<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 1996 Commission File Number 0-20364
BANYAN SYSTEMS INCORPORATED
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2798394
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
120 FLANDERS ROAD 01581
WESTBORO, MASSACHUSETTS (Zip Code)
(Address of principal executive offices)
508-898-1000
(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
------- ------
Number of shares outstanding of the issuer's classes of common stock as of
July 31, 1996:
Class Number of Shares Outstanding
- ----------------------------- ----------------------------
Common Stock, par value $.01 per share 17,125,124
-1-
<PAGE>
BANYAN SYSTEMS INCORPORATED
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
JUNE 30, 1996 AND DECEMBER 31, 1995
CONSOLIDATED STATEMENTS OF OPERATIONS 4
THREE AND SIX MONTHS ENDED
JUNE 30, 1996 AND 1995
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 7
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY 11
HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURE 12
</TABLE>
This Quarterly Report on Form 10-Q contains forward-looking statements,
including information with respect to the Company's plans and strategy for its
business. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes", "anticipates", "plans",
"expects" and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause actual
events or the Company's actual results to differ materially from those indicated
by such forward-looking statements. These factors include, without limitation,
those set forth below under the caption "Factors Affecting Future Operating
Results" included under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Part I of this Quarterly Report on Form
10-Q.
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
BANYAN SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS June 30, 1996 December 31, 1995
-------------- ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 12,734 $ 12,398
Marketable securities 966 7,729
Accounts receivable, less
allowances of $6,031 and $5,636 28,857 24,288
Inventories 2,809 3,664
Income taxes receivable 233 6,042
Deferred taxes, current portion 4,896 6,494
Other current assets 5,012 6,790
-------- -----------
Total current assets 55,507 67,405
Property and equipment:
Computers and peripherals 23,047 20,709
Equipment 10,240 9,959
Furniture and fixtures 4,578 4,639
Leasehold improvements 4,904 4,585
-------- -----------
Total 42,769 39,892
Less accumulated depreciation and
amortization 28,333 25,296
-------- -----------
Property and equipment, net 14,436 14,596
Marketable securities 10,746 11,136
Deferred taxes, non-current 5,649 5,872
Other assets, net of accumulated
amortization of $4,155 and $6,145 10,970 7,300
-------- -----------
Total assets $ 97,308 $ 106,309
======== ===========
LIABILITIES
Current liabilities:
Long-term debt, current portion $ 22 $ 62
Accounts payable 3,680 4,443
Accrued compensation 6,929 7,077
Accrued expenses 7,360 8,443
Accrued costs for restructuring
and other charges 1,128 9,007
Income taxes payable 2,338 2,531
Software licenses payable, current
portion 1,422 3,266
Note payable 1,049 719
Deferred revenue 24,771 22,323
-------- -----------
Total current liabilities 48,699 57,871
Software licenses payable, non-current 2,666 3,266
Minority interest in consolidated
subsidiary 762 830
STOCKHOLDERS' EQUITY
Common stock, $.01 par value;
authorized 25,000,000 shares; issued
and outstanding 18,708,100 and
18,623,154 shares 187 186
Preferred stock, $.01 par value;
authorized 1,000,000 shares; none
issued and outstanding - -
Additional paid-in capital 62,761 62,347
Retained earnings 11,793 11,238
Treasury stock at cost; 1,848,000
common shares (28,564) (28,564)
Foreign currency translation adjustment (861) (868)
Unrealized gain/(loss) on
appreciation/(depreciation) of
investments (135) 3
-------- -----------
Total stockholders' equity 45,181 44,342
-------- -----------
Total liabilities and
stockholders' equity $ 97,308 $ 106,309
======== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-3-
<PAGE>
BANYAN SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
1996 1995 1996 1995
---------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues:
Software $25,745 $24,342 $50,676 $58,021
Support and training 3,895 5,209 8,364 10,527
Hardware 561 603 1,093 1,955
------- ------- ------- -------
Total revenues 30,201 30,154 60,133 70,503
Cost of revenues:
Software 2,756 3,245 5,271 7,033
Support and training 3,367 3,321 6,640 6,525
Hardware 147 454 330 1,146
------- ------- ------- -------
Total cost of revenues 6,270 7,020 12,241 14,704
------- ------- ------- -------
Gross margin 23,931 23,134 47,892 55,799
Operating expenses:
Sales and marketing 15,425 19,968 30,604 38,691
Product development 5,639 5,850 10,972 11,556
General and administrative 2,732 2,969 5,832 6,158
------- ------- ------- -------
Total operating expenses 23,796 28,787 47,408 56,405
------- ------- ------- -------
Income/(loss) from operations 135 (5,653) 484 (606)
Other income/(expense):
Interest income 288 467 623 1,016
Interest expense (17) (8) (38) (16)
Other, net (116) (41) (203) (104)
------- ------- ------- -------
Total other income 155 418 382 896
------- ------- ------- -------
Income/(loss) before income taxes 290 (5,235) 866 290
Provision/(benefit) for income taxes 104 1,943 311 25
------- ------- ------- -------
Net income/(loss) $ 186 $(3,292) $ 555 $ 265
------- ======= ======= =======
Net income/(loss) per share $0.01 $(0.20) $0.03 $0.01
======= ======= ======= =======
Weighted average number of common
and dilutive common equivalent shares
outstanding 17,262 16,836 17,264 17,657
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-4-
<PAGE>
BANYAN SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 555 $ 265
Adjustments to reconcile net income to net cash (used in)/
provided by operating activities:
Depreciation and amortization 3,810 4,570
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable (4,589) 9,941
Decrease/(increase) in inventories 854 (1,352)
Decrease in income taxes receivable 5,809 -
