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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[x] Annual report pursuant to section 13 or 15(d) of the Securities and
Exchange Act of 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-26948
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SCOPUS TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-3134998
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
1900 Powell St., 7th Floor, Emeryville, CA 94608
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 597-5800
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 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 for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K.
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The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based on the closing sale price of the Common Stock on May 31,
1996, as reported on the Nasdaq National Market was approximately $113,028,623.
Shares of Common Stock held by each executive officer and director and by each
person who is known to own 5% or more of the outstanding Common Stock have been
excluded from this computation in that such persons may be deemed to be
affiliates. This determination of affiliate status is not a conclusive
determination for other purposes. As of May 31, 1996, the Registrant had
11,857,487 of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for its 1996 Annual Meeting
of Shareholders are incorporated by reference in Part III hereof.
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TABLE OF CONTENTS
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PART I............................................................................................... 3
Item 1. Business................................................................................ 3
Item 2. Properties.............................................................................. 14
Item 3. Legal Proceedings....................................................................... 14
Item 4. Submission of Matters to a Vote of Security Holders..................................... 14
PART II.............................................................................................. 15
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters................ 15
Item 6. Selected Financial Data................................................................. 16
Item 7. Management's Discussion and Analyses of Financial Condition and Results of Operations... 17
Item 8. Financial Statements and Supplementary Data............................................. 22
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.... 22
PART III............................................................................................. 22
Item 10. Directors and Executive Officers of the Registrant..................................... 22
Item 11. Executive Compensation................................................................. 22
Item 12. Security Ownership of Certain Beneficial Owners and Management......................... 22
Item 13. Certain Relationships and Related Transactions......................................... 22
PART IV.............................................................................................. 23
Item 14. Exhibits, Financial Statements and Reports on Form 8-K................................. 23
SIGNATURES........................................................................................... 24
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PART I
Item 1. Business
Throughout this report there is information containing trend analyses
and other forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and section 21E of the Securities and
Exchange Act of 1934, as amended. Actual results could differ materially from
those projected in the forward-looking statements as a result of the risk-
related factors set forth in this report.
Overview
Scopus Technology, Inc. ("Scopus" or the "Company") is a leading
provider of client/server software solutions for the customer information
management market. The Company's applications, Scopus SupportTEAM, Scopus
QualityTEAM, Scopus SalesTEAM and Scopus ServiceTEAM automate external customer
support and internal help desk support, the product design change process and
sales and marketing activities. Scopus applications are designed to enable
organizations to build a knowledgebase of customer information that can be
accessed and used by individuals throughout the enterprise to improve customer
support and satisfaction. The Company's products are based on a modular, open
architecture and support a variety of client computing platforms, industry
standard relational databases and server operating systems. Scopus products
offer customers a unique combination of built-in functionality, customizability,
adaptability and scalability. The Company also offers consulting, training and
post-sale maintenance and support services to facilitate the installation and
use of the Company's products.
The Company's products offer customers the following benefits:
Application Customizability. Recognizing that every organization
interacts with its customers in a unique and evolving manner, the Company has
designed its technology not only to offer a pre-packaged solution but also to
allow organizations to slightly tailor or extensively customize Scopus
applications without time consuming and costly source code programming changes.
As a result, Scopus applications can be adapted to the organization's specific
processes, integrated with its existing computing environments and modified as
the organization's functional and technical requirements grow or evolve.
Scalability and Flexibility. The Company's products allow customers to
take advantage of the benefits inherent in client/server computing, notably its
scalability and flexibility. Scopus applications enable customers to easily add
clients to new or existing servers. Organizations can also use Scopus
application service modules to incorporate additional functionality into Scopus
systems, such as remote access capabilities, telephony integration and multi-
site database replication, without costly changes to the overall application
architecture.
Third Party Software Integration Capabilities. The modular, open
architecture of Scopus applications and Scopus' published application
programming interface ("API") permit customers to integrate the Company's
applications with a wide variety of other computer and telephony technologies
and products. As a result, Scopus applications can be integrated with many
desktop software applications for Windows, UNIX and Macintosh clients, including
popular e-mail applications, spreadsheets and document editors, as well as
existing mainframe-based "legacy" systems, other client/server applications and
telephony equipment. Each Scopus application has also been designed to operate
with many industry standard relational database management systems, graphical
user interfaces and network protocols.
Business Strategy
The Company's objective is to become the leading supplier of enterprise
customer information management software solutions for the global marketplace.
To achieve this objective, the Company is pursuing the following strategies:
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Maintain Technological Leadership Position. Scopus has established
itself as a leader in the development and use of technology for customer
information management software. Scopus believes that it was the first
participant in this market to introduce a data-driven architecture, publish an
open API, provide customers with multi-site database replication capability and
integrate its applications with telephony services. The Company's applications
currently support a variety of client/server computing technologies, including
popular client computing platforms, industry standard relational databases and
server operating systems.
Build Relationships with Third Party Consulting Organizations. Scopus
has developed and continues to develop relationships with third party consulting
organizations to assist customers with the successful customization and
implementation of Scopus products. The Company trains third party consulting
organizations in the use of the Company's products, identifies appropriate
projects for specific consulting organizations and introduces one or more of
such consulting organizations to the customer early in the sales process.
Continue to Develop Pre-Packaged Solutions. Scopus originally developed
its Scopus SupportTEAM and Scopus QualityTEAM products for use in the software
industry for integrated customer support and defect tracking. Since that time,
the Company has licensed its products to organizations in a variety of other
industries and has developed other applications for additional markets. The
Company believes the flexibility inherent in its core technology facilitates the
development of applications for targeted vertical markets. Further, the Company
believes these targeted applications will allow for shorter sales cycles,
require less customization and offer simpler implementation. The Company also
plans to partner with key customers to develop such applications and believes
that these relationships will provide the Company with insight into the specific
needs of targeted vertical markets.
Expand Worldwide Distribution. To expand its international distribution
channels, Scopus has established subsidiaries in the United Kingdom, France and
Canada and has established relationships with thirteen distributors in various
major overseas markets including Germany, Italy and Japan. In addition, In June
1995 Scopus entered into a non-exclusive, worldwide distribution agreement with
Northern Telecom Inc. ("Northern Telecom"), a provider of communications
products, systems and networks. The agreement authorizes Northern Telecom to
bundle Scopus software with its communications products for advanced
computer/telephony integrations and sell such products through Northern
Telecom's worldwide network of distributors. The Company is exploring other
distribution arrangements to broaden its domestic and international channels,
and plans to expand its sales force both domestically and internationally.
Products
The Company's products currently consist of a suite of four principal
applications as well as several related application service modules and a
customization tool. The Company's principal applications consist of Scopus
SupportTEAM, Scopus SalesTEAM, Scopus QualityTEAM and Scopus ServiceTEAM. The
Company is also developing Scopus Voyager, a new application designed
specifically for field sales representatives, and Scopus HelpDesk, which will
combine the architecture of Scopus SupportTEAM (currently used by many customers
for the internal help desk) with additional functionality specifically targeted
at the needs of internal help desk professionals.
The Company's products support a variety of client/server computing
technologies, including popular client computing platforms such as Microsoft
Windows 3.1, Microsoft Windows 95, Microsoft Windows NT, Motif and Macintosh;
industry standard relational databases from Sybase, Oracle, Informix and
Microsoft; and server operating systems such as Microsoft Windows NT, Hewlett
Packard HP-UX, IBM/AIX, Sun OS and Sun Solaris.
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Scopus products may be integrated with each other and with a variety of
third party applications. For example, Scopus SupportTEAM can be used in
conjunction with Scopus QualityTEAM to integrate customer feedback with the
product design change process. Scopus QualityTEAM can accept modification
requests created from customer feedback through Scopus SupportTEAM, track the
ensuing adjustments and communicate the results back to Scopus SupportTEAM for
subsequent closure of all calls related to the modification. Additional service
modules available from Scopus significantly enhance the functionality of all
Scopus applications. For example, an embedded notification and workflow engine
can be used to drive the workflow of the modification process by escalating
calls to more senior personnel and notifying other professionals if problems
remain unsolved or other issues arise. WorldTEAM may be used to automatically
replicate critical information to databases in remote development centers so
that personnel throughout the enterprise can access the relevant information.
Applications
Scopus SupportTEAM. Scopus SupportTEAM is an integrated solution for
external customer support and internal help desks. Scopus SupportTEAM is
designed to automate and facilitate each step of the problem resolution process
from the gathering of problem information to problem resolution. It combines an
intuitive problem-assignment procedure with server problem resolution
technologies, including Query-By-Example, Relevancy Search and DataProbe, to
improve the speed and productivity of customer support professionals. Using
Scopus SupportTEAM, customer support professionals can enter data identifying
the caller and the problem and search the knowledgebase for similar problems and
their solutions. As call records accumulate, the resulting knowledgebase becomes
a library of problems, resolution steps, technical application notes and
solutions. If the problem cannot be resolved by the initial support
professional, Scopus SupportTEAM can assign the call to other support
professionals. Each step in the resolution process is captured by Scopus
SupportTEAM, creating a record of resolution steps previously performed. Scopus
SupportTEAM completes the resolution process through integration with standard
report writing tools for analysis and reporting of performance and customer
satisfaction metrics.
Scopus QualityTEAM. Scopus QualityTEAM automates the product design change
process and enables organizations to log, assign, coordinate and manage product
modifications and enhancements and the correction of product defects and non-
conformance items. Often, as in the software and hardware industries, a single
defect can result in several instances of product failure and may require the
resolution of multiple related sub-defects or tasks. Moreover, as the change
process progresses, duplicate modifications may be introduced into the system
and new modification requests may be found that are related to previously
identified requests. Scopus QualityTEAM enables product developers to break down
such defects or enhancement requests into tasks, manage the assignment of the
tasks and control the change process. By using the Company's problem resolution
tools, product developers can search the database for similar modifications or
tasks and link them together to ensure the efficient completion of all
modifications.
Scopus SalesTEAM. Scopus SalesTEAM manages integrated marketing and sales
cycles. With Scopus SalesTEAM, organizations can manage every phase of the sales
cycle from the design and execution of marketing campaigns and the generation of
qualified leads to order fulfillment and tracking of existing and potential
accounts. Scopus SalesTEAM has direct marketing and telesales components, which
support data-based marketing efforts and facilitate the collection of potential
customer data, the qualification of leads and the tracking of such leads to sale
closure. Scopus SalesTEAM allows organizations to simultaneously pursue multiple
opportunities in which group selling efforts are needed, manage employee to-do
lists and enforce the requirements of each step of the selling process including
lead generation, prospecting, cost estimation, quote generation, order booking,
fulfillment, billing and return.
Scopus ServiceTEAM. Scopus ServiceTEAM combines rich contract management
capability with the functionality of Scopus SalesTEAM. The resulting product
allows sophisticated sales and support for organizations that sell services in
addition to or instead of discreet products. The information managed by
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Scopus ServiceTEAM can then be linked with Scopus SupportTEAM so that customer
representatives immediately know the level of support that is contractually
required in any product support situation.
Application Service Modules
The Company has developed application service modules that can be combined
with any Scopus application to enhance functionality and create integrated
customer information management solutions.
WebTEAM allows users read and write access to the Scopus database
over the world wide web. This product has allowed many of Scopus' customers to
provide access to the Scopus system to their own customers. Those customers are
able to access their vendor's corporate database to speed problem resolution
through self-service or by directly logging a request for support.
