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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] 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 0-20034
BROADWAY & SEYMOUR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 41-1522214
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
128 SOUTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28202
(Address of principal executive (Zip code)
offices)
(704) 372-4281
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 par value
(Title of class)
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 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, 1998 9,228,623 shares of Common Stock, $.01 par value,
were outstanding.
Page 1 of 16
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BROADWAY & SEYMOUR, INC.
TABLE OF CONTENTS
PAGE
NUMBER
------
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statement of Operations -
Three months ended March 31, 1998
and March 31, 1997 3
Consolidated Balance Sheet -
March 31, 1998 and December 31, 1997 4
Consolidated Statement of Cash Flows -
Three months ended March 31, 1998 and
March 31, 1997 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
PART II OTHER INFORMATION:
Exhibit Index 12-15
Signature 16
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PRODUCTS MENTIONED IN THIS REPORT ARE USED FOR IDENTIFICATION PURPOSES ONLY AND
MAY BE TRADE NAMES OR TRADEMARKS OF BROADWAY & SEYMOUR, INC., ITS SUBSIDIARIES
OR THIRD PARTIES.
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BROADWAY & SEYMOUR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
Mar. 31, Mar. 31,
1998 1997
-------- --------
<S> <C> <C>
Net revenue $ 17,840 $ 19,661
-------- --------
Operating expenses:
Cost of revenue 13,299 13,140
Research and development 1,530 1,276
Sales and marketing 2,468 2,445
General and administrative 2,398 2,621
Restructuring and impairment (429)
-------- --------
Total operating expenses 19,695 19,053
-------- --------
Operating income (loss) (1,855) 608
Gain on disposition of non-strategic business units 1,607 91
Interest income 272 198
Interest expense (23) (15)
-------- --------
Income before income taxes 1 882
Income tax (provision) -- (402)
-------- --------
Net income $ 1 $ 480
======== ========
Net income per share:
- Basic $ 0.00 $ 0.05
- Diluted $ 0.00 $ 0.05
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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BROADWAY & SEYMOUR, INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1998 1997
---------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 20,229 $ 17,965
Receivables 23,846 29,372
Inventories 588 828
Deferred income taxes 3,234 2,945
Other current assets 1,753 1,300
-------- --------
Total current assets 49,650 52,410
Property and equipment 5,087 5,154
Software costs 3,569 3,630
Intangible assets 5,743 6,064
Other assets 74 85
-------- --------
$ 64,123 $ 67,343
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 65 $ 138
Accounts payable-trade 4,497 6,325
Accrued compensation 1,291 2,295
Estimated liabilities for contract losses 1,093 1,162
Other accrued liabilities 3,304 3,807
Deferred revenue 12,462 11,732
Income taxes payable 1,614 2,379
-------- --------
Total current liabilities 24,326 27,838
-------- --------
Deferred income taxes 1,593 1,435
-------- --------
Other liabilities 830 697
-------- --------
Stockholders' equity:
Common stock, $.01 par value; Authorized 20,000,000 shares; Issued
9,228,623 shares for 1998 and 1997 92 92
Paid-in capital 38,518 38,518
Less treasury stock, at cost, 38,552 shares (492) (492)
Accumulated deficit (744) (745)
-------- --------
37,374 37,373
-------- --------
$ 64,123 $ 67,343
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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BROADWAY & SEYMOUR, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
Mar. 31, Mar. 31,
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1 $ 480
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 1,330 1,368
Deferred income taxes (132) 353
Restructuring charge (credit) -- (429)
Gain on disposition of non-strategic business units (1,607) (91)
Loss on disposal of assets 1 33
Changes in assets and liabilities excluding effects
of disposition of non-strategic business units
Receivables 7,477 569
Inventories 240 139
Other assets (442) 571
Accounts payable - trade (1,829) (707)
Accrued compensation (870) (215)
Estimated liabilities for contract losses (69) (514)
Other liabilities (827) 16
Deferred revenue and customer deposits 731 (3,471)
Income taxes (765) (1,208)
------- -------
Net cash provided (used) by operating activities 3,239 (3,106)
------- -------
Cash flows used by investing activities:
Purchase of property and equipment (621) (548)
Investment in software costs (281) (80)
------- -------
Net cash used by investing activities (902) (628)
------- -------
Cash flows from (used by) financing activities:
Payments of notes payable and long-term debt (73) (122)
Proceeds from issuance of common stock -- 560
------- -------
Net cash from (used by) financing activities (73) 438
------- -------
Net increase (decrease) in cash and cash equivalents 2,264 (3,296)
Cash and cash equivalents, beginning of period 17,965 15,010
------- -------
Cash and cash equivalents, end of period $20,229 $11,714
======= =======
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
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BROADWAY & SEYMOUR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION:
The consolidated financial statements of Broadway & Seymour, Inc. (the
"Company") include all adjustments of a normal recurring nature which, in the
opinion of management, are necessary for a fair presentation of financial
position as of March 31, 1998 and results of operations and cash flows for the
interim periods presented. The results of operations for the three months ended
March 31, 1998 are not necessarily indicative of the results to be expected for
the entire year.
The accompanying unaudited 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, certain information and footnotes required by
generally accepted accounting principles are not included herein. These interim
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31, 1997 as
reported by the Company in its Annual Report on Form 10-K.
Certain prior year amounts have been reclassified to conform with
current year presentation.
NOTE 2 - DISPOSITIONS OF NON-STRATEGIC BUSINESS UNITS:
In September 1997, the Company sold substantially all of the assets,
including proprietary rights, object code and source code, subject to certain
related liabilities, related to its VisualImpact software product line. At
closing, the Company received approximately $3.1 million for the net assets sold
and as payment for certain royalties and software license fees. In addition, the
Company may be entitled to receive additional royalties based primarily on the
business' end user revenue, determined quarterly through the fourth quarter of
the year 2000.