Decrease in deferred taxes 1,821 595
Decrease/(increase) in other current assets 1,746 (2,786)
(Decrease) in accounts payable and accrued
compensation and expenses (1,591) (2,219)
(Decrease) in accrued costs for restructuring and other charges (7,879) -
(Decrease)/increase in software licenses payable, net (3,250) 1,546
(Decrease) in income taxes payable (183) (4,243)
Increase in deferred revenue 2,455 3,669
------- --------
Net cash (used in)/provided by operating activities (442) 9,986
Cash flows from investing activities:
Capital expenditures (2,943) (6,442)
Capitalization of software costs (907) (1,247)
Acquisition of software licenses (725) (219)
Proceeds from/(purchases of) marketable securities, net 7,015 1,919
Investment in unconsolidated affiliate (2,001) -
------- --------
Net cash provided by/(used in) investing activities 439 (5,989)
Cash flows from financing activities:
Repayment of principal on long-term debt (40) (38)
Proceeds from common stock options
and related tax benefits 415 2,776
Purchase of treasury stock - (11,199)
------- --------
Net cash provided by/(used in) financing activities 375 (8,461)
Effect of exchange rate changes on cash and cash equivalents (36) (232)
------- --------
Net increase/(decrease) in cash and cash equivalents 336 (4,696)
Cash and cash equivalents at beginning of the period 12,398 22,233
------- --------
Cash and cash equivalents at end of the period $12,734 $ 17,537
======= ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-5-
<PAGE>
BANYAN SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements include the
accounts of the Company and its subsidiaries, as of June 30, 1996, and have
been prepared by the Company in accordance with generally accepted
accounting principles. In the opinion of management, the accompanying
unaudited consolidated financial statements contain all adjustments,
consisting only of those of a normal recurring nature, necessary for a fair
presentation of the Company's financial position, results of operations and
cash flows at the dates and for the periods indicated. While the Company
believes that the disclosures presented are adequate to make the
information not misleading, these consolidated financial statements should
be read in conjunction with the consolidated financial statements and
related notes included in the Company's 1995 Annual Report to Stockholders.
The results of operations for the three-month and six-month periods ended
June 30, 1996 are not necessarily indicative of the results expected for
the full fiscal year.
B. INVENTORIES:
<TABLE>
<CAPTION>
Inventories consist of the following at:
(in thousands) June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Purchased parts $ 874 $1,250
Work in process 470 740
Finished goods 1,465 1,674
------ ------
$2,809 $3,664
====== ======
</TABLE>
C. CAPITALIZED SOFTWARE COSTS:
During the quarters ended June 30, 1996 and 1995, the Company capitalized
$383,000 and $655,000, respectively, of software costs. During the six
months ended June 30, 1996 and 1995, the Company capitalized $907,000 and
$1,247,000, respectively, of software costs. The Company amortized software
costs of $402,000 and $446,000 for the quarters ended June 30, 1996 and
1995, respectively, and $739,000 and $880,000 for the six months ended June
30, 1996 and 1995, respectively.
-6-
<PAGE>
BANYAN SYSTEMS INCORPORATED
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Total revenues for the three-month period ended June 30, 1996 were $30.2
million, which is essentially equal to the corresponding period in 1995. Total
revenues for the six-month period ended June 30, 1996 were $60.1 million, which
represents a 15% decrease when compared to the corresponding period in 1995.
This decrease was due to lower software and support and training revenues as
well as continued expected declines in hardware revenue. The Company's software
revenues for the three-month period ended June 30, 1996 increased by $1.4
million, or 6%, when compared to the corresponding period in 1995. The increase
was primarily due an increase in messaging revenues. The Company's software
revenues in the six-month period ended June 30, 1996, decreased by $7.3 million,
or 13%, when compared to the corresponding period in 1995. The decrease was
primarily due to a decrease in revenue from the Company's ENS platform
offerings. Support and training revenues decreased by $1.3 million, or 25%, and
$2.2 million, or 21%, for the three-month and six-month periods ended June 30,
1996, when compared to the corresponding periods in 1995, primarily due to lower
revenues from educational services and end-user support contracts. Hardware
revenues declined $0.1 million, or 7%, and $0.9 million, or 44% for the three-
month and six-month periods ended June 30, 1996, respectively, when compared to
the corresponding periods in 1995, primarily due to the continued phase-out of
the Company's hardware business.
International revenues for the three-month and six-month periods ended June 30,
1996 were $6.4 million and $13.4 million, respectively, compared with $7.1
million and $14.0 million for the corresponding periods in 1995. The decreases
were primarily due to lower revenues in Europe. International revenues
accounted for 21% and 22% of total revenues for the three-month and six-month
periods ended June 30, 1996, respectively, compared with 24% and 20%, for the
corresponding periods in 1995.
Gross margins for software were 89%, or $23.0 million, and 90%, or $45.4
million, for the three-month and six-month periods ended June 30, 1996,
respectively, compared with 87%, or $21.1 million, and 88%, or $51.0 million,
for the corresponding periods in 1995. The increases in software margin
percentages were primarily due to lower manufacturing costs as a result of the
Company's restructuring in the quarter ended December 31, 1995, which reduced
staffing and related facility costs. The increase in gross margin dollars for
the three-month period ended June 30, 1996 and the decrease in gross margin
dollars for the six-month period ended June 30, 1996 were primarily due to
relative sales volume.
