<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO _____________
-----------------
COMMISSION FILE NUMBER 0-19538
HYPERION SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1326879
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 LONG RIDGE ROAD, STAMFORD, CONNECTICUT 06902
(Address of principal executive offices, including zip code)
(203) 703-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
----- -----
As of April 30, 1996, there were 16,922,508 shares of the Registrant's
common stock, $.01 par value, outstanding.
================================================================================
<PAGE> 2
Hyperion Software Corporation
Form 10-Q
<TABLE>
CONTENTS
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet -- March 31, 1996 and June 30, 1995.............................2
Condensed Consolidated Statement of Income -- Three Months Ended
March 31, 1996 and 1995; Nine Months Ended March 31, 1996 and 1995.................................3
Condensed Consolidated Statement of Cash Flows --
Nine Months Ended March 31, 1996 and 1995..........................................................4
Notes to Condensed Consolidated Financial Statements -- March 31, 1996...............................5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..........7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..............................................................12
SIGNATURES............................................................................................13
</TABLE>
Hyperion, Financial Intelligence, Executive Forum, IMRS, Micro Control and
OnRequest are registered trademarks and Hyperion Financials, Hyperion
Enterprise, Hyperion Pillar, Hyperion Analyst, Hyperion OLAP, 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, Conversion
Catalyst 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.
For further information, refer to the IMRS Inc. (d/b/a Hyperion Software) annual
report on Form 10-K for the year ended June 30, 1995, as well as the company's
registration statement on Form S-3 declared effective January 18, 1995.
<PAGE> 3
Hyperion Software Corporation
<TABLE>
Condensed Consolidated Balance Sheet
(In thousands, except for share data)
<CAPTION>
MARCH 31, JUNE 30,
1996 1995
------------------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31,121 $ 45,494
Accounts receivable--net of allowances of $2,800 and $2,500 40,215 48,006
Prepaid expenses and other current assets 4,443 4,124
Deferred income taxes 1,879 2,059
----------------------
TOTAL CURRENT ASSETS 77,658 99,683
Property and equipment--at cost, less accumulated
depreciation and amortization of $18,106 and $13,570 52,154 32,093
Product development costs--at cost, less accumulated
amortization of $6,952 and $4,604 11,551 9,401
Goodwill and other intangible assets--at cost, less
accumulated amortization of $5,268 and $4,337 5,807 3,007
Deposits and other assets 1,424 1,974
----------------------
Total assets $148,594 $146,158
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 15,336 $ 13,050
Accrued employee compensation and benefits 8,809 14,879
Income taxes payable 3,108
Deferred revenue 29,211 30,599
Notes payable 733 741
----------------------
TOTAL CURRENT LIABILITIES 54,089 62,377
Mortgage payable 8,472 8,910
Deferred income taxes 2,984 3,165
Stockholders' equity:
Preferred stock--$.01 par value; authorized--1,000,000 shares;
none issued
Common stock--$.01 par value; authorized--100,000,000
shares; issued--21,168,722 and 20,378,066 shares 212 204
Additional paid-in capital 71,890 64,262
Retained earnings 24,765 20,659
Currency translation adjustments (585) (386)
Treasury stock, at cost--4,329,464 and 4,320,840 shares (13,233) (13,033)
----------------------
TOTAL STOCKHOLDERS' EQUITY 83,049 71,706
----------------------
Total liabilities and stockholders' equity $148,594 $146,158
======================
</TABLE>
Note: the balance sheet at June 30, 1995 has been derived from the audited
financial statements at that date.
See accompanying notes.
2
<PAGE> 4
Hyperion Software Corporation
<TABLE>
Condensed Consolidated Statement of Income (Unaudited)
(In thousands, except per share data)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995 1996 1995
-------------------- ---------------------
<S> <C> <C> <C> <C>
REVENUES
Software licenses $16,014 $15,316 $ 55,194 $44,987
License renewals and services 20,842 14,766 59,020 41,478
--------------------- ---------------------
Total revenues 36,856 30,082 114,214 86,465
COSTS AND EXPENSES
Cost of revenues:
Software licenses 1,180 924 3,365 2,395
License renewals and services 13,203 8,867 37,332 24,862
Sales and marketing 12,093 10,283 35,891 28,382
Product development 6,478 5,471 18,847 14,606
Purchased research and development 2,000
General and administrative 3,519 2,596 11,182 7,450
Merger and integration 1,000
------------------- ---------------------
36,473 28,141 108,617 78,695
-------------------- ---------------------
OPERATING INCOME 383 1,941 5,597 7,770
Interest income 311 436 1,178 1,190
Interest expense (105) (30) (149) (91)
--------------------- ---------------------
INCOME BEFORE INCOME TAXES 589 2,347 6,626 8,869
Provision for income taxes 220 950 2,520 3,590
--------------------- ---------------------
NET INCOME $ 369 $ 1,397 $ 4,106 $ 5,279
===================== =====================
EARNINGS PER SHARE
Primary $ .02 $ .08 $ .23 $ .31
Fully diluted $ .02 $ .08 $ .23 $ .30
AVERAGE NUMBER OF SHARES OUTSTANDING
Primary 17,942 17,488 17,921 17,230
Fully diluted 17,983 17,586 17,957 17,438
</TABLE>
See accompanying notes.