In November 1996, the Company sold all of the issued and outstanding
capital stock of its wholly owned subsidiary, Corbel & Co. ("Corbel"), excluding
its interest in National Pension Alliance ("NPA"), pursuant to a Stock Purchase
Agreement. At closing, the consideration paid to the Company was approximately
$13.5 million. The Company may also be entitled to receive an additional $.5
million of consideration subject to certain holdback provisions for
indemnification obligations. In addition, the Stock Purchase Agreement provided
for an earnout payment to be paid to the Company based on Corbel's revenue in
1997. For the period ending March 31, 1998, the Company recorded a gain of $1.6
million from earnout payments, net of certain fees and expenses and provisions
for indemnification obligations.
NOTE 3 - RECEIVABLES:
Receivables at March 31, 1998 and December 31, 1997 consisted of the
following:
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1998 1997
(In thousands)
<S> <C> <C>
Trade $ 17,317 $ 24,302
Unbilled 4,031 4,631
Other 3,420 1,361
-------- --------
24,768 30,294
Less - Allowance for doubtful accounts (922) (922)
-------- --------
$ 23,846 $ 29,372
======== ========
</TABLE>
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NOTE 4 - SOFTWARE COSTS:
The Company capitalizes a portion of its costs of developing software
to be licensed, including costs of product enhancements that improve the
marketability of the original product or extend its life. These capitalized
costs are incurred after the establishment of technological feasibility and
prior to the availability of the software for general release. During the three
months ended March 31, 1998 and March 31, 1997, the Company incurred research
and development costs of approximately $1.8 million and $1.4 million, of which
the Company capitalized approximately $.3 million and $.1 million, respectively.
Software costs in the accompanying balance sheet also include the cost of
purchased software. Software costs are generally amortized over the estimated
economic lives of the products, up to a maximum of six years. Accumulated
amortization was $8 million and $7.7 million at March 31, 1998 and December 31,
1997, respectively. Amortization expense was approximately $.3 million and $.4
million for the three months ended March 31, 1998 and March 31, 1997,
respectively.
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BROADWAY & SEYMOUR, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Broadway & Seymour, Inc. (the "Company"), headquartered in Charlotte,
North Carolina, is an information technology company that provides integrated
solutions to financial and professional services markets.
Broadway & Seymour, the Company's financial services business provides
customer relationship management solutions and custom systems integration
services to financial institutions. Broadway & Seymour's solutions for customer
relationship management include the proprietary software products
TouchPoint(TM), CRISP(TM) and BANCStar(R), which are often integrated and
customized to provide a tailored business solution to banks and other financial
institutions.
Elite Information Systems, Inc. ("Elite"), the Company's legal and
professional services business provides integrated time tracking, invoicing,
general ledger and office automation software solutions and consulting services
to the legal and professional services markets.
This Quarterly Report on Form 10-Q may contain certain "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and Section 27A of the Securities Act of 1933, as amended,
that represent the Company's expectations or beliefs concerning future events or
projected financial results. Such forward-looking statements are about matters
that are inherently subject to risks and uncertainties. Factors that could
influence the matters discussed in certain forward-looking statements include
the timing and amount of revenue that may be recognized by the Company,
continuation of current expense trends, absence of unforeseen changes in the
Company's markets, continued acceptance of the Company's services and products
and general changes in the economy, as well as matters discussed in "Risks and
Uncertainties" in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997. There can be no assurance that such future events or
projected results will be achieved and actual results could differ materially.
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FIRST QUARTER OF 1998 COMPARED TO
FIRST QUARTER OF 1997
RESULTS OF OPERATIONS:
The Company's consolidated net revenue decreased $1.8 million, or 9%,
to $17.8 million in the first quarter of 1998 from $19.7 million in the first
quarter of 1997.
<TABLE>
<CAPTION>
Three months ended
(in thousands)
Mar. 31, Mar. 31,
REVENUE 1998 1997
- --------------------- -------- --------
<S> <C> <C>
Broadway & Seymour $ 9,497 $10,093
Elite 8,193 8,612
Other revenue 150 956
-------- --------
Consolidated revenue $17,840 $19,661
======== ========
</TABLE>
Revenue from Broadway & Seymour, the Company's Charlotte-based
customer relationship management business, decreased a net $.6 million (or 6%)
for the first quarter of 1998 compared to the first quarter of 1997. Revenue
from its solutions (TouchPoint, BANCStar and Crisp) increased a net of $2.2
million (or 41%) over the first quarter of 1997, principally reflecting
pass-through sales of additional third party hardware and software components to
existing clients. In addition, the results for the first quarter of 1998,
compared to the same period of 1997, include several new engagements to provide
solutions to leading financial institutions. However, these increases were more
than offset by a $2.8 million decrease in its custom development and integration
services, principally a $1.9 million decrease in revenue from a single customer,
First Data Corp. ("FDC"). During the first quarter of 1998, Broadway & Seymour
amended its agreement with FDC and terminated its remaining obligations to
provide certain services to FDC. This amendment also reduced and accelerated all
remaining guaranteed payments due from FDC, resulting in $1.4 million of revenue
in the first quarter of 1998 with substantially no associated expense.
Revenue from the Elite legal and professional services business
decreased $.4 million (or 5%) in the first quarter of 1998 compared to the same
period in 1997, principally due to a decrease in the third party hardware
content of the ongoing projects in the first quarter of 1998 compared to the
same period in 1997. The amount of revenue generated from sales of third party
components from ongoing projects is subject to significant fluctuation from
period-to-period due to the unique needs and contractual arrangements with each
customer.
An additional $.8 million decrease in revenue compared to the same
period in 1997 relates to certain non-strategic business units sold in prior
periods.