TeleTEAM permits telephony services, such as automatic call distributors
(ACDs) and interactive voice response units (IVRs), to be integrated with Scopus
applications to improve call center productivity. Through this integration,
TeleTEAM synchronizes incoming calls with the creation of a computer screen
containing information about the caller. This capability eliminates the need to
query the database for caller information as the operator receives the call,
facilitating rapid responses to customer inquiries. These screens can be
transferred with the call to other system users when necessary.
CommLink Server permits personnel, customers and business partners at
geographically dispersed sites to access an organization's Scopus system via e-
mail. CommLink Server is designed to provide users with 24-hour, self-help
access to a database for problem resolution, lead tracking or problem status.
WorldTEAM is a database replication program that manages the replication,
inter-site distribution and reconciliation of customer information. WorldTEAM
can be configured to automatically replicate specified subsets of information at
given intervals and at specific sites. WorldTEAM also incorporates mechanisms to
ensure that data integrity across sites is preserved during replication.
Customization Tool
ScopusWorks. Scopus offers a drag-and-drop development environment that
allow users to customize the interface, workflow and content of Scopus
applications. Scopus recently released ScopusWorks which increased the combined
functionality of its DesignTEAM and InformTEAM products.
ScopusWorks allows organizations to easily customize and personalize Scopus
applications without costly source code changes. ScopusWorks allows users to
customize specific portions of an application or even recreate the entire schema
of each Scopus application including its windows, forms, fields and buttons. In
addition, ScopusWorks is designed to allow organizations to easily automate and
reconfigure the notification, escalation, assignment of responsibilities and
transfer of forms associated with certain defined events or actions. ScopusWorks
can be integrated with existing systems so that such notifications can occur via
e-mail, fax, pagers or other telephony systems.
Services
The Company believes that high quality customer service and support are
integral components of the application solutions it offers. Accordingly, the
Company offers a range of fee-based training, consulting and post-sale
maintenance and support services to facilitate the installation and use of the
Company's products. The Company uses its own products to provide many of its
customer services. As of March 31, 1996, the Company employed 21 persons in its
consulting services organization and 17 persons in its support organization
which offers customer service, training and documentation services.
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Consulting Services. The Company employs its own implementation personnel
and works with third party consulting organizations and systems integrators to
offer on-site project design and implementation services. These consulting
services include the installation and customization of Scopus products,
integration of such products with other existing and planned communications and
information systems, project management and process reengineering. To meet
future requirements for large scale consulting projects, the Company has
established relationships with third party systems integrators and professional
consulting firms to facilitate direct relationships between such firms and the
Company's customers.
Software Maintenance and Support. The Company's support organization offers
a variety of support services to its customers. Customers have the option of
purchasing the Company's Standard Support Package or its extended Support
Package. Through its Standard Support Package, the Company provides its
customers with 12-hour weekday hotline support, 24-hour electronic support
through use of the Company's WebTEAM or CommLink Server products or Scopus'
electronic News Group Service, and periodic product updates and maintenance
releases. Fees for the Company's Standard Support Package are typically 15% of
the then-current list price of the licensed products. For an additional fee, a
customer can purchase the Extended Support Package which complements the
services available in the Standard Support Package with 24-hour phone support,
priority escalation and the opportunity to have a support representative
assigned to the customer's account. To date, substantially all of the Company's
expiring maintenance contracts have been renewed.
Sales and Marketing
The Company sells its software and services in North America primarily
through a direct sales force. To support its sales force, the Company conducts
marketing programs which include direct mail, trade shows, pubic relations,
advertising and ongoing customer communication programs. While the sales cycle
varies from customer to customer, it typically ranges from six to nine months.
The North American sales organization is based at the Company's corporate
headquarters in Emeryville, California and at nine field sales offices in the
metropolitan areas of Atlanta, Boston, Chicago, Dallas, Los Angeles, New York,
Seattle, Toronto and Washington D.C. The Company markets and sells its software
and services outside North America through the direct sales force of its
subsidiaries in Europe and has relationships with independent distributors
located in other major geographic areas including Europe and Asia. The Company's
international distributors typically provide first line technical support and
services to their customers.
The Company intends to expand its direct sales force and diversify its
sales channels by adding third party distributors both domestically and
internationally. In this regard, in June 1995 the Company signed a non-exclusive
distribution agreement with Northern Telecom which authorizes Northern Telecom
to bundle the Company's software with its communications products for advanced
computer/telephony integrations and sell such products through Northern
Telecom's worldwide network of distributors.
The Company's ability to achieve significant revenue growth in the future
will depend in large part on its success in recruiting and training sufficient
sales personnel and establishing relationships with distributors, resellers and
systems integrators. The Company is currently investing, and plans to continue
to invest, significant resources to expand its domestic and international direct
sales force and develop distribution relationships with third party
distributors, resellers and systems integrators. The Company's existing
distribution relationships are generally non-exclusive and can be terminated by
either party without cause. The Company's distributors also sell or can
potentially sell products offered by the Company's competitors. There can be no
assurance that the Company will be able to retain or attract a sufficient number
of its existing or future third party distribution partners or that such
partners will recommend, or continue to recommend the Company's products. The
inability to establish or maintain successful relationships with distributors,
resellers or systems integrators could have a material adverse effect on the
Company's business, operating results or financial condition. In addition, there
can be no
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assurance that the Company will be able to successfully expand its direct sales
force or other distribution channels. Any failure by the Company to expand its
direct sales force or other distribution channels would materially and adversely
affect the Company's business, operating results and financial condition.
An important element of the Company's strategy is to expand its
international operations. In this regard, although the company has established
subsidiaries in the United Kingdom and France and is currently investing
significant resources in its international operations, including the development
of third party distributor relationships and the hiring of additional sales
representatives, there can be no assurance that the Company will be successful
in expanding its international operations. While international revenues were
less than 10% of total revenues in fiscal 1996, in the event that international
revenues increase as a percentage of the Company's total revenues, the Company's
business, operating results or financial condition could be materially adversely
affected by risks inherent in conducting business internationally, such as
changes in currency exchange rates, longer payment cycles, difficulties in
staffing and managing international operations, problems in collecting accounts
receivable, seasonal reduction in business activity during the summer months in
Europe and certain other parts of the world, increases in tariffs, duties, price
controls or other restrictions on foreign currencies and trade barriers imposed
by foreign nationalities. The inability of the Company to successfully expand
its international operations in a timely manner could materially adversely
affect the Company's business, operating results or financial condition.
Technology
Each of the Company's applications is built on a common core architecture
that is designed to efficiently leverage the performance and scalability of
client/server computing. The core technology was developed by Scopus to
facilitate the development and customization of enterprise applications for a
wide variety of customers. Since all Scopus applications share this technology,
they all communicate with the database server in the same manner and can be
easily integrated with one another to provide custom solutions. The Company
believes that its product architecture provides it with a competitive advantage
by allowing it to craft tailored solutions for its customers and by simplifying
and facilitating new product development.
The Company's core technology has the following attributes:
Distributed Processing
The Company partitions its applications into multiple, independent tasks
and allocates these tasks to the computing resource most suited to process such
tasks in order to fully take advantage of the scalability, flexibility and
performance offered by client/server environments. By reducing a typical
application into a set of computing processes that function most efficiently as
client processes, application services and agent services (i.e., data services,
computer/telephony integration services), the Company's products enable its
customers to effectively and efficiently utilize their computing resources (such
as data server processing and network bandwidth). Moreover, this distribution of
computing tasks enables the Company to leverage technological improvements in
any area of the client/server system and to incorporate new functionality into
its suite of products.
Data-Driven Architecture
The Company's products utilize a data-driven architecture that enables
users to build and efficiently customize Scopus applications in distributed
processing environments. The Company has designed its applications to reference
and interpret data that defines a set of application functions ("metadata") and
is stored in the database. These functions determine the look and feel of the
graphical user interface ("GUI"), the workflow of the applications and the
required processing. Since the metadata exists independent from the source code
of the foundation and the applications, customers can extensively customize the
GUI and processes of each of the applications to meet their diverse internal
requirements
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without the need to make costly changes to product source code. These
customizations can include changes to notification and escalation rules,
additions of forms, buttons and fields and the development of entirely new
screens. Customers make these changes either by using the Scopus design tool,
ScopusWorks, by using a scripting language compliant with Microsoft's Visual
Basic for Applications or by using another standard fourth generation scripting
language, Tcl. The use of metadata enables the Company to efficiently customize
its application logic whether that logic is executed as client processes,
application services or agent services. Additionally, even customers with
different client platforms only need to make changes to the metadata once at the
server level. All clients will then automatically receive the changes. The
management of software is therefore easier than attempting to manage software
changes on a large number of different client machines.
Open API Technology
The Company's customers can also customize their Scopus applications
through the use of the Company's published and open API which is used to invoke
the functionality of a wide array of third party applications by either the
client processes, applications services or agents, thereby further distributing
application processing, increasing flexibility and enhancing functionality.
Since the Company's API can be used within each component of the Company's
architecture, the Company can integrate with third party applications at the
most efficient component. The Company's core technology also enables its
applications to share a set of application service modules, which coordinate the
flow of information and processes within the Scopus system. These application
service modules, which can be deployed as customer needs mandate, also support
an efficient distribution of computing services. Data-based programmability,
efficient use of its application service modules and the API provide the Company
with multiple design points to customize its applications.
Common Customer Information Database
In addition to sharing common core technologies and customization
capabilities, Scopus applications share a common normalized table format which
utilizes industry standard relational databases (Sybase, Oracle, Informix and
Microsoft SQL). This database is designed to maintain information, such as
customer profiles, site identifications, user preferences and permissions, cases
and accumulated experience necessary to operate the applications and thereby
support customer requirements. Customer profiles include basic customer
information such as name and address, as well as site identification and group
affiliations. An organization's common customer database contains information on
the status of each case, including case origination, case worker assignments and
open issues. In the Scopus system, a case can be a call, a defect, or a
potential sales transaction. Attachments, technical notes and tasks can be
associated with each case through bi-directional cross referencing or through
support for Microsoft's Object Linking and Embedding ("OLE") to facilitate the
problem resolution process. As cases accumulate in the database, a common
knowledgebase of cases and associated information is created, which allows
support representatives and sales personnel to service new cases more
effectively and with greater speed.
Problem Resolution Technologies
Each of the Company's applications can employ a set of problem resolution
technologies to search the common customer information database. These
technologies include:
Query-By-Example. Query-By-Example ("QBE") enables Scopus users to launch a
query to the database to search for information similar to that entered into a
field or a combination of fields. QBE can therefore be used to identify
information specific to a given user or locate solutions with entries identical
to those of the instant case.
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Relevancy Search. Relevancy Search enables users to search for cases that
are most similar to the current case by computing a numerical ranking to each
solution returned by a QBE search. This ranking is based on the prevalence of
certain keywords in each of the solutions.
DataProbe. DataProbe is a powerful query tool that enables users to
construct intelligent Boolean queries based on any field, form or topic in the
common customer information database. These queries can be constructed either
directly through SQL statements or indirectly through the application interface.
DataProbe also permits users to include automatically generated keywords in the
search.
Case-Based Reasoning Integration. An integration with CasePoint by
Inference Corporation provides customers with an additional level of problem
resolution capabilities. CasePoint features a question and answer methodology
that helps refine user queries. Through CasePoint, users can compare the instant
case to other known solutions and transfer the results back into the Scopus
knowledgebase.
Third Party Knowledgebase Integration. The Company's problem resolution
technologies also can be combined with pre-packaged knowledgebases to offer
customers a means to supplement the cases accumulated through their own
experience.
