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 reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
As of July 31, 2000, there were 42,498,041 shares of the Registrant's
Common Stock outstanding.
CENTURA SOFTWARE CORPORATION
FORM 10-Q for the Quarter Ended June 30, 2000
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
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Page No.
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Item 1. Financial statements and supplementary data
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Condensed consolidated balance sheets at June 30, 2000 and
December 31, 1999
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Condensed consolidated statements of operations for the
three months and six months ended June 30, 2000 and 1999
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Condensed consolidated statements of cash flows for the
six months ended June 30, 2000 and 1999
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Notes to condensed consolidated financial statements
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Item 2. Management's discussion and analysis of financial
condition and results of operations
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Item 3. Quantitative and qualitative disclosures about market risk
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PART II. OTHER INFORMATION
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Item 1. Legal proceedings
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Item 2. Changes in securities and use of proceeds
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Item 3. Defaults upon senior securities
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Item 4. Submission of matters to a vote of security holders
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Item 5. Other information
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Item 6. Exhibits and reports on Form 8-K
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Signature
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PART I -- FINANCIAL INFORMATION
Item 1. Financial statements and supplementary data
CENTURA SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(IN THOUSANDS)
June 30, December 31,
2000 1999
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents........................ $17,957 $20,614
Accounts receivable, less allowances
of $1,404 and $1,209........................... 11,455 14,394
Other current assets............................. 4,546 4,970
------------ ------------
Total current assets........................... 33,958 39,978
Property and equipment, net......................... 3,584 3,541
Capitalized software, net........................... 2,254 1,035
Goodwill, net....................................... 2,710 2,694
Other intangible assets, net........................ 3,229 3,686
Other assets........................................ 547 546
------------ ------------
$46,282 $51,480
============ ============
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations......... $447 $430
Accounts payable................................. 2,508 2,782
Accrued compensation and related expenses........ 1,809 1,759
Short-term borrowings............................ 2,605 3,302
Other accrued liabilities........................ 3,549 3,738
Deferred revenue................................. 12,484 13,923
------------ ------------
Total current liabilities...................... 23,402 25,934
Other long-term liabilities......................... 237 501
------------ ------------
23,639 26,435
------------ ------------
Mandatorily redeemable convertible preferred
stock............................................ -- 10,360
------------ ------------
Stockholders' Equity:
Common stock..................................... 424 375
Additional paid-in capital....................... 109,602 95,978
Accumulated other comprehensive loss............. (382) (452)
Accumulated deficit.............................. (87,001) (81,216)
------------ ------------
Total stockholders' equity .................... 22,643 14,685
------------ ------------
$46,282 $51,480
============ ============
The accompanying notes are an integral part of these condensed
consolidated financial statements.
CENTURA SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
2000 1999 2000 1999
--------- --------- --------- ----------
Net revenues:
Product............................. $3,867 $5,527 $9,840 $12,624
Service............................. 6,282 5,384 12,713 10,656
--------- --------- --------- ----------
Total net revenues................ 10,149 10,911 22,553 23,280
--------- --------- --------- ----------
Cost of revenues:
Product............................. 705 1,124 1,133 1,961
Service............................. 638 944 1,391 1,900
Amortization of acquired technology. 134 45 267 45
--------- --------- --------- ----------
Total cost of revenues............ 1,477 2,113 2,791 3,906
--------- --------- --------- ----------
Gross profit...................... 8,672 8,798 19,762 19,374
--------- --------- --------- ----------
Operating expenses:
Sales and marketing................. 8,202 6,643 15,970 13,179
Engineering and product development. 1,861 2,340 3,904 4,355
General and administrative.......... 2,871 2,679 5,065 4,296
Amortization of goodwill and
workforce intangible.............. 501 61 709 61
--------- --------- --------- ----------
Total operating expenses.......... 13,435 11,723 25,648 21,891
--------- --------- --------- ----------
Operating loss................... (4,763) (2,925) (5,886) (2,517)
Other income (expense):
Interest income..................... 299 53 545 109
Interest expense.................... (111) (86) (258) (154)
Foreign currency loss............... (129) (169) (105) (456)
--------- --------- --------- ----------
Loss before income taxes............... (4,704) (3,127) (5,704) (3,018)
Provision for income taxes............. 66 34 81 39
--------- --------- --------- ----------
Net loss............................... ($4,770) ($3,161) ($5,785) ($3,057)