In addition to FDC noted above, Chase Manhattan Bank accounted for $3.9
million (or 22%) and $1.1 million (or 5.5%) of the Company's consolidated
revenue for the quarters ended March 31, 1998 and 1997, respectively, and
therefore exceeds the disclosure requirement thresholds for a significant
customer. The business and organizational characteristics of the Company's
customer base may vary significantly from period to period and may cause
fluctuations in the size and timing of revenue. If the Company is unable to
continue to generate significant new engagements, or if there is any delay or
cancellation of existing engagements in a particular period, the Company's
financial condition, liquidity and results of operations could be materially
adversely affected.
Consolidated gross margins decreased to 25.5% (or $4.5 million) in the
first quarter of 1998 from 33.2% (or $6.5 million) in the first quarter of 1997.
The majority of costs of revenue are direct project expenses such as personnel
costs, contract labor and the costs of third party products for resale to
customers. Personnel costs are principally based
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on expectations for future revenue and are relatively fixed in the short-term.
Accordingly, the decrease in revenue noted above had a direct impact on gross
margin in the first quarter of 1998.
Consolidated research and development expenses increased $.3 million
(or 20%) in the first quarter of 1998 to 9% of revenue compared to 7% of revenue
in the first quarter of 1997. These expenses are net of capitalized software
development costs which were $.3 million and $.1 million, in the first quarter
of 1998 and 1997, respectively. Increases in research and development expenses
relate to the ongoing development of and enhancements to the Company's customer
relationship management and Elite products. The Company is committed to
maintaining its research and development efforts in order to provide sufficient
development and enhancements to support existing and future software solutions.
Consolidated sales and marketing expenses remained consistent at
approximately $2.5 million from the first quarter of 1997 to the first quarter
of 1998 while increasing as a percentage of revenue from 12% to 14% for the same
periods. The Company views its sales and marketing expenditures as an integral
part of its business growth strategy and as such it has increased its efforts to
develop new business. The Company has implemented a solutions selling group,
added sales and relationship managers, and taken a more focused approach to
alliances. The Company currently anticipates that it will continue to increase
future sales and marketing expenditures as a result of adding sales personnel
and marketing efforts to target new markets and expand into new delivery
channels.
Consolidated general and administrative expenses have remained
consistent at 13% of revenue for the first quarters of 1998 and 1997, although
decreasing $.2 million in the first quarter of 1998 compared to 1997 principally
as a result of lower personnel costs, resulting from attrition, and cost control
measures.
Results for the first quarter of 1998 include a one-time pre-tax gain
of $1.6 million resulting from an earn out related to the 1996 disposition of
its wholly owned subsidiary Corbel & Co. In the first quarter of 1997, the
Company revised its estimate of the remaining costs to complete the exit plan of
its National Pension Alliance downward by $.4 million.
YEAR 2000 ISSUES:
Reference is made to the Company's Annual Report on Form 10-K for the
period ended December 31, 1997 for a more complete discussion of this issue as
it relates to the Company.
Throughout the software industry, many software applications "assume"
the first two digits of the year date to be "19". Applications designed in this
manner may not be able to process dates with years following 1999; for example,
"00" may be treated as 1900 rather than the year 2000. Results of this failure
to process the date correctly could include miscalculations and system
breakdowns. The Company has recognized this potential problem and has reviewed,
and when necessary modified, its current software products so that they can
process data relating to dates subsequent to December 31, 1999 ("Year 2000
compliance").
Although the Company believes that its current versions of proprietary
software products are Year 2000 compliant, no assurance can be given that
additional modifications for Year 2000 compliance will not be necessary. The
Company's software systems as installed are integrated with its customers'
software and hardware systems and other vendors' software and hardware systems
and have, in many cases, been uniquely customized to the customers'
specifications. The customers' systems and other vendors' systems with which the
Company's systems interoperate may not be Year 2000 compliant. Generally, the
operation of the Company's software in these environments or the failure of
these systems to be compliant could impact the Year 2000 compliance of the
Company's systems and the Company may incur costs in ascertaining the cause of
the failure and modifying its software. The Company also believes that many
companies are expending significant amounts of time and dollars on Year 2000
compliance issues and that the purchasing patterns of such customers or
potential customers may be significantly impacted.
While management believes it is successfully addressing the Year 2000
compliance issue in its proprietary software products, upon which its results of
operations are significantly dependent, any of the foregoing could result in a
material adverse effect on the Company's business, operating results and
financial condition. In addition, third party software and computer technology
used internally, if not Year 2000 compliant may materially impact the Company.
The Company is reviewing what actions will be required to make all software
systems used internally Year 2000 compliant as well as to mitigate its
vulnerability to Year 2000 compliance problems that its service suppliers may
have.
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The total cost and time associated with the impact of Year 2000
compliance cannot presently be determined. Any costs of addressing Year 2000
compliance are being expensed as incurred.
INCOME TAXES:
The Company's provision for income taxes of 41% and 46% of pre-tax
income for the periods ended March 31, 1998 and 1997, respectively, exceeds the
tax expense at statutory rates principally due to the permanent differences of
non-deductible goodwill amortization, stock compensation expense and state
income taxes. The Company believes that the effective tax rate throughout 1998
will remain higher than the statutory rate due to the ongoing non-deductible
goodwill amortization associated with the Company's acquisitions and stock
compensation expense.
LIQUIDITY AND CAPITAL RESOURCES:
At March 31, 1998, the Company had cash and cash equivalents of
approximately $20.2 million and working capital of approximately $25.3 million.
The Company also has a two-year, $15 million revolving credit facility, against
which it has made no borrowings. The Company may borrow up to a maximum of 80%
of eligible accounts receivable. As of April 30, 1998, the Company had $10.2
million available for borrowing under this agreement. The credit facility is
secured by substantially all of the Company's tangible and intangible assets.
