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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
------------ ------------
--------------------------------
COMMISSION FILE NUMBER 0-19538
IMRS INC.
(Exact name of registrant as specified in its charter)
d/b/a HYPERION SOFTWARE
DELAWARE 06-1326879
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 LONG RIDGE ROAD, STAMFORD, CONNECTICUT 06902
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (203) 321-3500
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
As of September 15, 1995, there were 8,180,446 shares of the registrant's Common
Stock, $.01 par value, outstanding. The aggregate market value of the
registrant's voting stock held by non-affiliates as of September 15, 1995 was
approximately $414 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for its 1995 Annual Meeting of
Stockholders, scheduled to be held on November 15, 1995, are incorporated by
reference in Part III hereof.
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PART I
ITEM 1. BUSINESS
GENERAL
IMRS Inc., now doing business as Hyperion Software ("Hyperion Software" or
the "company"), develops, markets and supports corporate financial software
applications for client/server environments. The company's Windows-based,
client/server products address the diverse accounting, financial consolidation,
management reporting, budgeting, and information access needs of large
corporations worldwide. Founded in 1981, the company designs products
specifically for network implementation, providing fast, multi-user access to
centrally controlled and secure corporate data.
Hyperion, Financial Intelligence, Executive Forum, IMRS, Micro Control and
OnRequest are registered trademarks and Hyperion Financials, Hyperion
Enterprise, Hyperion Pillar, Hyperion Analyst, Hyperion Connect, Hyperion
Retrieve, Hyperion Reporting, Hyperion Forms, Hyperion OnTrack, Hyperion Ledger,
Hyperion Payables, Hyperion Admin, Hyperion Tools, Hyperion Purchasing, Hyperion
Receivables, Hyperion Assets, Hyperion Software and LedgerLink are trademarks of
the company. FYPlan and Pillar are registered trademarks and FYControl is a
trademark of Hyperion Software, Pillar Group Inc., a wholly-owned subsidiary of
the company. All other trademarks and company names mentioned are the property
of their respective owners.
INDUSTRY BACKGROUND
Large corporations generate significant amounts of accounting,
manufacturing, human resources, sales and marketing data. To be useful to senior
executives, managers and analysts, such transactional data must be retrieved
from a variety of financial and operational systems, then summarized and
organized into meaningful business information that is consistent and easily
accessible. The process of integrating the data is complicated because most
large corporations use multiple accounting systems and transactional databases,
conduct business in numerous locations and have diverse information requirements
across functions and throughout the management hierarchy.
Historically, corporations have attempted to collect, summarize, organize
and present information from fragmented computer systems and transactional data
sources in a number of ways. In many instances, business information reports are
assembled manually with the aid of spreadsheets and using data from general
ledgers and other operational systems. Additionally, many corporations have
sought to automate business information systems through the use of mainframe or
minicomputer software developed by their internal management information systems
("MIS") department. Hyperion Software believes that these systems are becoming
increasingly obsolete because they are inherently rigid in structure, slow in
response time, expensive to maintain, and difficult to update when information
requirements change. In addition, growing corporate competition has increased
the demand for more comprehensive and timely business information that is
accessible throughout the corporation.
Recent advances in computer and networking technology have allowed business
information processing at large corporations to be moved to local area networks
("LANs") of personal computers. This trend in down-sizing corporate computing
has gained momentum as a result of improvements in PC processing speeds and
memory capacity and the widespread acceptance of LANs. Local area and
enterprise-wide networks have significantly increased the ability to share
information among users throughout an organization. While MIS departments were
initially slow to adopt LAN technology, they now view networked PCs as a
strategic element of information management. LAN-based solutions are becoming
accepted as an important means of decreasing computing costs while improving the
flow, accessibility and usefulness of corporate information. Additionally, the
flexibility of new client/server architectures has led to MIS adoption of new
technologies at a faster pace. Client/server computing takes advantage of the
power of desktop computers by appropriately segregating user interface and
application processing tasks between separate client and server machines.
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The need for better business information, combined with the acceptance of
PCs and network computing, including new client/server architectures, has
created a significant market opportunity for a new class of information software
designed to operate on this platform. Most financial analysts and accountants
and many executives rely on personal computers for analysis and forecasting
through the use of spreadsheets. While spreadsheets and other PC software tools
have been used to perform some corporate business information tasks, they have
limited capability for information sharing and lack the necessary controls to
ensure corporate consistency. Existing custom or packaged software for
mainframes or minicomputers is impractical to modify for network computing
because it is based on operating systems and architectures which are
incompatible with PCs and lack the ease of use of PC software. The company's
experience since 1981 in developing and marketing corporate financial software
applications for PCs and networks positions it well for this market.
STRATEGY
The company's objective is to be the leading provider of Windows-based,
client/server financial solutions to large, multi-divisional or multi-location
companies worldwide. Hyperion Software focuses on designing network-based
applications that are easy to implement and operate and which facilitate the
redesign of financial and accounting processes. The company's products are
designed to be flexible, easy to maintain, cost-efficient, fast, functionally
complete and integrated with an architecture based on connectivity and openness
to other best-of-class applications. The company will continue to extend and
enhance its suite of integrated Windows-based, client/server products. The
company believes that its financial reporting and consolidation, as well as its
planning and budgeting solutions, are well established in the financial and
corporate offices of multinational enterprises. And, accordingly, with the
introduction of Hyperion Financials, a line of integrated accounting products,
Hyperion Software believes it is well positioned to participate in this emerging
client/server, accounting applications market. Hyperion Financials' commercial
release began in fiscal year 1995 and includes Windows-based: general ledger,
toolkit, report writer and system administrator modules, to be followed by
accounts payable, accounts receivable, fixed asset and purchasing modules.
The company believes that client/server and networked personal computing
has become a standard direction for the largest and best known companies in the
world. These technologies, when coupled with software that reflects applications
expertise, produce clear and immediate benefits to an organization.
The company's strategy to achieve its objective includes the following
elements:
Increase Penetration of Financial Reporting and Budgeting Markets. The
company believes that a small minority of potential customers has purchased
network-based, Windows financial consolidation and reporting, and planning and
budgeting software. The company intends to further its penetration in this
market and expand its leadership position by enhancing its current products and
dedicating significant resources to sales, marketing, support and new product
development.
Leverage Existing Market Leadership Position. The company believes that the
core of a complete business information system is financial consolidation and
reporting because much of the data that executives use relates to a company's
internal financial information. The company believes that its established
strength in providing financial reporting solutions places it in a strong
position to market its finance and accounting applications to both new and
existing customers.
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Focus on Leading Network and Software Technologies. Hyperion Software is
committed to the development of network-based software for business information
applications. The company has products designed to run in the Microsoft Windows
environment, all of which are compatible with widely-used LANs. The company
intends to enhance its existing products and develop new products linked to
emerging client/server software standards, including Windows 95, Windows NT,
Sybase SQL Server and Oracle databases.
Design Applications for Specific Business Information Needs. The company's
product line is designed specifically for business information data collection,
accounting, presentation and interactive analysis. Hyperion Software products
have pre-programmed functionality, reducing implementation time. This
orientation to specific tasks results in superior processing speed for fast data
compilation and data access. The use of application specific, as opposed to
general purpose, databases optimizes performance on high volume networked
applications. Company products also offer integrated, industry standard SQL
databases.
Design for Ease of Implementation and Ease of Use. The company's products
are designed for an end-user role in implementation and maintenance, with
minimal training. Application expertise is built into products and is also
provided by the company through consulting services. Following implementation,
customers are able to operate self-sufficiently with trained administrators at
headquarters locations and independent end-users at headquarters and at remote
sites.
Maintain Direct Sales and Support Relationships. Unlike many other PC
software companies, the company licenses its products throughout the world
primarily through a direct sales force. In certain territories outside of North
America, products are licensed through independent distributors, including major
accounting firms. Hyperion Software often provides installation and post-sale
consulting support to build long-term customer relationships.
Generate Follow-on Revenues. The company generates revenues from existing
customers through the licensing of additional sites, the introduction of new
products and license renewal fees. In addition, sales of training and consulting
services to existing customers represents a significant portion of the company's
total service revenues. Follow-on revenues leverage sales and marketing
resources and strengthen the company's relationships with its customers.
PRODUCTS AND SERVICES
The company's product line provides executives, managers, analysts and
accountants with the capability to collect, process, report and analyze business
information. The company's Hyperion Enterprise and Micro Control products
consolidate and report financial and other business data; Hyperion Pillar is
used for corporate budgeting and financial planning; Hyperion Financials is used
for corporate accounting; Hyperion OnTrack is a complete Visual Information
Access software product; and Hyperion Forms is used to design, implement and
control forms for detailed and consistent data collection. The company also
offers installation, training, consulting and support services.
PRODUCTS
Hyperion Enterprise. Hyperion Enterprise, released in July 1991 and now in
its third major release, is an advanced business information consolidation and
reporting product designed to take advantage of the capabilities of the
Microsoft Windows graphical operating environment. The company began development
of Hyperion Enterprise in mid-1988 as a new product that combines powerful
consolidation and reporting capabilities with an open architecture and
administrative ease of use made possible through the graphical user interface of
Windows. Hyperion Enterprise reflects the company's thirteen years of experience
in financial and
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business information software, and is targeted to corporations that have
committed to a Windows standard and direction. The company has provided a
migration path to Hyperion Enterprise for Micro Control or FASTAR users who may
decide to adopt Windows, but intends to continue to offer both character-based
and Windows products to the financial reporting and consolidation market. The
company derived approximately 61%, 50% and 20% of its worldwide total revenues
from Hyperion Enterprise licenses and related services during fiscal 1995, 1994
and 1993, respectively.
A Hyperion Enterprise headquarters site license is priced at $150,000
($175,000 for the SQL version), with administrative and reporting site licenses
priced at $30,000 and $6,000, respectively, or less, depending on the number of
sites.
Micro Control. Micro Control was introduced in 1982 and is now in its eighth
major release. Micro Control consolidates, reports and maintains, in one
integrated database, a company's financial and statistical reporting
information, including actual, budget, forecast, plan and prior years' data. The
company derived approximately 13%, 25% and 51% of its worldwide total revenues
from Micro Control licenses and related services during fiscal 1995, 1994 and
1993, respectively.
Micro Control enables a financial staff to independently manage the
collection, consolidation, analysis and reporting of financial data without the
need for technical training. Information can be automatically loaded from
various sources, including mainframe or minicomputer-based general ledgers and
from spreadsheets. Reporting locations enter and validate information and
transmit it to headquarters through a wide area network, local area network or
direct PC-to-PC. Consolidation, currency conversions, intercompany eliminations
and expense allocations are performed automatically by Micro Control. Security
and audit trail features are also provided.
The company offers several complementary Micro Control modules. Through
Retrieve-MC and Retrieve MC/XL, Micro Control users can link directly to Lotus
1-2-3 and Microsoft Excel, respectively, for further data manipulation and
analysis. TelePath allows menu-driven on-screen report building. Chartbuilder
provides a method for quick and easy creation and maintenance of a Micro Control
system.
A Micro Control headquarters site license is priced at $95,000, and it
allows for an unlimited number of computers at the site to run the software.
Reporting site licenses are $3,500 per site or less, depending on the number of
sites.
Hyperion Pillar. Hyperion Pillar is a complete solution for corporate
planning needs. It facilitates the collaborative, iterative process of
enterprise-wide budgeting and forecasting. Hyperion Pillar helps give the
corporate plan greater credibility by allowing for line managers to assume full
accountability for their budgets. The software enables users to build up their
budgets from a series of line items the way they think--in units, rates and/or
amounts. Product security features ensure that planning managers have complete
control over which users have access to what data. Hyperion Pillar is a
Windows-based solution with flexible import/export capabilities for interaction
with virtually all financial software systems. The product easily allows for
changes in corporate structure or reporting lines--making it easy to change the
plan as the company evolves. Hyperion Pillar is typically licensed to user
groups of 10 or more, priced at $45,000 for 10 end users.
Hyperion Financials. Hyperion Financials accounting products allow an
enterprise to control the detailed collection and reporting of day-to-day
business transactions. Hyperion Financials products are designed for fast
installation and easy maintenance. Superior integration among modules allows
users to drill-down from ledger information to supporting subsystem
transactions.
Hyperion Ledger, released in March 1995, is a Windows-based general ledger
accounting system for large, corporate client/server environments. Hyperion
Ledger controls the management of a full range of advanced accounting
functions, including flexible account structures, intercompany transaction
control, multi-currency processing, and complex consolidation processing. A
Hyperion Ledger headquarters site license is priced at $120,000 per server.
Hyperion Reporting, released in March 1995, is a powerful graphical tool for
presenting financial data in business formats such as cash flow reports,
profit and loss statements, and balance sheets. A Hyperion Reporting
headquarters site license is priced at $30,000 per server.
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Hyperion Tools, released in March 1995, is an object-oriented development
environment that runs under Microsoft Windows. It allows an organization to
customize Hyperion Software applications or build complementary applications to
extend its corporate systems. A Hyperion Tools headquarters site license is
priced at $45,000 per server.
Hyperion Admin, released in March 1995, provides system control for the
Hyperion Financials installation. User-defined parameter settings allow
customers to tailor security and processes to meet unique business
requirements. Benefits of Hyperion Admin include reduced maintenance and
increased system integrity. Simplified set-up functions and predefined values
allow for quicker installation. A Hyperion Admin headquarters site license is
priced at $60,000 per server.
Hyperion Payables is expected to be released commercially this fall.
Subsequent Hyperion Financials product releases will include Hyperion
Purchasing, Hyperion Receivables and Hyperion Assets.
Hyperion OnTrack. Hyperion OnTrack, introduced in 1989 and now in its third
major release, is a Windows-based, Visual Information Access product. Hyperion
OnTrack provides senior executives, managers and analysts with access to
business information through an attractive, intuitive user interface.
Presentation of information from a variety of sources, which may include one of
the company's financial reporting software products, is easily accomplished
through a set of Windows-based system administration facilities. Information
from mainframe or network-based systems, such as marketing, sales, human
resources or production data, and external information, such as stock price
quotations or economic data, may also be incorporated. Graphics and spreadsheets
are easily integrated. A key benefit to Hyperion OnTrack is greatly reduced
development and maintenance effort in comparison to traditional mainframe-based
systems.
OnRequest, a module of Hyperion OnTrack, was released in June 1992.
OnRequest incorporates Trinzic Corp.'s Forest and Trees product into Hyperion
OnTrack, providing access to a number of SQL databases.
A headquarters site license for OnTrack is priced at $85,000, with
administrative and reporting site licenses priced at $10,000 and $5,000,
respectively, or less, depending on the number of sites. An OnRequest license
for application development, including 10 end user versions of Forest and Trees,
is priced at $15,000.