Gross margins for support and training were 14%, or $0.5 million, and 21%, or
$1.7 million, for the three-month and six-month periods ended June 30, 1996,
respectively, compared with 36%, or $1.9 million, and 38%, or $4.0 million, for
the corresponding periods in 1995. The decreases in margin and dollars for the
three-month and six-month periods ended June 30, 1996 were primarily due to
lower revenues from education classes and end user support contracts.
Gross margins for hardware were 74%, or $0.4 million, and 70%, or $0.8 million,
for the three-month and six-month periods ended June 30, 1996, respectively,
compared with 25%, or $0.1 million, and 41%, or $0.8 million, for the
corresponding periods in 1995. The increases in hardware margin percentages
were primarily due to lower manufacturing costs as a result of the
-7-
<PAGE>
Company's restructuring in the quarter ended December 31, 1995, which reduced
staffing and related facility costs.
Sales and marketing expenses of $15.4 million and $30.6 million for the three-
month and six-month periods ended June 30, 1996, respectively, represented
decreases of 23% and 21% compared to the corresponding periods in 1995. The
decreases were primarily due to lower sales staffing and personnel costs as a
result of the reduction in force as part of the Company's reorganization in the
quarter ended December 31, 1995. Additionally, variable sales costs decreased
due to lower revenues for the six-month period ended June 30, 1996 when compared
to the corresponding period in the prior year. Sales and marketing expenses as
a percentage of revenues were 51% for both the three-month and six-month periods
ended June 30, 1996, as compared to 66% and 55% for the corresponding periods in
1995.
Product development expenses of $5.6 million and $11.0 million for the three-
month and six-month periods ended June 30, 1996, respectively, represented
decreases of 4% and 5%, respectively, over the corresponding periods in 1995.
These decreases were primarily due to lower headcount in the six month period
ended June 30, 1996 when compared to the corresponding period in the prior year
as a result of the Company's reorganization in the quarter ended December 31,
1995. The Company continues to focus its product development resources on its
enterprise network services particularly the NT based products and its messaging
products. The Company has also increased its investment in internet-related
product initiatives. Product development expenses as a percentage of revenues
were approximately 19% and 18% for the three-month and six-month periods ended
June 30, 1996, respectively, as compared to 19% and 16% for the corresponding
periods in 1995. Software costs of $383,000 and $907,000 were capitalized for
the three-month and six-month periods ended June 30, 1996, respectively, as
compared to $655,000 and $1,247,000 for corresponding periods in 1995. The
amounts capitalized represented 6% and 8% of product development expenditures
for the three-month and six-month periods ended June 30, 1996, respectively, as
compared to 10% for both the three-month and six-month periods ended June 30,
1995.
General and administrative expenses of $2.7 million and $5.8 million for the
three-month and six-month periods ended June 30, 1996, respectively, represented
decreases of 8% and 5% when compared to the corresponding periods in 1995. The
decreases were due to lower administrative and personnel costs as a result of
the reduction in force as part of the Company's reorganization in the quarter
ended December 31, 1995. General and administrative expenses as a percentage of
revenues were 9% and 10% for the three-month and six-month periods ended June
30, 1996, as compared to 10% and 9% for the corresponding periods in 1995.
Interest income was $288,000 and $623,000 for the three-month and six-month
periods ended June 30, 1996, respectively, and represented decreases of 38% and
39% from the corresponding periods in 1995. These decreases were due to lower
levels of available funds invested in marketable securities.
The Company's effective tax rate was 36% for both the three-month and six-month
periods ended June 30, 1996 and 37.1% and 8.6%, respectively, for the
corresponding periods in the prior year. The lower effective tax rate for the
six month period ended June 30, 1995 was in part due to the impact of foreign
operations as well as the reduced level of profitability for the period.
-8-
<PAGE>
FACTORS AFFECTING FUTURE OPERATING RESULTS
Certain of the information contained in this Form 10-Q, including information
with respect to the Company's plans and strategy for its business expectations,
consists of forward-looking statements. Important factors that could cause
actual results to differ materially from the forward-looking statements include
the following:
In 1995 and the first six months of 1996, a substantial majority of the
Company's product sales were to existing customers for upgrade or expansion of
their networks. The Company's results in 1996 will depend on its ability both
to continue to sell products for use in networks of existing customers and to
attract new customers for the Company's products. In addition, in 1995 and the
first six months of 1996, the Company experienced extended selling cycles due to
an increase in multi-year customer agreements and to longer evaluation of
operating systems and hardware platforms by potential customers. The Company
expects that extended selling cycles will continue to affect the Company's
operating results for the foreseeable future.
The Company's results are partially dependent on its ability to enhance existing
products and introduce new products on a timely basis, and to achieve market
acceptance for such enhanced and new products. The Company's results in 1995
and the first six months of 1996 were adversely affected by delays in the
release and localization of certain products, and there can be no assurance that
the Company will not experience similar delays in the future. The Company plans
in 1996 to introduce additional product offerings that provide integration of
the Windows NT operating system into a VINES network. While the Company does
not expect to record significant revenues from this NT-based product in 1996,
any delay in introducing this product or failure of this product to achieve
market acceptance could have a material adverse effect on the Company's future
results of operations.
The Company has recently established its Internet Products Division
(Coordinate.com) to develop products and services to bring the Company's
directory and messaging capabilities to Internet users. The Company has limited
experience in developing or selling products for the Internet and the success of
the division will depend in part on its ability to enter into strategic
alliances with other Internet providers. While the Company does not expect to
record significant revenues in 1996 from sales of products for the Internet, any
delay in developing its products and services for the Internet or failure of
such products and services to achieve market acceptance could have a material
adverse effect on the Company's future results of operations.