========= ========= ========= ==========
Accretion of mandatorily redeemable
convertible preferred stock to
redemption value..................... -- -- (4,125) --
Mandatorily redeemable convertible
preferred stock dividend............. (47) -- (188) --
--------- --------- --------- ----------
Net loss available to common
stockholders......................... ($4,817) ($3,161) ($10,098) ($3,057)
========= ========= ========= ==========
Net loss per share - basic and diluted. ($0.12) ($0.10) ($0.26) ($0.10)
========= ========= ========= ==========
Basic and diluted weighted average
common shares........................ 41,089 31,064 39,770 30,335
========= ========= ========= ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
CENTURA SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(IN THOUSANDS)
Six Months Ended
June 30,
---------------------
2000 1999
---------- ----------
Cash flows from operating activities:
Net loss................................................ ($5,785) ($3,057)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization......................... 2,391 1,648
Provision for doubtful accounts, sales returns
and allowances....................................... 273 145
Issuance of stock options for services................ 187 --
Changes in assets and liabilities:
Accounts receivable................................... 2,513 2,893
Other current assets.................................. (186) 568
Other assets.......................................... 5 (333)
Accounts payable and accrued liabilities.............. (455) (8)
Deferred revenue...................................... (1,439) (479)
---------- ----------
Net cash provided by (used in) operating activities. (2,496) 1,377
---------- ----------
Cash flows from investing activities:
Net cash acquired on acquisition........................ -- 370
Maturities of investments............................... -- 461
Acquisition of property and equipment................... (1,138) (628)
Capitalization of software costs........................ (1,638) (255)
Purchase of other intangibles........................... (155) (38)
Proceeds from payment on note receivable................ 513 --
---------- ----------
Net cash used in investing activities............... (2,418) (90)
---------- ----------
Cash flows from financing activities:
Repayment of short-term borrowings, net................. (697) 248
Repayment of capital lease obligation................... (242) (203)
Proceeds from issuance of common stock, net............. 3,126 --
---------- ----------
Net cash provided by financing activities........... 2,187 45
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents.............................................. 70 167
---------- ----------
Net increase in cash and cash equivalents................. (2,657) 1,499
Cash and cash equivalents at beginning of period.......... 20,614 6,414
---------- ----------
Cash and cash equivalents at end of period................ $17,957 $7,913
========== ==========
Supplemental disclosure of non cash financing activities:
Accretion of mandatorily redeemable convertible
preferred stock to redemption value................. $4,125 $--
========== ==========
Mandatorily redeemable convertible preferred
stock dividend...................................... $188 $--
========== ==========
Conversion of operating lease to capital lease........ $-- $1,300
========== ==========
Conversion of mandatorily redeemable convertible
preferred stock to common stock..................... $14,673 $--
========== ==========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CENTURA SOFTWARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
References to "we", "us", "our" or "Centura" means Centura Software
Corporation and its subsidiaries and divisions, and their predecessor
companies and subsidiaries.
1. Summary of significant accounting policies
Method of preparation
The accompanying condensed consolidated balance sheet as of June 30,
2000, the condensed consolidated statement of operations for the three and
six month periods ended June 30, 2000 and June 30, 1999, and cash flows
for the six month periods ended June 30, 2000 and 1999 are unaudited. In
our opinion, all adjustments which are normal, recurring and necessary for
a fair statement of the financial position, results of operations and of
cash flows have been made for all periods presented.
The balance sheet as of December 31, 1999 has been derived from our
audited financial statements but does not include all disclosures required
by generally accepted accounting principles. Such disclosures are
contained in our Annual Report on Form 10-K.
The results of operations for the three and six month period ended
June 30, 2000 are not necessarily indicative of the operating results to
be expected for the full year. This financial data should be reviewed in
conjunction with management's discussion and analysis of financial
condition and results of operation and the audited financial statements
and accompanying notes included in our Annual Report on Form 10-K for the
year ended December 31, 1999.
The preparation of financial statements in accordance with generally
accepted accounting principles requires us to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from these estimates.
Net loss per share
Basic net loss per share is calculated by dividing loss available
to common stockholders by the weighted average number of shares of common
stock outstanding during each respective period. Diluted net loss per
share is calculated giving effect to all dilutive potential shares of
common stock that were outstanding during each respective period.
Dilutive potential shares of common stock could consist of mandatorily
redeemable convertible preferred stock, stock options and warrants.
However, in periods where we have a reported loss or in cases where
stock options, warrants and mandatorily redeemable convertible preferred
stock have an exercise price greater than the market price of the common
shares for the period, they are excluded from the per share calculation
as they are antidilutive.