3
<PAGE> 5
Hyperion Software Corporation
<TABLE>
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
1996 1995
----------------------
<S> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES $ 16,502 $ 16,596
INVESTING ACTIVITIES
Office facilities in progress (14,230) (12,311)
Leasehold improvements and purchases of furniture,
equipment and software (12,193) (8,934)
Product development costs (4,498) (3,787)
Deposits and intangible assets (53) (1,620)
Business acquisitions (3,144)
----------------------
Cash used by investing activities (34,118) (26,652)
FINANCING ACTIVITIES
Principal payments on notes payable (446) (164)
Mortgage payable--proceeds 9,500
Exercise of stock options by employees 3,888 2,565
----------------------
Cash provided by financing activities 3,442 11,901
Effect of exchange rate changes (199) 157
----------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (14,373) 2,002
Cash and cash equivalents at beginning of period 45,494 37,913
----------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 31,121 $ 39,915
======================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 2,921 $ 2,312
Interest ($266 and $108 capitalized in 1996 and 1995) 412 167
</TABLE>
See accompanying notes.
4
<PAGE> 6
Hyperion Software Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 1996
A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring accruals, considered necessary for a fair presentation
have been included in the accompanying unaudited financial statements. Operating
results for the three and nine-month periods ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the full year
ending June 30, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the company's annual
report on Form 10-K for the year ended June 30, 1995.
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. 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. All share and per share data have been
retroactively adjusted to reflect a 2-for-1 stock split effected in the form of
a 100% stock dividend paid in December 1995. The stock dividend resulted in a
retroactively applied transfer of approximately $.1 million (par value of $.01
per share) from additional paid-in capital to common stock.
B. ACQUISITIONS
During the quarter ended December 1995, the company concluded two strategic
acquisitions involving application technologies and an important European client
base. The acquisitions, which amounted to $3.6 million, were accounted for as
purchase transactions and, accordingly, $2 million was allocated to purchased
research and development and $1.6 million was allocated to identifiable
intangible assets based on their estimated fair values. The purchased research
and development is reflected as a one-time charge in the company's operating
results. The charge had the effect of reducing net income for the nine months
ended March 31, 1996 by approximately $1.3 million or $.07 per share.
Specifically, in December 1995, the company acquired certain assets and
application technologies, and assumed certain obligations of Trust Consult s.a.,
a Brussels-based financial solutions provider. Along with over 130 customers,
Hyperion gained significant European statutory consolidation and reporting
expertise and technology. Hyperion is using this unique applications expertise
in the development of Hyperion Enterprise release 4XA, the company's next
generation financial reporting solution. Enterprise 4XA, currently being tested
by clients worldwide, is targeted for commercial release by mid-calendar year.
The net operating results of the acquired business from the date of purchase are
included in the accompanying statement of income. Pro forma statement of income
data as if the acquisition had occurred on July 1, 1994 is not shown, as it
would not differ significantly from reported results.
In November 1995, the company acquired certain rights from Sinper Corporation to
its powerful database engine, TM/1, technology. The new technology was used in
the development of Hyperion OLAP (On-Line Analytical Processing), a solution for
customers' most complex and high volume multidimensional analysis needs, such as
product profitability and sales analysis. Hyperion OLAP became commercially
available in April 1996.
5
<PAGE> 7
Hyperion Software Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
March 31, 1996
C. STOCKHOLDER RIGHTS PLAN
In November 1995, the company adopted a stockholder rights plan (the "Rights
Plan") in which preferred stock rights were distributed as a rights dividend at
the rate of one right for each share of common stock held as of the close of
business on December 1, 1995. The Rights Plan is designed to deter coercive or
unfair takeover tactics and to prevent an acquirer from gaining control of
Hyperion without offering a fair price to all of the company's stockholders. The
plan was not adopted by the board of directors in response to any specific offer
or threat, but rather is intended to protect the interests of stockholders in
the event the company is confronted in the future with coercive or unfair
takeover tactics.