In 1995, the Company reorganized its operations and, as a result, has reduced
its workforce by approximately ten percent. The Company's future success will
depend on its ability both to retain its key employees and attract new
employees, and there can be no assurance it will be able to do so.
The markets for the products of the Enterprise Networking Division and the
planned products of the Internet Division are highly competitive and
characterized by rapidly changing technology. There can be no assurance that
current or potential competitors will not introduce products that offer
performance or other features that are more attractive than those of the
Company's products. Many of the Company's competitors have greater name
recognition, larger installed customer bases and greater financial resources
than the Company and therefore may be able to adapt more quickly to new or
emerging technologies and changes in customer requirements. Other factors that
may affect the Company's future operating results include its ability to expand
its international sales, its dependence on indirect reseller channels, declines
in purchases by any major reseller, and fluctuations in currency exchange rates.
-9-
<PAGE>
Because of the foregoing factors, past financial results should not be relied
upon as an indication of future performance. The Company believes that period-
to-period comparisons of its financial results are not necessarily meaningful
and its expects that its results of operations may fluctuate from period to
period in the future.
LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased from $9.5 million at December 31, 1995 to $6.8 million
at June 30, 1996. At June 30, 1996, cash and cash equivalents combined with
short-term and long-term marketable securities were $24.4 million, compared with
$31.3 million at December 31, 1995. Cash and cash equivalents increased $0.3
million from December 31, 1995 resulting in a cash balance of $12.7 million at
June 30, 1996. The increase was due principally to net proceeds from the sale
of marketable securities of $7.0 million, the collection of income taxes
receivable of $5.8 million, an increase in deferred revenues of $2.5 million, a
decrease in deferred income taxes of $1.8 million and a decrease in inventories
of $0.9 million, offset in part by restructuring and other charges of $7.9
million, an increase in accounts receivable of $4.6 million, capital
expenditures of $2.9 million, a minority interest equity investment of $2.0
million and the net affect of other operating, investing and financing
activities.
In the quarter ended December 31, 1995, the Company recorded a restructuring and
other charges of $15.8 million. As of June 30, 1996, a balance of $1.1 million
associated with this charge remains on the balance sheet. Management believes
that this remaining balance is adequate to cover future expenditures associated
with the 1995 restructuring and other charges.
The Company has negotiated to extend its current line of credit of $10 million
which will expire in May 1997. Borrowings may be made at the bank's prime rate.
At June 30, 1996, the Company had no borrowings under this line of credit and
was in compliance with all covenants of the agreement. The Company believes that
existing cash and marketable securities, combined with cash expected to be
generated from operations and the available line of credit, will be sufficient
to meet the Company's working capital and capital expenditure requirements
through at least 1996.
-10-
<PAGE>
BANYAN SYSTEMS INCORPORATED
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
At the Company's Annual Meeting of Stockholders held on April 29, 1996,
the following proposals were adopted by the vote specified below:
<TABLE>
<CAPTION>
Against or Broker
Proposal For Withheld Abstain Non-votes
-------- ---- ---------- ------- ---------
<S> <C> <C> <C> <C>
1. Election of Class I Directors:
David C. Mahoney 14,077,387 234,824 --- ---
G. Leonard Baker, Jr. 14,085,469 266,742 --- ---
2. Approval of amendments to the
Company's 1992 Stock Incentive Plan 13,768,571 336,795 88,238 133,927
3. Ratification of Coopers & Lybrand L.L.P.
as the Company's independent accountants 14,219,127 43,867 49,217 15,320
</TABLE>
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
a. The exhibits listed in the Exhibit Index filed as part of this
report are filed as part of or are included in this report.
b. The Company filed no reports on Form 8-K during the quarter for
which this report is filed.
-11-
<PAGE>
BANYAN SYSTEMS INCORPORATED
SIGNATURE
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.
BANYAN SYSTEMS INCORPORATED
Date: August 9, 1996 By: /s/ Richard M. Spaulding
-------------------------
Richard M. Spaulding
Vice President Finance
and Treasurer
(Principal Accounting Officer)
-12-
<PAGE>
EXHIBIT INDEX
10.9(C) Amendment to Commitment Letter, dated May 5, 1996, between the Company
and Silicon Valley Bank.
10.39 Separation Agreement and Release and Waiver of Claims dated May 6,
1996, between the Company and John Curtis.
27 Financial Data Schedule
-13-
<PAGE>
EXHIBIT 10.9(C)
LOAN DOCUMENT MODIFICATION AGREEMENT
(NO. 6; DATED AS OF MAY 5, 1996)
LOAN DOCUMENT MODIFICATION AGREEMENT dated as of May 5,1996 by and between
Banyan Systems Incorporated, a Massachusetts corporation with its principal
place of business at 120 Flanders Road, Westboro, MA 0158 I (the "Borrower') and
-----------
SILICON VALLEY BANK (the "Bank'), a California chartered bank with its principal
-------
place of business at 3003 Lakeside Drive, Santa Clara, California 95054, and
with a loan production office located at Wellesley Office Park, 40 William
Street Wellesley, MA 02181, doing business under the name "Silicon Valley East".
1. Reference to Existing Loan Documents.
------------------------------------
Reference is hereby made to that Commitment Letter dated June 5, 1992 between
the Bank and the Borrower as previously amended as of May 5, 1993, May 5, 1994,
May 5, 1995, January 22, 1996 and February 1, 1996 (with the attached schedules
and exhibits, the 'Commitment Letter) and the Loan Documents referred to
therein, including without limitation that certain Amended and Restated
Promissory Note of the Borrower dated May 5, 1995 in the principal amount of
$10,000,000 (the "Note'), and the Security Documents referred to therein.