June 30,
-------------------
2000 1999
--------- ---------
(in thousands)
Antidilutive potential shares of
common stock at period end:
Warrants............................ 923 2,686
Options............................. 8,007 6,136
--------- ---------
8,930 8,822
========= =========
Comprehensive loss
We report components of comprehensive loss in our annual
consolidated statement of stockholders' equity. Other comprehensive loss
consists of net loss and foreign currency translation adjustments. Our
total comprehensive loss was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(in thousands)
Net loss.............................. ($4,770) ($3,161) ($5,785) ($3,057)
Other comprehensive gain.............. 135 87 70 167
--------- --------- --------- ---------
Total comprehensive loss.............. ($4,635) ($3,074) ($5,715) ($2,890)
========= ========= ========= =========
Recent Accounting Pronouncements
In March 2000, the Financial Standards Board issued Interpretation
No. 44, or FIN 44, "Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No. 25". FIN 44 clarifies
the application of Opinion 25 for (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether
a plan qualifies as a noncompensatory plan, (c) the accounting
consequences of various modifications to the terms of a previously fixed
stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 is effective July
1, 2000, but certain conclusions cover specific events that occur after
either December 15, 1998, or January 12, 2000. We believe that the
effects of the provisions which are specific to events after December 15,
1998 and January 12, 2000 will not have a material effect on our
financial position and results of operation on adoption of FIN 44. We are
currently evaluating the impact of the adoption of the remaining
provisions of FIN 44 on our financial position and results of operations.
In December 1999, the Securities and Exchange Commission, or SEC,
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements", or SAB 101. SAB 101 provides guidance for revenue
recognition under certain circumstances. In June 2000, the SEC issued
SAB No. 101B to defer the effective date of implementation of SAB 101
until the fourth quarter of fiscal 2000. We are currently reviewing the
effect of SAB 101 on our consolidated results of operations, financial
position and cash flows.
In June 1998, the Financial Accounting Standards Board, or FASB,
issued FAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended in June 2000 by FAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities", which
requires the recognition of all derivatives as assets or liabilities on
the balance sheet and measurement of those instruments at fair value.
Changes in fair value of derivatives are recorded in earnings or other
comprehensive income depending upon the intended use of the derivative
and the resulting designation. The effective date of this statement has
been delayed to fiscal years beginning after June 15, 2000. We are
currently reviewing the impact of adoption of this statement on our
consolidated results of operations, financial position and cash flows.
2. Segment information
We are a leading global provider of solutions that mobilize the
enterprise, allowing our customers to extend their business information
systems to the Internet and to wireless information devices, for
business-to-business applications. The following table presents
information based on our method of internal reporting and on how we
organize our revenue into groups of similar products:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(in thousands)
Embedded databases....................$ 2,593 $ 4,020 $ 6,893 $ 9,298
Application development environment... 1,101 1,295 2,278 2,544
Other tools and connectivity software. 173 212 669 782
--------- --------- --------- ---------
Total net product revenue...........$ 3,867 $ 5,527 $ 9,840 $ 12,624
========= ========= ========= =========
3. Mandatorily redeemable convertible preferred stock
In December 1999, we completed a private placement of 12,500 shares
of our series A preferred stock resulting in net proceeds of $11,200,000,
after deducting expenses associated with the offering.
In accordance with the rights of the preferred stockholders we
accrued a cumulative dividend, at the rate of 4.5% per annum up until May
1, 2000, being the date that the preferred stock was converted into
shares of common stock.
Had we not been able to register the shares of common stock
underlying the preferred stock within 150 days of issuance of the
preferred stock, the preferred stockholders would have been able to
redeem the preferred stock at 125% of face value. To reflect this
potential liability we accreted the preferred stock balance to 125% of
the face value of the preferred stock outstanding, over a period of 150
days, prorated for the three months ended March 31, 2000. However, as we
received notice of effective registration on April 3, 2000, as discussed
in the next paragraph, no such liability exists and we have not accreted
further for this event in the three months ended June 30, 2000.
On April 3, 2000 our registration statement on Form S-3, as
amended, registering shares of common stock underlying the mandatorily
redeemable convertible preferred stock issued December 30, 1999 and
associated warrants, was declared effective. In accordance with the
terms of the Certificate of Designation of the preferred stock (the
"Certificate") we then issued a conversion notice to the holders of the
preferred stock requiring them to convert all of their outstanding
preferred stock holdings to common stock over the period beginning April
17, 2000 and ending May 30, 2000. On May 1, 2000 all of the preferred
stock was converted to 3,099,000 shares of common stock. In accordance
with the Certificate, during the Company-directed conversion period, the
number of shares issued were determined by dividing the face value of the
preferred stock by the lesser of $5.82 or the lowest of the daily
weighted average trading prices on the NASDAQ Small Cap or National
Market 10 days prior to the selected conversion date within the
conversion period, which was $4.093.