Research and Development
As of March 31, 1996, the Company's research and development staff
consisted of 44 persons. The Company's research and development expenditures in
fiscal 1995 and 1996 were $2.7 million and $5.4 million, respectively, and
represented 18% and 19% of total revenues, respectively, during such periods.
The Company has historically developed and expects to continue to develop
its products in conjunction with its existing and potential customers. The
Company's current development initiatives include the enhancement of the
features and functionality of existing products, the development of
complementary products and the development of integrated packages of its
products tailored to the requirements of certain market segments.
A new application, Scopus Voyager, is currently expected be available to
customers on a limited release basis in June 1996 with general availability
planned for September 1996. This product is designed to provide a company's
field sales representatives with up-to-date information by enabling mobile links
to the corporate database. This two-way link provides them new information on
prospects, customers, products and pricing while simultaneously updating the
corporate database for new information on their specific prospects or contacts.
This improves the effectiveness of not only the field sales individual but the
management and visibility of the sales process.
As a result of the similarity between the processes of providing support
for internal customers and for external customers, a number of the Company's
customers have been using Scopus SupportTEAM for internal customer support
(i.e., internal help desk). The Company is currently developing Scopus HelpDesk,
which will combine the functionality of Scopus SupportTEAM with additional
functionality to address the needs of internal help desk professionals. In
addition to leveraging the information management and problem resolution
capabilities of Scopus SupportTEAM, Scopus HelpDesk is being developed to
include enhanced problem diagnosis and capabilities and integration with fixed
asset management and tracking tools. Since Scopus HelpDesk is being designed to
integrate with the Company's other applications and application service modules,
help desk professionals will be able to use WebTEAM and CommLink Server with
Scopus HelpDesk to enable problem resolution directly by end users. The Company
currently intends to release Scopus HelpDesk commercially in the second half of
calendar 1996.
The market for the Company's products is characterized by rapid
technological advances, evolving industry standards in computer hardware and
software technology, changes in customer
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requirements and frequent new product introductions and enhancements. The
Company is currently investing significant resources in product development and
expects to continue to do so in the future. The Company's future success will
depend on its ability to continue to enhance its current product line and to
continue to develop and introduce new products that keep pace with competitive
product introductions and technological developments, satisfy diverse and
evolving customer requirements and otherwise achieve market acceptance. There
can be no assurance that the Company will be successful in continuing to develop
and market on a timely and cost-effective basis fully functional product
enhancements or new products that respond to technological advances by others,
or that its enhanced and new products will achieve market acceptance. In
addition, the Company has in the past experienced delays in the development,
introduction and marketing of new or enhanced products, and there can be no
assurance that the Company will not experience similar delays in the future. Any
failure by the Company to anticipate or respond adequately to changes in
technology and customer preferences, or any significant delays in product
development or introduction, would have a material adverse effect on the
Company's business, operating results and financial condition.
Due to the complexity and sophistication of the Company's software
products, the Company's products from time to time contain defects or "bugs"
which can be difficult to correct. Furthermore, as the Company continues to
develop and enhance its products, there can be no assurance that the Company
will be able to identify and correct defects in such a manner as will permit the
timely introduction of such products. Moreover, despite extensive testing, the
Company has from time to time discovered defects only after its systems have
been used by many customers. There can be no assurance that software defects
will not cause delays in product introductions and shipments, result in
increased costs, require design modifications, or impair customer satisfaction
with the Company's products. Any such event could materially adversely affect
the Company's business, operating results or financial condition.
Competition
The customer information management software market is relatively new,
intensely competitive, highly fragmented, subject to rapid change, and highly
sensitive to new product introductions and marketing efforts by industry
participants. The Company competes with a variety of other companies depending
on the target market for their products. These competitors include (i) a select
number of companies targeting the enterprise-wide customer information market;
(ii) a substantial number of small private companies and public companies which
offer products targeted at one or more specific markets, including the customer
support market, the help desk market, the quality assurance market and the sales
and marketing automation market; (iii) professional services organizations that
design and develop custom systems; (iv) large information technology providers;
and (v) the internal information technology departments of potential customers
which develop proprietary customer information management applications. Among
the Company's potential competitors are also a number of large hardware and
software companies that may develop or acquire products that compete with the
Company's products. The Company believes that many existing competitors and new
market entrants will attempt to develop fully integrated customer information
management systems that will compete with the Company's products.
Current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their products to address the needs of the Company's prospective
customer. Accordingly, it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. Increased
competition is likely to result in price reductions, reduced operating margins,
and loss of market share, any one of which could materially adversely affect the
Company's business, results of operations or financial condition. Many of the
Company's current and potential competitors have significantly greater
financial, technical, marketing and other resources than the Company. As a
result, they may be able to respond more quickly to new or emerging technologies
and to changes in customer requirements, or to devote greater resources to the
development, promotion and sale of their products than can the Company. There
can be no assurance that the Company will be able to compete successfully
against current or future competitors or that competitive
Page 11
<PAGE>
pressures will not materially adversely affect the Company's business, operating
results and financial condition.
The Company believes that the principal competitive factors affecting its
market include product features such as adaptability, scalability, ability to
integrate with third party products, functionality, ease of use, product
reputation, quality, performance, price, customer service and support,
effectiveness of sales and marketing efforts and company reputation. Although
the Company believes that it currently competes favorably with respect to such
factors, there can be no assurance that the Company can maintain its competitive
position against current and potential competitors, especially those with
greater financial, marketing, service, support, technical, and other resources
than the Company.
Intellectual Property, Proprietary Rights and Licenses
The Company's success is dependent in part on its ability to protect its
proprietary technology. The Company licenses its products in object code form
only, although it has source code escrow arrangements when required by
customers. The Company relies on a combination of copyright, trademark and trade
secret laws, as well as confidentiality agreements and licensing arrangements,
to establish and protect its proprietary rights. The Company does not have any
patents or patent applications pending, and existing copyright, trademark and
trade secret laws afford only limited protection. In addition, the laws of
certain countries do not protect the Company's proprietary rights to the same
extent as do the laws of the United States. Accordingly, there can be no
assurance that the Company will be able to protect its proprietary rights
against unauthorized third party copying or use, which could materially
adversely affect the Company's business, operating results or financial
condition.
Despite the Company's efforts to protect its proprietary rights, attempts
may be made to copy or reverse engineer aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. Moreover,
there can be no assurance that others will not develop products that infringe
the Company's proprietary rights, or that are similar or superior to those
developed by the Company. Policing the unauthorized use of the Company's
products is difficult. Litigation may be necessary in the future to enforce the
Company's intellectual property rights, to protect the Company's trade secrets
or to determine the validity and scope of the proprietary rights of others. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on the Company's business, operating
results or financial condition.
As is common in the software industry, the Company from time to time
receives notices from third parties claiming infringement by the Company's
products of third party proprietary rights. While the Company is not currently
subject to any such claim, the Company expects its software products will
increasingly be subject to such claims as the number of products and competitors
in the Company's industry segment grows and the functionality of products
overlaps. Any such claim, with or without merit, could result in significant
litigation costs and require the Company to enter into royalty and licensing
agreements, which could have a material adverse effect on the Company's
business, operating results or financial condition. Such royalty and licensing
agreements, if required, may not be available on terms acceptable by the Company
or at all.
The Company also relies on certain technology which it licenses from third
parties, including software which is integrated with internally developed
software and used in the Company's products to perform key functions. There can
be no assurance that these third party technology licenses will continue to be
available to the Company on commercially reasonable terms. The loss of or
inability of the Company to maintain any of these technology licenses could
result in delays or reductions in product shipments until equivalent technology
could be identified, licensed and integrated. Any such delays or reductions in
product shipments would materially adversely affect the Company's business,
operating results and financial condition.
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<PAGE>
Employees
As of March 31, 1996, the Company employed 161 persons, including 61 in
sales and marketing, 21 in its consulting services organization, 17 in customer
support, 44 in research and development and 18 in finance and administration.
Of these, 11 are located in Europe and the remainder are located in North
America. None of the Company's employees is represented by a labor union. The
Company has experienced no work stoppages and believes its relationship with its
employees is good. Competition for qualified personnel in the Company's industry
is intense. The Company believes that its future success will depend in part on
its continued ability to attract, hire and retain qualified personnel.
Executive Officers
As of May 31, 1996, the Company's executive officers were as follows:
<TABLE>
<CAPTION>
Name Age Position
----- --- --------
<S> <C> <C>
Ori Sasson 34 Chairman of the Board, Chief Executive
Officer and President
William C. Leetham 43 Chief Financial Officer
A. Aaron Omid 37 Vice President, Sales and Secretary
Mark J. Barrenechea 31 Vice President, Product Development
Jeffery G. Bork 39 Vice President, Marketing
Steve Jacob 41 Vice President, Europe
Lyle D. York 54 Vice President, Customer Services
</TABLE>
Ori Sasson is a co-founder of the Company and has served as the Company's
Chairman of the Board since the Company's inception in March 1991. Mr. Sasson
has also served as the Company's Chief Executive Officer and President since
February 1994 and as Secretary from March 1991 to February 1992. From January
1990 to March 1991 and from September 1986 to January 1989, Mr. Sasson was an
independent software design consultant. From January 1989 to January 1990, Mr.
Sasson was a software engineer at Sybase Corporation, a client/server relational
database management software company. From December 1984 to August 1986, Mr.
Sasson was a support engineer at Hewlett Packard Company, a manufacturer of
computers and related products. Mr. Sasson earned a B.A. degree in Computer
Science and a M.S.C. degree in Engineering both from the University of
California at Berkeley.
William C. Leetham has served as the Company's Chief Financial Officer
since March 1995. From November 1992 to March 1995, Mr. Leetham served as Chief
Financial Officer of Berkeley Systems, Inc., a consumer software vendor. From
August 1984 to November 1992, he held various positions at Candle Corporation, a
manufacturer of system performance software for mainframe computers, most
recently serving as Vice President, Financial Operations. Prior thereto, Mr.
Leetham held various positions in development, operations, sales and finance
with Xerox Computer Services. Mr. Leetham earned a B.S. degree in Computer
Science from Oregon State University and a M.B.A. degree from the University of
California at Los Angeles.
A. Aaron Omid is a co-founder of the Company and has served as the
Company's Vice President, Sales since March 1991, and as Secretary since
February 1992. Mr. Omid also served as President of the Company from March 1991
to October 1991, and as a director of the Company from March 1991 to October
1992. From August 1990 to February 1991, Mr. Omid was Vice President, Sales of
North America at Opus Systems, a computer hardware manufacturer. From May 1986
to August 1990, he held various marketing and sales positions at Sun
Microsystems, a workstation manufacturer, most recently serving as Sales
Manager. Mr. Omid earned a B.S. degree in Electrical Engineering from the
University of London.
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<PAGE>
Mark J. Barrenechea has served as the Company's Vice President, Product
Development since September 1995. From December 1994 to September 1995, Mr.
Barrenechea founded and served as Chief Technical Officer at New View, Inc., a
company which provides managed Internet access. From October 1993 to December
1994, Mr. Barrenechea was Vice President, Tools and Technology at Tesseract
Corporation, a client/server software company. From October 1991 to October
1993, he held various positions at Microway, Inc., a software company, most
recently serving as President and Managing Director of Microway (Europe) Ltd.
Mr. Barrenechea earned a B.A. degree in Computer Science from Saint Michael's
College and a M.S. degree in Engineering from Boston University.