Unless otherwise defined herein, capitalized terms used in this Agreement shall
have the same respective meanings as set forth in the Commitment Letter.
2. Effective Date
This Agreement shall become effective as of May 5, 1996 (the Effective
Date),provided that the Bank shall have received the following documents on or
before June 24, 1996, and provided further, however, that in no event shall this
Agreement become effective until signed by an officer of the Bank in California.
(a) Two copies of this Agreement, duly executed by the Borrower;
<PAGE>
(b) One copy of an amended and restated Promissory note in the
principal amount of $1 0,000,000 duly executed by the Borrower;
and
(c) The Borrower's check in the amount of $25,000 representing
payment of the Bank's facility amendment fee.
By the signature of its authorized officer below, the Borrower is hereby
representing that, except as modified in attached hereto, the representations of
the Borrower set forth in the Loan Documents (including those contained in the
Commitment Letter, as amended by this Agreement) are true and correct as of the
Effective Date as if made on and as of such date. Finally, the Borrower (and
each guarantor, if any, signing below) agrees that, as of the Effective Date, it
has no defenses against its obligations to pay any amounts under the Commitment
Letter and the other Loan Documents.
3. Description in Change in Terms
As of the Effective Date, the Commitment Letter is modified in the following
respects:
(a) Numbered paragraph 2 is amended in full to read as follows:
"Unless otherwise renewed in writing by the Bank, the Commitment
will expire May 4, 1997."
(b) Numbered paragraph 18 of Schedule 11 is hereby restated in its
entirety as follows:
<PAGE>
"18. Minimum Profitability The Borrower shall now incur Net Losses in any
two consecutive fiscal quarters and shall not permit Net Income to be less than
$1.00 in any fiscal year."
(c) Numbered Paragraph 20 of Schedule 11 is hereby restated in its
entirety to read as follows:
"20. TCB. The Borrower will not permit its TCB to be less than
$37,500,000 at the end of any fiscal quarter, commencing with the quarter ending
June 30,1996. "
(d) Section 11 to the Commitment Letter is hereby further amended by
restating Exhibit A thereto in its entirety in the form of
Exhibit A hereto.
(e) The Commitment Letter and the other Loan Documents are hereby
amended wherever necessary or appropriate to reflect the
foregoing changes.
4. Continuing Validity 1
Upon the effectiveness hereof, each reference in each Security Instrument or
other Loan Document to "the Commitment Letter", "thereunder", "thereof',
"therein", or words of like import referring to the Commitment Letter, shall
mean and be a reference to the Commitment Letter, as amended hereby. Except as
specifically set forth above, the Commitment Letter shall remain in full force
and effect and is hereby ratified and confirmed. Each of the other Loan
Documents is in full force and effect and is hereby ratified and confirmed. The
amendments set forth above (i) do not constitute a waiver or modification of any
term, condition or covenant of the Commitment Letter or any other Loan Document,
other than as expressly set forth herein, and (ii) shall not prejudice any
rights which the Bank may now or hereafter have under or in connection with the
Commitment Letter, as modified hereby, or the other Loan Documents and shall not
obligate the Bank to assent to any further modifications.
5. Miscellaneous
<PAGE>
(a) This Agreement may be signed in one or more counterparts each of
which taken together shall constitute one and the same document.
(b) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
(c) THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING
OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
LOAN MODIFICATION AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY
REASON LENDER CANNOT AVAIL ITSELF OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA
CLARA COUNTY, CALIFORNIA.
(d) The Borrower agrees to promptly pay on demand all costs and
expenses of the Bank in connection with the preparation,
reproduction, execution and delivery of this letter amendment and
the other instruments and documents to be delivered hereunder,
including the reasonable fees and out-of-pocket expenses of
Sullivan & Worcester, special counsel for the Bank with respect
thereto.
<PAGE>
IN WITNESS WHEREOF, the Bank and the Borrower have caused this Agreement to
be signed under seal by their respective duly authorized officers as of THE date
set forth above.
Sincerely,
SILICON VALLEY EAST, a Division
of Silicon Valley Bank
By:
Name: Joan S. Parsons
Title: Senior Vice President
SILICON VALLEY BANK
By:
Name: Pamela S. Doyle
Title: Senior Vice President
(signed in Santa Clara, CA)
BANYAN SYSTEMS INCORPORATED
By:
Name: Jeffrey D. Glidden
Title: Vice President and Chief
Financial Officer
<PAGE>
AMENDED AND RESTATED PROMISSORY NOTE
$10,000,000.00 Wellesley, Massachusetts
May 5, 1996 (Originally dated
May 5, 1992 and previously amended
and restated as of May 5, 1993, May 5, 1994
and May 5, 1995
For value received, the undersigned, BANYAN SYSTEMS INCORPORATED, a
Massachusetts corporation (the "Borrower"), promises to pay to SILICON VALLEY
-----------
BANK (the "Bank') at the office of the Bank located at 3000 Lakeside Drive,
-------
Santa Clara, California 95054, or to its order, the lesser of Ten Million
Dollars ($10,000,000) or the outstanding principal amount hereunder, on May 4,
1997 (the "Maturity Date"), together with interest on the principal amount
----------------
hereof from time to time outstanding at a fluctuating rate per annum equal to
the Prime Rate (as defined below) until the Maturity Date, payable monthly in
arrears on the first day of each calendar month occurring after the date hereof
and on the Maturity Date. The Borrower promises to pay on demand interest at a
per annum rate of interest equal to the Prime Rate plus 4% on any overdue
principal (and to the extent permitted by law, overdue interest). The Bank's
"Prime Rate" is the per annum rate of interest from time to time announced and
made effective by the Bank as its Prime Rate (which rate may or may not be the
lowest rate available from the Bank at any given time).