Hyperion Forms. Hyperion Forms, commercially released in fiscal year 1994,
is a Microsoft Windows-based product used to control a full range of data
collection and forms management functions. Hyperion Forms supports financial
workflow by accelerating and securing data collecting and transferring
procedures. It provides customers with the ability to design custom forms for
detailed data entry and transfer data into Hyperion Forms from virtually any
corporate database.
A headquarters site license for Hyperion Forms is priced at $60,000, with
remote locations priced at $2,000 per site.
SERVICES
The company provides design consulting and implementation support for its
products and their operation on local or wide area networks and offers a range
of administrator and end-user courses at its training facilities or at the
customer's site. Implementation, consulting and training services are not
included in software license fees but are provided on a time and materials
basis. This allows the customer to determine the level of support appropriate to
its needs and permits the company to provide high quality services on a
profitable basis.
Following product implementation, a customer has the option to receive
support under a standard license renewal and maintenance fee and may choose,
through payment of a retainer, to receive ongoing product consulting services at
a discount from standard rates. Under the terms of the company's standard
license agreement, customers, at their option, pay a license renewal and
maintenance fee annually. The annual fee charged to a customer is generally a
fixed percentage of the then-current list prices for the licensed software
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used by the customer (subject to a 10% limit on the permitted increase in any
one year). This fee entitles customers to support, including a user hotline and
electronic bulletin board, and to any updates and enhancements provided for
their software. The company's product support function provides a hotline,
collects and evaluates requests for enhancement of products and together with
the product management and planning group, coordinates the design, development
and releases of new products and product enhancements.
An active user group, including a steering committee and product enhancement
sub-committees, works closely with the company in helping to define product
enhancement priorities and directions. A U.S. user group meeting, attended by
over 1,300 users from 625 companies in May 1995, is held annually. Regional user
meetings and product-specific focus groups are also scheduled periodically,
including an annual European user group meeting.
CUSTOMERS AND APPLICATIONS
The company markets its products worldwide to multi-divisional or
multi-locational organizations which have extensive operations and significant
information management requirements. Examples of the use of Hyperion Software
products by the company's clients include the following:
- A leading international home appliance manufacturer and marketer has
implemented Hyperion Enterprise as part of its global financial
information process re-engineering initiative. Operating in more than
120 countries, sites from around the world were previously faxing data
to corporate headquarters, where the data was manually entered into
spreadsheets. The entire process was "extremely tedious and prone to
error," according to the customer. Now, Hyperion Enterprise is
addressing the customer's expanding global information requirements,
providing easy access to data, direct links to spreadsheets and easy
system maintenance, all within a Microsoft Windows-based computing
environment.
- A healthcare company eliminated tedious re-keying of data and
dramatically reduced manual input by using Hyperion Enterprise for its
worldwide financial information requirements. An expanding presence in
Europe and the addition of a new line of over-the-counter products
required that the customer keep track of an extensive amount of product
data on a global basis. Essential business data of the customer includes
knowing where and when sales are made, products are introduced, and
whether budgets are being achieved. Hyperion Enterprise 's flexible
reporting, dynamic links to spreadsheet products, speed, and access to
both detail and top-level data for more than 500 products is the
cornerstone for this data.
- A leading, worldwide, personal computer manufacturer using Hyperion
Pillar has reduced its budget roll-up process from three days to three
hours. According to the computer company's finance group, it now
spends 80 percent of its time on analysis and 20 percent on mechanics.
Prior to installing Hyperion Pillar, the customer used a
spreadsheet-based system and applied as much as 80 percent of its time
verifying numbers.
The company has licensed its software to over 2,300 corporate headquarters
customers. In the past three fiscal years, no one customer accounted for more
than 10% of total revenues. The company's customers include the following:
<TABLE>
<CAPTION>
COMPUTERS & SOFTWARE UTILITIES & ENERGY COMMUNICATIONS
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<S> <C> <C>
3COM Arco Oil & Gas Ameritech
Amdahl BP Exploration AT&T
</TABLE>
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<TABLE>
<S> <C> <C>
AST Research Canadian Occidental Bell Atlantic
AT&T Chevron BellSouth International
Bull Citizens Utilities GTE
Compaq Computer Conoco ITT
Dell Computer Mobil Oil ICL
Digital Equipment Northwest Utilities NYNEX
Microsoft Pennzoil SNET
Motorola Santa Fe Energy Resources Southwestern Bell
Novell Southern California Gas Sprint
Wang Tenneco Turner Broadcasting System
CHEMICALS PHARMACEUTICALS FINANCIAL SERVICES
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E.I. duPont de Nemours American Home Products American Express
Eastman Kodak Bristol-Myers Squibb Bank of America
Hercules Eli Lilly Canada The Bank of New York
Monsanto Johnson & Johnson National Westminster Bancorp
PPG Industries Merck & Co. Skandia International
The Sherwin-Williams Company Upjohn Shawmut Bank
Union Carbide
FOOD & BEVERAGE CONSUMER GOODS INSURANCE
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Burger King American Brands Aetna
CPC International Black & Decker Guardian Life Insurance
Dannon Clairol Kemper Life
Dole Colgate-Palmolive Liberty Mutual Group
General Mills Eveready Battery Metropolitan Life
Hiram Walker-Allied Vintners Gillette Principal Mutual Life
H.J. Heinz Goodyear Prudential Insurance
Kraft General Foods Levi Strauss & Co. St. Paul Companies
McDonald's Mattel TIAA
Nabisco Nike The Travelers
Pepsi-Cola International Reckitt & Colman
Philip Morris Sony USA
Sara Lee Timex
Whirlpool
</TABLE>
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SALES AND MARKETING
The company has a direct sales force comprised of 131 sales personnel as of
June 30, 1995. The company supports its sales force with lead generation and
marketing programs which include telemarketing, public relations, direct mail,
advertising, seminars, trade shows and ongoing customer communication programs.
The company has sales offices at its headquarters in Stamford, Connecticut and
in: Amsterdam, Atlanta, Baltimore, Boston, Brussels, Chicago, Dallas, Denver,
Detroit, Foster City, Frankfurt, Houston, Linz, London, Los Angeles, Madrid,
Manchester, Milan, Newark, Ottawa, Paris, Philadelphia, Raleigh, Rome,
Sacramento, San Francisco, Seattle, Singapore, St. Louis, Stockholm, Tokyo,
Toronto and Washington, DC. Product support and training are available as well
through many of these locations.
The company markets its products outside of North America through a
combination of subsidiaries and independent distributors. These distributors are
managed through the company's operations facility in Milan, Italy, which is
staffed by 16 company personnel. The company has license and distribution
agreements with independent distributors in: Australia, Japan, Mexico, Hong
Kong, New Zealand, South Africa, Southeast Asia and Switzerland. The company's
distributors include affiliates of Arthur Andersen & Co. in Japan and
Switzerland, and of KPMG Peat Marwick in Australia and New Zealand. The
distributors generally maintain sales and service personnel dedicated solely to
the company's products. The distribution agreements between the company and its
distributors generally provide for the exclusive right to offer the company's
products within a territory, in return for royalties typically equal to 50% of
license and license renewal fees. In each of its 1995, 1994 and 1993 fiscal
years, approximately 28.1%, 26.7% and 25.5%, respectively, of the company's
total revenues were derived from sources outside of the United States.
Because the company generally ships its products shortly after license
agreements are signed, the company's software licensing backlog is typically
small.
PRODUCT DEVELOPMENT
To date, all of the company's principal products have been developed by its
internal staff except for Hyperion Pillar, which was acquired in connection with
the company's acquisition of Pillar Corporation (November 1994), and portions of
Hyperion OnTrack and Hyperion Forms. When developing a new product or
enhancement, the company works closely with current and prospective customers to
determine their requirements. A user product enhancement committee, comprised of
representatives of certain of the company's customers, meets quarterly and
advises the company of their priorities for product development and enhancement,
as well as product support service.
The company's current product development efforts are primarily focused on
Hyperion Financials, and on maintaining the competitiveness of its current
product line, including development of the next releases of Hyperion Enterprise,
Hyperion Pillar, Hyperion OnTrack and Hyperion Forms. Also under development for
release this fall is Hyperion Analyst. This new product will provide
multi-dimensional, on-line analysis capabilities tailored to the specialized
requirements of working with financial and accounting data. The company
generally releases enhancements to its products every 12 to 18 months. As of
June 30, 1995, the company's product development was performed by 183 employees
primarily located at its Stamford, Connecticut headquarters.
During fiscal 1995, 1994 and 1993, the company's product development
expense, which is net of capitalized development costs, was $20,980,000,
$12,767,000 and $9,196,000, or 15.3%, 13.5% and 13.8% of total revenues,
respectively. In accordance with Statement of Financial Accounting Standards No.
86, the company capitalizes certain development costs. During fiscal 1995, 1994
and 1993, the company capitalized $5,207,000, $4,009,000 and $2,050,000,
respectively, or 19.9%, 23.9% and 18.2% of total product development
expenditures.
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COMPETITION
The principal competitive factors in the markets served by the company
include product quality, functionality, speed, reliability and ease of use,
customer satisfaction, service, price, vendor reputation and financial
stability. The company believes that its products currently compete favorably
with respect to such factors, although it may be at a competitive disadvantage
against companies with greater financial, marketing, service and support and
technological resources.
The company experiences competition from applications software vendors and
from software developed by the MIS departments of its potential customers. Many
of the company's potential customers utilize software developed internally for
mainframes or minicomputers. The market for Windows-based, client/server
corporate financial software is still an emerging market and is not well
established. As the market for the company's products develops, additional
competitors may enter the market and competition may intensify. Some of the
company's current and potential competitors have significantly greater
development, marketing and capital resources than the company. While Hyperion
Software is anticipating formidable competition with respect to Hyperion
Financials, the company believes the widespread presence and acceptance of its
financial management and budgeting solutions in the marketplace will serve to
establish the position of Hyperion Financials in the emerging client/server,
corporate accounting applications market.
PROPRIETARY RIGHTS AND LICENSES
The company depends upon a combination of trade secret, copyright and
trademark laws, license agreements, nondisclosure and other contractual
provisions and technical measures to protect its proprietary rights in its
products. In addition, the company attempts to protect its trade secrets and
other proprietary information through agreements with employees and consultants.
Despite these precautions, it may be possible for unauthorized third parties to
copy aspects of the company's products or to obtain information that the company
regards as proprietary. The company also seeks to protect the source code of its
products as a trade secret and as an unpublished copyright work.
The company distributes its products under software license agreements which
grant customers a nonexclusive, nontransferable license to the company products
and contain terms and conditions prohibiting the unauthorized reproductions or
transfer of the company's products. The company does not provide licensees with
the source code for its products.
Customers are billed an initial license fee for the software upon delivery
and, subsequently, are billed an annual license renewal fee entitling them to
routine support and product updates. The license renewal fee is typically
calculated at a fixed percentage of the then-current price of all licensed
software used by the customer, subject to a maximum year-to-year increase of
10%. The annual license renewal is optional; however, without renewing, the
licensee is entitled only to use the software in its then current form, without
receiving future updates or product support. See "Services."
The company believes that, due to the rapid pace of innovation within the
software industry, factors such as the technological and creative skills of its
personnel and ongoing reliable product maintenance and support are more
important in establishing and maintaining a leadership position within the
industry than are the various legal protections of its technology. In addition,
the company believes that the nature of its customers, the importance of the
company's products to them and their need for continuing product support reduce
the risk of unauthorized reproduction.
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EMPLOYEES
As of July 31, 1995, the company employed a total of 846 employees,
including 215 in marketing and sales, 546 in product development, support and
technical services, and 85 in management, administration and finance. None of
the company's employees is represented by a labor union. The company has
experienced no work stoppages and believes that its employee relations are good.
The executive officers of the company are as follows:
<TABLE>
<CAPTION>
Name Age Position
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<S> <C> <C>
James A. Perakis................ 51 President and Chief Executive Officer and Director
Terence W. Rogers............... 53 Executive Vice President
David M. Sample................. 47 Senior Vice President
Lucy Rae Ricciardi.............. 53 Senior Vice President and Chief Financial Officer
John N. Adinolfi................ 45 Vice President - Marketing
Thomas E. Bell.................. 41 Vice President - Hyperion Financials Business Group
Gordon O. Rapkin................ 40 Vice President - Hyperion Enterprise Business Group
Craig M. Schiff................. 40 Vice President - Products and Services and Secretary
</TABLE>
Mr. Perakis has served as Chief Executive Officer and as a director of the
company since September 1985 and as President since December 1987. Mr. Perakis
is also Chairman of the Board of Directors. From 1983 to September 1985, Mr.
Perakis served as Senior Vice President and General Manager of Chase Decision
Systems, a division of Interactive Data Corporation, a developer and marketer of
mainframe software for planning and financial applications. From 1979 to 1983,
Mr. Perakis was Chief Financial Officer of Interactive Data Corporation, a
supplier of data and software to financial and corporate markets.
Mr. Rogers has served as Executive Vice President of the company since
August 1993. From August 1991 to August 1993, Mr. Rogers served as Vice
President - Communications Products Division of Lotus Development Corporation, a
developer and marketer of applications software and information services. From
April 1990 to August 1991, Mr. Rogers was Vice President - Spreadsheet
Development of Lotus. Prior to April 1990, Mr. Rogers served in a variety of
senior development positions at IBM.
Mr. Sample has served as Senior Vice President of the company since July
1993. From July 1986 to July 1993, Mr. Sample served as Vice President - Sales
of the company. From 1978 to July 1986, Mr. Sample was associated with the
Business Information Services Division of Control Data Corporation, most
recently as a District Sales Manager.
Ms. Ricciardi was appointed Senior Vice President of the company in July
1995. From February 1990 to July 1995, Ms. Ricciardi served as Vice President -
Finance and Chief Financial Officer of the company. From February 1988 to
February 1990, Ms. Ricciardi served as Director of Finance of the company. Prior
to 1988, Ms. Ricciardi was associated with Dun & Bradstreet, most recently in
its Acquisitions Analysis Group.
Mr. Adinolfi has served as Vice President - Marketing of the company since
March 1987. Prior to March 1987, Mr. Adinolfi served in a variety of software
and product management positions with Dun & Bradstreet.
Mr. Bell has served as Vice President - Hyperion Financials Business Group
of the company since April 1994. From May 1991 to April 1994, Mr. Bell served
first as Director of Software Architecture and later as Director of Programming
of the company. Prior to May 1991, Mr. Bell served as Director of Development
with Must Software, a spin-off from Dun & Bradstreet.
-10-
<PAGE> 12
Mr. Rapkin has served as Vice President - Hyperion Enterprise Business Group
of the company since April 1994. From November 1992 to April 1994, Mr. Rapkin
served as Vice President - Product Management and Planning. From October 1988 to
November 1992, Mr. Rapkin served as Vice President - Product Development of the
company. From 1981 to October 1988, Mr. Rapkin served as Senior Director,
Product Development of Comshare, Inc., an applications software company.