Jeffrey G. Bork has served as the Company's Vice President, Marketing since
September 1995. From December 1992 to September 1995, he was a marketing
consultant and from December 1991 to December 1992, he was Vice President,
Product Management at Slate Corporation, a software company. From April 1989 to
June 1991, he was Vice President, Marketing at Informix Software, Inc., a
client/server relational database management software company. Mr. Bork earned
a B.S. degree in Electrical Engineering from the University of Michigan.
Steve Jacob has served as the Company's Vice President, Europe, since April
1996. From August 1994 to April 1996 he served as the Vice President Europe,
Africa, and the Middle East for Landmark Graphics Corporation. From June 1988 to
July 1994 he served as the U.K. Sales Director for Ingram U.K. Ltd. Mr. Jacob
earned a B.Ed. degree from the University of London.
Lyle D. York has served as the Company's Vice President, Customer Services
since February 1994. From June 1993 to February 1994, he was President of York
and Associates, a customer support consulting firm. From January 1991 to June
1993, Mr. York served as Vice President, Software Services at Integraph
Corporation, a manufacturer of interactive computer graphics systems. From
January 1984 to January 1991, Mr. York held various positions at Daisy/Cadnetix,
Inc., a supplier of computer aided design software and hardware systems, most
recently serving as Vice President, Customer Support Division.
Item 2. Properties
The Company's principal administrative, engineering, manufacturing,
marketing and sales facilities total approximately 37,400 square feet, and are
located in a single building in Emeryville, California under a lease which
expires in October 1999. In addition, the Company leases offices in the
metropolitan areas of Atlanta, Boston, Chicago, Dallas, London, Los Angeles, New
York, Paris, Seattle, Toronto and Washington, D.C. Management believes that its
current facilities are adequate to meet its needs through the next twelve
months, and that, if required, suitable additional space will be available to
accommodate expansion of the Company's operations on commercially reasonable
terms.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders in the quarter
ended March 31, 1996.
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<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
The Company's common stock is traded on the Nasdaq National Market under
the symbol "SCOP". Following the Company's initial public offering on November
16, 1995, the following high and low closing prices were reported by Nasdaq in
each quarter:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Quarter ended December 31, 1995 $28.75 $16.75
(subsequent to November 16, 1995)
Quarter ended March 31, 1996 $25.25 $13.875
</TABLE>
As of March 31, 1996, the Company had approximately 80 holders of record of
its common stock.
The Company has never paid any cash dividends on its capital stock and does
not expect to pay any such dividends of the foreseeable future. Further, an
existing bank credit agreement currently restricts the Company's ability to pay
cash dividends without the bank's consent.
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<PAGE>
Item 6. Selected Financial Data
SCOPUS TECHNOLOGY, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended March 31,
-------------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data
Revenues:
Licenses $ 369 $2,002 $5,011 $11,097 $19,753
Services and maintenance 413 702 1,524 4,153 8,843
------ ------ ------ ------- -------
Total revenues 782 2,704 6,535 15,250 28,596
Cost of revenues:
Licenses 266 723 305 601 874
Services and maintenance 63 211 554 3,340 6,915
------ ------ ------ ------- -------
Total cost of revenues 329 934 859 3,941 7,789
------ ------ ------ ------- -------
Gross margin 453 1,770 5,676 11,309 20,807
------ ------ ------ ------- -------
Operating expenses:
Sales and marketing 126 524 2,754 5,937 10,565
Research and development 239 666 1,532 2,716 5,382
General and administrative 46 266 714 1,170 2,169
------ ------ ----- ------- -------
Total operating expenses 411 1,456 5,000 9,823 18,116
------ ------ ----- ------- -------
Income from operations 42 314 676 1,486 2,691
Other income, net 1 7 22 59 468
------ ------ ----- ------- -------
Income before provision for income taxes 43 321 698 1,545 3,159
Provision for income taxes 1 120 131 572 1,169
------ ------ ----- ------- -------
Net income 42 201 567 973 1,990
====== ====== ===== ======= =======
Net income per share $ 0.01 $ 0.03 $ 0.07 $ 0.10 $ 0.18
====== ====== ===== ======= =======
Shares used in per share computation 6,612 7,352 8,476 9,683 10,965
====== ====== ===== ======= =======
<CAPTION>
March 31,
-------------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Cash, cash equivalents and investments $147 $1,085 $ 901 $ 3,553 $29,254
Working capital 228 1,143 1,755 5,671 29,891
Total assets 308 2,385 5,504 11,424 41,581
Mandatorily redeemable preferred stock - 1,000 1,400 1,400 -
Total shareholders' equity 248 449 1,126 5,900 33,455
</TABLE>
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<PAGE>
Item 7. Management's Discussion and Analyses of Financial Condition and Results
of Operations
Throughout this report there is information containing trend analyses and
other forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and section 21E of the Securities and
Exchange Act of 1934, as amended. Actual results could differ materially from
those projected in the forward-looking statements as a result of the risk-
related factors set forth in this report.
Overview
The Company's quarterly operating results have varied substantially in the
past and are likely to vary substantially from quarter to quarter in the future
due to a variety of factors. In particular, the Company's period-to-period
operating results are significantly dependent upon the timing of the closing of
large license agreements. In this regard, the purchase of the Company's products
can require a significant capital investment from a potential customer which the
customer generally views as a discretionary cost that can be deferred or
canceled due to budgetary or other business reasons. Estimating future revenues
is also difficult because the Company ships its products soon after an order is
received and as such does not have a significant backlog. Thus, quarterly
license revenues are heavily dependent upon orders received and shipped within
the same quarter. Moreover, the Company has generally recorded 50% to 70% of its
total quarterly revenues in the third month of the quarter, with a concentration
of these revenues in the last half of that third month. This concentration of
revenues is influenced by customer tendencies to make significant capital
expenditures at the end of a fiscal quarter. The Company expects these revenue
patterns to continue for the foreseeable future. In addition, quarterly license
revenues are dependent on the timing of revenue recognition, which can be
affected by many factors, including the timing of customer installations,
completion of customization activity and the fulfillment of acceptance criteria.
In this regard the Company has from time to time experienced delays in
recognizing revenues with respect to certain orders. Despite the uncertainties
in its revenue patterns, the Company's operating expenses are based upon
anticipated revenue levels and such expenses are incurred on an approximately
ratable basis throughout the quarter. As a result, if expected revenues are
deferred or otherwise not realized in a quarter for any reason, the Company's
business, operating results and financial condition would be materially
adversely affected.
The Company was incorporated in March 1991 and introduced its first product
in February 1992. Although the Company has been profitable each fiscal year
since inception, there can be no assurance that the Company will be able to
sustain profitability on a quarterly or annual basis in the future. In addition,
the Company's revenues and operating results have varied substantially in the
past and are likely to vary substantially in the future due to a variety of
factors, including (i) the relatively long sales cycle for the Company's
software products, which is typically six to nine months, (ii) the timing and
size of the Company's individual license transactions, and, in particular, the
fact that the Company's revenues in any quarter can be largely dependent on a
limited number of large licenses, (iii) the fact that a significant portion of
the Company's revenues in any given quarter are recognized in the last month,
weeks or even days of the quarter, (iv) the relative proportion of total
revenues derived from license revenues and services and maintenance revenues,
(v) the timing of the introduction of new products or product enhancements by
the Company and its competitors, (vi) the extent of customization required by
any individual license transaction, which can result in deferral of significant
revenues until completion or acceptance of certain customized portions of the
software, (vii) changes in customer budgets, (viii) seasonality of technology
purchases by customers and general economic conditions, (ix) the mix of revenues
among various distribution channels and between domestic and international
customers and (x) the relative proportion of license revenues derived from third
party products distributed by the Company in conjunction with its products.
Therefore, the Company believes that period to period comparisons of its
revenues and operating results are not necessarily meaningful and that such
comparisons cannot be relied upon as indicators of future performance. Due to
all of the foregoing factors, it is likely that in some future period the
Company's total revenues or operating results will be below the expectations of
public market
Page 17
<PAGE>
analysts and investors. In such event, the price of the Company's Common Stock
would likely decline, perhaps substantially.
The Company's business has grown rapidly with total revenues increasing
from $15.3 million in fiscal 1995 to $28.6 million in fiscal 1996. The growth of
the Company's business and expansion of its customer base has placed and is
expected to continue to place a significant strain on the Company's management
and operations. The Company will continue to be dependent upon its ability to
attract, hire and retain skilled employees for whom there is considerable market
competition. Further, the substantial growth in the number of its employees will
place additional burden upon its management, operating and financial systems.
There also can be no assurance that the Company will be able to sustain the
rates of revenue growth that it has experienced in the past, or that the Company
will be able to improve its operating results.
The Company has become increasingly dependent on third party consultants
and systems integrators for implementation services. This dependence poses
several risks that could have a material adverse effect on the Company's
business, operating results or financial condition. For example, there can be no
assurance that these third party providers, who have direct obligations to the
Company's customers, will be able to continue to provide a level of quality of
service required to meet the needs of such customers. In addition, the Company's
ability to recognize revenues on certain of its contracts may depend on
fulfillment of acceptance criteria to be performed by third party providers,
over which the Company will have little or no control. If the Company is unable
to maintain effective, long-term relationships with these third parties, or if
these third parties fail to meet the needs of the Company's customers in a
timely fashion, the Company's business, operating results and financial
condition will be materially and adversely affected.
Page 18
<PAGE>
Results Of Operations
The following table sets forth for the periods indicated the percentage of
total revenues represented by the Company's consolidated statement of
operations:
<TABLE>
<CAPTION>
Year Ended March 31,
---------------------------
1994 1995 1996
-------- ------- --------
<S> <C> <C> <C>
Revenues:
Licenses 76.7% 72.8% 69.1%
Services and maintenance 23.3 27.2 30.9
-------- ------- -------
Total revenues 100.0 100.0 100.0
-------- ------- -------
Cost of revenues:
Licenses 4.6 3.9 3.0
Services and maintenance 8.5 21.9 24.2
-------- ------- -------
Total cost of revenues 13.1 25.8 27.2
-------- ------- -------
Gross margin 86.9 74.2 72.8
-------- ------- -------
Operating expenses:
Sales and marketing 42.2 38.9 37.0
Research and development 23.4 17.8 18.8
General and administrative 10.9 7.7 7.6
-------- ------- -------
Total operating expenses 76.5 64.4 63.4
-------- ------- -------
Income from operations 10.4 9.8 9.4
Other income, net 0.3 0.4 1.6
-------- ------- -------
Income before provision for income taxes 10.7 10.2 11.0
Provision for income taxes 2.0 3.8 4.0
-------- ------- -------
Net income 8.7% 6.4% 7.0%
======== ======= =======
</TABLE>
Revenues
The Company's revenues are derived from license revenues which are
comprised of one-time fees for the license of the Company's products, and
services and maintenance revenues which consist of fees for consulting,
maintenance and training services. The Company's revenue recognition policies
are in accordance with Statement of Position No. 91-1, issued by the American
Institute of Certified Public Accountants. Accordingly, license revenues are
recognized upon receipt of an executed license agreement or unconditional
purchase order and shipment of the product to the customer and if no significant
vendor obligations remain and collection of the resulting receivable is deemed
probable. Reserves for credit losses are estimated and provided for at the time
of sale. Maintenance revenues for ongoing customer support and product updates
are recognized ratably over the maintenance term, which is typically twelve
months. Consulting and training services revenues are recognized when the
service is performed.