Additionally, the loan agreement contains customary covenants that require
compliance with certain financial ratios and targets and restricts the
incurrence of additional indebtedness, payment of dividends and acquisitions or
dispositions of assets, among other things. As of April 30, 1998, the Company
was in compliance with such covenants, as amended.
If the Company is unable to continue to generate significant new
engagements, or if there is any delay or cancellation of existing engagements,
there could be a material reduction in the Company's liquidity, including
decreases in cash from operations, use of cash on hand and borrowings under the
credit facility. However, management currently believes that cash and cash
equivalents, cash from operations, the issuance of stock pursuant to its
employee stock purchase and stock option plans, and availability under its
credit facility will be sufficient to meet currently anticipated operating
needs.
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(a)(3) EXHIBITS:
Exhibit No. Description
----------- -----------
3.1 Restated Certificate of Incorporation of Broadway & Seymour,
Inc., dated June 16, 1992 (Incorporated by reference to
Exhibit 3.1 to the Registrants Annual Report on Form 10-K for
the Fiscal Year Ended January 31, 1993)
3.2 Restated By-laws of the Company (Incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on Form
S-1, SEC File No. 33-46672)
4.1 Specimen share certificate (Incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement on Form
S-1, SEC File No. 33-46672)
4.2 Articles 4 and 5 of Broadway & Seymour, Inc.'s Restated
Certificate of Incorporation (Incorporated by reference to
Exhibit 4.2 to the Registrant's Registration Statement on Form
S-1, SEC File No. 33-46672)
4.3 Article II, Section 2.2 of the Company's Restated By-laws
(Incorporated by reference to Exhibit 4.3 to the Registrant's
Registration Statement on Form S-1, SEC File No. 33-46672)
10.01+ Restated 1985 Incentive Stock Option Plan of Broadway &
Seymour, Inc. dated June 12, 1985 (Incorporated by reference
to Exhibit 10.1 to the Registrant's Registration Statement on
Form S-1, SEC File No. 33-46672)
10.02+ Amendment No. 1 to Restated 1985 Incentive Stock Option Plan
of Broadway & Seymour, Inc. dated February 25, 1993
(Incorporated by reference to Exhibit 10.2 to the Registrant's
Annual Report on Form 10-K for the Fiscal Year Ended January
31, 1993)
10.03+ Amendment No. 2 to Restated 1985 Incentive Stock Option Plan
of Broadway & Seymour, Inc. dated February 17, 1994
(Incorporated by reference to Exhibit 10.16 to the
Registrant's Transition Report on Form 10-K for the Eleven
Months Ended December 31, 1993)
10.04+ Amendment No. 3 to Restated 1985 Incentive Stock Option Plan
of Broadway & Seymour, Inc. dated May 15, 1995 (Incorporated
by reference to Exhibit 10.4 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended September 30, 1995)
10.05+ Broadway & Seymour, Inc. 1996 Stock Option Plan dated
September 16, 1996 (Incorporated by reference to Appendix B to
the Registrant's Definitive Proxy Statement on Form DEFS14A
dated August 14, 1996)
10.06 Asset Purchase Agreement, dated as of April 10,1996 by and
between Fidelity Investments Institutional Services Company
Inc. and Broadway & Seymour, Inc., BancCorp Systems, Inc.,
Heebink Group, Inc., and National Systems Group, Inc.
(Incorporated by reference to Exhibit 2.1 to the Registrant's
Current Report on Form 8-K dated May 15, 1996)
10.07 Amendment No. 1 to Asset Purchase Agreement dated May 15, 1996
by and between Fidelity Investments Institutional Services
Company Inc. and Broadway & Seymour, Inc., BancCorp Systems,
Inc., Heebink Group, Inc., and National Systems Group, Inc.
(Incorporated by reference to Exhibit 2.1a to the Registrant's
Current Report on Form 8-K dated May 15, 1996)
10.08 Quantech License and Services Agreement, dated April 10, 1996,
by and between Fidelity Investments Institutional Services
Company, Inc. and Corbel & Co. (Incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K
dated May 15, 1996)
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Exhibit No. Description
----------- -----------
10.09 Licenses and Services Agreement, dated April 10, 1996, by and
between Fidelity Investments Institutional Services Company,
Inc. and BancCorp Systems, Inc. (Incorporated by reference to
Exhibit 2.3 to the Registrant's Current Report on Form 8-K
dated May 15, 1996)
10.10 Temporary Professional Services Agreement, dated May 15, 1996,
by and between Fidelity Investments Institutional Services
Company, Inc. and Broadway & Seymour, Inc. (Incorporated by
reference to Exhibit 2.4 to the Registrant's Current Report on
Form 8-K dated May 15, 1996)
10.11 Guaranty and Indemnity Agreement, dated April 10, 1996, by and
between Fidelity Investments Institutional Services Company,
Inc. and Broadway & Seymour, Inc. (Incorporated by reference
to Exhibit 2.5 to the Registrant's Current Report on Form 8-K
dated May 15, 1996)
10.12 Amendment No. 1 to the Guaranty and Indemnity Agreement, dated
May 15, 1996 by and between Fidelity Investments Institutional
Services Company, Inc. and Broadway & Seymour, Inc.
(Incorporated by reference to Exhibit 2.5a to the Registrant's
Current Report on Form 8-K dated May 15, 1996)
10.13 Transition Services and Support Agreement, dated May 15, 1996,
by and between Fidelity Investments Institutional Services
Company, Inc. and Broadway & Seymour, Inc. (Incorporated by
reference to Exhibit 2.6 to the Registrant's Current Report on
Form 8-K dated May 15, 1996)
10.14 Stock Purchase Agreement, dated as of November 19, 1996, by
and among Broadway & Seymour, Inc., Corbel & Co. and SunGard
Investment Ventures, Inc. (Incorporated by reference to
Exhibit 2.1 to the Registrant's Current Report on Form 8-K
dated November 19, 1996)
10.15 Asset Purchase Agreement between Unisys Corporation and
Broadway & Seymour, Inc. dated as of July 24, 1997.