Mr. Schiff has served as Vice President -- Products and Services of the
company since July 1985. Mr. Schiff originally joined the company in July 1983.
Prior to July 1983, Mr. Schiff served in a variety of customer service and
support positions with General Electric Information Services.
ITEM 2. PROPERTIES
The company's principal administrative, marketing and product development
and support facilities are located in Stamford, Connecticut, where the company
leases approximately 73,600 square feet under several agreements that expire in
the second quarter of fiscal 1996. The annual base rent (not including operating
expenses, insurance, property taxes and assessments) is approximately $1,300,000
and is subject to an annual adjustment in accordance with the Consumer Price
Index. The company also leases regional office space for its local sales and
service needs.
On January 20, 1995, the company completed the purchase of an office
facility in Stamford, Connecticut, for $11.4 million. The purchase price was
financed by the Connecticut Development Authority ("CDA," an agency of the State
of Connecticut) through a $9.5 million mortgage loan, with company funds used
for the balance. In the interest of Connecticut-based jobs, the CDA agreed to
such financing over a 15-year period at LIBOR minus 2%, subject to, among other
things: (i) the creation of a specified number of new Connecticut-based jobs,
(ii) a 10-year residency in the state, and (iii) the payment of the remaining
unpaid principal at the end of year ten. Violations of certain such covenants,
if any, would result in additional interest charges and/or a penalty payment.
The new location, to be ready this fall, has approximately 200,000 square feet
of existing office space and it allows for future expansion of up to 300,000
square feet of additional space.
ITEM 3. LEGAL PROCEEDINGS
From time to time, in the normal course of business, various claims are made
against the company. At this time, in the opinion of management, there are no
pending claims the outcome of which is expected to result in a material adverse
effect on the financial position of the company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders, through the solicitation of
proxies or otherwise.
-11-
<PAGE> 13
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The company's common stock trades on The Nasdaq Stock Market under the
symbol HYSW. The following table sets forth, for the periods indicated, the high
and low sales prices of the common stock as reported on The Nasdaq Stock Market.
<TABLE>
<CAPTION>
Fiscal 1994: High Low
- - -----------------------------------------------------------------------------------
<S> <C> <C>
First quarter $21 3/4 $16
Second quarter 27 3/4 18 1/4
Third quarter 29 1/4 21
Fourth quarter 26 3/4 18
FISCAL 1995: HIGH LOW
First quarter $37 1/2 $21 1/4
Second quarter 40 1/4 32
Third quarter 49 3/4 34 3/4
Fourth quarter 49 31 1/4
FISCAL 1996: HIGH LOW
First quarter (through September 15th) $53 3/4 $44
</TABLE>
The company has never declared or paid any cash dividends on its capital
stock. The company currently intends to retain all earnings to finance future
growth and therefore does not anticipate paying any cash dividends in the
foreseeable future. The company's credit agreement with its bank contains
covenants that restrict the company regarding the payment of dividends.
As of September 15, 1995, the company had 108 stockholders of record and
approximately 2,000 beneficial holders of its common stock.
-12-
<PAGE> 14
<TABLE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)
<CAPTION>
YEAR ENDED JUNE 30
----------------------------------------------------------------------------
1995 1994 1993 1992(b) 1991
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA (A)
REVENUES
Software licenses $ 77,985 $ 51,687 $ 35,801 $ 28,609 $ 20,100
License renewals and services 59,156 42,575 30,844 20,242 15,204
---------------------------------------------------------------------------
Total revenues 137,141 94,262 66,645 48,851 35,304
COSTS AND EXPENSES
Cost of revenues:
Software licenses 4,454 2,820 1,841 1,309 815
License renewals and services 36,443 24,921 18,541 12,249 10,282
Sales and marketing 44,324 30,036 21,325 17,504 11,440
Product development 20,980 12,767 9,196 6,944 6,177
Purchased research and development 2,600
General and administrative 11,302 9,703 8,407 5,790 4,671
Merger and integration 1,000
---------------------------------------------------------------------------
118,503 80,247 61,910 43,796 33,385
---------------------------------------------------------------------------
OPERATING INCOME 18,638 14,015 4,735 5,055 1,919
Interest income 1,620 851 605 569 179
Interest expense (119) (117) (137) (439) (557)
---------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 20,139 14,749 5,203 5,185 1,541
Provision for income taxes 8,000 6,140 2,860 2,750 1,834
---------------------------------------------------------------------------
NET INCOME (LOSS) $ 12,139(C) $ 8,609 $ 2,343(d) $ 2,435 $ (293)
===========================================================================
EARNINGS (LOSS) PER SHARE
Primary $ 1.40(C) $ 1.04 $ .30(d) $ .35 $ (.06)
Fully diluted $ 1.39(C) $ 1.04 $ .29(d) $ .34 $ (.06)
AVERAGE NUMBER OF SHARES OUTSTANDING
Primary 8,658 8,292 7,750 7,053 5,124
Fully diluted 8,740 8,300 7,952 7,123 5,124
</TABLE>
<TABLE>
<CAPTION>
JUNE 30
-------------------------------------------------------------
1995 1994 1993 1992(b) 1991
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (A)
Working capital $ 37,306 $34,829 $25,839 $24,590 $ 6,058
Total assets 146,158 94,715 67,358 52,670 25,871
Total long-term debt 8,910 2,731
Stockholders' equity 71,706 53,661 40,683 32,894 9,903
<FN>
(a) Includes Pillar Corporation (see Note B to the accompanying consolidated
financial statements).
(b) Reflects the initial public offering of the company's common stock in
November 1991.
(c) Includes nonrecurring merger and integration charges relating to the
acquisition of Pillar Corporation, which had the effect of reducing net
income by approximately $1,000 or $.11 per share.
(d) Includes a one-time charge relating to the fiscal 1993 purchase of research
and development, which had the effect of reducing net income by
approximately $1,560 or $.20 per share.
</TABLE>
-13-
<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Dollars in thousands)
RESULTS OF OPERATIONS
- - --------------------------------------------------------------------------------
IMRS Inc., now doing business as Hyperion Software ("Hyperion Software" or the
"company"), derives revenues from licensing its software products and providing
related product installation, support and training services. Customers are
billed an initial fee for the software upon delivery. A license renewal fee
entitling customers to routine support and product updates is billed annually.
Hyperion Software licenses its products throughout the world primarily through a
direct sales force. In certain territories outside of North America, products
are licensed through independent distributors, including major accounting firms.
The company includes in revenues its net share of revenues generated by
distributors.
On November 29, 1994, the company completed its acquisition of Pillar
Corporation, a California-based provider of Windows-based corporate budgeting
and planning products. The company's financials have been restated for all prior
periods to include Pillar. For further details of the merger, see below and Note
B of the accompanying consolidated financial statements.
FISCAL 1995 COMPARED TO FISCAL 1994
REVENUES
<TABLE>
<CAPTION>
1995 CHANGE 1994
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Software licenses $77,985 50.9% $51,687
Percentage of total revenues 56.9% 54.8%
- - --------------------------------------------------------------------------------
License renewals and services $59,156 38.9% $42,575
Percentage of total revenues 43.1% 45.2%
</TABLE>
Software license revenues rose primarily as a result of an increase in the
number of licenses sold versus, for example, price increases. Demand for the
company's Microsoft Windows-based enterprise financial management and planning
products continues to be strong. Windows-based product licenses comprise more
than 90% of the company's total software license revenues.
The increase in license renewal and service revenue is mainly attributable to
the year-to-year growth of the company's installed customer base.
Revenues generated from markets outside the United States for fiscal 1995 and
1994 were $38,471 and $25,136, or 28.1% and 26.7% of total revenues,
respectively.
COST OF REVENUES
<TABLE>
<CAPTION>
1995 CHANGE 1994
- - ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Software licenses $ 4,454 57.9% $ 2,820
Gross profit percentage 94.3% 94.5%
- - ---------------------------------------------------------------------------------
License renewals and services $36,443 46.2% $24,921
Gross profit percentage 38.4% 41.5%
- - ---------------------------------------------------------------------------------
</TABLE>
Cost of software license revenues consists primarily of the cost of product
packaging and documentation materials, amortization of capitalized software
costs, amortization of certain intangible assets related to business
acquisitions, and royalty expenses. The increase in the cost of software license
revenues principally reflects the associated increase in the number of software
licenses sold and the amortization of capitalized costs ($997) related to new
products and product enhancements. The amortization of capitalized software
costs commences upon the general release of the software to customers.
-14-
<PAGE> 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(Dollars in thousands)
The increase in the cost of license renewal and service revenues was due
primarily to additional staffing expense for both installation and ongoing
support services. The professional services staff includes new members dedicated
to the company's newly released (March 1995) set of accounting products,
Hyperion Financials.
OPERATING EXPENSES
<TABLE>
<CAPTION>
1995 CHANGE 1994
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales and marketing $ 44,324 47.6% $30,036
Percentage of total revenues 32.3% 31.9%
- - --------------------------------------------------------------------------------
Product development $ 20,980 64.3% $12,767
Percentage of total revenues 15.3% 13.5%
- - --------------------------------------------------------------------------------
General and administrative $ 11,302 16.5% $ 9,703
Percentage of total revenues 8.2% 10.3%
- - --------------------------------------------------------------------------------
</TABLE>
The increase in sales and marketing expenses is primarily due to a net increase
in sales/marketing personnel, an increase in commission costs directly
associated with the significant increase in software license revenues, and, to a
lesser extent, greater overall marketing initiatives.
The increase in product development expenses reflects additional personnel and
third-party development costs associated with expanded research and development
activities. In fiscal 1995 and 1994, the company capitalized $5,207 and $4,009
of software development costs, respectively, in accordance with Statement of
Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed" ("FAS-86"). The amounts
capitalized by the company in 1995 and 1994 primarily relate to the company's
development of Microsoft Windows-based financial management and accounting
applications for client/server environments and represented 19.9% and 23.9%,
respectively, of total product development expenditures. Capitalized software
costs are amortized over the estimated economic life of the product, but
generally not more than four years.
The increase in general and administrative expenses resulted from increases in
personnel and professional services costs incurred to support the growth of the
company's overall operations, partially offset by a decrease in the provision
for doubtful accounts from the requirement of the prior year.
On November 29, 1994, the company issued 570,796 shares of its common stock
(including 73,485 shares underlying options and warrants assumed by Hyperion
Software) in connection with the merger with Pillar Corporation. Pillar, based
in California, develops, markets and supports Microsoft Windows and
Macintosh-based corporate budgeting and planning products. Pillar generated
revenues of approximately $10,000 for its year ended September 30, 1994. The
acquisition has been accounted for as a pooling of interests and, accordingly,
the financial statements have been restated for all prior periods to include
Pillar. Further, all common share and per share data have been restated for
prior periods. In connection with the acquisition, the company charged $1,000 to
operations in fiscal 1995 for nonrecurring merger and integration costs
incurred. For further details, see Note B of the accompanying consolidated
financial statements.
-15-
<PAGE> 17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(Dollars in thousands)
<TABLE>
NONOPERATING INCOME AND EXPENSE
<CAPTION>
1995 CHANGE 1994
- - ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $1,620 90.4% $ 851
- - ----------------------------------------------------------------------------------
Interest expense $ (119) 1.7% $(117)
- - ----------------------------------------------------------------------------------
</TABLE>
Interest income increased due to a general rise in interest rates and the
increase in cash available for investment which resulted from operations.
PROVISION FOR INCOME TAXES
The company's effective income tax rate decreased from 41.6% to 39.7%, as a
greater portion of the company's earnings arose in certain jurisdictions where
the income tax rates are lower, offset 1.9% by nondeductible merger costs.
NET INCOME
As a result of the above factors, net income for 1995 increased to $12,139, or
by 41%, from $8,609 for 1994.
To date, the overall impact of inflation on the company has not been material.
Accounting standards promulgated by, among others, the Financial Accounting
Standards Board change periodically. Changes in such standards may have a
negative impact on the company's future financial results.
<TABLE>
FISCAL 1994 COMPARED TO FISCAL 1993
REVENUES
<CAPTION>
1994 CHANGE 1993
- - ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Software licenses $51,687 44.4% $35,801
Percentage of total revenues 54.8% 53.7%
- - ------------------------------------------------------------------------------------
License renewals and services $42,575 38.0% $30,844
Percentage of total revenues 45.2% 46.3%
- - ------------------------------------------------------------------------------------
</TABLE>
Software license revenues rose primarily as a result of an increase in the
number of licenses sold. Demand for the company's Microsoft Windows-based
products rose sharply. In 1994, Windows-based product licenses comprised 92.4%
of the company's total software license revenues, up from 60.5% for 1993. While
the company intends to continue enhancing its DOS-based product, Micro Control,
it expects the trend toward the Windows market to continue. Accordingly, the
company has extended its suite of integrated, Windows-based, client/server
products, including Hyperion Forms, data collection and forms management
software; Hyperion Enterprise 1.8 which allows for the use of Sybase SQL Server
or Microsoft SQL Server for the Hyperion database, providing open access and
scalability of hardware for server processing; and Hyperion Financials, a line
of transaction-based accounting applications, which was subject to internal and
external testing in fiscal 1994 through commercial release in March 1995.
Hyperion Forms and Hyperion Enterprise 1.8 were delivered in December 1993.
-16-
<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(Dollars in thousands)
The increase in license renewal and service revenue is mainly attributable to
the year-to-year growth of the company's installed customer base.
Revenues generated from markets outside the United States for fiscal 1994 and
1993 were $25,136 and $16,973, or 26.7% and 25.5% of total revenues,
respectively.
COST OF REVENUES
<TABLE>
<CAPTION>
1994 CHANGE 1993
- - ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Software licenses $ 2,820 53.2% $ 1,841
Gross profit percentage 94.5% 94.9%
- - ------------------------------------------------------------------------------------
License renewals and services $24,921 34.4% $18,541
Gross profit percentage 41.5% 39.9%
- - ------------------------------------------------------------------------------------
</TABLE>
Cost of software license revenues consists primarily of the cost of product
packaging and documentation materials, amortization of capitalized software
costs, amortization of certain intangible assets related to business
acquisitions, and royalty expenses. The increase in the cost of software license
revenues resulted principally from the amortization of capitalized costs related
to new products and product enhancements, which commenced upon the general
release of the software to customers in the second half of fiscal 1993 and in
the second quarter of fiscal 1994.
The increase in the cost of license renewal and service revenues was due
primarily to additional staffing expense for both installation and ongoing
support services.