Licenses. License revenues increased from $5.0 million in fiscal 1994 to
$11.1 million in fiscal 1995 and $19.8 million in fiscal 1996, representing 77%,
73% and 69% of total revenues in the respective periods. The increase in license
revenues in each period was primarily attributable to increasing market
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<PAGE>
awareness and acceptance of the Company's products, continuing enhancement and
increasing breadth of the Company's product offerings, expansion of the
Company's sales and marketing organization and increased sales to new industry
segments.
Services and Maintenance. Services and maintenance revenues increased from
$1.5 million in fiscal 1994 to $4.2 million in fiscal 1995 and $8.8 million in
fiscal 1996, representing 23%, 27% and 31% of total revenues in the respective
periods. The increases in services and maintenance revenues as a percentage of
total revenues is primarily attributable to the increased demand for systems
integration services the Company was fulfilling during the last quarter of
fiscal 1995 and the first half of fiscal 1996. In fiscal 1996, the Company began
establishing relationships with third party consulting firms to allow those
firms to work directly with the Company's customers. As a result, services and
maintenance revenues comprised a lower percentage of total revenues in the
second half of fiscal 1996.
Cost of Revenues
Licenses. Cost of licenses consists primarily of royalty and other payments
to third party vendors and costs of product media, duplication and packaging.
Cost of licenses was $305,000 in fiscal 1994, $601,000 in fiscal 1995 and
$874,000 in fiscal 1996, representing 6%, 5% and 4% of license revenues in the
respective periods. These changes in both absolute dollar amounts and in
percentages of total revenues reflect the fluctuation in royalties and other
payments made to third party software vendors as a result of fluctuations in
volumes of sales of third party products sold in combination with licenses of
the Company's products. Although the Company does not expect revenues and costs
from the distribution of third party software products to be significant in
future periods, period to period fluctuations may occur and the Company's gross
margins and net operating margins could be materially and adversely affected.
Services and Maintenance. Cost of services and maintenance consists of
costs for personnel to provide customer support, training and consulting
services, as well as costs paid to third party consulting firms for those
services. Costs of services and maintenance was $554,000 in fiscal 1994, $3.3
million in fiscal 1995 and $6.9 million in fiscal 1996, representing 36%, 80%
and 78% of services and maintenance revenues in the respective periods. The
substantial increase in cost of services and maintenance as a percentage of
total revenues from fiscal 1994 to 1995 was primarily due to the use of third
party software consulting organizations and employees to meet the substantial
increase in demand for product consulting and large scale systems integration
services and, to a lesser extent, higher than expected costs associated with
certain fixed fee consulting arrangements. While the cost of services and
maintenance revenues as a percentage of service and maintenance revenues fell
only slightly from fiscal 1995 to 1996, the Company realized a significant
improvement in these costs between the first half and second half of fiscal
1996 as these costs as a percentage of services and maintenance revenue fell
from 93% to 64%, respectively. To make this improvement, the Company added new
management, established relationships with third party consulting firms that
allow those firms to work directly with the Company's customers, established new
procedures for estimating the scope of consulting projects and shifted the
pricing responsibility for that work to its consulting services organization.
Operating Expenses
Sales and Marketing. Sales and marketing expenses increased from $2.8
million in fiscal 1994 to $5.9 million in fiscal in 1995 and $10.6 million in
fiscal 1996, representing 42%, 39% and 37% of total revenues in the respective
periods. The increased dollar amounts of such spending are attributable to the
Company's continued expansion of its direct sales force in the U.S. and Europe
and increased marketing activities to support the Company's expanded product
line. The Company is in the process of significantly increasing direct sales and
marketing expenditures to address certain international and vertical markets. As
a result, such expenses may increase as a percentage of total revenues in future
periods.
Research and Development. Research and development expenses increased from
$1.5 million in fiscal 1994 to $2.7 million in fiscal 1995 and $5.4 million in
fiscal 1996, representing 23%, 18% and 19% of total revenues in the respective
periods. The increases in the dollar amounts of such spending were the result of
increased staffing and associated support costs of software engineers and
consultants in
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<PAGE>
connection with expansion and enhancement of the Company's product line and its
quality assurance and testing organization.
Based on the Company's research and development process, costs incurred
between the establishment of technological feasibility and general release have
not been material and therefore have not been capitalized in accordance with
Statement of Financial Accounting Standards No. 86. All research and development
costs have been expensed as incurred.
General and Administrative. General and administrative expenses increased
from $714,000 in fiscal 1994 to $1.2 million in fiscal 1995 and $2.2 million in
fiscal 1996, representing 11% of total revenues for fiscal 1994 and 8% of total
revenues for both fiscal 1995 and 1996. These increases in dollar amounts were
primarily due to increased staffing and related expenditures required to enhance
the infrastructure to support the Company's growth.
Other Income, Net. Other income, net, increased from $22,000 in fiscal 1994
to $59,000 in fiscal 1995 and $468,000 in fiscal 1996. The substantial increase
in fiscal 1996 was primarily due to investment income earned on the proceeds
from the Company's initial public offering in November 1995.
Provision for Income Taxes. The Company's effective tax rate was 19% for
fiscal 1994 and 37% for both fiscal 1995 and 1996. Income taxes are accounted
for in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." The effective income tax rate differs from the
statutory income tax rate primarily due to the utilization of research and
development credits. See Note 5 of Notes to Consolidated Financial Statements.
Liquidity and Capital Resources
In November 1995, the Company completed an initial public offering of
2,760,000 shares of its common stock, of which 2,225,000 shares were issued and
sold by the Company and 535,000 were sold by selling shareholders. As a result
of this offering, the Company recorded proceeds of $23.9 million, net of related
underwriting discounts and offering expenses. Prior to its initial public
offering, the Company funded its operations primarily through private sales of
its equity securities and cash generated from operations.
In fiscal 1996, the Company generated $3.4 million of cash from operations.
The primary contributors to positive cash flow from operations were net income
before depreciation charges and increases in the balances of accounts payable,
accrued liabilities and deferred revenue, offset in part by increases in
accounts receivables and prepaid expenses. The Company's investing activities in
fiscal 1996 used $8.7 million in cash, with $1.8 million relating to purchases
of property and equipment to support the Company's expanding employee base and
the balance used in the purchase and sale of investments. Financing activity in
fiscal 1996 generated $24.1 million in cash, primarily due to proceeds from the
Company's initial public offering. The Company's principal commitments at March
31, 1996, consisted of leases on its headquarters and sales offices. See Note 8
of Notes to Consolidated Financial Statements.
Accounts receivable increased from $3.3 million at March 31, 1994, to $5.7
million at March 31, 1995, and $7.5 million at March 31, 1996. Deferred revenues
increased from $842,000 at March 31, 1994, to $1.5 million at March 31, 1995,
and $3.3 million at March 31, 1996. The levels of accounts receivables at each
quarter end will be affected by the concentration of revenues in the final weeks
of each quarter and may be negatively affected by expanded international
revenues in relation to total revenues as licenses to international customers
often have longer payment terms. In addition, from time to time, the Company
enters into license agreements with customers with extended payment terms. In
accordance with Statement of Position No. 91-1, if no significant vendor
obligations exist, revenues affiliated with future payments are discounted and
recognized based upon the discounted value. These future payments are accounted
for as unbilled receivables, which had a balance of $1.9 million at March 31,
1996.
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<PAGE>
As of March 31, 1996, the Company had $29.3 million of cash, cash
equivalents and short term investments and $29.9 million of working capital. The
Company also has available a $4.0 million bank line of credit which is secured
by the assets of the Company and expires on August 31, 1996. As of March 31,
1996, there were no amounts outstanding under this credit agreement. The Company
believes that existing cash balances and available credit should be sufficient
to meet the Company's capital needs for the foreseeable future.
Item 8. Financial Statements and Supplementary Data
The Company's consolidated financial statements together with related notes
and the report of Coopers & Lybrand L.L.P., independent accountants, are set
forth at the pages indicated at Item 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Certain information required by part III is omitted from this Report on
Form 10-K in that the Company will file its definitive Proxy Statement for its
Annual Meeting of Stockholders to be held on August 15, 1996, pursuant to
Regulation 14A of the Securities and Exchange Act of 1934, as amended (the
"Proxy Statement"), not later than 120 days after the end of the fiscal year
covered by this Report, and certain information included in the Proxy Statement
is incorporated herein by reference.
Item 10. Directors and Executive Officers of the Registrant
(a) Executive Officers -- See the section titled "Executive Officers" in
Part I, Item 1 hereof.
(b) Directors -- The information required by this Item is incorporated by
reference to the section entitled "Election of Directors" in the Proxy
Statement.
The disclosure required by Item 405 of Regulation S-K is incorporated by
reference to the section entitled "Section 16(a) Reporting Delinquencies" in the
Proxy Statement.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to the
section entitled "Executive Compensation" in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated by reference to the
section entitled "Security Ownership of Certain Beneficial Owners and
Management" in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this item is incorporated by reference to the
section entitled "Certain Transactions" in the Proxy Statement.
Page 22
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements and Reports on Form 8-K
(a) The following documents are filed as part of this Form:
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
1. Financial Statements
Report of Independent Accountants F-1
Consolidated Balance Sheets F-2
As of March 31, 1995 and 1996
Consolidated Statement of Operations F-3
For the Three Years Ended March 31, 1996
Consolidated Statement of Changes in F-4
Stockholders' Equity
For the Three Years Ended March 31, 1996
Consolidated Statement of Cash Flows F-5
For the Three Years Ended March 31, 1996
Notes to Consolidated Financial Statements F-6
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts F-20
3. Exhibits: See Index to Exhibits. The Exhibits listed in the
accompanying Index to Exhibits are filed or incorporated by
reference as part of this report.
</TABLE>
(b) Reports on Form 8-K:
None
(c) Exhibits
See (a) above
(d) Financial Statement Schedules
See (a) above
Page 23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Emeryville, California on
this 28th day of June, 1996.
SCOPUS TECHNOLOGY, INC.
/s/ Ori Sasson
By: _________________________________
Ori Sasson
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Ori Sasson and William C. Leetham
and each of them acting individually, as his or her attorney-in-fact, each with
full power of substitution, for him or her in any and all capacities, to sign
any and all amendments to this Report on Form 10-K, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming our signatures as them may be signed by our said
attorney to any and all amendments to this Report on Form 10-K.
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Report on Form 10-K has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------- --------------------------------- -------------
<S> <C> <C>
/s/ Ori Sasson
- ----------------------------- Chairman, and Chief Executive June 28, 1996
Ori Sasson Officer (Principal Executive
Officer)
/s/ William C. Leetham Chief Financial Officer June 28, 1996
---------------------------- (Principal Financial and
William C. Leetham Accounting Officer)
/s/ J. Michael Cline Director June 28, 1996
----------------------------
J. Michael Cline
/s/ Christopher R. Gibbons Director June 28, 1996
----------------------------
Christopher R. Gibbons
/s/ Mark Gorenberg Director June 28, 1996
----------------------------
Mark Gorenberg
/s/ Max D. Hopper Director June 28, 1996
----------------------------
Max D. Hopper
</TABLE>
Page 24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Scopus Technology, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Scopus
Technology, Inc. and Subsidiaries as of March 31, 1995 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended March 31, 1996. We have also
audited the financial statement schedule listed in Item 14(a)2 of this form 10-
K. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Scopus Technology,
Inc. and Subsidiaries as of March 31, 1995 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended March 31, 1996 in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.
/s/ Coopers & Lybrand L.L.P.