Computations of interest shall be made by the Bank on the basis of a year
of 360 days for the actual number of days occurring in the period for which such
interest is payable.
This promissory note amends and restates the terms and conditions of the
obligations of the Borrower under the promissory note dated May 5, 1992 as
previously amended and
<PAGE>
restated as of May 5, 1993, May 5, 1994 and May 5, 1995(the "Original Note") by
---------------
the Borrower to the Bank. Nothing contained in this promissory note shall be
deemed to create or represent the issuance of new indebtedness or the exchange
by the Borrower of the Original Note for a new promissory note. This promissory
note is referred to in the commitment letter dated May 5, 1992 as amended by
letter amendments dated as of May 5, 1993, May 5, 1994, May 5, 1995 and May 5,
1996 by the Bank and accepted by the Borrower together with all related
schedules, as the same may be amended, modified or supplemented from time to
time (the "Commitment Letter"), and is subject to optional and mandatory
-------------------
prepayment as provided therein, and is entitled to the benefits thereof and of
the other Loan Documents referred to therein.
Each reference in each Loan Document (as defined in the Commitment Letter)
to "the Note", "thereof", "therein", 'thereunder", or words of like import
referring to the Original Note, shall mean and be a reference to the Original
Note, as amended and restated hereby.
<PAGE>
Upon the occurrence of any Event of Default under, and as defined in, the
Commitment Letter, at the option of the Bank, the principal amount then
Outstanding of and the accrued interest on the advances under this note and all
other amounts payable under this note shall become immediately due and payable,
without notice (including, without limitation, notice of intent to accelerate),
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
The Bank shall keep a record of the amount and the date of the making of each
advance pursuant to the Commitment Letter and each payment of principal with
respect thereto either by endorsing such information on the schedule annexed
hereto and made a part hereof, or continuations thereof which shall be attached
hereto and made a part hereof, or by maintaining a computerized record of such
information and printouts of such computerized record, which endorsement or
computerized record, and the printouts thereof, shall constitute prima facie
evidence of the accuracy of the information so endorsed.
The undersigned agrees to pay all reasonable costs and expenses of the Bank
(including, without limitation, the reasonable fees and expenses of attorneys)
in connection with the enforcement of this note and the other Loan Documents and
the preservation of their respective rights hereunder and thereunder.
No delay or omission on the part of the Bank in exercising any right hereunder
shall operate as a waiver of such right or of any other right of the Bank, nor
shall any delay, omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion. The Borrower and
every endorser or guarantor of this note regardless of the time, order or place
of signing waives presentment, demand, protest and notices of every kind and
assents to any one or more
<PAGE>
extensions or postponements of the time of payment or any other indulgences, to
any substitutions, exchanges or releases of collateral for this note, and to the
additions or releases of any other parties or persons primarily or secondarily
liable.
THIS NOTE HAS BEEN DELIVERED TO THE BANK AND ACCEPTED BY THE BANK IN THE STATE
OF CALIFORNIA.
THE BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO
A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING WHICH ARISES OUT OF OR BY REASON
OF THIS NOTE, ANY LOAN DOCUMENT (AS DEFINED IN THE COMMITMENT LETTER), OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
BY ITS EXECUTION AND DELIVERY OF THIS NOTE, THE BORROWER ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE COMMONWEALTH OF MASSACHUSETTS OR THE STATE OF CALIFORNIA IN ANY ACTION,
SUIT OR PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF
THIS NOTE, ANY LOAN DOCUMENT (AS DEFINED IN THE COMMITMENT LETTER), OR THE
TRANSACTIONS CONTEMPLATED HEREBY, IN ADDITION TO ANY OTHER COURT IN WHICH SUCH
ACTION, SUIT OR PROCEEDING MAY BE BROUGHT, IRREVOCABLY AGREES TO BE BOUND BY ANY
FINAL JUDGMENT RENDERED BY ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING
IN WHICH IT SHALL HAVE BEEN SERVED WITH PROCESS IN THE MANNER HEREINAFTER
PROVIDED, SUBJECT TO EXERCISE AND EXHAUSTION OF ALL RIGHTS OF APPEAL AND TO THE
EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES AND AGREES NOT TO ASSERT, BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, IN SUCH ACTION. SUIT OR PROCEEDING ANY
CLAIMS THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT
ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION,
SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF
IS IMPROPER, AND AGREES THAT PROCESS MAY BE SERVED UPON IT IN ANY SUCH ACTION,
SUIT OR PROCEEDING IN THE MANNER PROVIDED BY CHAPTER 223A OF THE GENERAL LAWS OF
<PAGE>
MASSACHUSETTS, RULE 4 OF THE MASSACHUSETTS RULES OF CIVIL PROCEDURE OR RULE 4 OF
THE FEDERAL RULES OF CIVIL PROCEDURE.
ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS AND THIS NOTE SHALL BE DEEMED TO BE UNDER SEAL.
BANYAN SYSTEMS INCORPORATED
By: ___________________________
Name: Jeffrey D. Glidden
Title: Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 10.39
SEPARATION AGREEMENT AND
RELEASE AND WAIVER OF CLAIMS
----------------------------
This Separation Agreement and Release and Waiver of Claims (the
"Agreement") is entered into this 6th day of May, 1996, by and between Banyan
Systems Incorporated, with offices at 120 Flanders Road, Westboro, Massachusetts
01581 ("Banyan") and John H. Curtis, a resident of 9 Parmenter Road, Framingham,
MA 01701 (the "Undersigned").