OPERATING EXPENSES
<TABLE>
<CAPTION>
1994 CHANGE 1993
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales and marketing $30,036 40.8% $21,325
Percentage of total revenues 31.9% 32.0%
- - --------------------------------------------------------------------------------------------
Product development $12,767 38.8% $ 9,196
Percentage of total revenues 13.5% 13.8%
- - --------------------------------------------------------------------------------------------
General and administrative $ 9,703 15.4% $ 8,407
Percentage of total revenues 10.3% 12.6%
- - --------------------------------------------------------------------------------------------
</TABLE>
The increase in sales and marketing expenses is primarily due to a net increase
in sales/marketing personnel, greater overall marketing initiatives and an
increase in commission costs directly associated with the significant increase
in software license revenues.
The increase in product development expenses reflects additional personnel and
third-party development costs associated with expanded research and development
activities. In fiscal 1994 and 1993, the company capitalized $4,009 and $2,050
of software development costs, respectively, in accordance with FAS-86. The
amounts capitalized by the company in 1994 and 1993 primarily relate to the
company's development of Microsoft Windows-based financial management
applications for client/server environments and represented 23.9% and 18.2%,
respectively, of total product development expenditures. In addition to Hyperion
Forms, Hyperion Enterprise 1.8 and Hyperion Financials, as mentioned above,
various other development and major product enhancement projects, which costs
are required to be capitalized under FAS-86, were in process during the year
ended June 30, 1994. Capitalized software costs are amortized over the estimated
economic life of the product, but generally not more than four years.
-17-
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(Dollars in thousands)
Currently, Hyperion Financials represents the company's largest development
project. It began in February 1993 with the technology acquisition from MAI
Systems Corporation for $2,600. The substance of the transaction represented the
purchase of research and development and, as such, is included as a one-time
charge in the company's operating results. The charge had the effect of reducing
net income for fiscal 1993 by approximately $1,560 or $.20 per share.
The increase in general and administrative expenses resulted from increases in
personnel and professional services costs incurred to support the growth of the
company's overall operations, as well as an increase in the provision for
doubtful accounts directly associated with the significant increase in revenues.
NONOPERATING INCOME AND EXPENSE
<TABLE>
<CAPTION>
1994 CHANGE 1993
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $ 851 40.7% $ 605
- - --------------------------------------------------------------------------------
Interest expense $(117) 14.6% $(137)
- - --------------------------------------------------------------------------------
</TABLE>
Interest income increased primarily due to the increase in cash available for
investment which resulted from 1994's operations.
PROVISION FOR INCOME TAXES
The company's effective income tax rate decreased from 55% to 41.6%. The higher
rate in 1993 primarily reflects an increase in the valuation allowance for
deferred tax assets in 1993, while the allowance remained essentially unchanged
in 1994.
NET INCOME
As a result of the above factors, net income for 1994 increased to $8,609, or by
267.4%, from $2,343 for 1993.
-18-
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(Dollars in thousands)
QUARTERLY FINANCIAL INFORMATION
The following table sets forth certain unaudited operating results for each of
the company's eight most recent fiscal quarters. This information has been
prepared by the company on the same basis as its audited consolidated financial
statements appearing elsewhere in this Annual Report and includes all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly this information when read in conjunction with the company's
audited consolidated financial statements and notes thereto. The company's
operating results for any one quarter or series of quarters are not necessarily
indicative of results for any future period.
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------------------------------------------------------------
June March Dec. Sept. June March Dec. Sept.
30, 1995 31, 1995 31, 1994 30, 1994 30, 1994 31, 1994 31, 1993 30, 1993
-----------------------------------------------------------------------------------------------------
(In thousands, except per share data)
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $50,676 $30,082 $30,055 $26,328 $35,616 $21,348 $20,273 $17,025
Operating income 10,868 1,941 3,009* 2,820 8,359 2,782 2,064 810
Net income 6,860 1,397 2,011* 1,871 5,034 1,723 1,295 557
Earnings per share .78 .16 .23* .22 .60 .21 .16 .07
</TABLE>
* Includes nonrecurring merger and integration charges relating to the
acquisition of Pillar Corporation, which had the effect of reducing
operating and net income by approximately $1,000 or $.11 per share.
The company operates with a minimal software licensing backlog. Therefore,
quarterly revenues and operating results are quite dependent on the volume and
timing of the signing of licensing agreements and product deliveries during the
quarter, which are difficult to forecast. The company's future operating results
may fluctuate due to these and other factors, such as customer buying patterns,
the timing of new product introductions and product upgrade releases, the
company's hiring plans, the scheduling of sales and marketing programs, and new
product development by the company or its competitors. The company generally has
realized lower revenues in its first (September) and third (March) fiscal
quarters than in the immediately following quarters. The company believes that
these revenue fluctuations are caused by customer buying patterns, including
traditionally slow purchase activity in the summer months and low purchase
activity in the financial reporting and consolidation market during the March
quarter, as many potential customers are busy with their year-end closing and
financial reporting. In any case, due to the relatively fixed nature of certain
costs, including personnel and facilities expenses, a decline in quarterly
and/or annual revenues typically results in lower profitability or may result in
losses.
-19-
<PAGE> 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
(Dollars in thousands)
LIQUIDITY AND CAPITAL RESOURCES
- - --------------------------------------------------------------------------------
To date, the company has financed its business principally through positive cash
flow from operations, long-term and short-term borrowings and sales of its
common stock. For fiscal years 1995, 1994, and 1993, the company generated
positive cash flow from operations of $28,936, $19,707, and $6,626,
respectively.
Cash used by investing activities amounted to $34,316 for fiscal 1995, $14,308
for the purchase of a Stamford, Connecticut office facility (including closing
and other related intangible costs), $12,880 for leasehold improvements and
purchases of equipment and software, $5,207 for product development costs and
$1,921 for deposits and intangible assets (primarily related to the
reacquisition, from independent distributors, of exclusive rights to license
company products in certain territories of Europe).
Financing activities in fiscal 1995, including a mortgage loan and stock options
exercised by employees, generated cash of $12,911. The mortgage relates to
reduced rate (currently 5.75%) financing of $9,500 received on January 20, 1995
from an agency of the State of Connecticut in connection with the purchase of an
office facility. The new location, which has approximately 200,000 square feet
of existing office space, allows for future expansion of up to 300,000 square
feet of additional space. In connection with the stock options exercised by
certain of its employees (for a total of 397,878 common shares), the company
recognized (as a credit to additional paid-in capital) an income tax benefit of
$3,195 for the year ended June 30, 1995.
As of June 30, 1995, the company had cash and cash equivalents of $45,494 and
working capital of $37,306, no long-term debt other than the mortgage loan for
the Stamford office facility, and its ratio of current assets to current
liabilities was 1.6 to 1. Cash equivalents are comprised primarily of investment
grade U.S. state and political subdivision obligations with varying terms of
three months or less. The company has long-term credit availability of $25,000
under a revolving credit facility. For further details of the credit facility,
see Note E of the company's consolidated financial statements. The company
anticipates capital expenditures of approximately $30,000 for its 1996 fiscal
year, including $14,000 for the new office facility and $6,000 of capitalized
product development costs. The company intends to continue to review potential
acquisitions that it believes would enhance the company's growth and
profitability. From time to time, in the normal course of business, various
claims are made against the company. At this time, in the opinion of management,
there are no pending claims the outcome of which is expected to result in a
material adverse effect on the financial position of the company.
The company believes that funds generated from operations, existing cash
balances and its available credit facility will be sufficient to finance the
company's operations for at least the next two years.
-20-
<PAGE> 22
ANNUAL REPORT ON FORM 10-K
YEAR ENDED JUNE 30, 1995
IMRS INC. AND SUBSIDIARIES
(d/b/a HYPERION SOFTWARE)
STAMFORD, CONNECTICUT
------------------------------------------------------
ITEM 8 AND ITEM 14(a)(1)
REPORT OF INDEPENDENT AUDITORS
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-21-
<PAGE> 23
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
IMRS Inc.
We have audited the accompanying consolidated balance sheet of IMRS Inc. (d/b/a
Hyperion Software) and subsidiaries as of June 30, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended June 30, 1995. Our audits also
included the financial statement schedule listed in the index at Item 14(a).
These financial statements and schedule are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IMRS Inc. (d/b/a
Hyperion Software) and subsidiaries at June 30, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1995, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
/s/ Ernst & Young LLP
Stamford, Connecticut
July 20, 1995
-22-
<PAGE> 24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Consolidated Balance Sheet
(In thousands, except for share data)
<TABLE>
<CAPTION>
JUNE 30,
1995 1994
----------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 45,494 $ 37,913
Accounts receivable -- net of allowances of $2,500 and $1,640 48,006 33,830
Prepaid expenses and other current assets 4,124 1,704
Deferred income taxes 2,059 770
----------------------
TOTAL CURRENT ASSETS 99,683 74,217
Property and equipment -- at cost, less accumulated depreciation and amortization of
$13,570 and $8,607 32,093 10,265
Product development costs -- at cost, less accumulated amortization of $4,604 and $2,355 9,401 6,443
Goodwill and other intangible assets -- at cost, less accumulated amortization of $4,337
and $3,605 3,007 2,671
Deposits and other assets 1,974 1,119
----------------------
Total assets $146,158 $ 94,715
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 13,050 $ 7,917
Accrued employee compensation and benefits 14,879 8,727
Income taxes payable 3,108 1,229
Deferred revenue 30,599 21,055
Notes payable 741 460
----------------------
TOTAL CURRENT LIABILITIES 62,377 39,388
Mortgage payable 8,910
Deferred income taxes 3,165 1,666
COMMITMENTS AND CONTINGENCIES - Note H
Stockholders' equity:
Preferred stock -- $.01 par value; authorized -- 1,000,000 shares;
none issued
Common stock -- $.01 par value; authorized -- 15,000,000 shares;
issued -- 10,189,033 and 9,791,155 shares 102 98
Additional paid-in capital 64,364 57,496
Retained earnings 20,659 9,536
Currency translation adjustments (386) (436)
Treasury stock, at cost -- 2,160,420 shares (13,033) (13,033)
----------------------
TOTAL STOCKHOLDERS' EQUITY 71,706 53,661
----------------------
Total liabilities and stockholders' equity $146,158 $ 94,715
======================
</TABLE>
See accompanying notes.
-23-
<PAGE> 25
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Consolidated Statement of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1995 1994 1993
---------------------------------
<S> <C> <C> <C>
REVENUES
Software licenses $ 77,985 $51,687 $35,801
License renewals and services 59,156 42,575 30,844
---------------------------------
Total revenues 137,141 94,262 66,645
COSTS AND EXPENSES
Cost of revenues:
Software licenses 4,454 2,820 1,841
License renewals and services 36,443 24,921 18,541
Sales and marketing 44,324 30,036 21,325
Product development 20,980 12,767 9,196
Purchased research and development 2,600
General and administrative 11,302 9,703 8,407
Merger and integration 1,000
---------------------------------
118,503 80,247 61,910
---------------------------------
OPERATING INCOME 18,638 14,015 4,735
Interest income 1,620 851 605
Interest expense (119) (117) (137)
---------------------------------
INCOME BEFORE INCOME TAXES 20,139 14,749 5,203
Provision for income taxes 8,000 6,140 2,860
---------------------------------
NET INCOME $ 12,139 $ 8,609 $ 2,343
=================================
EARNINGS PER SHARE
Primary $1.40 $1.04 $.30
Fully diluted $1.39 $1.04 $.29
AVERAGE NUMBER OF SHARES OUTSTANDING
Primary 8,658 8,292 7,750
Fully diluted 8,740 8,300 7,952
</TABLE>
See accompanying notes.
-24-
<PAGE> 26
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Consolidated Statement of Stockholders' Equity
(In thousands, except for share data)
<TABLE>
<CAPTION>
Common Stock
------------ Additional Retained Currency
Par Paid-in Earnings Translation Treasury
Shares Value Capital (Deficit) Adjustments Stock
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1992 8,937,569 $ 89 $47,254 $ (1,416) - $(13,033)
Exercise of stock options/sale of
shares 572,115 6 4,621
Income tax benefit from exercise of
stock options 1,392
Currency translation effect $(573)
Net income 2,343
---------------------------------------------------------------------------
Balance at June 30, 1993 9,509,684 95 53,267 927 (573) (13,033)
Exercise of stock options/sale of
shares 281,471 3 3,029
Income tax benefit from exercise of
stock options 1,200
Currency translation effect 137
Net income 8,609
---------------------------------------------------------------------------
Balance at June 30, 1994 9,791,155 98 57,496 9,536 (436) (13,033)
Charge reflecting change in Pillar
Corporation's fiscal year (1,016)
Exercise of stock options 397,878 4 3,673
Income tax benefit from exercise of
stock options 3,195
Currency translation effect 50
Net income 12,139
---------------------------------------------------------------------------
BALANCE AT JUNE 30, 1995 10,189,033 $102 $64,364 $20,659 $(386) $(13,033)
===========================================================================
</TABLE>
See accompanying notes.
-25-
<PAGE> 27
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Consolidated Statement of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1995 1994 1993
-------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 12,139 $ 8,609 $ 2,343
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 8,338 5,347 3,357
Accounts receivable allowance provisions 1,667 2,029 1,205
Deferred income taxes 210 2,312 (513)
Charge reflecting change in Pillar Corporation's fiscal year (1,016)
Changes in operating assets and liabilities:
Accounts receivable (15,843) (12,126) (8,343)
Prepaid expenses and other assets (2,463) 161 1,551
Accounts payable and accrued expenses 11,286 3,898 2,581
Income taxes payable 5,074 448 781
Deferred revenue 9,544 9,029 3,664
-------------------------------------
Cash provided by operating activities 28,936 19,707 6,626
INVESTING ACTIVITIES
Purchase of office facility (14,308)
Leasehold improvements and purchases of furniture, equipment and
software (12,880) (5,740) (4,995)
Product development costs (5,207) (4,009) (2,050)
Acquisition of business (1,764)
Deposits and intangible assets (1,921) (329)
-------------------------------------
Cash used by investing activities (34,316) (9,749) (9,138)
FINANCING ACTIVITIES
Notes payable -- proceeds (payments), net (309) 309 (271)
Mortgage payable -- proceeds 9,500
Exercise of stock options by employees/sale of common stock 3,720 2,989 4,067
-------------------------------------
Cash provided by financing activities 12,911 3,298 3,796
Effect of exchange rate changes 50 137 (367)
-------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 7,581 13,393 917
Cash and cash equivalents at beginning of year 37,913 24,520 23,603
-------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 45,494 $ 37,913 $ 24,520
=====================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 2,716 $ 2,170 $ 746
Interest ($243 capitalized in 1995) 311 69 112
</TABLE>
See accompanying notes.
