
<ALLOWANCES> 138,022 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 68,113,847 0
<PP&E> 27,867,289 0
<DEPRECIATION> 13,660,609 0
<TOTAL-ASSETS> 115,461,147 0
<CURRENT-LIABILITIES> 46,914,356 0
<BONDS> 0 0
0 0
0 0
<COMMON> 23,656,369 0
<OTHER-SE> 39,036,101 0
<TOTAL-LIABILITY-AND-EQUITY> 61,913,162 0
<SALES> 101,100,519 42,759,864
<TOTAL-REVENUES> 101,100,519 42,759,864
<CGS> 5,224,013 2,010,924
<TOTAL-COSTS> 82,987,756 28,237,951
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 12,558,978 9,703,575
<INCOME-TAX> 9,489,934 4,045,975
<INCOME-CONTINUING> 12,558,978 9,703,575
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,069,044 5,657,600
<EPS-PRIMARY> .23 .42
<EPS-DILUTED> .22 .39
<FN>
<F1> INCLUDED IN TOTAL COSTS AND EXPENSES ARE ONE-TIME ACQUISITION CHARGES OF
$9,914,000 FOR THE NINE MONTH PERIOD ENDED DECEMBER 31, 1997 REPRESENTING
PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT IN CONNECTION WITH THE
ACQUISITIONS OF GAT AND INNOSEARCH ON JUNE 24, 1997. AS REQUIRED BY GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES, THE PORTION OF THE PURCHASE PRICE ALLOCATED TO
PURCHASED TECHNOLOGY WAS IMMEDIATELY EXPENSED.
</FN>
</TABLE>