Oakland, California
April 30, 1996
F-1
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1995 and 1996
(in thousands, except share data)
----------
<TABLE>
<CAPTION>
ASSETS 1995 1996
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,001 $21,792
Investments 552 7,462
Accounts receivable, net of allowance for doubtful accounts of $349 and $665
in 1995 and 1996, respectively 5,653 7,530
Prepaid expenses and other 236 648
Deferred income taxes 321 574
-------- --------
Total current assets 9,763 38,006
Property and equipment, net 1,658 2,734
Prepaid royalties - 326
Deferred income taxes - 83
Other assets 3 432
-------- --------
Total assets $11,424 $41,581
======== ========
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 733 $ 1,561
Accrued liabilities 1,558 2,544
Income taxes payable 273 740
Deferred revenue 1,528 3,270
-------- --------
Total current liabilities 4,092 8,115
Deferred income taxes 32 11
------- --------
Total liabilities 4,124 8,126
------- --------
Commitments (Notes 8 and 13)
Mandatorily redeemable convertible preferred stock, Series A, $0.01 par value; 1,400 -
issued and outstanding 1,590,910 shares at March 31, 1995 -------- ---------
Shareholders' equity:
Convertible preferred stock, Series B, $0.01 par value; issued and outstanding
1,263,333 shares at March 31, 1995 13 -
Preferred stock, $0.01 par value, 2,500,000 shares authorized; none issued and
outstanding - -
Common stock, $0.001 par value; authorized 10,545,076 and 50,000,000 shares
at March 31, 1995 and 1996, respectively; issued and outstanding 6,313,718 and
11,705,557 shares at March 31, 1995 and 1996, respectively 6 12
Additional paid-in capital 4,096 29,944
Deferred compensation - (271)
Cumulative translation adjustment 1 (4)
Retained earnings 1,784 3,774
-------- ---------
Total shareholders' equity 5,900 33,455
-------- ---------
Total liabilities and shareholders' equity $11,424 $41,581
======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended March 31, 1994, 1995 and 1996
(in thousands, except per share data)
---------------
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Revenues:
Licenses $5,011 $11,097 $19,753
Services and maintenance 1,524 4,153 8,843
------ ------ -------
Total revenues 6,535 15,250 28,596
------ ------ -------
Cost of revenues:
Licenses 305 601 874
Services 554 3,340 6,915
------ ------ -------
Total cost of revenues 859 3,941 7,789
------ ------ -------
Gross margin 5,676 11,309 20,807
------ ------ -------
Operating expenses:
Sales and marketing 2,754 5,937 10,565
Research and development 1,532 2,716 5,382
General and administrative 714 1,170 2,169
------ ------ -------
Total operating expenses 5,000 9,823 18,116
------ ------ -------
Income from operations 676 1,486 2,691
Interest expense (33) (16) (22)
Interest income 55 139 515
Other nonoperating expense - (64) (25)
------ ------ -------
Income before income taxes 698 1,545 3,159
Provision for income taxes 131 572 1,169
------ ------ -------
Net income $ 567 $ 973 $ 1,990
====== ====== =======
Net income per share $ 0.07 $ 0.10 $ 0.18
====== ====== =======
Weighted average common and common equivalent shares 8,476 9,683 10,965
====== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended March 31, 1994, 1995, and 1996
(in thousands, except share data)
-----------------
<TABLE>
<CAPTION>
Series B Convertible
Preferred Stock Common Stock Additional
-------------------- ---------------- Paid-in
Shares Amount Shares Amount Capital
--------- ------ --------- ------ --------
<S> <C> <C> <C> <C> <C>
Balances at March 31, 1993 - - 5,246,743 $5 $200
Common shares issued for cash upon exercise of options - - 1,028,999 1 109
Net income - - - - -
---------- --- ---------- --- -------
Balances at March 31, 1994 - - 6,275,742 6 309
Common shares issued for cash upon exercise of options - - 37,976 - 31
Preferred stock issued for cash at $3.00
per share, net of issuance costs of $21 1,263,333 $13 - - 3,756
Net income - - - - -
Translation adjustment - - - - -
---------- --- ---------- --- -------
Balances at March 31, 1995 1,263,333 13 6,313,718 6 4,096
Common shares issued for cash upon exercise of options - - 90,653 - 74
Issuance of common stock in public
offering, net of issuance costs of $968 - - 2,225,000 2 23,861
Conversion of mandatorily redeemable preferred stock, Series A - - 1,590,910 2 1,398
Conversion of Series B preferred stock (1,263,333) (13) 1,263,333 1 12
Common stock issued for cash on exercise of Series B-2 warrants - - 34,167 - 137
Common stock issued on non-cash exercise of Series B-2 warrants - - 187,776 1 (1)
Issuance of stock options at below fair value - - - - 367
Deferred compensation related to stock options - - - - -
Amortization of deferred compensation related to stock options - - - - -
Net income - - - - -
Translation adjustment - - - - -
---------- --- ---------- --- -------
Balances at March 31, 1996 - - 11,705,557 $12 $29,944
========== === ========== === =======
</TABLE>
<TABLE>
<CAPTION>
Cumulative Total
Deferred Translation Retained Shareholders'
Compensation Adjustment Earnings Equity
------------ ----------- -------- -------------
<S> <C> <C> <C> <C>
Balances at March 31, 1993 - - $244 $449
Common shares issued for cash upon exercise of options - - - 110
Net income - - 567 567
----- --- ------ -------
Balances at March 31, 1994 - - 811 1,126
Common shares issued for cash upon exercise of options - - - 31
Preferred stock issued for cash at $3.00
per share, net of issuance costs of $21 - - - 3,769
Net income - - 973 973
Translation adjustment - $1 - 1
----- --- ------ -------
Balances at March 31, 1995 - 1 1,784 5,900
Common shares issued for cash upon exercise of options - - - 74
Issuance of common stock in public
offering, net of issuance costs of $968 - - - 23,863
Conversion of mandatorily redeemable preferred stock, Series A - - - 1,400
Conversion of Series B preferred stock - - - -
Common stock issued for cash on exercise of Series B-2 warrants - - - 137
Common stock issued on non-cash exercise of Series B-2 warrants - - - -
Issuance of stock options at below fair value - - - 367
Deferred compensation related to stock options $(367) - - (367)
Amortization of deferred compensation related to stock options 96 - - 96
Net income - - 1,990 1,990
Translation adjustment - (5) - (5)
----- --- ------ -------
Balances at March 31, 1996 $(271) $(4) $3,774 $33,455
===== === ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended March 31, 1994, 1995, and 1996
(in thousands)
-----------------
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 567 $973 $1,990
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization 187 519 947
Noncash charges (credits), net (216) 193 (126)
Changes in assets and liabilities:
Increase in receivables (2,375) (2,322) (1,882)
Decrease (increase) in prepaid expenses and other (261) 71 (1,167)
Increase in deferred income taxes (148) (138) (357)
Increase in accounts payable 371 286 828
Increase in accrued liabilities 456 875 986
Increase in income taxes payable 187 17 467
Increase in deferred revenue 679 686 1,742
------ ------ -------
Net cash provided by (used in) operating activities (553) 1,160 3,428
------ ------ -------
Cash flows used in investing activities:
Purchase of investments (42) - (7,466)
Proceeds from sale of investments 450 - 555
Payments for purchase of fixed assets (492) (1,516) (1,815)
Proceeds from disposal of fixed assets - 14 15
------ ------ -------
Net cash used in investing activities (84) (1,502) (8,711)
------ ------ -------
Cash flows from financing activities:
Proceeds from exercise of common stock options 110 31 74
Proceeds from initial public offering of stock, net - - 23,863
Proceeds from exercise of warrants - - 137
Proceeds from issuance of preferred stock 400 3,769 -
(Repayments) borrowings under line of credit, net 350 (750) -
------ ------ -------
Net cash provided by financing activities 860 3,050 24,074
------ ------ -------
Net increase in cash and cash equivalents 223 2,708 18,791
Cash and cash equivalents at beginning of year 70 293 3,001
------ ------ -------
Cash and cash equivalents at end of year $ 293 $3,001 $21,792
====== ====== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (NOTE 11)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------
1. ORGANIZATION:
Scopus Technology, Inc. and Subsidiaries (the "Company") is a leading
provider of client/server software solutions for the customer information
management market. The Company's applications automate external customer
support and internal help desk support, the product design change process
and sales and marketing activities. The Company's applications are
designed to enable organizations to build a customer information
knowledgebase that can be accessed and utilized by individuals throughout
the enterprise to improve customer support and satisfaction.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements of the Company include the
accounts of Scopus Technology, Inc. and its wholly-owned subsidiaries,
Scopus Technology U.K., Limited and Scopus Technology Canada Inc. All
significant intercompany accounts and transactions are eliminated in
consolidation.
REVENUE RECOGNITION:
Software license revenues are recognized upon receipt of an executed
licensing agreement or unconditional purchase order and shipment of
product to the customer and if no significant vendor obligations remain
and collection of the resulting receivables is deemed probable. Amounts
billed for postcontract customer support (maintenance) are deferred and
recognized ratably over the term of the service period which is
typically one year. Consulting and training revenues are recognized as
services are performed. Hardware revenues were recognized upon shipment
(see Note 3).
COST OF REVENUES:
Cost of licenses includes the cost of media, product packaging,
documentation and other production costs, third-party royalties and
hardware (see Note 3).
Cost of services and maintenance consists primarily of salaries,
benefits and allocated overhead costs related to consulting, training
and customer support personnel, including costs of services provided by
third party consultants.
Continued
F-6
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. The Company's cash
and cash equivalents are maintained with a bank and a brokerage
institution.
INVESTMENTS:
At March 31, 1996, the Company's investments consisted primarily of
treasury notes and municipal notes and bonds. Remaining maturities at the
time of purchase are generally less than one year. At March 31, 1995, the
Company's investments consisted of shares of a mutual fund which invests in
securities guaranteed by the U.S. government or its agencies with an
average remaining maturity of not more than five years.
Effective April 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115 "Accounting for Certain Investments in
Debt and Equity Securities." This statement requires that securities be
classified as "held to maturity," "available for sale," or "trading," and
the securities in each classification be accounted for at either amortized
cost or fair market value, depending upon their classification. The Company
has the intent and ability to hold all investments until maturity.
Therefore, all such investments are classified as "held to maturity"
investments and carried at amortized cost in the accompanying financial
statements. At March 31, 1996, the amortized cost of the Company's
investments approximated fair value.
As of March 31, 1996, the Company's investments consisted of the following
(in thousands) :
<TABLE>
<CAPTION>
Maturity of securities
Amortized --------------------------------------
cost basis Within one year One to five years
---------- ---------------- -----------------
<S> <C> <C> <C>
Municipal debt securities $6,462 $6,462 -
U.S. Treasury debt securities 1,000 1,000 -
--------- -------------- ----------------
$7,462 $7,462 -
========= ============== ================
</TABLE>
Continued
F-7
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
SOFTWARE DEVELOPMENT COSTS:
Statement of Financial Accounting Standards No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed (SFAS
86), requires that software development costs be capitalized once the
technological feasibility of the software product has been established. To
date, such amounts have been insignificant and have been charged to
product development expense in the period incurred.
PROPERTY AND EQUIPMENT:
Property and equipment is stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of three years
for computer hardware and purchased computer software, five years for
furniture and fixtures, and over the remaining term of the principal
facility lease for leasehold improvements.