Each right will entitle holders of Hyperion common stock to buy one share of
Series A Junior Participating Preferred Stock of the company at an exercise
price of $150. The rights will be exercisable only if a person or group acquires
more than 15% of the common stock, or announces a tender or exchange offer which
would result in its ownership of 15% or more of the common stock, or a person
owning 10% or more of the common stock is determined by the board to be an
Adverse Person, as defined in the Rights Plan.
If any person or group becomes the beneficial owner of 20% or more of the common
stock except pursuant to a tender offer for all shares at a price that a
majority of the independent directors determines to be fair; a more-than-15%
stockholder engages in a merger with the company in which the company survives
and its common stock remains outstanding and unchanged; certain other
self-dealing events involving the company and a more-than-15% stockholder occur;
or, under certain circumstances, the board determines a 10% or more stockholder
to be an Adverse Person (collectively "Flip-In Events"), each right not owned by
such person or related parties will entitle its holder to purchase, at the then
current exercise price of the right, common stock of Hyperion Software having a
value of twice the right's exercise price (or, in certain circumstances, a
combination of cash, property, common stock or other securities or a reduction
in the exercise price having an aggregate value equal to the value of the common
stock otherwise purchasable). After the occurrence of a Flip-In Event and before
any person or affiliated group becomes the owner of 50% or more of the then
outstanding common stock, the company may also exchange one share of common
stock for each right outstanding. In addition, if the company is involved in a
merger or other business combination transaction with another person in which
its common stock is changed or converted, or sells or transfers more than 50% of
its assets or earning power to another person, each right that has not
previously been exercised will entitle its holder to purchase, at the then
current exercise price of the right, shares of common stock of such other person
having a value of twice the right's exercise price.
The company can, in certain circumstances, redeem the rights at $.01 per right.
The rights will expire on November 17, 2005, unless earlier redeemed or
exchanged.
D. CONTINGENCIES
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.
6
<PAGE> 8
Hyperion Software Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations
OVERVIEW
- - --------------------------------------------------------------------------------
Hyperion Software, incorporated in 1981, develops, markets and supports complete
financial management and accounting solutions for enterprise client/server
environments. The company's software addresses the diverse accounting, financial
consolidation, management reporting, budgeting, analysis, and information access
needs of large corporations worldwide. The company designs products specifically
for network implementation, providing fast, multi-user access to centrally
controlled and secure corporate data.
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.
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 deferral and/or realization of deferred software license revenues according
to contract terms, 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. A
significant portion of the company's quarterly software licensing agreements is
concluded in the last month of the fiscal quarter, generally with a
concentration of such revenues earned in the final ten business days of that
month. The company generally has realized lower revenues in its first
(September) and third (March) fiscal quarters than in the immediately following
quarters. Total revenues and net income were $40.7 million and $1.5 million
(includes one-time charges relating to purchases of research and development,
which had the effect of reducing net income by approximately $1.3 million),
respectively, for the second quarter of fiscal 1996, and $36.6 million and $2.2
million, respectively, for the first quarter of fiscal 1996. 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 corporate financial applications 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 or
shortfall in quarterly and/or annual revenues typically results in lower
profitability or may result in losses.
Except for the historical information contained in this report on Form 10-Q, the
matters discussed herein are forward looking statements that involve risks and
uncertainties. The company's future results may vary significantly based on a
number of factors, such as those discussed in the preceding paragraph, as well
as other risks as detailed in the company's annual report on Form 10-K for the
year ended June 30, 1995, and its registration statement on Form S-3 declared
effective January 18, 1995, particularly under "Investment Considerations."
7
<PAGE> 9
Hyperion Software Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
<TABLE>
RESULTS OF OPERATIONS
- - -----------------------------------------------------------------------------------------------------
<CAPTION>
REVENUES
Third Quarter Ended Nine Months Ended
March 31, 1996 CHANGE 1995 1996 CHANGE 1995
- - ----------------------------- ----------------------------- -------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Software licenses $16,014 4.6% $15,316 $55,194 22.7% $44,987
Percentage of total revenues 43.5% 50.9% 48.3% 52.0%
- - ----------------------------- ----------------------------- -------------------------------
License renewals and services $20,842 41.1% $14,766 $59,020 42.3% $41,478
Percentage of total revenues 56.5% 49.1% 51.7% 48.0%
- - ----------------------------- ----------------------------- -------------------------------
</TABLE>
Software license revenues rose primarily as a result of an increase in the
number of licenses sold (unit volume) versus, for example, price increases.