(Incorporated by reference to Exhibit 10.35 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended September 30, 1997)
10.16 Amendment to Asset Purchase Agreement between Unisys
Corporation and Broadway & Seymour, Inc. dated September 17,
1997. (Incorporated by reference to Exhibit 10.36 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended September 30, 1997)
10.17 Loan Agreement by and among Broadway & Seymour, Inc., Elite
Information Systems, Inc., The Minicomputer Company of
Maryland, Inc., Elite Information Systems International, Inc.,
Pragmatix Telephony Solutions, Inc., and Fleet National Bank
(as agent and lender) for $15,000,000 secured revolving credit
loan dated as of July 23, 1997. (Incorporated by reference to
Exhibit 10.21 to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended June 30, 1997)
10.18 Security Agreement by and between Broadway & Seymour, Inc. and
Fleet National Bank dated as of July 23, 1997 (Incorporated by
reference to Exhibit 10.22 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended June 30, 1997)
10.19 Security Agreement by and between Elite Information Systems,
Inc. and Fleet National Bank dated as of July 23, 1997
(Incorporated by reference to Exhibit 10.23 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
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Exhibit No. Description
----------- -----------
10.20 Security Agreement by and between Elite Information Systems
International, Inc. and Fleet National Bank dated as of July
23, 1997 (Incorporated by reference to Exhibit 10.24 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
10.21 Security Agreement by and between The Minicomputer of
Maryland, Inc. and Fleet National Bank dated as of July 23,
1997 (Incorporated by reference to Exhibit 10.26 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
10.22 Security Agreement by and between Pragmatix Telephony
Solutions, Inc. and Fleet National Bank dated as of July 23,
1997 (Incorporated by reference to Exhibit 10.26 to the
Registrant's Quarterly Report of Form 10-Q for the Quarter
Ended June 30, 1997)
10.23 Conditional Trademark Assignment by and between Broadway &
Seymour, Inc. and Fleet National Bank dated as of July 23,
1997 (Incorporated by reference to Exhibit 10.27 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
10.24 Conditional Trademark Assignment by and between Elite
Information Systems, Inc. and Fleet National Bank dated as of
July 23, 1997 (Incorporated by reference to Exhibit 10.28 to
the Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
10.25 Conditional Trademark Assignment by and between Elite
Information Systems International, Inc. and Fleet National
Bank dated as of July 23, 1997 (Incorporated by reference to
Exhibit 10.29 to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended June 30, 1997)
10.26 Conditional Trademark Assignment by and between The
Minicomputer of Maryland, Inc. and Fleet National Bank dated
as of July 23, 1997 (Incorporated by reference to Exhibit
10.30 to the Registrant's Quarterly Report on Form 10-Q for
the Quarter Ended June 30, 1997)
10.27 Conditional Trademark Assignment by and between Pragmatix
Telephony Solutions, Inc. and Fleet National Bank dated as of
July 23, 1997 (Incorporated by reference to Exhibit 10.31 to
the Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
10.28 Stock Pledge Agreement by and between Broadway & Seymour, Inc.
and Fleet National Bank dated as of July 23, 1997
(Incorporated by reference to Exhibit 10.32 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
10.29 Stock Pledge Agreement by and between Elite Information
Systems, Inc. and Fleet National Bank dated as of July 23,
1997 (Incorporated by reference to Exhibit 10.33 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
10.30 Letter dated June 30, 1997 regarding the disposition of the
holdback and termination of the indemnification provisions
contained in the Asset Purchase Agreement between Broadway &
Seymour, Inc. and Fidelity Investments Institutional Services
Company, Inc. (Incorporated by reference to Exhibit 10.34 to
the Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 1997)
14
<PAGE> 15
Exhibit No. Description
----------- -----------
10.31 First Amendment to Loan Agreement by and among Broadway &
Seymour, Inc., Elite Information Systems, Inc., The
Minicomputer Company of Maryland, Inc., Elite Information
Systems International, Inc., and Fleet National Bank (as agent
and lender) dated September 30, 1997 (Incorporated by
reference to Exhibit 10.31 to the Registrant's Annual Report
on form 10-K for the year ended December 31, 1997)
10.32 Second Amendment to Loan Agreement by and among Broadway &
Seymour, Inc., Elite Information Systems, Inc., The
Minicomputer Company of Maryland, Inc., Elite Information
Systems International, Inc., and Fleet National Bank (as agent
and lender) dated February 6, 1998 (Incorporated by reference
to Exhibit 10.32 to the Registrant's Annual Report on form
10-K for the year ended December 31, 1997)
10.33* Third Amendment to Loan Agreement by and among Broadway &
Seymour, Inc., Elite Information Systems, Inc., The
Minicomputer Company of Maryland, Inc., Elite Information
Systems International, Inc., and Fleet National Bank (as agent
and lender) dated May 6, 1998
10.34+ Employment Agreement, dated as of May 29, 1997 (executed June
1, 1997), by and between Broadway & Seymour, Inc. and Keith B.
Hall (Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997)
10.35*+ Amendment No. 1 to Employment Agreement for Keith B. Hall
dated February 19, 1998
10.36+ Employment Agreement dated as of September 1, 1995 by and
between Broadway & Seymour, Inc. and Alan C. Stanford
(Incorporated by reference to Exhibit 10.28 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended September 30, 1995
10.37*+ Amendment No. 1 to Employment Agreement for Alan C. Stanford
dated February 19, 1998
11* Computation of earnings per share
27* Financial Data Schedule, which is submitted electronically to
the Securities and Exchange Commission for information only
and not filed.
* Filed herewith.
+ Management contract or compensatory plan or arrangement required to
be filed as an exhibit.