When assets are sold or retired, the cost and related accumulated
depreciation are removed from the accounts and any resulting gain or loss
is included in operations. Maintenance and repairs are charged to
operations as incurred.
INCOME TAXES:
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS No.109).
Under SFAS No.109, deferred income tax liabilities and assets are
determined based on the difference between the financial reporting amounts
and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates in
effect for the years in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amounts expected to be realized. Income
tax expense is the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
FOREIGN CURRENCY TRANSLATIONS AND TRANSACTIONS:
The accounts of the Company's U.K. and Canadian subsidiaries are
translated into U.S. dollars at year-end rates of exchange. Revenues and
expenses are translated at average rates for the period. The resultant
translation adjustments are shown as a separate component of shareholders'
equity. Gains and losses from foreign currency transactions are included
in the determination of net income and have not been material.
Continued
F-8
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
INITIAL PUBLIC OFFERING:
On November 16, 1995, the Company completed an underwritten initial public
offering pursuant to which the underwriters purchased 2,760,000 shares of
common stock, of which 2,225,000 were purchased from the Company and
535,000 were purchased from existing shareholders at a price of $12 per
share. The Company received net proceeds of approximately $23.9 million
from the initial public offering.
COMPUTATION OF EARNINGS PER SHARE:
Net income per common share is computed using the weighted average number
of common and dilutive common equivalent shares outstanding during each
period. Fully diluted and primary earnings per common share are the same
amounts for each of the periods presented. Dilutive common equivalent
shares consist of stock options and warrants (using the treasury stock
method) and convertible preferred stock. Pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 83, common shares issued
by the Company during the twelve-month period prior to the initial filing
date of the public offering, plus the number of common equivalent shares
which became issuable during the same period pursuant to the grant of
stock options (using the treasury stock method and the proposed public
offering price), have been included in the calculation of common and
common equivalent shares as if they were outstanding for all periods
presented. Convertible preferred stock issued and outstanding is treated
as if converted to common stock on their respective dates of original
issuance.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
Continued
F-9
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
ACCOUNTING FOR STOCK-BASED COMPENSATION:
In October 1995, Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation," (FAS 123) was issued and is
effective for the Company's 1997 fiscal year. The Company intends to
continue to account for employee stock options in accordance with APB
Opinion No. 25 and will make the pro forma disclosures required by FAS 123
in fiscal 1997.
3. CONCENTRATIONS OF CREDIT RISK:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments and other short-term investments. The Company has a policy to
address the quality and amount of investments to be placed with financial
institutions. The Company places its temporary cash investments primarily
with two financial institutions.
The Company performs ongoing credit evaluations of its customers and
generally does not require collateral on accounts receivable as the
majority of the Company's customers are large, well established companies.
Unbilled receivables of $1,862,000 were included in the accounts
receivable balance as of March 31, 1996. There were no unbilled
receivables as of March 31, 1995. Five customers accounted for
approximately 40% and 32%, of the billed accounts receivable balance at
March 31, 1995 and 1996.
Pursuant to an agreement with a customer, the Company sold a software
application preinstalled on personal computer hardware. This agreement
also required the Company to provide support services in connection with
the software. Approximately 12% and 3% of total revenues were generated
pursuant to this agreement in fiscal 1994 and 1995, respectively. During
fiscal 1996, revenues from this agreement were less than 0.5% of total
revenues. As of March 31, 1996, this agreement is no longer in effect.
Continued
F-10
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------
4. PROPERTY AND EQUIPMENT:
Property and equipment, at March 31, 1995 and 1996, consisted of the
following (in thousands):
<TABLE>
<CAPTION>
1995 1996
------- ------
<S> <C> <C>
Computer equipment and software $1,742 $3,484
Furniture and fixtures 493 740
Leasehold improvements 43 70
------ ------
2,278 4,294
Less accumulated depreciation and amortization (620) (1,560)
------ ------
Total property and equipment, net $1,658 $2,734
====== ======
</TABLE>
Continued
F-11
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------
5. INCOME TAXES:
The components of the provision for income taxes, for the years ended
March 31, 1994, 1995, and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Federal:
Current $240 $565 $1,200
Deferred (120) (130) (335)
----- ----- ------
120 435 865
----- ----- ------
State:
Current 39 129 283
Deferred (28) (8) (22)
----- ----- ------
11 121 261
----- ----- ------
Foreign - current - 16 43
----- ----- ------
Provision for income taxes $ 131 $ 572 $1,169
===== ===== ======
</TABLE>
The effective income tax rate differs from the statutory federal income tax rate
for the following reasons:
<TABLE>
<CAPTION>
Years ended March 31,
---------------------
1994 1995 1996
------- ------ ------
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0%
State taxes, net of federal income tax benefit 6.1 6.1 6.1
Utilization of research and development credits (18.0) (7.6) (4.1)
Other (3.3) 4.5 1.0
------ ------ -----
18.8% 37.0% 37.0%
====== ====== =====
</TABLE>
Continued
F-12
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
5. INCOME TAXES, CONTINUED:
Significant components of the Company's deferred tax balances are as
follows (in thousands) :
<TABLE>
<CAPTION>
March 31,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Current:
Accrued employee benefits $ 81 $ 161
Allowance for doubtful accounts 140 267
Deferred rent 52 30
State taxes 48 94
Capital loss carryforward - 22
Noncurrent - prepaid royalties - 83
----- ------
Total deferred tax assets 321 657
----- ------
Deferred tax liabilities:
Noncurrent - property and equipment (32) (11)
----- ------
Total deferred tax liabilities (32) (11)
----- ------
Net deferred tax assets $ 289 $ 646
===== ======
</TABLE>
Continued
F-13
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
6. ACCRUED LIABILITIES:
Accrued liabilities at March 31, 1995 and 1996 consist of the following (in
thousands):
<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Commissions $ 423 $ 842
Employee compensation 389 635
Employee withholdings - 359
Sales and use tax 105 98
Consulting 303 -
Royalties - 134
Other 338 476
------ ------
Total $1,558 $2,544
====== ======
</TABLE>
7. LINE OF CREDIT:
As of March 31, 1996, the Company had a $4,000,000 line of credit agreement
with a bank under which there were no amounts outstanding. Advances under
the line accrue interest at the bank's prime rate plus 1.0% per annum as of
March 31, 1996, and are collateralized by substantially all of the
Company's assets. The line of credit agreement contains restrictive
covenants, including minimum profitability levels and maintenance of
specified levels of tangible net worth and certain financial ratios. The
line of credit agreement also prohibits the payment of cash dividends.
Continued
F-14
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------
8. COMMITMENTS:
LEASES:
The Company leases administrative and sales offices under noncancellable
operating leases and subleases expiring through March 2001. Total rent
expense for the years ended March 31, 1994, 1995, and 1996 aggregated
$217,000, $648,000, and $859,000, respectively. Minimum future rental
payments under these operating leases as of March 31, 1996, are as follows
(in thousands):
<TABLE>
<CAPTION>
Fiscal years ending March 31:
<S> <C>
1997 $ 910
1998 789
1999 788
2000 460
2001 79
------
$3,026
======
</TABLE>
ROYALTY FEES:
Pursuant to Value Added Remarketer Agreements with various vendors, the
Company has the right to embed certain vendor products in its own software.
In exchange for this right, the Company is required to pay royalty fees on
the portion of the sale related to the vendor's software. For the years
ended March 31, 1994, 1995 and 1996 the Company incurred $171,000, $223,000
and $286,000, respectively, in royalty fee expense.
9. PREFERRED STOCK:
At March 31, 1996, the Company was authorized to issue 2,500,000 shares of
preferred stock. No preferred stock was issued or outstanding at March 31,
1996.
In November 1992, the Company issued 1,590,910 shares of Series A preferred
stock for proceeds of $1,400,000.
Continued
F-15
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------
9. PREFERRED STOCK, CONTINUED:
In June 1994, 1,263,333 shares of Series B-1 preferred stock were issued at
a price of $3.00 per share for proceeds of $3,769,000, net of issuance
costs of $21,000. In conjunction with this issuance, the purchasers
received warrants to purchase up to 315,833 shares of Series B-2 preferred
stock. The warrants were exercisable, at an exercise price of $4.00 per
share. In connection with the initial public offering of the Company's
common stock, warrants to purchase 34,167 shares of Series B-2 preferred
stock, were exercised for cash. 187,776 shares of Series B-2 preferred
stock were issued upon the cashless exercise of the remaining 281,666
warrants. All outstanding shares of mandatorily redeemable convertible
preferred stock, Series A, and convertible preferred stock, Series B, were
automatically converted into common stock upon the closing of the offering.
10. STOCK OPTIONS:
In December 1991, the Company adopted the 1991 Stock Option Plan (the Plan)
under which eligible employees, directors, and consultants can receive
options to purchase shares of the Company's common stock at a price
generally not less than 100% and 85% of the fair value of the common stock
on the date of the grant for incentive stock options and nonstatutory stock
options, respectively. Stock purchase rights may also be granted under the
Plan. The Plan, as amended in September 1995, allows for the issuance of a
maximum of 3,200,000 shares of the Company's common stock. This number of
shares of common stock has been reserved for issuance under the Plan. The
options granted under the Plan are exercisable over a maximum term of ten
years from the date of grant and generally vest in various installments
over a four-year period.
Continued
F-16
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------
10. STOCK OPTIONS, CONTINUED:
A summary of the activity under the Plan is set forth below:
<TABLE>
<CAPTION>
Options Outstanding
Shares -------------------------------
Available Number of Exercise
for Grant Shares Price
--------- ---------- ------------
<S> <C> <C> <C>
Balance at March 31, 1993 1,273,281 855,000 $0.008-0.816
Granted (834,000) 834,000 0.816
Exercised - (1,028,999) 0.008-0.816
Forfeited 398,250 (398,250) 0.570-0.816
---------- ---------- ------------
Balance at March 31, 1994 837,531 261,751 0.816
Granted (351,750) 351,750 0.816
Exercised - (37,976) 0.816
Forfeited 106,381 (106,381) 0.816
---------- ---------- ------------
Balance at March 31, 1995 592,162 469,144 0.816
Authorized 1,063,907 - -
Granted (1,119,675) 1,119,675 0.816-14.50
Exercised - (90,653) 0.816
Forfeited 147,473 (147,473) 0.816-12.00
---------- ---------- ------------
Balance at March 31, 1996 683,867 1,350,693 $0.816-14.50
========== ========== ============
Exercisable at March 31, 1996 278,189 $0.816-6.80
========== ============
</TABLE>
In compliance with the terms of the Plan, the Company entered into a restricted
stock purchase agreement in March 1994 with one of its executives. The executive
had previously been granted options to purchase an aggregate of 850,000 shares
of common stock of the Company. Pursuant to the March agreement, the executive
exercised all the options, subject to the original vesting schedule. At March
31, 1996, all such shares were vested.
Continued
F-17
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------
10. STOCK OPTIONS, CONTINUED:
The Company has recorded deferred compensation of $367,000 for options
granted during the year ended March 31, 1996. This deferred compensation
is amortized ratably over the vesting period of the related options.
1995 EMPLOYEE STOCK PURCHASE PLAN:
In September 1995, the Company adopted the 1995 Employee Stock Purchase
Plan (the "Purchase Plan"). A total of 200,000 shares of the Company's
common stock has been reserved for issuance under the Purchase Plan. The
Purchase Plan enables eligible employees to purchase common stock at 85%
of the lesser of the fair market value of: (i) the shares at the
participant's entry date into a one-year offering period, or (ii) the end
of each six-month segment within such offering period. No shares were
issued under the purchase plan during fiscal 1996.