For and in consideration of the mutual terms, conditions and covenants
herein, Banyan and the Undersigned agree as follows:
1. RESIGNATION OF EMPLOYMENT. The Undersigned hereby resigns as an Officer
of Banyan effective on May 6, 1996, and further resigns his position with Banyan
as Senior Vice President, Enterprise Networking Division, effective May 6, 1996.
The Undersigned shall promptly execute and deliver to Banyan a separate
instrument embodying such resignation.
2. PAYMENT. For and in consideration of the Undersigned's execution of this
Agreement, Banyan shall pay to the Undersigned the amount set forth in Exhibit
A, attached hereto, less applicable deductions and/or withholdings for taxes or
similar governmental payments and charges, and provide the benefits set forth in
Exhibit A.
3. PUBLIC STATEMENT. The Undersigned agrees that he will not
intentionally make or disclose or cause to be disclosed any negative, adverse or
derogatory comments about Banyan or its management, business, personnel or about
any product or service
<PAGE>
provided by Banyan, or about Banyan's prospects for the future. Banyan agrees
that its officers, executives, and authorized spokespersons will not
intentionally make or disclose any negative, adverse or derogatory comments
about the Undersigned.
4. RELEASE. In exchange for the benefits of this Agreement, the
Undersigned agrees to give up all the rights that he now has to any relief or
any kind from Banyan and all affiliated or parent corporations, officers,
directors, shareholders, employees and agents, whether or not he knows about
those rights, arising out of the Undersigned's employment with Banyan up until
the date this Agreement is signed. This does not waive any rights or claims
that arise after the date this Agreement is executed. This includes, but is not
limited to, claims or rights under any federal, state or other governmental law,
statute, regulation, ordinance, or any other legal restrictions, including, but
not limited to Chapter 15 1B of the Massachusetts General Laws, the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, and
the Americans with Disabilities Act, which prohibit discrimination in employment
on the basis of sex, age and/or disability.
THIS MEANS THE UNDERSIGNED MAY NOT SUE BANYAN FOR ANY CURRENT OR PRIOR
CLAIMS ARISING OUT OF HIS EMPLOYMENT WITH OR SEPARATION FROM BANYAN.
The Undersigned acknowledges and agrees that Banyan has discharged and
performed all of its obligations other than those obligations which are
specifically set forth in this Agreement, that there are no outstanding claims
against Banyan, that if
<PAGE>
there are any such claims there is considerable doubt as to the prospect of
successfully prevailing on them in litigation, and that the consideration
provided by Banyan pursuant to this Agreement is sufficient to support each and
all of the contractual obligations that the Undersigned is undertaking herein.
5. COVENANT NOT TO SUE. The Undersigned represents and warrants that he
has not filed any complaints, charges or claims for relief against Banyan and/or
related officers, directors,
stockholders, corporate affiliates, agents or employees with any local, state or
federal court or administrative agency which currently are outstanding. If the
Undersigned has done so, he will forthwith dismiss all such complaints, charges
or claims for relief with prejudice. The Undersigned further agrees and
covenants not to bring any complaints, charges or claims against Banyan, its
officers, directors, stockholders, corporate affiliates, agents or employees
with respect to any matters arising out of his employment with or termination of
such employment by Banyan.
6. REMEDIES. If at any time during the term of this Agreement, Banyan
believes that the Undersigned has breached any material obligations or covenants
hereunder, Banyan promptly shall give the Undersigned written notice of the
same. In the event that the Undersigned does not promptly cure such breach (if
such breach is susceptible of cure), Banyan may, at its option, commence an
action at law or equity, against the Undersigned, including but not limited to
injunctive relief.
<PAGE>
7. GOVERNING LAW, SEVERABILITV. This Agreement is entered into and shall
be construed pursuant to the laws of The Commonwealth of Massachusetts,
excluding its conflicts of law rules. In the event any provision of this
Agreement is determined to be illegal or unenforceable by a duly authorized
court of competent jurisdiction, then the remainder of this Agreement, or the
application of such provision in circumstances other than those as to which it
is so declared illegal or unenforceable, shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
8. WAIVERS, AMENDMENTS. The failure of Banyan to require the performance
of any term or obligation of this Agreement, or the waiver by Banyan of any
breach of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation and shall not be deemed a waiver of any subsequent breach.
No modification or waiver of any provision of this Agreement shall be effective
unless in writing and signed by both parties.
9. NON-ADMISSION. Banyan expressly disclaims any wrongdoing to the
Undersigned and the Undersigned agrees that by entering into this Agreement
Banyan admits no wrongdoing.
10. REPRESENTATIONS. The Undersigned represents that he understands the
various claims he could have asserted under the common law of Massachusetts, the
Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964,
Chapter 15 IB of the Massachusetts General Laws, the Americans with Disabilities
Act and other such similar laws; and he has read the Agreement
<PAGE>
carefully and understands all of its provisions; that he understands that he has
the right to and is advised to consult an attorney at the Undersigned's own
expense concerning this Agreement and in particular the waiver of any rights he
might have under these laws; that to the extent, if any, that he desired, he
availed himself of this right; that he has had at least twenty-one (21) days to
consider whether to sign the Agreement; and that he enters this Agreement and
waives any claims knowingly and willingly.
11. CHALLENGE TO VALIDITY OF AGREEMENT. The Undersigned agrees that he
shall never bring a proceeding to challenge the validity of this Agreement.