15
<PAGE> 16
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BROADWAY & SEYMOUR, INC.
Date: May 13, 1998 By: /s/ Keith B. Hall
------------ ---------------------------------
Keith B. Hall, Vice President and
Chief Financial Officer
16
<PAGE> 1
EXHIBIT 10.33
THIRD AMENDMENT TO LOAN AGREEMENT
This Third Amendment to Loan Agreement is made by and among BROADWAY &
SEYMOUR, INC., a Delaware corporation ("Broadway") with a principal place of
business at 128 South Tryon Street, Charlotte, North Carolina 28202-5050, ELITE
INFORMATION SYSTEMS, INC., a California corporation ("Elite") with a principal
place of business at 3415 South Sepulveda Boulevard, Suite 500, Los Angeles,
California 90034, THE MINICOMPUTER COMPANY OF MARYLAND, INC., a Maryland
corporation ("TMC") with a principal place of business at Executive Plaza I,
11350 McCormick Road, Suite 600, Hunt Valley, MD 21031-1012, ELITE INFORMATION
SYSTEMS INTERNATIONAL, INC., a California corporation ("Elite International")
with a principal place of business at 3415 South Sepulveda Boulevard, Suite 500,
Los Angeles, California 90034 (Broadway, Elite, TMC and Elite International are
hereinafter jointly and severally referred to as, the "Borrower") and FLEET
NATIONAL BANK, a national banking association organized under the laws of the
United States and having an office at One Federal Street, Boston, Massachusetts
02110 as Agent for itself and each of the other Lenders who now and/or hereafter
become parties to the hereinafter defined Loan Agreement pursuant to the terms
of Section 9.11 thereof (sometimes the "Agent" and sometimes "Fleet" and in its
capacity as a Lender, sometimes "Fleet" and sometimes a "Lender"). Capitalized
terms used herein and not expressly defined herein shall have the respective
meanings ascribed to such terms in the hereinafter defined Loan Agreement.
WITNESSETH THAT:
WHEREAS, the Borrower and the Agent are parties to that certain Loan
Agreement dated as of July 23, 1997 pursuant to which the Lenders extended a
$15,000,000 revolving credit facility, as amended by that certain First
Amendment to Loan Agreement dated September 30, 1997 and as further amended by
that certain Second Amendment to Loan Agreement dated December 31, 1997 (as
amended hereby and as hereafter amended from time to time, the "Loan
Agreement"); and
WHEREAS, the Borrower and the Agent desire to amend certain provisions
of the Loan Agreement as hereinafter set forth.
NOW, THEREFORE, the Borrower and the Agent hereby agree as follows:
1. All references in the Loan Agreement to the Financing Documents
shall be deemed to refer to such documents and in addition shall also refer to
this Third Amendment to Loan Agreement.
2. Effective as of the date hereof, a definition of "EBITDA" is hereby
added to Section 1.1 of the Loan Agreement to read in its entirety:
<PAGE> 2
"EBITDA" means, for any fiscal period, Net Income plus, to the
extent accounted for in Net Income, Interest Expense, taxes, depreciation,
amortization and other noncash charges, for such period determined on an accrual
and consolidated basis in accordance with GAAP.
3. Effective as of the date hereof, a definition of "Net Outstanding
Amount of Permitted Foreign Receivables" is hereby added to Section 1.1 of the
Loan Agreement to read in its entirety:
"Net Outstanding Amount of Permitted Foreign Receivables"
means the net amount of Permitted Foreign Receivables outstanding after
eliminating from the aggregate amount of outstanding Permitted Foreign
Receivables all payments, adjustments and credits applicable thereto.
4. Effective as of the date hereof, a definition of "Permitted Foreign
Receivables" is hereby added to Section 1.1 of the Loan Agreement to read in its
entirety:
"Permitted Foreign Receivables" means accounts receivable of
the Borrower from an account debtor located either in the United Kingdom or
Canada evidencing Indebtedness of Persons to the Borrower for goods actually
sold and delivered or services actually performed in the ordinary course of
business by the Borrower to or for such Person, as to which goods or services no
written notice has been received by Borrower from such Person that alleges a
breach by the Borrower of its obligation to deliver such goods and/or services
and which accounts receivable have been outstanding for less than ninety (90)
days since their respective invoicing dates, but excluding, however, (i)
accounts receivable owing by officers, directors, shareholders or employees of
Borrower, (ii) accounts receivable with respect to which goods are placed on
consignment, guaranteed sale, "bill and hold" or other terms by reason of which
the payment by the account debtor may be conditional, (iii) accounts receivable
owing by the United States or any agency, department or instrumentality thereof
unless such accounts are freely assignable to the Agent under the United States
Assignment of Claims Act and the Borrower has separately assigned each such
account to the Agent in compliance with such Act, (iv) accounts receivable owing
by any Subsidiary or Affiliate of Borrower, (v) accounts receivable with respect
to which Borrower or any Subsidiary or Affiliate is liable to the account debtor
for goods sold or services provided to Borrower or any Subsidiary or Affiliate
by such account debtor to the extent of Borrower's or any Subsidiary's or
Affiliate's liability to such account debtor, (vi) as to any particular account
debtor, not more than 50% of the total accounts receivable of such debtor shall
be outstanding for more than ninety (90) days since their respective invoicing
dates, (vii), any accounts receivable as to which the account debtor has claimed
in writing any setoff or any dispute as to the amount owing by the account
debtor to the extent of the amount in dispute, (viii) any accounts receivable
subject to any Lien other than pursuant to the Security Documents, (ix) any
accounts receivable owing by any Person which is insolvent and/or the subject of
any bankruptcy, receivership or other insolvency proceeding, and (x) any
accounts receivable deemed by the Agent in the Agent's sole discretion exercised
in good faith difficult to collect or uncollectible.