-26-
<PAGE> 28
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements
BUSINESS
IMRS Inc., now doing business as Hyperion Software ("Hyperion Software" or the
"company"), develops, markets and supports corporate financial software
applications for client/server environments. The company's Windows-based,
client/server product suite includes a wide spectrum of accounting, management
reporting, financial consolidation, budgeting and information access software.
Customers consist primarily of large multinational corporations.
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the company and
its subsidiaries, all of which are wholly owned. All significant intercompany
accounts and transactions have been eliminated.
Assets and liabilities denominated in foreign currencies are translated at the
exchange rate on the balance sheet date. The related revenues, costs and
expenses are translated at average rates of exchange prevailing during the
reporting period. Translation adjustments resulting from this process are
charged or credited to stockholders' equity.
Revenue Recognition
Software license revenues are recognized upon execution of the license
agreement and delivery of the software. In all cases, however, collection of
any related receivable must be probable and no significant post-contract
obligations of the company shall be remaining.
License renewal fees, for routine support and product updates, are recognized
ratably over the term of the license agreement.
Current Assets and Liabilities
The company considers highly liquid investment instruments with remaining terms
of three months or less at the time of acquisition to be cash equivalents. Cash
equivalents are comprised primarily of investment grade U.S. state and
political subdivision obligations.
All other current assets and liabilities are stated at cost, which approximates
market value, because of their short-term nature.
-27-
<PAGE> 29
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Product Development Costs
The company begins capitalizing product development costs, principally wages
and contractor fees, only after establishing commercial and technical
viability. Product development costs are stated at the lower of cost or net
realizable value. Annual amortization of these costs represents the greater of
the amount computed using (i) the ratio that current gross revenues for the
product(s) bear to the total current and anticipated future gross revenues for
the product(s), or (ii) the straight-line method over the remaining estimated
economic life of the product(s); generally such deferred costs are amortized
over four years. Amortization commences when the product is available for
general release to customers. Amortization expense totaled $2.2 million for
1995, $1.3 million for 1994 and $.6 million for 1993.
Depreciation/Amortization
Depreciation and amortization are computed principally using the straight-line
method over the estimated useful lives of the applicable assets.
Income Taxes
The company provides for taxes based on current taxable income and the future
tax consequences of temporary differences between the financial reporting and
income tax carrying values of its assets and liabilities.
Earnings Per Share
Earnings per share ("EPS") are calculated by dividing net income by the
weighted average number of common and common equivalent shares outstanding
during the period after giving effect to the merger with Pillar Corporation
(see Note B below). For primary EPS, common equivalent shares are shares which
would be issuable upon the exercise of outstanding stock options, reduced by
the number of shares assumed to be purchased by the company with the proceeds
obtained therefrom at the average market price during the period. For the
fully diluted EPS calculation, shares are assumed to be purchased by the
company at the higher of the average or period-end market price and, therefore,
this calculation may include additional equivalent shares.
-28-
<PAGE> 30
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
B. ACQUISITIONS
On November 29, 1994, the company issued 570,796 shares of its common stock
(including 73,485 shares underlying options and warrants assumed by Hyperion
Software) in connection with the merger with Pillar Corporation ("Pillar").
Pillar, based in California, develops, markets and supports Microsoft Windows
and Macintosh-based corporate budgeting and planning products. The acquisition
has been accounted for as a pooling of interests. Accordingly, the financial
statements have been restated for all prior periods to include Pillar.
Further, all common share and per share data have been restated for prior
periods.
For the pre-merger periods indicated, revenues and net income of the company
and Pillar are as follows, in thousands:
<TABLE>
<CAPTION>
Three months ended Year ended June 30,
September 30, 1994 1994 1993
- - -------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
REVENUES
Hyperion Software $22,470 $84,384 $61,025
Pillar 3,858 9,878 5,620
- - -------------------------------------------------------------------------------
$26,328 $94,262 $66,645
===============================================================================
NET INCOME
Hyperion Software $ 1,225 $ 8,470 $ 4,284
Pillar 1,016 139 (1,941)
adjustment (a) (370)
- - -------------------------------------------------------------------------------
$ 1,871 $ 8,609 $ 2,343
===============================================================================
</TABLE>
(a) To adjust the provision for income taxes to reflect, on a combined company
basis, the annual effective tax rate.
Pillar previously used the fiscal year ended September 30 for its financial
reporting. Pillar's operating results for the years ended September 30, 1994
and 1993 are included in the accompanying statement of income in the columns
headed June 30, 1994 and 1993, respectively. The statement of income's
comparative 1995 results reflect the operations of Hyperion Software and Pillar
for the year ended June 30, 1995. The balance sheet at June 30, 1994 has been
derived from the combination of the audited consolidated financial statements
of Hyperion Software at that date and the audited financial statements of
Pillar as of September 30, 1994. Accordingly, the duplication of Pillar's net
income, for the three months ended September 30, 1994, in retained earnings has
been adjusted by a $1 million charge to retained earnings in fiscal 1995.
In connection with the acquisition, the company charged $1 million to
operations for nonrecurring merger and integration costs (principally
professional fees) incurred.
-29-
<PAGE> 31
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
B. ACQUISITIONS (CONTINUED)
On February 12, 1993, the company acquired, from MAI Systems Corporation,
client/server accounting and related applications technology for $2.6 million.
The substance of the transaction represented the purchase of research and
development and, as such, is included as a one-time charge in the company's
operating results. The charge had the effect of reducing net income for fiscal
1993 by approximately $1.6 million or $.20 per share.
C. PROPERTY, EQUIPMENT AND RELATED MORTGAGE LOAN
Property and equipment consists of the following at June 30:
<TABLE>
<CAPTION>
Depreciation/
Amortization
1995 1994 Period
- - ------------------------------------------------------------------------------------
(In thousands) (years)
<S> <C> <C> <C>
Land $ 3,800
Office facilities in progress 10,508 39
Furniture, equipment and software 29,106 $17,670 3 to 7
Leasehold improvements 2,249 1,202 lease term*
- - --------------------------------------------------------------------
45,663 18,872
Less accumulated depreciation and amortization 13,570 8,607
- - --------------------------------------------------------------------
$32,093 $10,265
====================================================================
</TABLE>
* Leasehold improvements are amortized over the lesser of the remaining life of
the lease or the useful life of the improvements.
Depreciation and amortization of these assets totaled $5.4 million, $3.2
million and $2.2 million for 1995, 1994 and 1993, respectively.
On January 20, 1995, the company completed the purchase of an office facility
in Stamford, Connecticut for $11.4 million. The purchase price was financed by
the Connecticut Development Authority ("CDA," an agency of the State of
Connecticut) through a $9.5 million mortgage loan, with company funds used for
the balance. In the interest of Connecticut-based jobs, the CDA agreed to such
financing over a 15-year period at LIBOR minus 2%, subject to, among other
things: (i) the creation of a specified number of new Connecticut-based jobs,
(ii) a 10-year residency in the state, and (iii) the payment of the remaining
unpaid principal at the end of year ten. Violations of certain such
requirements, if any, would result in additional interest charges and/or a
penalty payment.
-30-
<PAGE> 32
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
D. GOODWILL AND OTHER INTANGIBLE ASSETS
Components of intangible assets, which relate primarily to business
acquisitions, are as follows at June 30:
<TABLE>
<CAPTION>
Amortization
1995 1994 Period
- - ---------------------------------------------------------------------------------------
(In thousands) (years)
<S> <C> <C> <C>
Goodwill $2,687 $2,649 9 to 20
Software/technology 2,089 2,089 4 to 6
Customer base 1,019 1,019 5
Product distribution and service rights 809 3 to 7
Noncompete agreements 476 476 3
Copyrights, trademarks and other 264 43 various
- - ---------------------------------------------------------------------
7,344 6,276
Less accumulated amortization 4,337 3,605
- - ---------------------------------------------------------------------
$3,007 $2,671
=====================================================================
</TABLE>
The carrying value of intangible assets will be reviewed by management if the
facts and circumstances suggest that the value(s) may be impaired. If this
review indicates that the carrying amount(s) will not be recoverable, as
determined based on the undiscounted cash flows attributable to such asset(s)
over the remaining amortization period, management will reduce the carrying
amount by the estimated shortfall of cash flows.
E. AVAILABLE CREDIT FACILITY
The company may borrow up to $25 million under an amended and restated credit
facility (the "Facility") with The Bank of New York. Key provisions of the
Facility are as follows: (i) the maturity date is June 30, 2000, (ii) the
interest rate is the bank's base rate plus .25% or, at the company's option,
LIBOR plus 1.5%, (iii) a commitment fee is charged based on any unused credit,
at the rate of .25% per annum, and (iv) borrowings under the Facility are
limited to the sum of (a) 85% of eligible accounts receivable, as defined, from
debtors located in the United States, plus (b) 75% of eligible accounts
receivable, as defined, from debtors located outside of the United States.
Other significant terms of the Facility restrict the company regarding the
payment of dividends, capital expenditures and acquisitions, and additional
indebtedness, including other fiscal commitments, and require the company to
maintain minimum net worth and working capital ratios and to meet certain
profitability criteria, as defined. Except for its office facilities (see Note
C), substantially all of the company's assets have been pledged as security
under terms of the Facility.
-31-
<PAGE> 33
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
F. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and their tax bases. Significant components of deferred tax assets and
liabilities at June 30 are as follows:
<TABLE>
<CAPTION>
1995 1994
- - ---------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Deferred income tax assets:
Net operating loss carryforwards $ 5,143 $4,092
Deferred revenue 1,777 1,509
Accounts receivable, allowances 795 577
Tax credit carryforwards 675 675
Other intangible assets, amortization 347 668
Other 340 508
- - ---------------------------------------------------------------------------------------------
9,077 8,029
Less valuation allowance 5,985 5,782
- - ---------------------------------------------------------------------------------------------
3,092 2,247
- - ---------------------------------------------------------------------------------------------
Deferred income tax liabilities:
Product development costs 3,855 2,642
Property and equipment, depreciation 325 439
Other 18 62
- - ---------------------------------------------------------------------------------------------
4,198 3,143
- - ---------------------------------------------------------------------------------------------
Net deferred income tax liability $(1,106) $ (896)
=============================================================================================
</TABLE>
The provision for income taxes consists of the following charges (credits):
<TABLE>
<CAPTION>
1995 1994 1993
- - --------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
U.S. $5,211 $2,271 $2,200
State 1,709 957 946
Other countries 870 600 227
- - --------------------------------------------------------
7,790 3,828 3,373
- - --------------------------------------------------------
Deferred:
U.S. 252 1,766 (400)
State 588 (134)
Other countries (42) (42) 21
- - --------------------------------------------------------
210 2,312 (513)
- - --------------------------------------------------------
$8,000 $6,140 $2,860
========================================================
</TABLE>
-32-
<PAGE> 34
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
F. INCOME TAXES (CONTINUED)
The effective income tax rate varied from the statutory U.S. federal tax rate
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. tax rate 35.0% 35.0% 34.0%
State income taxes, net of U.S. tax benefit 5.6 6.9 9.6
Valuation change deferred tax assets 1.0 1.5 17.0
Tax exempt interest (1.9) (1.3) (3.0)
Export sales (2.4) (.9) (2.6)
Other net 2.4 .4
- - -------------------------------------------------------------------------------------
Effective income tax rate 39.7% 41.6% 55.0%
=====================================================================================
</TABLE>
The company has net operating loss (NOL) carryforwards of $16.2 million and tax
credit carryforwards of $.8 million, primarily acquired through the merger with
Pillar Corporation (see Note B), which expire as follows:
<TABLE>
<CAPTION>
NOL Tax Credit
Year Carryforwards Carryforwards
- - ---------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
1998 $ 629
1999 1,325
2000 2,063
2004 3,948 $193
2005 2,790 67
2006 and thereafter 2,711 240
No expiration date 2,775 309
- - ---------------------------------------------------------------------------------------
$16,241 $809
=======================================================================================
</TABLE>
The company's utilization of acquired NOL and tax credit carryforwards is
subject to annual limitations as prescribed by Sections 382 and 383 of the
Internal Revenue Code and similar state authority.
-33-
<PAGE> 35
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
G. STOCK OPTION AND EMPLOYEE SAVINGS PROGRAMS
Under the company's stock option plans and its employee stock purchase plan
("Plans") and under certain employee compensation arrangements, 2,582,258
(782,289 under the employee stock purchase plan) shares of common stock are
reserved for issuance to eligible participants at June 30, 1995.
Changes in outstanding options were as follows:
<TABLE>
<CAPTION>
Price Range Shares
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding, June 30, 1992 $ .415 - $39.09 1,693,027
Options granted:
Plans 1.96 - 18.00 216,777
Options exercised:
Plans .415 - 17.50 (179,613)
Compensation arrangements .415 - 5.50 (234,000)
Options forfeited:
Plans 1.96 - 17.50 (5,224)
- - ----------------------------------------------------------------------------------------
Outstanding, June 30, 1993 .415 - 39.09 1,490,967
- - ----------------------------------------------------------------------------------------
Options granted:
Plans 3.13 - 31.27 405,479
Options exercised:
Plans 1.50 - 19.50 (144,387)
Compensation arrangements .75 - 5.50 (106,722)
Options forfeited:
Plans 1.96 - 18.25 (10,771)
- - ----------------------------------------------------------------------------------------
Outstanding, June 30, 1994 .415 - 39.09 1,634,566
- - ----------------------------------------------------------------------------------------
Options granted:
Plans 9.38 - 47.00 304,627
Options exercised:
Plans .415 - 28.50 (217,978)
Compensation arrangements .75 - 5.50 (179,900)
Options forfeited:
Plans 1.96 - 39.09 (14,471)
- - ----------------------------------------------------------------------------------------
OUTSTANDING, JUNE 30, 1995 $ .75 - $47.00 1,526,844
========================================================================================
</TABLE>
Generally, options under the stock option plans expire 10 years after the date
of grant, are granted at prices not less than fair market value and become
exercisable over two- to four-year periods. Under the employee stock purchase
plan, shares of the company's common stock may be purchased at six-month
intervals at 85% of the lower of the fair market value on the first or the last
business day of each six-month period. Employees may purchase shares having a
value not exceeding 10% of their gross compensation, up to 500 shares, during
an offering period. Options granted under employee compensation arrangements
become exercisable and expire over various periods. At June 30, 1995, 991,720
options outstanding for common stock were exercisable and the average option
price for all outstanding options was $12.73 per share. Outstanding options
expire on various dates beginning October 1, 1996 and ending on June 18, 2005.
-34-
<PAGE> 36
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
G. STOCK OPTION AND EMPLOYEE SAVINGS PROGRAMS (CONTINUED)
The company maintains an employee savings plan that qualifies as a cash or
deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
Under the plan, participating U.S. employees may defer up to 15% of their
pre-tax compensation, but not more than approximately $9,000 per calendar year.