12. ENTIRE AGREEMENT. This Agreement sets forth the full terms of the
arrangement between Banyan and the Undersigned and supersedes any prior oral or
written understandings. Notwithstanding the foregoing, nothing in this
Agreement shall be deemed to affect the application and enforceability of the
Employee Patent and Confidential Information Agreement executed by the
Undersigned.
<PAGE>
13. SIGNATURE. This Agreement may be signed on one or more copies, each of
-----------
which when so signed will be deemed to be an original, and all of which together
will be one and the same document.
14. CONFIDENTIALITY OF AGREEMENT. The Undersigned agrees that the terms of
------------------------------
this Agreement are strictly confidential (except portions that are in the public
domain) and shall not be disclosed to any other person, except that the
Undersigned may disclose this Agreement to his immediate family, attorney and
tax or other professional advisors.
15. EFFECTIVE DATE. This Agreement shall become effective seven (7) days
----------------
after it is signed by the Undersigned and executed by a representative of
Banyan. The Undersigned may revoke this Agreement within seven (7) days after
it is signed by the Undersigned, and it shall not become effective or
enforceable until this seven (7) day revocation period has expired.
IN WITNESS WHEREOF, THE PARTIES HAVE HEREUNTO SET THEIR NAMES ON MAY
6,1996. THE UNDERSIGNED HAS BEEN OFFERED THE OPPORTUNITY TO SEEK ADVICE OF
COUNSEL PRIOR TO EXECUTING THIS AGREEMENT. BOTH PARTIES HAVE READ, UNDERSTAND
AND AGREE TO BE BOUND BY THIS AGREEMENT.
JOHN H. Curtis BANYAN SYSTEMS INCORPORATED
By:: By:
Date: Date:
<PAGE>
JOHN H. CURTIS
--------------
EXHIBIT A
---------
SEPARATION AGREEMENT AND RELEASE AND WAIVER OF CLAIMS
-----------------------------------------------------
For and in consideration of the Undersigned's execution of this Agreement,
Banyan shall: (i) pay to the Undersigned, as applicable, the amounts set forth
in Section I below, less any applicable deductions for medical, dental, or
prescription contributions and/or withholdings for taxes or similar governmental
payments or charges; and (ii) provide the benefits set forth in Sections 2 and 3
below.
1. PAYMENT AMOUNT.
---------------
a. Banyan shall pay the Undersigned a lump-sum payment in a gross
amount equal to $50,000.00 less applicable deductions for medical, dental, or
prescription contributions and/or withholdings for taxes or similar governmental
payments or charges. Such amount shall be payable on or after May 6, 1996.
b. In the event that the Undersigned has not become employed or
assumes independent contractor status (together "Re-employment") by August 6,
1996, despite good faith efforts on his part to find Re-employment, then Banyan
shall make payments to the Undersigned on customary Banyan pay days for a period
not to exceed three (3) months at the Undersigned's base, bi-weekly gross salary
rate of $7,692.30, less applicable deductions for medical, dental,
<PAGE>
or prescription contributions and/or withholdings for taxes or similar
governmental payments or charges. It is expressly understood that such payments
shall be reduced to the extent of any income derived from the Undersigned's Re-
employment. It shall be the affirmative obligation of the Undersigned to notify
Banyan promptly in writing upon Re-employment.
2. MEDICAL, DENTAL AND PRESCRIPTION) DRUG BENEFITS.
------------------------------------------------
a. Banyan shall continue to provide medical, dental and prescription
drug benefits from May 6, 1996 through November 6, 1996 subject to the
Undersigned's continued contribution at his current premium levels.
b. In the event that Re-employment of the Undersigned has not
occurred by November 6, 1996 Banyan shall bear the Undersigned's Cobra costs
from November 6, 1996 through the earlier of May 6, 1997 or the Undersigned's
eligibility for participation in a group medical insurance policy. It shall be
the affirmative obligation of the Undersigned to notify Banyan promptly in
writing upon Re-employment.
3. INCENTIVE STOCK OPTIONS. All Incentive Stock Options granted to the
-------------------------
Undersigned shall cease vesting on May 6, 1996. Banyan has accelerated the
vesting of (I) 25,000 Incentive Stock Options at a per share option price of
$12.4375 and (ii) 6,250 Incentive Stock Options at a per share option price of
$8.00. The undersigned may exercise such vested Incentive Stock Options on or
before November 2, 1996. The aforementioned 25,000 Incentive
<PAGE>
Stock Options and 6,250 Incentive Stock Options represent the cumulative total
number of Incentive Stock Options which are available for exercise by the
Undersigned.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1995
<CASH> 12,734 12,398
<SECURITIES> 966 7,729
<RECEIVABLES> 34,888 29,924
<ALLOWANCES> 6,031 5,636
<INVENTORY> 2,809 3,664
<CURRENT-ASSETS> 55,507 67,405
<PP&E> 42,769 39,892
<DEPRECIATION> 28,333 25,296
<TOTAL-ASSETS> 97,308 106,309
<CURRENT-LIABILITIES> 48,699 57,871
<BONDS> 0 0
0 0
0 0
<COMMON> 187 186
<OTHER-SE> 44,994 44,156
<TOTAL-LIABILITY-AND-EQUITY> 97,308 106,309
<SALES> 51,769 59,976
<TOTAL-REVENUES> 60,133 70,503
<CGS> 5,601 8,179
<TOTAL-COSTS> 59,649 71,109
<OTHER-EXPENSES> (420) (912)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 38 16
<INCOME-PRETAX> 866 290
<INCOME-TAX> 311 25
<INCOME-CONTINUING> 555 265
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 555 265
<EPS-PRIMARY> 0.03 0.01
<EPS-DILUTED> 0.03 0.01
</TABLE>