5. Effective as of the date hereof, the definition of "Revolving Credit
Loan Formula Amount" is hereby amended to read in its entirety:
2
<PAGE> 3
"Revolving Credit Loan Formula Amount" means an amount equal
to the sum of (i) eighty percent (80%) of the Net Outstanding Amount of Eligible
Receivables and (ii) eighty percent (80%) of the Net Outstanding Amount of
Permitted Foreign Receivables.
6. Effective as of the date hereof, a new Section 5.1.25 of the Loan
Agreement is hereby added to read in its entirety:
Section 5.1.25. Minimum Debt Service Coverage Ratio. To the
extent that at any time there shall be an outstanding balance of the Revolving
Credit Loan or the sum of Borrower's and its Subsidiaries' (i) cash on hand or
on deposit in any bank or trust company which has not suspended business and
(ii) Cash Equivalent Investments (without duplication with (i)) is less than
$10,000,000, maintain a ratio of (i) EBITDA less, for the fiscal periods in
question, the sum of taxes paid and Capital Expenditures to (ii) the sum of (y)
Interest Expense and (z) the then outstanding balance of the Revolving Credit
Loan multiplied by .25 of not less than 1.25:1.00, such ratio to be measured at
each Borrower fiscal quarter end for the rolling four Borrower fiscal quarter
period consisting of the Borrower fiscal quarter then ending and the three
immediately preceding Borrower fiscal quarters.
7. Effective as of the date hereof, Section 5.1.13 of the Loan
Agreement is hereby amended to read in its entirety:
Section 5.1.13. Minimum Adjusted Net Income. To the extent that at any time
there shall be an outstanding balance of the Revolving Credit Loan or the sum of
Borrower's and its Subsidiaries' (i) cash on hand or on deposit in any bank or
trust company which has not suspended business and (ii) Cash Equivalent
Investments (without duplication with (i)) is less than $10,000,000, maintain a
Minimum Adjusted Net Income at each Borrower fiscal quarter end for the Borrower
fiscal quarter then ending and for the immediately preceding Borrower fiscal
quarter in an amount not less than zero (0) provided that Minimum Adjusted Net
Income for the rolling four Borrower fiscal quarter period consisting of the
Borrower fiscal quarter then ending and the three immediately preceding Borrower
fiscal quarters is greater than zero (0).
8. Effective as of the date hereof, Section 5.1.11 of the Loan
Agreement is hereby amended to read in its entirety:
Section 5.1.11. Minimum Quick Ratio. Maintain at the end of
each fiscal quarter of the Borrower a ratio of (i) the sum of (w) cash on hand
or on deposit in any bank or trust company which has not suspended business, (x)
Cash Equivalent Investments (without duplication with (w)) and (y) net
outstanding amount of accounts receivable to (ii) (x) Current Liabilities plus
the outstanding amount of the Revolving Credit Loan less the amount of any
deferred revenue of not less than 1.50:1.00. Each item described in clauses (i)
and (ii) of this Section 5.1.11 shall be calculated as of the last day of the
Borrower fiscal quarter and include only the item(s) in question of the Borrower
and its Subsidiaries on a consolidated basis.
3
<PAGE> 4
9. Effective as of the date hereof, Section 5.2.12(ii) of the Loan
Agreement is hereby amended to read in its entirety:
(ii) other employee loans not to exceed $250,000 in the
aggregate outstanding at any one time to all such employees,
10. The Borrower hereby restates all of the representations, warranties
and covenants of the Borrower set forth in the Loan Agreement to the same extent
as if fully set forth herein and the Borrower hereby certifies that all such
representations and warranties are true and accurate as of the date hereof.
11. The Borrower and the Agent hereby ratify, confirm and approve the
Loan Agreement, amended as set forth herein, as a binding obligation,
enforceable in accordance with its terms. The Borrower further acknowledges and
agrees that Agent has not waived any of its rights under the Loan Agreement,
amended as set forth herein, or any Event(s) of Default that may hereafter exist
thereunder and that there does not exist (i) any offset or defense against
payment or performance of any of the Indebtedness and Obligations of the
Borrower evidenced thereby, or (ii) any claim or cause of action by Borrower
against Agent with respect to the transactions described therein.
12. The Borrower represents and warrants to the Agent that no Default
or Event of Default exists under the Loan Agreement, amended as set forth
herein, any of the Financing Documents or any document or agreement executed in
connection therewith or herewith.
13. As consideration for the Agent entering into this Third Amendment
to Loan Agreement, the Borrower shall pay to the Agent a nonrefundable amendment
fee equal to Fifteen Thousand Dollars ($15,000) (the "Amendment Fee"), together
with fees and disbursements of the Agent's legal counsel incurred in connection
with such amendment.
14. This Third Amendment to Loan Agreement shall be effective as of
March 31, 1998.
4
<PAGE> 5
IN WITNESS WHEREOF, the Borrower and the Agent have caused this Second
Amendment to Loan Agreement to be executed as a sealed instrument by their
proper representatives hereunto duly authorized as of the 6th day of May, 1998.
Witness: Broadway & Seymour, Inc.
_________________________ By: /s/ Bryan P. Causey
-----------------------------
Bryan Causey, Treasurer
Witness: Elite Information Systems, Inc.
_________________________ By: /s/ Bryan P. Causey
-----------------------------
Bryan Causey, Assistant Treasurer
Witness: The MiniComputer Company of Maryland,
Inc.
_________________________ By: /s/ Bryan P. Causey
-----------------------------
Bryan Causey, Assistant Treasurer
Witness: Elite Information Systems
International, Inc.