Delays in the closing of some multi-product sales in March 1996 contributed to
slower software revenue growth over sales of the same quarterly period of the
prior year. Other factors included a slower than planned reorientation of the
sales force to a multi-product, complete financial solution approach, and
delayed sales pending the release of Hyperion Enterprise 4XA. Revenue growth for
the nine month comparison was led by demand for the company's enterprise
financial reporting and budgeting products.
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 the first three
quarters of fiscal 1996 and 1995 were $38.8 million and $25.1 million, or 34.0%
and 29.1% of total revenues, respectively. Revenue growth was particularly
strong in certain territories of Asia, Canada and in Europe, most notably in
France and the Netherlands.
<TABLE>
COST OF REVENUES
<CAPTION>
Third Quarter Ended Nine Months Ended
March 31, 1996 CHANGE 1995 1996 CHANGE 1995
- - ----------------------------- ----------------------------- -------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Software licenses $ 1,180 27.7% $ 924 $ 3,365 40.5% $ 2,395
Gross profit percentage 92.6% 94.0% 93.9% 94.7%
- - ----------------------------- ----------------------------- -------------------------------
License renewals and services $13,203 48.9% $8,867 $37,332 50.2% $24,862
Gross profit percentage 36.7% 39.9% 36.7% 40.1%
- - ----------------------------- ----------------------------- -------------------------------
</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 amortization of
capitalized costs related to new products and product enhancements. The
amortization of capitalized software costs begins upon the general release of
the software to customers.
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.
8
<PAGE> 10
Hyperion Software Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
<TABLE>
OPERATING EXPENSES
<CAPTION>
Third Quarter Ended Nine Months Ended
March 31, 1996 CHANGE 1995 1996 CHANGE 1995
- - ----------------------------- ----------------------------- -------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Sales and marketing $12,093 17.6% $10,283 $35,891 26.5% $28,382
Percentage of total revenues 32.8% 34.2% 31.4% 32.8%
- - ----------------------------- ----------------------------- -------------------------------
Product development $ 6,478 18.4% $ 5,471 $18,847 29.0% $14,606
Percentage of total revenues 17.6% 18.2% 16.5% 16.9%
- - ----------------------------- ----------------------------- -------------------------------
General and administrative $ 3,519 35.6% $ 2,596 $11,182 50.1% $ 7,450
Percentage of total revenues 9.5% 8.6% 9.8% 8.6%
- - ----------------------------- ----------------------------- -------------------------------
</TABLE>
The increase in sales and marketing expenses is primarily due to a net increase
in sales-marketing personnel.
The increase in product development expenses reflects additional personnel and
third-party development costs associated with expanded research and development
activities. In the first three quarters of fiscal 1996 and 1995, the company
capitalized $4.5 million and $3.8 million 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." The amounts capitalized by the company primarily relate to
the company's development of enterprise-wide financial management and accounting
solutions for client/server environments and represented 19.3% and 20.6% 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.
In the second quarter of fiscal 1996, the company concluded two strategic
acquisitions involving application technologies and an important European client
base. The acquisitions, which amounted to $3.6 million, were accounted for as
purchase transactions and, accordingly, $2 million was allocated to purchased
research and development and $1.6 million was allocated to identifiable
intangible assets based on their estimated fair values. The purchased research
and development is reflected as a one-time charge in the company's operating
results. The charge had the effect of reducing net income for the nine months
ended March 31, 1996 by approximately $1.3 million or $.07 per share. For
further details of the acquisitions, see Note B of the accompanying financial
statements.
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.
In November 1994, the company completed a merger with Pillar Corporation.
Pillar, based in California, develops, markets and supports client/server
corporate budgeting and planning solutions. In connection with the acquisition,
which was accounted for as a pooling of interests, the company charged $1
million to operations in the second quarter of fiscal 1995 for nonrecurring
merger and integration costs incurred.
9
<PAGE> 11
Hyperion Software Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
PROVISION FOR INCOME TAXES
The company's effective income tax rate decreased from 40.5% to approximately
38%, as a result of operating profits in certain jurisdictions where, for the
same periods of the prior year, the company had losses without recognizable tax
benefits. The rate for the current nine-month period reflects the company's
expectations for the full year ending June 30, 1996.