1995 OUTSIDE DIRECTORS STOCK OPTION PLAN:
In September 1995, the Company adopted a stock option plan for non-
employee members of its Board of Directors pursuant to which 75,000 shares
of the Company's common stock have been reserved for issuance. No options
had been granted under the plan as of March 31, 1996.
11. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
During fiscal 1994 and 1996, the Company entered into agreements whereby
they exchanged their software products and services for a three year
sublease of office space and software products and services of another
company, respectively. The Company recorded the assets received and the
revenue on these transactions in accordance with their accounting
policies. The dollar amount of those transactions were approximately
$220,000 and $225,000 for the years ended March 31, 1994 and 1996
respectively. During fiscal 1995, the Company wrote off the remaining
unamortized balance of $128,000 as the office space was no longer being
utilized.
Continued
F-18
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------
11. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION, CONTINUED:
In conjunction with the initial public offering, all shares of Series A
and B preferred stock were automatically converted to common stock.
Additionally, 281,666 Series B-2 warrants were exercised on a net exercise
basis for 187,776 shares of common stock.
Other supplemental cash flow information is as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Cash paid during the year for:
Interest $32 $16 $22
====== ====== ======
Income taxes $92 $702 $1,071
====== ====== ======
</TABLE>
12. 401(K) SAVINGS PLAN:
The Company adopted a 401(k) plan for employees on April 1, 1994. All
employees who meet certain service requirements are eligible to
participate. Matching contributions are at the discretion of the Company.
As of March 31, 1996, the Company had not elected to make any
discretionary contributions.
13. SUBSEQUENT EVENT:
In April 1996, the Company entered into a distribution agreement under
which the other party will distribute the Company's software products in
the Hong Kong, China and Taiwan markets. In April 1996, the Company
advanced $200,000 to the other party under the above agreement to finance
product localization and organizational costs .
F-19
<PAGE>
SCOPUS TECHNOLOGY, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Allowance for Doubtful Accounts (in thousands):
<TABLE>
<CAPTION>
Additions
----------------------
Balance at Charged to Charged to
Beginning Costs and Other Balance at
Description of Period Expenses Accounts Deductions End of Period
---------------- --------- -------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Year Ended March 31, 1994 - $ 196 - $ (46) $150
Year Ended March 31, 1995 $150 551 - (352) 349
Year Ended March 31, 1996 349 1,072 - (756) 665
</TABLE>
F-20
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
3.1 Restated Articles of Incorporation of
the Company.
3.4 * Bylaws of the Company.
4.1 * Specimen Common Stock Certificate of
the Company.
10.1 * Form of Indemnification Agreement.
10.2 * (1) 1991 Stock Option Plan and form of
Stock Option Agreement.
10.3 * (1) Employee Stock Purchase Plan and form
of subscription agreement.
10.4 * (1) Director Stock Option Plan.
10.5 * Amended and Restated Rights Agreement
dated as of Jun 10, 1994 by and among
the Company and certain investors.
10.6 * Watergate Office Lease between
Watergate Tower Associates and the
Company dated as of August 22, 1994, as
amended by Amendment thereto dated
April 1995.
10.7 * Business Loan Agreement between the
Company and Silicon Valley Bank dated as of August
7, 1992, as amended by Loan Modification Agreement of
September 19, 1995.
11.1 Computation of Earnings per Share.
21.1 Subsidiaries of the Company.
23.1 Consent of Coopers & Lybrand L.L.P.,
Independent Auditors.
24.1 Power of Attorney (see page 24).
27 Article 5 of Regulation S-X
</TABLE>
- --------------
* Incorporated by reference from the Company's Registration Statement on Form
SB-2 (file number 33-97674-LA), as amended, filed on October 2, 1995.
(1) Management contract or compensation plan or arrangement required to be filed
as an exhibit to this report on Form 10-K pursuant to Item 14(c) of this
report.
<PAGE>
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION OF
SCOPUS TECHNOLOGY, INC.
Ori S. Sasson and A. Aaron Omid certify that:
1. They are the Chairman and Chief Executive Officer, and the Secretary,
respectively, of Scopus Technology, Inc., a California corporation.
2. The Articles of Incorporation of this Corporation are restated to read in
full as follows:
"Article I
---------
The name of this Corporation is Scopus Technology, Inc.
Article II
----------
The purpose of this Corporation is to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
Article III
-----------
This Corporation is authorized to issue two classes of stock, designated
"Common Stock" and "Preferred Stock". The total number of shares which this
Corporation is authorized to issue is 52,500,000. The number of shares of
Common Stock which this Corporation is authorized to issue is 50,000,000, par
value $0.001 per share. The number of shares of Preferred Stock which this
Corporation is authorized to issue is 2,500,000 shares of Preferred Stock, par
value $0.01 per share, all of which shares shall initially be undesignated as to
series.
Any Preferred Stock not designated as to series may be issued from time to
time in one or more series pursuant to a resolution or resolutions providing for
such issue duly adopted by the Board of Directors (authority to do so being
hereby expressly vested in the Board of Directors), and such resolution or
resolutions shall also set forth the voting powers, full or limited or none, of
each such series of Preferred Stock and shall fix the designations, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions of each such series of Preferred
Stock. The Board of Directors is authorized to alter the designation, rights,
preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of Preferred Stock and, within the limits and restrictions
stated in any resolution or resolutions of the Board of Directors originally
fixing the number of shares constituting any series of Preferred Stock, to
increase or decrease (but not below the number
<PAGE>
of shares of any such series then outstanding) the number of shares of any such
series subsequent to the issue of shares of that series. In case the number of
shares shall be so decreased, the shares constituting such decrease shall resume
the status that they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
Each share of Preferred Stock issued by the Corporation, if reacquired by the
Corporation (whether by redemption, repurcase, conversion to Common Stock or
other means), shall upon such reacquisition resume the status of authorized and
unissued shares of Preferred Stock, undesignated as to series and available for
designation and issuance by the Corporation in accordance with the immediately
preceding paragraph.
The Corporation shall from time to time in accordance with the laws of the
State of California increase the authorized amount of its Common Stock if at any
time the number of shares of Common Stock remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred Stock.
Article IV
----------
Section 1. Limitation of Director's Liability.
----------------------------------
The liability of the directors of the Corporation for monetary damages shall
be eliminated to the fullest extent permissible under California law.
Section 2. Indemnification of Corporate Agents.
-----------------------------------
The Corporation is authorized to provide indemnification of the directors and
officers of the Corporation to the fullest extent permissible under California
law.
Section 3. Repeal or Modification.
----------------------
Any repeal or modification of the foregoing provisions of this Article IV by
the shareholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification."
3. The foregoing Restated Articles of Incorporation have been duly approved by
the Board of Directors of this corporation.
4. The foregoing Restated Articles of Incorporation have been duly approved by
the required vote of shareholders in accordance with Sections 902 and 903 of the
California Corporations Code. The total number of outstanding shares of Common
Stock of the corporation on the date of approval was 6,319,427 shares. The total
number of outstanding shares of Preferred Stock of the Corporation on the date
of approval was 1,590,910 shares of Series A Preferred Stock, 1,263,333 shares
of Series B-1
-2-
<PAGE>
Preferred Stock and zero (0) shares of Series B-2 Preferred Stock. The number of
shares voting in favor of the amendment equaled or exceeded the vote required.
The percentage vote required was more than 50% of the outstanding shares of
Common Stock, voting as a separate class, more than 50% of the outstanding
shares of Series A Preferred, voting as a separate class, and more than 50% of
the Series B Preferred Stock, voting as a seperate class. Prior to the filing of
these Restated Articles of Incorporation, all outstanding shares of Preferred
Stock will be converted into Common Stock.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Date: November 16, 1995.
/s/Ori S. Sasson
---------------------------
Ori S. Sasson, Chairman and
Chief Executive Officer
/s/A. Aaron Omid
---------------------------
A. Aaron Omid, Secretary
-3-
<PAGE>
Exhibit 11.1
SCOPUS TECHNOLOGY, INC.
STATEMENT OF COMPUTATION OF NET INCOME PER SHARE
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------
PRIMARY 1995 1996
- ------- -------- --------
<S> <C> <C>
Weighted average number of common 8,853 10,182
shares outstanding
Shares issuable pursuant to options - 783
granted under employee stock option
plan, less shares assumed repurchased
at the average fair market value
during the year
Adjustments to reflect requirements of 830 -
the Securities and Exchange
Commission's Staff Accounting Bulletin
No. 83 regarding stock option grants ------ -------
Number of shares for computation of 9,683 10,965
earnings per share ====== =======
Net income $ 973 $ 1,990
====== =======
Net income per share $ 0.10 $ 0.18
====== =======
<CAPTION>
YEAR ENDED MARCH 31,
--------------------
FULLY DILUTED 1995 1996
- ------------- ------ ------
<S> <C> <C>
Weighted average number of common 8,853 10,182
shares outstanding
Shares issuable pursuant to options - 888
granted under employee stock option
plan, less shares assumed repurchased
at the ending fair market value for
the year
Adjustments to reflect requirements of 830 -
the Securities and Exchange
Commission's Staff Accounting Bulletin
No. 83 regarding stock option grants ------ -------
Number of shares for computation of 9,683 11,070
earnings per share
====== =======
Net income $ 973 $ 1,990
====== =======
Net income per share $ 0.10 $ 0.18
====== =======
</TABLE>
<PAGE>
Exhibit 21.1
SCOPUS TECHNOLOGY, INC.
Subsidiaries of the Company
Scopus Technology U.K., Ltd.
Scopus Technology France, SARL
Scopus Technology Canada Inc.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement of
Scopus Technology, Inc. on Form S-8 (File No. 33-99532) of our report dated
April 30, 1996 on our audits of the consolidated financial statements and the
financial statement schedule of Scopus Technology, Inc. and Subsidiaries as of
March 31, 1996 and 1995, and for the years ended March 31, 1996, 1995 and 1994,
which report is included in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Oakland, California
June 26, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ANNUAL AUDIT
REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> MAR-31-1995 MAR-31-1996
<PERIOD-START> APR-01-1994 APR-01-1995
<PERIOD-END> MAR-31-1995 MAR-31-1996
<CASH> 3,001 21,792
<SECURITIES> 552 7,462
<RECEIVABLES> 6,002 8,195
<ALLOWANCES> 349 665
<INVENTORY> 0 0
<CURRENT-ASSETS> 9,763 38,006
<PP&E> 2,278 4,294
<DEPRECIATION> 620 1,560
<TOTAL-ASSETS> 11,424 41,581
<CURRENT-LIABILITIES> 4,092 8,115
<BONDS> 0 0
1,400 0
13 0
<COMMON> 6 12
<OTHER-SE> 5,881 33,443
<TOTAL-LIABILITY-AND-EQUITY> 11,424 41,581
<SALES> 11,097 19,753
<TOTAL-REVENUES> 15,250 28,596
<CGS> 601 874
<TOTAL-COSTS> 13,764 25,905
<OTHER-EXPENSES> 64 25
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 16 22
<INCOME-PRETAX> 1,545 3,159
<INCOME-TAX> 572 1,169
<INCOME-CONTINUING> 1,486 2,691
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 973 1,990
<EPS-PRIMARY> 0.10<F1> 0.18<F1>
<EPS-DILUTED> 0.10 0.18
<FN>
<F1>All data in thousands except per share data.
</FN>
</TABLE>