_________________________ By: /s/ Bryan P. Causey
-----------------------------
Bryan Causey, Assistant Treasurer
Witness: Fleet National Bank, as Agent for the
Lenders and as a Lender
/s/ Tina M. Bosets AVP By: /s/ Michael S. Barclay
- ------------------------- -----------------------------
Name: Michael S. Barclay
Title: Assistant Vice President
5
<PAGE> 1
EXHIBIT 10.35
AMENDMENT NO. 1 to EMPLOYMENT AGREEMENT
KEITH B. HALL
THIS AMENDMENT NO. 1 to EMPLOYMENT AGREEMENT is made and entered into
as of the 19th day of February 1998 by and between BROADWAY & SEYMOUR, INC.
("Employer") and KEITH B. HALL ("Employee") and amends and modifies the
Employment Agreement dated May 29, 1997 (the "Agreement") by and among Employer
and Employee. Capitalized terms used herein and not defined shall have the
meanings ascribed to such terms in the Agreement.
1. Section 2 shall be amended by deleting the phrase "one-year terms" and
replacing it with the phrase "two-year terms" and by deleting the
phrase "90 days" and replacing it with the phrase "180 days."
2. Section 5(c)(i) shall be amended by deleting subsections (A) and (B)
and replacing them with the following:
"two times (A) Employee's annual Base Salary as in effect immediately
prior to the date of such event, and (B) the aggregate amount of cash
bonuses paid to Employee in respect of the most recent fiscal year (or
in the event of a termination prior to a bonus being paid for 1998,
$50,000)."
3. Section 5(e) shall be amended by adding the following at the end
thereof:
"; provided, however, that for a two-year period following such
termination Employee shall continue as an employee of Employer for all
purposes (including without limitation Employer's benefits plans and
Employer's 1996 Stock Option Plan) and Employer shall pay to Employee
any portion of Employee's Base Salary (as in effect immediately prior
to such termination) not paid by the disability insurance carrier(s)
then providing coverage for Employer's executive officers."
4. Section 7 shall be amended by deleting the colon and adding the
following to the end of the introductory phrase:
"and for a period of two years following termination of employment
hereunder:"
5. Except as hereby amended, the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as the
date first above written.
BROADWAY & SEYMOUR, INC.
By: /s/ Lillian N. Wilson /s/ Keith B. Hall
------------------------------ -----------------------------
Lillian N. Wilson Keith B. Hall
Vice President
<PAGE> 1
EXHIBIT 10.37
AMENDMENT NO. 1 to EMPLOYMENT AGREEMENT
ALAN C. STANFORD
THIS AMENDMENT NO. 1 to EMPLOYMENT AGREEMENT is made and entered into
as of the 19th day of February 1998 by and between BROADWAY & SEYMOUR, INC.
("Employer") and ALAN C. STANFORD ("Employee") and amends and modifies the
Employment Agreement dated September 1, 1995 (the "Agreement") by and among
Employer and Employee. Capitalized terms used herein and not defined shall have
the meanings ascribed to such terms in the Agreement.
1. Section 3(d)(i) shall be amended by replacing the reference to
"Employer's 1995 Stock Option Plan" with "Employer's 1996 Stock Option
Plan." Accordingly, all references in the Agreement to the Stock
Option Plan shall be deemed to be references to Employer's 1996 Stock
Option Plan.
2. Section 5(c)(i) shall be amended by deleting subsections (A) and (B)
and replacing them with the following:
"two times (A) Employee's annual Base Salary as in effect immediately
prior to the date of such event, and (B) the aggregate amount of cash
bonuses paid to Employee in respect of the most recent fiscal year."
3. Section 5(e) shall be amended by adding the following at the end
thereof:
"; provided, however, that for a two-year period following such
termination Employee shall continue as an employee of Employer for all
purposes (including without limitation Employer's benefits plans and
Employer's 1996 Stock Option Plan) and Employer shall pay to Employee
any portion of Employee's Base Salary (as in effect immediately prior
to such termination) not paid by the disability insurance carrier(s)
then providing coverage for Employer's executive officers."
4. Section 7 shall be amended by deleting the colon and adding the
following to the end of the introductory phrase:
"and for a period of two years following termination of employment
hereunder:"
5. Except as hereby amended, the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BROADWAY & SEYMOUR, INC.
By: /s/ Lillian N. Wilson /s/ Alan C. Stanford
------------------------------ -----------------------------
Lillian N. Wilson Alan C. Stanford
Vice President
<PAGE> 1
EXHIBIT 11
Broadway & Seymour, Inc.
Computation of Earnings per Share
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
Mar. 31, Mar. 31,
1998 1997
------- ------
<S> <C> <C>
Net income $ 1 $ 480
====== ======
Basic earnings per share:
Weighted average common shares outstanding 9,190 9,009
====== ======
Net income per common share $ 0.00 $ 0.05
====== ======
Diluted earnings per share:
Weighted average common shares outstanding 9,190 9,009
Addition from assumed exercise of stock options 17 122
------ ------
Weighted average common and common equivalent
shares outstanding 9,207 9,131
====== ======
Net income per common and common equivalent share $ 0.00 $ 0.05
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 20,229,000
<SECURITIES> 0
<RECEIVABLES> 24,768,000
<ALLOWANCES> (922,000)
<INVENTORY> 588,000
<CURRENT-ASSETS> 49,650,000
<PP&E> 16,686,000
<DEPRECIATION> (11,599,000)
<TOTAL-ASSETS> 64,123,000
<CURRENT-LIABILITIES> 24,326,000
<BONDS> 0
0
0
<COMMON> 92,000
<OTHER-SE> 37,282,000
<TOTAL-LIABILITY-AND-EQUITY> 64,123,000
<SALES> 17,840,000
<TOTAL-REVENUES> 17,840,000
<CGS> 13,299,000
<TOTAL-COSTS> 13,299,000
<OTHER-EXPENSES> 6,396,000
<LOSS-PROVISION> 13,000
<INTEREST-EXPENSE> (249,000)
<INCOME-PRETAX> 1,000
<INCOME-TAX> 410
<INCOME-CONTINUING> 590
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 590
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