The company contributes to the plan, annually, up to a maximum of $1,000 per
participant. A similar savings plan is maintained with respect to certain
non-U.S. employees. In fiscal 1995, 1994 and 1993, the company contributed $.7
million, $.5 million and $.4 million, respectively, to the savings plans.
H. COMMITMENTS AND CONTINGENCIES
The company leases office facilities and certain equipment under various
operating lease agreements. The leases expire at various times through the year
2000.
Future minimum lease payments under all operating leases with noncancellable
terms in excess of one year amount to $12.9 million as follows (in millions):
$3.9 in 1996, $3.1 in 1997, $2.3 in 1998, $2 in 1999 and $1.6 in 2000. Certain
of the office leases provide as well for contingent payments based on building
operating expenses. Rental expense for the years ended June 30, 1995, 1994 and
1993 under all lease agreements was $4.4 million, $2.9 million and $2.6
million, respectively.
From time to time, in the normal course of business, various claims are made
against the company. At this time, in the opinion of management, there are no
pending claims the outcome of which is expected to result in a material adverse
effect on the financial position of the company.
-35-
<PAGE> 37
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
I. FINANCIAL DATA BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
Other
U.S. U.K. International
Operations Operations Operations Eliminations Consolidated
- - ---------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
1995
Revenues:
Customers $115,284 $13,290 $ 8,567 $137,141
Intercompany 6,212 3,935 $(10,147)
- - ---------------------------------------------------------------------------------------------------------------
Total 121,496 13,290 12,502 $(10,147) 137,141
===============================================================================================================
Operating income (loss) 23,120 928 (5,410) 18,638
===============================================================================================================
Identifiable assets $128,033 $ 9,781 $ 8,344 $146,158
===============================================================================================================
1994
Revenues:
Customers $ 82,581 $ 9,070 $ 2,611 $ 94,262
Intercompany 2,900 3,913 $ (6,813)
- - ---------------------------------------------------------------------------------------------------------------
Total 85,481 9,070 6,524 $ (6,813) 94,262
===============================================================================================================
Operating income (loss) 14,174 667 (826) 14,015
===============================================================================================================
Identifiable assets $ 86,132 $ 5,413 $ 3,170 $ 94,715
===============================================================================================================
1993
Revenues:
Customers $ 56,898 $ 8,007 $ 1,740 $ 66,645
Intercompany 1,895 2,215 $ (4,110)
- - ---------------------------------------------------------------------------------------------------------------
Total 58,793 8,007 3,955 (4,110) 66,645
===============================================================================================================
Operating income (loss) 4,536 858 (651) $ (8) 4,735
===============================================================================================================
Identifiable assets $ 61,232 $ 4,547 $ 1,579 $ 67,358
===============================================================================================================
</TABLE>
"Other International Operations" relate primarily to subsidiaries in Austria,
Belgium, Canada, France, Germany, Italy, Netherlands and Singapore. Intercompany
revenues between geographic areas are accounted for at prices representative of
unaffiliated party transactions of a similar nature.
Revenues from markets outside the United States were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
U.K. operations $13,290 $ 9,070 $ 8,007
Other international operations 8,567 2,611 1,740
Export 16,614 13,455 7,226
- - -------------------------------------------------------------------------------
$38,471 $25,136 $16,973
===============================================================================
Percentage of total revenues 28% 27% 25%
===============================================================================
</TABLE>
The majority of "Export" revenues, some of which are generated through
independent distributors, results from product licenses and services sold to
customers throughout Europe.
-36-
<PAGE> 38
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
Notes to Consolidated Financial Statements (continued)
J. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a tabulation of the unaudited quarterly results of operations
for the two years ended June 30, 1995 (thousands of dollars, except per share
data):
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------
FISCAL 1995 SEPT. 30 DEC. 31 MARCH 31 JUNE 30
- - -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $26,328 $30,055 $30,082 $50,676
Gross profit 17,924 20,993 20,291 37,036
Net income 1,871 2,011* 1,397 6,860
Earnings per share .22 .23* .16 .78
<CAPTION>
- - -----------------------------------------------------------------------------------
Fiscal 1994 Sept. 30 Dec. 31 March 31 June 30
- - -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $17,025 $20,273 $21,348 $35,616
Gross profit 11,399 14,375 14,648 26,099
Net income 557 1,295 1,723 5,034
Earnings per share .07 .16 .21 .60
</TABLE>
* Includes nonrecurring merger and integration charges relating to the
acquisition of Pillar Corporation, which had the effect of reducing net
income by approximately $1,000 or $.11 per share.
-37-
<PAGE> 39
PART II (CONTINUED)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See the sections entitled "Election of Directors" and "Reports About
Ownership of the company's Common Stock," which are incorporated herein by
reference to the company's Proxy Statement for its 1995 Annual Meeting of
Stockholders. See also the section entitled "Executive Officers of the
Company" appearing in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
See the section entitled "Compensation Information Concerning Directors and
Officers," which is incorporated herein by reference to the company's Proxy
Statement for its 1995 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the section entitled "Principal Holders of Voting Securities," which is
incorporated herein by reference to the company's Proxy Statement for its 1995
Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See the section entitled "Certain Transactions," which is incorporated
herein by reference to the company's Proxy Statement for its 1995 Annual
Meeting of Stockholders.
-38-
<PAGE> 40
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) The consolidated financial statements of IMRS Inc. and Subsidiaries
(d/b/a Hyperion Software) are included in Item 8:
Consolidated Balance Sheet as of June 30, 1995 and 1994
Consolidated Statement of Income for the years ended June 30, 1995,
1994 and 1993
Consolidated Statement of Stockholders' Equity for the years ended
June 30, 1995, 1994 and 1993
Consolidated Statement of Cash Flows for the years ended June 30,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
(2) Financial statement schedule, which is included at the end of this
report:
Schedule VIII - Valuation and Qualifying Accounts
All other schedules have been omitted since they are not required,
not applicable or the information has been included in the
consolidated financial statements or the notes thereto.
(3) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
- - ----------- -----------
<S> <C>
3.1 (b) - Restated Certificate of Incorporation of the company.
3.2 (b) - By-laws, as amended and restated, of the company.
10.1 (b) - 1985 Incentive Stock Option Plan.
10.2 (b) - 1989 Stock Option Plan.
10.3 (b) - 1991 Stock Plan.
10.4 (b) - 1991 Employee Stock Purchase Plan.
10.5 (b) - 1991 Non-Employee Director Stock Option Plan.
10.6 (b) - Sub-Lease Agreement with Amstar Corporation for the lease of premises located at 777
Long Ridge Road, Stamford, CT
10.7 (b) - Sub-Lease Agreement with Citicorp North America, Inc. for the lease of premises
located at 777 Long Ridge Road, Stamford, CT.
10.8 (b) - Sub-Lease Agreement with National Reinsurance Corporation for the lease of premises
located at 777 Long Ridge Road, Stamford, CT.
10.9 (c) - Amended and Restated Credit Agreement with The Bank of New York and the signatory
banks thereto, dated as of May 1, 1992 (including forms of guaranty and security agreement,
and pledge agreement).
10.10 (b) - Registration Rights Agreement among the company and certain holders of Common Stock of
the company, dated as of August 9, 1991
</TABLE>
-39-
<PAGE> 41
<TABLE>
<CAPTION>
Exhibit No. Description
- - ----------- -----------
<S> <C>
10.11 (f) - Employment Agreement with James A. Perakis, dated as of August 1, 1993.
10.12 (f) - Employment Agreement with David M. Sample, dated as of July 1, 1994.
10.13 (f) - Employment Agreement with Lucy Rae Ricciardi, dated as of July 1, 1994.
10.14 (f) - Employment Agreement with Craig M. Schiff, dated as of July 1, 1994.
10.15 (f) - Employment Agreement with John N. Adinolfi, dated as of July 1, 1994
10.16 (f) - Employment Agreement with Gordon O. Rapkin, dated as of July 1, 1994.
10.17 (b) - Agreement with Marco Arese Lucini, dated as of October 1, 1990.
10.18 (b) - Stock Option Agreement with Harry S. Gruner, dated as of December 22, 1989.
10.19 (b) - Employment Agreement with Thomas Bell, dated as of July 1, 1994.
10.20 (b) - Form of Software License Agreement.
10.21 (b) - Consulting Agreement with Natcom Consulting Services Ltd., dated as of January 1,
1988.
10.22 (b) - Consulting Agreement with Natcom Consulting Services Ltd., dated as of January 1,
1991, and amendments thereto.
10.23 (b) - Software Development License Agreement with Teknedata S.R.L.
10.24 (b) - Lease with 1033 Washington Blvd. Associates, dated as of December 23, 1985 and amended
thereto.
10.25 (h) - Purchase and Sale Agreement with Combustion Engineering, Inc., dated January 20, 1995,
regarding the purchase of an office facility.
10.26 (h) - Loan Agreement with the Connecticut Development Authority, dated January 20, 1995,
regarding the financing of an office facility (including related Promissory Note and
Mortgage Deed).
10.27 (b) - License Agreement with KPMG Peat Marwick Hungerfords Managements Consultants dated as
of June 8, 1989.
10.28 (b) - Trademark and Tradename License Agreement with KPMG of Hong Kong.
10.29 (b) - License Agreement with IMRS Nordic dated as of January 1, 1989.
10.30 (b) - License Agreement with Prologic Decision Support (PTY) Ltd. dated as of March 28,
1991.
10.31 (b) - License Agreement with Arthur Andersen Japan dated as of December 17, 1990.
10.32 (a) - Software Development and License Agreement with Channel Computing, Inc., dated
February 27, 1992.
10.33 (b) - License Agreement with Arthur Andersen AG dated as of November 2, 1989.
10.34 [Reserved]
10.35 [Reserved]
10.36 (a) - Distributor Agreement with Arthur Andersen Auditors, S.A. dated March 1, 1992.
10.37 (a) - Distributor Agreement with Austrian Industries Informatics Ges.m.b.H dated July 1,
1992.
10.38 (c) - Amendment to the Termination of the License Agreement with Sema Group Systems Limited,
Government and Commerce Division, dated March 31, 1992.
10.39 (c) - Exclusive Sales Agency Agreement with Sema Group Systems Limited, Government and
Commerce Division, dated April 1, 1992.
10.40 (c) - Business Purchase and Sale Agreement with Sema Group Systems Limited, Government and
Commerce Division, dated March 31, 1992, effective July 1, 1992.
</TABLE>
-40-
<PAGE> 42
<TABLE>
<CAPTION>
Exhibit No. Description
- - ----------- -----------
<S> <C>
10.41 (d) - Asset Purchase and Sale Agreement between Columbia Software, Inc. and IMRS Inc., dated
January 21, 1993.
10.42 (d) - Asset Purchase and Sale Agreement between MAI Systems Corporation and IMRS Inc., dated
February 12, 1993.
10.43 (e) - Letter Agreement with Arthur Andersen AG, dated as of May 19, 1993, regarding
distribution of company products in Switzerland and Liechtenstein.
10.44 - Waiver and Amendment No. 2 to Amended and Restated Credit Agreement with The Bank of
New York and signatory banks thereto, dated as of June 30, 1995 (filed herewith).
10.45 (e) - Employment Agreement with Terence W. Rogers, dated as of July 16, 1993.
10.46 (f) - Distributor Agreement with Consultores de Integracion de Sistemas S.A. de C.V.
10.47 (f) - Distributor Agreement with Delteq Systems Pte Ltd.
10.48 (g) - Agreement and Plan of Reorganization dated as of November 7, 1994 by and among IMRS
Inc., IP Merger, Inc., Pillar Corporation and American Stock Transfer & Trust Company, as
escrow Agent.
10.49 (g) - Agreement and Plan of Merger dated as of November 29, 1994 among IMRS Inc., IP Merger,
Inc. and Pillar Corporation.
11.1 - Statement Re: Computation of Earnings Per Share (filed herewith).
22.1 - Subsidiaries of the company (filed herewith).
23.1 - Consent of Ernst & Young LLP, independent auditors (filed herewith).
<FN>
- - -----------------
(a) Incorporated by reference to the exhibits to the registrant's
Registration Statement on Form S-1 File No. 33-50694)
(b) Incorporated by reference to the exhibits to the registrant's
Registration Statement on Form S-1 File No. 33-42855).
(c) Incorporated by reference to the exhibits to the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1992.
(d) Incorporated by reference to the exhibits to the registrant's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1992.
(e) Incorporated by reference to the exhibits to the registrant's Annual
Report on Form 10-K for the year ended June 30, 1993.
(f) Incorporated by reference to the exhibits to the registrant's Annual
Report on Form 10-K for the year ended June 30, 1994.
(g) Incorporated by reference to the exhibits to the registrant's Current
Report on Form 8-K, dated November 29, 1994, which was filed on
December 14, 1994.
(h) Incorporated by reference to the exhibits to the registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1994.
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed or were required to be filed by the
registrant during the fourth quarter of the fiscal year ended June 30,
1995.
-41-
<PAGE> 43
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.
Date: September 27, 1995 IMRS Inc. (d/b/a Hyperion Software)
(Registrant)
By: /s/ James A. Perakis
--------------------------------
James A. Perakis
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ James A. Perakis President, Chief Executive Officer and Director September 27, 1995
- - -------------------------------------------
James A. Perakis
/S/ Gary G. Greenfield Director September 21, 1995
- - -------------------------------------------
Gary G. Greenfield
/S/ Harry S. Gruner Director September 20, 1995
- - -------------------------------------------
Harry S. Gruner
/S/ William W. Helman IV Director September 22, 1995
- - -------------------------------------------
William W. Helman IV
/S/ Marco Arese Lucini Director September 21, 1995
- - -------------------------------------------
Marco Arese Lucini
/S/ Aldo Papone Director September 20, 1995
- - -------------------------------------------
Aldo Papone
/S/ Robert W. Thomson Director September 24, 1995
- - -------------------------------------------
Robert W. Thomson
/S/ Lucy Rae Ricciardi Senior Vice President and Chief Financial Officer September 26, 1995
- - -------------------------------------------
Lucy Rae Ricciardi
/S/ Michael A. Manto Corporate Controller September 19, 1995
- - -------------------------------------------
Michael A. Manto
</TABLE>
-42-
<PAGE> 44
ITEM 14(A)(2) AND ITEM 14(D). FINANCIAL STATEMENT SCHEDULE
IMRS INC. AND SUBSIDIARIES
(d/b/a Hyperion Software)
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
================================================================================
<TABLE>
<CAPTION>
Additions
----------------------------
Charged
Balance at Charged to to Other Balance
Beginning Costs and Accounts Deductions- at End
Description of Period Expenses - Describe (a) Describe of Period
----------- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended June 30, 1993
Allowance for doubtful accounts,
returns and discounts
$1,055 739 466 (a) 1,044 (b) $1,216
For the year ended June 30, 1994
Allowance for doubtful accounts,
returns and discounts
$1,216 1,118 911 (a) 1,605 (b) $1,640
For the year ended June 30, 1995
Allowance for doubtful accounts,
returns and discounts
$1,640 320 1,347 (A) 807 (B) $2,500
</TABLE>
- - ----------------
(a) Charged to revenues
(b) Write-offs, returns and discounts, net of recoveries
<PAGE> 1
EXHIBIT 10.44. WAIVER AND AMENDMENT NO. 2
TO AMENDED AND RESTATED CREDIT AGREEMENT
WAIVER AND AMENDMENT NO. 2 (this "WAIVER AND AMENDMENT"), dated as of June
30, 1995, to the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 1, 1992
by and among HYPERION SOFTWARE CORPORATION (formerly known as IMRS OPERATIONS
INC.), a Delaware corporation (the "COMPANY"), the signatory banks thereto (the
"BANKS"), and THE BANK OF NEW YORK, as agent (the "AGENT"), as amended by
Waiver and Amendment, dated as of June 30, 1993 (as so amended, the "CREDIT
AGREEMENT").