NET INCOME
As a result of the above factors (including the nonrecurring charges), net
income for the three and nine-month periods ended March 31, 1996 decreased to
$.4 million or by 73.6% from $1.4 million and $4.1 million or by 22.2% from $5.3
million, respectively, for the corresponding periods of 1995.
To date, the overall impact of inflation on the company has not been material.
10
<PAGE> 12
Hyperion Software Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
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 1993, 1994 and 1995 and for the nine months ended
March 31, 1996, the company generated positive cash flow from operations of $6.6
million, $19.7 million, $28.9 million and $16.5 million, respectively.
Cash used by investing activities amounted to $34.1 million for the first three
quarters of fiscal 1996, including $14.2 million for office facilities in
progress, $12.2 million for leasehold improvements and purchases of equipment
and software, $4.5 million for product development costs and $3.1 million for
business acquisitions as described above, and to reacquire company product
distribution and service rights for Scandinavia and certain territories of
Europe.
Financing activities in the first three quarters of fiscal 1996, including stock
options exercised by employees and payment of indebtedness, generated cash of
$3.4 million. In connection with the stock options exercised by certain of its
employees (for a total of 790,656 common shares), the company recognized (as a
credit to additional paid-in capital) an income tax benefit of $3.3 million for
the nine months ended March 31, 1996.
As of March 31, 1996, the company had cash and cash equivalents of $31.1 million
and working capital of $23.6 million, no long-term debt other than the mortgage
loan (currently 3.06%) for the Stamford, Connecticut office facility, and its
ratio of current assets to current liabilities was 1.4 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 million under a revolving credit facility.
The company anticipates capital expenditures of approximately $9 million for the
remainder of its 1996 fiscal year, including $3 million to complete the office
facilities and $2 million 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.
11
<PAGE> 13
Hyperion Software Corporation
Part II. Other Information
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibit is included herein: (11) Statement Re: Computation of
Earnings Per Share.
The company did not file any reports on Form 8-K during the three months ended
March 31, 1996.
12
<PAGE> 14
Hyperion Software Corporation
Form 10-Q
for the three-month period ended March 31, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hyperion Software Corporation
-------------------------------------------------------------
Michael A. Manto Date
Corporate Controller
-------------------------------------------------------------
Lucy Rae Ricciardi Date
Senior Vice President and Chief Financial Officer
13
<PAGE> 1
Hyperion Software Corporation
<TABLE>
Exhibit (11) - Statement Re: Computation of Earnings Per Share (Unaudited)
(In thousands, except per share amounts)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995 1996 1995
--------------------- ---------------------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average number of common
shares outstanding 16,780 15,798 16,513 15,530
Weighted average number of common
equivalent shares outstanding 1,162 1,690 1,408 1,700
--------------------- ---------------------
17,942 17,488 17,921 17,230
===================== =====================
Net income $ 369 $ 1,397 $ 4,106 $ 5,279
===================== =====================
Per share amount $ .02 $ .08 $ .23 $ .31
===================== =====================
FULLY DILUTED
Weighted average number of common
shares outstanding 16,780 15,798 16,513 15,530
Weighted average number of common
equivalent shares outstanding 1,203 1,788 1,444 1,908
--------------------- --------------------
17,983 17,586 17,957 17,438
===================== =====================
Net income $ 369 $ 1,397 $ 4,106 $ 5,279
===================== =====================
Per share amount $ .02 $ .08 $ .23 $ .30
===================== =====================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF HYPERION SOFTWARE CORPORATION FOR THE
QUARTER ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 31,121
<SECURITIES> 0
<RECEIVABLES> 43,015
<ALLOWANCES> 2,800
<INVENTORY> 0
<CURRENT-ASSETS> 77,658
<PP&E> 70,260
<DEPRECIATION> 18,106
<TOTAL-ASSETS> 148,594
<CURRENT-LIABILITIES> 54,089
<BONDS> 8,472
<COMMON> 212
0
0
<OTHER-SE> 82,837
<TOTAL-LIABILITY-AND-EQUITY> 148,594
<SALES> 36,856
<TOTAL-REVENUES> 36,856
<CGS> 14,383
<TOTAL-COSTS> 36,473
<OTHER-EXPENSES> 22,090
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105
<INCOME-PRETAX> 589
<INCOME-TAX> 220
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 369
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