RECITALS
A. Capitalized terms used herein which are not defined herein and which are
defined in the Credit Agreement shall have the same meanings as therein
defined.
B. The Company has entered into agreements to acquire (i) Pillar
Corporation, (ii) certain real property and improvements from Combustion
Engineering, Inc., and (iii) product distribution rights from Whiteport Corp.,
N.V., Drs A.J. Hordijk B.V. and Hyperion Nordic AB, and has requested that the
Banks and the Agent waive the failure to comply with certain notice and
reporting requirements of the Credit Agreement and certain other requirements
of the Credit Agreement contravened by the foregoing acquisitions.
C. The Banks and the Agent are willing to grant the foregoing waivers
subject to the terms and conditions set forth herein.
D. The Company, the Banks and the Agent have also agreed to certain
amendments to the Credit Agreement as set forth below.
In consideration of the covenants, conditions and agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, pursuant to Section 11.1 of the
Credit Agreement, the parties agree as follows:
SECTION 1. WAIVERS
The Banks and the Agent hereby agree:
1. In connection with the acquisition by the Company of the building and
land located at 900 Long Ridge Road, Stamford, Connecticut to be improved by a
90,000 square foot addition (the "HEADQUARTERS ACQUISITION"), on the terms in
the purchase and sale agreement, dated January 20, 1995, between the Company
and Combustion Engineering, Inc. and the mortgage loan (the "CDA LOAN"), dated
January 20, 1995, between the Company and the Connecticut Development Authority
(the "CDA MORTGAGE LOAN AGREEMENT"), notwithstanding anything to the contrary
contained in Sections 7.6, 8.1, 8.2, 8.3, 8.4, 8.6(h), 8.11 or any other
provisions of the Credit Agreement to the extent that any of said provisions
are currently or may be contravened by said Acquisition and related mortgage
loan, the Agent and the Banks hereby consent to the Headquarters Acquisition
and related mortgage loan, provided, however, that (i) the capital expenditure
for the Headquarters Acquisition shall not exceed $35,000,000, and (ii) the
calculation of the financial covenants in Sections 7.13, 7.14, 7.15 and 8.12
shall at all times include the Headquarters Acquisition except where
specifically noted otherwise in such financial covenant.
<PAGE> 2
2. To waive the provisions of Sections 7.1(f), 8.1, 8.2, 8.3, 8.4,
8.6(h), 8.9 or any other provisions of the Credit Agreement to the extent that
any of the said provisions were contravened by (i) the acquisition of product
distribution rights from Whiteport Corp., N.V. on the terms contained in the
agreement dated February 16, 1995, between Whiteport Corp., N.V. and the
Company, a copy of which was provided to the Agent, and/or (ii) the acquisition
of product distribution rights from Drs A.J. Hordijk B.V. on the terms
contained in the agreement dated March 8, 1995, between Drs A.J. Hordijk B.V.
and the Company, a copy of which was provided to the Agent, and/or (iii) the
acquisition of Pillar Corporation by the Company on the terms contained in the
merger agreement dated November 29, 1994 (the "PILLAR AGREEMENT"), and/or (iv)
the acquisition of product distribution rights from Hyperion Nordic AB on the
terms contained in the agreement dated on or about September 15, 1995, between
the Company, Hyperion Nordic, AB, Premiaraktoren 1164 AB (d/b/a Hyperion
Software Nordic AB), and Anders Wincrantz, an individual residing in Stockholm,
Sweden, (the "NORDIC AGREEMENT") provided that an executed copy of the Nordic
Agreement shall be delivered to the Agent no later than October 16, 1995.
3. To waive the Company's failure to comply with the provisions of
Section 7.2(a)(iii) or any other provisions of the Credit Agreement which
require that the Company give prompt written notice to the Agent and each Bank
if there shall occur and be continuing a Default or an Event of Default, to the
extent such notice should have been so given at any time prior to and including
September 25, 1995 with respect to any matter or Default or any Event of
Default which the Banks and the Agent are waiving and/or amending in this
Waiver and Amendment.
4. To waive the Company's failure to comply with the provisions of
Section 7.9 of the Credit Agreement (Collateral Locations) or any other
provisions of the Credit Agreement with respect to maintaining tangible
Collateral at only the locations shown on Schedule 7.9, for periods prior to
and including June 30, 1995, provided that a revised Schedule 7.9 shall be
delivered to the Agent by the effective date of this Waiver and Amendment.
5. To waive the Company's failure to provide the documents required
pursuant to Sections 7.16 and 8.9 of the Credit Agreement for any Subsidiary,
provided that the Company delivers such documents on or before January 31,
1996.
SECTION 2. AMENDMENTS
The Credit Agreement is, effective as of June 30, 1995 and subject to the
satisfaction of the conditions precedent set forth in Section 3 below, hereby
amended as follows:
1. Section 1.1 of the Credit Agreement is amended by deleting the
definition of "Applicable Margin" in full and substituting therefor the
following:
<TABLE>
"APPLICABLE MARGIN": with respect to the unpaid principal amount of
Revolving Credit Loans, in accordance with the following:
<CAPTION>
Applicable Margin for Applicable Margin for
Period Eurodollar Rate Option Base Rate Option
- - ---------------------------------- ---------------------- ---------------------
<S> <C> <C>
When the Funded Debt Ratio is
equal to or greater than 1.25:1.00 1.50% 0.25%
When the Funded Debt Ratio is less
than 1.25:1.00 but equal to or
greater than 0.41:1.00 1.25% 0.00%
When the Funded Debt Ratio is less
than 0.40:1.00 0.75% 0.00%
</TABLE>
-2-
<PAGE> 3
2. Section 1.1 of the Credit Agreement is further amended by
deleting the definition of "CURRENT LIABILITIES" in full and substituting
therefor the following: "Current Liabilities": at any time, all current
liabilities of the Company and its Subsidiaries (as determined in accordance
with GAAP on a Consolidated basis) excluding 50% of deferred revenue.
3. Section 1.1 of the Credit Agreement is further amended by
inserting the following new definition of "FUNDED DEBT RATIO" in the
appropriate alphabetical order: "Funded Debt Ratio": at any time, the ratio of
the outstanding amount of all liabilities of the Company and its Subsidiaries
for money borrowed (including without limitation obligations under Capitalized
Leases) to EBITDA.
4. Section 1.1 of the Credit Agreement is further amended by
deleting the definition of "INTEREST COVERAGE RATIO" in full and substituting
therefor the following: "'Interest Coverage Ratio': for any period, the ratio
of (i) EBITDA (excluding GAAP basis unusual and/or infrequent accounting
charges and related income tax benefits, if any) less capital expenditures
(excluding capital expenditures for the Headquarters Acquisition, not to exceed
$35,000,000) to (ii) Interest Expense less interest income, such ratio to be
calculated based upon a rolling four quarters ended on the Company's latest
fiscal quarter end."
5. Section 1.1 is further amended by deleting the figure
"$2,500,000" in the definition of "Significant Subsidiary" and substituting
therefor the figure "$5,000,000".
6. Section 1.1 is further amended by deleting the date "June 30,
1997" in the definition of "Maturity Date" and substituting therefor the date
"June 30, 2000."
7. Section 1.1 is further amended by amending the definition of
"MATERIAL ADVERSE CHANGE" in full to read as follows: "'Material Adverse
Change': a material adverse change in (i) the financial condition, business,
prospects or Property of the Company and its Subsidiaries taken as a whole or
(ii) the ability of the Company to perform its obligations under the Loan
Documents".
8. Section 1.1 is further amended by amending the definition of
"MATERIAL ADVERSE EFFECT" in full to read as follows: "'Material Adverse
Effect': a material adverse effect on (i) the financial condition, business,
prospects or Property of the Company and its Subsidiaries taken as a whole or
(ii) the ability of the Company to perform its obligations under the Loan
Documents".
9. Section 1.1 of the Credit Agreement is further amended by
inserting the following new definition of "UNITED STATES" and "U.S." in the
appropriate alphabetical order: "'United States' and 'U.S.': the United States
of America (including the States thereof and the District of Columbia)".
10. Section 3.1 of the Credit Agreement is amended by deleting the
figure "3/8%" therein and substituting therefor the figure "1/4%".
11. Section 7.1(f)(i) is amended in full to read as follows: "(i) any
Acquisition in excess of $2,000,000, provided that written notice of all
Acquisitions not previously disclosed in writing to the Agent or set forth in
the annual report of the Company shall be delivered to the Agent within 90 days
after the end of each fiscal year, or."
12. Section 7.1(f)(ii) is amended by deleting the figure "$500,000"
therein and substituting therefor the figure "$2,000,000".
-3-
<PAGE> 4
13. Section 7.5 is amended by deleting the wording in its entirety
and substituting the following wording: "(a) INSURANCE. Maintain and cause each
Significant Subsidiary to maintain (A) insurance with financially sound
insurance carriers on such of its Property, against at least such risks, and in
at least such amounts, defined in a certificate of insurance reasonably
acceptable to the Agent, such certificate will be filed with the Agent at the
end of each fiscal year simultaneously with the delivery of the annual
financial statements delivered pursuant to Section 7.1(a), and (B) for each
Significant Subsidiary that develops software, software developers errors &
omissions insurance with deductibles not exceeding $50,000 per occurrence, and
unless included in the certificate of insurance delivered pursuant to
subsection (A) herein, file with the Agent at the end of each fiscal year
simultaneously with the delivery of the annual financial statements delivered
pursuant to Section 7.1(a) a detailed list of such insurance then in effect,
together with a certificate of the Chief Financial Officer (or such other
officer as shall be acceptable to the Agent) of the Company certifying that in
the opinion of such officer such insurance is adequate in nature and amount,
complies with the obligations of the Company under this paragraph 7.5, and is
in full force and effect.
(b) INSURANCE COVERING COLLATERAL. Insure, and cause each Significant
Subsidiary to insure, all of its tangible Collateral against risks as defined
in a certificate of insurance reasonably acceptable to the Agent. All such
insurance policies shall be endorsed to provide that, in respect of the
interests of the Agent: (A) the Agent shall be named as an additional insured,
except with respect to the Headquarters Acquisition assets, (B) a certificate
of such insurance shall be filed with the Agent at the end of each fiscal year,
(C) thirty days' prior written notice of any cancellation, reduction of amounts
payable, or any changes and amendments shall be given to the Agent, and (D) the
Agent shall have the right, but not the obligation, to pay any premiums due or
to acquire other such insurance upon the failure of the Company to pay the same
or to so insure.
(c) CONCURRENT INSURANCE. The Company shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained pursuant to paragraph (b) above unless the Agent has
approved the carrier and the form and content of the insurance policy,
including, without limitation, naming the Agent as additional insured, except
with respect to the Headquarters Acquisition assets.
(d) Provided that no Default or Event of Default shall exist or be
continuing at the time of the receipt of such insurance proceeds, if any, the
Agent agrees, promptly upon its receipt thereof, to pay over to the Company the
proceeds of any such payment and, provided further, that if a Default or Event
of Default shall exist or be continuing at the time of the receipt of such
proceeds, the Agent may apply such proceeds to the Company's obligations under
the Loan Documents and pay over any excess thereof to the Company.
14. Section 7.13 is amended in full to read as follows: "(a)
Maintain at each quarter end during the period from June 30, 1995 through June
30, 1996, Net Worth, excluding GAAP basis unusual and/or infrequent accounting
charges, of not less than $62,000,000; (b) maintain at each quarter end during
each fiscal year thereafter, Net Worth, excluding GAAP basis unusual and/or
infrequent accounting charges, of not less than the sum of (i) $62,000,000
plus, (ii) 50% of the Company's Net Income of the preceding fiscal year (if
positive) plus 100% of any equity offerings including pooling of interest
mergers, in each case on a cumulative basis, such cumulative basis to commence
on July 1, 1996."
15. Section 7.15 is amended by deleting the ratio "4.00:1.00"
therein and substituting therefor the ratio "3.50:1.00".
-4-
<PAGE> 5
16. Section 8.1(ii) is amended in full to read: "(ii) Indebtedness
of the Company and its United States Subsidiaries (excluding the CDA Loan) in an
amount not to exceed $1,500,000 in the aggregate at any time outstanding or
available under lines of credit or credit facilities plus obligations under
Capitalized Leases and purchase money Indebtedness incurred in any fiscal
year, provided that no Default or Event of Default shall exist immediately
before or after the Company or any United States Subsidiary shall incur any
such Indebtedness, and"
17. Section 8.1(iv) is amended in full to read: "(iv) Indebtedness
of all of the Company's non-United States Subsidiaries in an amount not to
exceed $1,500,000 (U.S. Dollars) in the aggregate at any time outstanding or
available under any foreign denominated lines of credit or credit facilities
plus obligations under Capitalized Leases and purchase money Indebtedness
incurred in any fiscal year, provided that no Default or Event of Default shall
exist immediately before or after any such Subsidiary shall incur any such
Indebtedness, and"
18. Section 8.2(xi) is amended in full to read as follows: "(xi)
Liens on Property of the Company and its Subsidiaries to secure Indebtedness
permitted under clauses (ii) and (iv) of Section 8.1."
19. Section 8.4(i) is amended in full to read as follows: "(i) the
Company and/or any Subsidiary may assume, guarantee, indorse, contingently
agree to purchase or perform, or otherwise become liable upon any Contingent
Obligation to the same extent that it could do so with non-contingent
obligations under paragraphs 8.1, 8.3 and 8.6(h) (without duplication) and".
20. Section 8.6 is amended by inserting the words "or with consent
of the Bank and/or Agent" after "8.9" of the first line of Section 8.6.
21. Section 8.6(h) is amended by inserting the words "and/or its
subsidiaries," after the first instance of the word "Company" in this Section.
22. Section 8.6(h)(d)(x) is amended by deleting the figure
"$2,000,000" therein and substituting therefor the figure "$10,000,000".
23. Section 8.6(h)(d)(y) is amended by deleting the figure
"$4,000,000" therein and substituting therefor the figure "$15,000,000".
24. Section 8.6(h)(d)(z) is amended in full to read as follows: "(z)
$35,000,000 during the period from July 1, 1995 to and including the date on
which all obligations to the Agent and the Banks under the Loan Documents have
been indefeasibly paid in full in cash, PROVIDED, HOWEVER, that the foregoing
shall not apply to the SEMA Acquisition and the acquisition of the net assets
of Columbia Data Systems, Inc. and MAI Systems Corporation and the acquisition
of Pillar Corporation and the acquisition of product distribution rights from
Whiteport Corp., N.V. and the acquisition of product distribution rights from
Drs A.J. Hordijk B.V. and the acquisition of real property at 900 Long Ridge
Road from Combustion Engineering, Inc. which are excluded from the purchase
price limitations set forth in this clause (d);"
25. Section 8.6 is further amended by adding after subsection (i)
thereof a new subsection (j) to read as follows: "(j) With respect to
non-United States Subsidiaries of the Company, subsections 8.6(a), (b), (c),
(d), (e), (f) and (g) shall apply relative to equivalent investment
alternatives of the domicile country of the respective Subsidiary."
26. Section 8.7 is amended by deleting the words "required by GAAP"
therein and substituting therefor the words "required or allowed by GAAP."
-5-
<PAGE> 6
27. Section 8.8(b) is amended in full to read as follows: "(b)
software licenses and software license distribution rights granted in the
ordinary course of business,"
28. Section 8.8(c) is amended by deleting the figure "$750,000"
therein and substituting therefor the figure "$1,500,000".
29. Section 8.9 is amended in full to read as follows: "Create or
acquire any other Subsidiary, or permit any Subsidiary so to do, unless:
(a) if such Subsidiary is a Significant Subsidiary, such Significant
Subsidiary shall become a Subsidiary Guarantor and within 30 days of becoming a
Subsidiary, unless otherwise provided herein, such Subsidiary (i) shall have
delivered a Subsidiary Guaranty and Security Agreement substantially in the
form of Exhibit H to the Agreement duly executed by such Significant
Subsidiary, (ii) shall have delivered UCC-1 Financing Statements or other
documents necessary to perfect such security interest, (iii) shall have
delivered such legal opinions, corporate certificates and other documents as
are reasonably requested by the Agent;
(b) if such Subsidiary is a United States Subsidiary (whether or not the
Subsidiary is a Significant Subsidiary), within 90 days of becoming a
Subsidiary, the Company or such Significant Subsidiary, as the case may be,
shall cause all Stock of such Person to be delivered to the Agent under the
Pledge Agreement or the Subsidiary Guaranty and Security Agreements, as the
case may be, together with appropriate stock powers and such other
documentation as the Agent shall reasonably request; and
(c) if such Subsidiary is a non-United States Subsidiary (whether or not
the Subsidiary is a Significant Subsidiary), within 180 days of becoming a
Subsidiary, the Company or such Significant Subsidiary, as the case may be,
shall cause at least 65% of the issued Stock of such Person as may from time
to time be outstanding to be delivered to the Agent under the Pledge Agreement
or the Subsidiary Guaranty and Security Agreements, as the case may be,
together with appropriate stock powers and such other documentation as the
Agent shall reasonably request."
30. Section 8.11 is amended by deleting the percentage "20%" therein
and substituting therefor the percentage "25%".
31. Section 8.12 is amended by deleting the ratio "1.00:1.00"
therein and substituting therefor the ratio "1.25:1.00".
32. Section 8.13 is amended by deleting the figure "$4,000,000"
therein and substituting therefor the figure "$5,000,000".
33. Section 8.15 is amended by inserting the words "if such payment
or obligation would in any way materially adversely affect the interests of the
Agent or the Banks under any of the Loan Documents or the obligations of the
Company under the Loan Documents, provided, in any case, that no such payment
or obligation shall exceed $2,000,000 in any fiscal year except that the
Company may prepay up to 50% of the original principal amount of the CDA Loan"
after the last word in this Section.
34. Section 8.16 is amended by deleting the figure "$250,000"
therein and substituting therefor the figure "$1,000,000".
35. Section 9.1(q) is amended by deleting the figure "$750,000"
therein and substituting therefor the figure "$2,000,000".
-6-
<PAGE> 7
36. Schedule 4.1 attached hereto is hereby substituted for Schedule
4.1 to the Credit Agreement.
37. Schedule 7.9 attached hereto is hereby substituted for Schedule
7.9 to the Credit Agreement.
38. Exhibit A attached hereto is hereby substituted for Exhibit A
to the Credit Agreement.
39. Except as specifically amended or waived herein, the Credit
Agreement shall remain in full force and effect.
SECTION 3. CONDITION TO EFFECTIVENESS
This Waiver and Amendment shall become effective as of June 30, 1995, when
the Agent shall have received:
a.) Counterparts of this Waiver and Amendment executed by the Company, the
Banks and the Agent;
b.) a new Note for each Bank in the amounts set forth in Exhibit A attached
hereto;
c.) a Subsidiary Guaranty and Security Agreement fully executed by Hyperion
Software, Pillar Group Inc., together with duly executed UCC-1 financing
statements;
d.) a certificate of the Secretary or an Assistant Secretary of the Company,
dated the date hereof, (i) attaching a true and complete copy of all documents
evidencing necessary corporate action (in form and substance satisfactory to
the Agent and to Special Counsel) taken by the Company to authorize the
execution and delivery of this Waiver and Amendment and the transactions
contemplated hereby, (ii) certifying that the Articles of Incorporation and the
By-Laws of the Company have not been amended, modified or changed in any manner
since May 1, 1992 or, if so, setting forth the same, (iii) setting forth the
incumbency of each officer of the Company who signs this Waiver and Amendment,
including therein a signature specimen of such officer, and (iv) attaching a
certificate of good standing of the Secretary of State of the State of its
incorporation;
e.) an opinion of Counsel to the Company in all respects satisfactory to the
Agent;
f.) an executed copy of the Pillar Agreement and the CDA Mortgage Loan
Agreement;
g.) payment of the Agent's amendment fee and all of the Agent's expenses
(including the reasonable fees and disbursements of Special Counsel) incurred
in connection with the preparation, negotiation and closing of this Waiver and
Amendment; and
h.) such other documents as the Agent shall reasonably request.
4. In order to induce the Agent to execute this Waiver and Amendment,
the Company hereby (i) certifies that all representations and warranties
contained in the Credit Agreement are true and correct in all respects as of
the date hereof, (ii) certifies that, immediately after giving effect to this
Waiver and Amendment, no Default or Event of Default exists under the Credit
Agreement, (iii) reaffirms and admits the validity and enforceability of the
Loan Documents and its obligations thereunder and (iv) agrees and admits that
it has no valid defenses to or offsets against any of its obligations to the
Agent or the Banks under the Loan Documents as of the date hereof.
-7-
<PAGE> 8
SECTION 4. COUNTERPARTS
This Waiver and Amendment may be executed in any number of counterparts,
each of which shall be an original and all of which shall constitute one
agreement. It shall not be necessary in making proof of this Waiver and
Amendment to produce or account for more than one counterpart containing the
signature of the party to be charged.
SECTION 5. GOVERNING LAW
This Waiver and Amendment is being delivered in and is intended to be
performed in the State of New York and shall be construed and is enforceable in
accordance with, and shall be governed by, the internal laws of the State of
New York without regard to principles of conflict of laws.
SECTION 6. EFFECT ON THE LOAN DOCUMENTS
This Waiver and Amendment shall be subject to such conditions and
limitations as are specified herein, and the rights of the Company, the
Guarantors, the Banks and the Agent under the Credit Agreement and the other
Loan Documents shall be otherwise unaffected. No waiver or consent contained
herein, except as otherwise specified herein, shall extend to any subsequent or
other action by the Company.
IN WITNESS WHEREOF, the parties have caused this Waiver and Amendment to be
duly executed as of the date first written above.
HYPERION SOFTWARE CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
THE BANK OF NEW YORK,
individually and as Agent
By:________________________________
Name:______________________________
Title:_____________________________
-8-
<PAGE> 9
CONSENT OF GUARANTORS
DATED AS OF JUNE 30, 1995
The undersigned, as the Guarantors under the Amended and Restated Credit
Agreement, dated as May 1, 1992 by and among Hyperion Software Corporation
(formerly known as IMRS Operations Inc.), the signatory banks thereto and The
Bank of New York, as Agent, as amended by Waiver and Amendment, dated as of
June 30, 1993 (as so amended, the "CREDIT AGREEMENT"), each hereby consents to
the foregoing Waiver and Amendment and hereby confirms and agrees that,
notwithstanding the effectiveness of said Waiver and Amendment, (i) the
Subsidiary Guaranty and Security Agreement, the Holding Guaranty (each a
"GUARANTY") and each Collateral Document in effect on the date hereof to which
it is a party are, and shall continue to be, in full force and effect and are
hereby confirmed and ratified in all respects, except that, upon the
effectiveness of, and after the date of, said Waiver and Amendment, all
references in each Guaranty and such Collateral Documents to the Credit
Agreement shall mean the Credit Agreement as amended by said Waiver and
Amendment and (ii) such Collateral Documents consisting of security agreements
and all collateral described therein do, and shall continue to, secure the
payments by the Company referred to in said Waiver and Amendment of its
obligations under the Credit Agreement, as amended by said Waiver and
Amendment, and under the Notes.
IMRS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
HYPERION SOFTWARE (UK), PLC
By:________________________________
Name:______________________________
Title:_____________________________
HYPERION SOFTWARE, PILLAR GROUP INC.
By:________________________________
Name:______________________________
Title:_____________________________
-9-
<PAGE> 10
<TABLE>
EXHIBIT A
List of Commitments
-------------------
<CAPTION>
Commitment Commitment
Bank Amount Percentage
- - -------------------- ----------- ----------
<S> <C> <C>
The Bank of New York $25,000,000 100%
</TABLE>
<PAGE> 1
IMRS Inc. and Subsidiaries (d/b/a Hyperion Software)
<TABLE>
Exhibit (11.1) - Statement Re: Computation of Earnings Per Share
(In thousands, except per share amounts)
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------
1995 1994 1993
----------------------------------------
<S> <C> <C> <C>
PRIMARY
Weighted average number of common shares
outstanding 7,822 7,540 7,222
Weighted average number of common equivalent
shares outstanding 836 752 528
----------------------------------------
8,658 8,292 7,750
========================================
Net income $12,139 $8,609 $2,343
========================================
Per share amount $ 1.40 $ 1.04 $ .30
========================================
FULLY DILUTED
Weighted average number of common shares
outstanding 7,822 7,540 7,222
Weighted average number of common equivalent
shares outstanding 918 760 730
----------------------------------------
8,740 8,300 7,952
========================================
Net income $12,139 $8,609 $2,343
========================================
Per share amount $ 1.39 $ 1.04 $ .29
========================================
</TABLE>
<PAGE> 1
<TABLE>
IMRS INC.and Subsidiaries (d/b/a Hyperion Software)
Exhibit (22.1) - Subsidiaries of the Company
<CAPTION>
Name Jurisdiction of Incorporation
- - ---- -----------------------------
<S> <C>
Hyperion Software Corporation . . . . . . . . . . . . . . . . . Delaware
Hyperion Software Corporation of Canada, Ltd. . . . . . . . . Ontario
Hyperion Software Europe S.r.l. . . . . . . . . . . . . . . . Italy
Hyperion Software Italia S.r.l. . . . . . . . . . . . . . . . Italy
Hyperion Software Foreign Sales Corp. . . . . . . . . . . . . Barbados
Hyperion Software (UK) plc. . . . . . . . . . . . . . . . . . United Kingdom
Hyperion Software Deutschland GmbH . . . . . . . . . . . . . . Germany
Hyperion Softwarevertribs-Gesellschaft MbH . . . . . . . . . . Austria
Hyperion Software France S.A. . . . . . . . . . . . . . . . . France
Hyperion Software BeLux . . . . . . . . . . . . . . . . . . . Belgium
Hyperion Software Nederland, B.V. . . . . . . . . . . . . . . The Netherlands
Hyperion Software Asia Pte. Ltd. . . . . . . . . . . . . . . . Singapore
Hyperion Software, Pillar Group Inc. . . . . . . . . . . . . . California
IMRS Hyperion Software Iberica, S.A. . . . . . . . . . . . . . Spain
Hyperion Software Nordic AB . . . . . . . . . . . . . . . . . . Sweden
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference, in the Registration Statement
(Form S-8 No. 33-44127) pertaining to the 1985 Incentive Stock Option Plan of
IMRS Inc., 1989 Stock Option Plan of IMRS Inc., the IMRS Inc. 1991 Employee
Stock Purchase Plan, the IMRS Inc. 1991 Non-Employee Director Stock Option
Plan, the IMRS Inc. 1991 Stock Plan and to Stock Options Granted Pursuant to
Employment, Consulting and Option Agreements, in the Registration Statement
(Form S-8 No. 33-57143) pertaining to the Pillar Corporation 1988 Stock Option
Plan and to the Pillar Corporation 1992 Long Term Equity Incentive Plan, in the
Registration Statement (Form S-8 No. 33-57145) pertaining to the IMRS Inc. 1991
Stock Plan and in the Registration Statement (Form S-3 No. 33-56989)
pertaining to the registration of 514,585 shares of IMRS Inc. common stock, of
our report dated July 20, 1995, with respect to the consolidated financial
statements and schedule of IMRS Inc. (d/b/a Hyperion Software) included in the
Annual Report (Form 10-K) for the year ended June 30, 1995.
/s/ Ernst & Young LLP
Stamford, Connecticut
September 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF IMRS INC. (d/b/a HYPERION SOFTWARE) FOR THE
YEAR ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 45,494
<SECURITIES> 0
<RECEIVABLES> 50,506
<ALLOWANCES> 2,500
<INVENTORY> 0
<CURRENT-ASSETS> 99,683
<PP&E> 45,663
<DEPRECIATION> 13,570
<TOTAL-ASSETS> 146,158
<CURRENT-LIABILITIES> 62,377
<BONDS> 0
<COMMON> 102
0
0
<OTHER-SE> 71,604
<TOTAL-LIABILITY-AND-EQUITY> 146,158
<SALES> 137,141
<TOTAL-REVENUES> 137,141
<CGS> 40,897
<TOTAL-COSTS> 118,503
<OTHER-EXPENSES> 77,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 119
<INCOME-PRETAX> 20,139
<INCOME-TAX> 8,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,139
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 1.39
</TABLE>