Mandatorily redeemable convertible preferred stock consists of the
following:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(in thousands)
Balance at beginning of period........$ 14,626 $ -- 10,360 $ --
Dividend.............................. 47 -- 188 --
Accretion to redemption value......... -- -- 4,125 --
Conversion to shares of common stock.. (14,673) -- (14,673) --
--------- --------- --------- ---------
$ -- $ -- -- $ --
========= ========= ========= =========
Item 2. Management's discussion and analysis of financial condition and
results of operations
We are a leading global provider of solutions that mobilize the
enterprise. We extend information systems to the Internet and to
wireless information devices, for business-to-business applications. Our
family of products, which as a whole provides end-to-end functionality in
these environments, include a scalable Internet development environment
(CTD), a dynamic wireless connectivity solution (eSNAPP), and a range of
powerful, secure embedded databases (SQLBase SafeGarde, Velocis, RDM and
db.star). In essence, we make the software our customers use to create
sophisticated Web and wireless applications.
This quarterly report on Form 10-Q contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. When used in
this report, the words "anticipate", "believe", "will", "may", "intend"
and "expect" and similar expressions identify forward-looking statements.
Actual results could differ materially from those projected in the
forward-looking statements as a result of certain of the risk factors set
forth below and elsewhere in this Quarterly Report on Form 10-Q. In
evaluating our business, prospective investors should carefully consider
the following factors in addition to the other information presented in
this report.
You should read the following discussion in conjunction with the
unaudited condensed consolidated financial statements and accompanying
notes included in Part I-Item 1 of this quarterly report, and the audited
consolidated financial statements and accompanying notes, and
management's discussion and analysis of financial condition and results
of operations included in our Annual Report on Form 10-K for the year
ended December 31, 1999.
Results of Operations:
Net product revenue
The following table presents our net product revenues by product
line and approximate percentage of total revenues for the three months
ended June 30, 2000 and June 30, 1999:
Three Months Ended June 30,
---------------------------------------
2000 1999
------------------- -------------------
(in % of (in % of
thousands) total thousands) total
Embedded databases................... $2,593 67 % $4,020 73 %
Application development environment.. 1,101 29 1,295 23
Other tools and connectivity software 173 4 212 4
--------- --------- --------- ---------
Total net product revenue.......... $3,867 100 % $5,527 100 %
========= ========= ========= =========
Net product revenues decreased $1,660,000, or 30% for the three
months ended June 30, 2000 compared with the three months ended June 30,
1999. This decrease is primarily due to a 49% decline in net sales of
SQLBase, an embedded database product primarily used in desktop
client/server applications, and was partially offset by sales of Velocis
Database Server, our scalable database server used largely in Web-centric
applications, and RDM, a small footprint embedded database, which is used
primarily in embedded device applications. This reflects the continuation
of what we believe is a market trend wherein customers are shifting
incremental information technology development away from desk-top client
server applications to Web-centric applications, coupled with competitive
pressure from large competitors that offer scalable database environments.
Net revenues from our development environment, CTD, decreased
$194,000, or 15% for the three months ended June 30, 2000 compared with
the three months ended June 30, 1999. Our latest release of CTD, CTD 2000
was released late in the 2000 second quarter, which had a negative impact
on the potential incremental revenue which typically follows a new product
version release. Also, we believe that the increasing strength and
reliability of network bandwidth has allowed the emergence of application
service providers, or ASPs, as a serious business alternative to in-house,
self-hosted applications. The ASP model involves the hosting of
enterprise or other business application software by a third party,
typically in exchange for monthly remuneration. We believe this has
created a general hesitancy in buying decisions among corporate
information technology professionals and independent software developers
as they evaluate the efficacy of the ASP approach. This has contributed
to what we believe is a general slowdown in major Internet application
projects in which our newly released development environment CTD 2000
could be implemented. We believe this slowdown resulted in the deferral
and potential loss of business at the end of the quarter.
Our new connectivity product offering, eSNAPP, version 2.0, a
general release product, was released at the end of the second quarter of
2000 and as such there are no significant revenues reported to date for
this product.
The following table presents our net product revenues by product line and
approximate percentage of total revenues for the six months ended June 30,
2000 and June 30, 1999:
Six Months Ended June 30,
---------------------------------------
2000 1999
------------------- -------------------
(in % of (in % of
thousands) total thousands) total
Embedded databases................... $6,893 70 % $9,298 74 %
Application development environment.. 2,278 23 2,544 20
Other tools and connectivity software 669 7 782 6
--------- --------- --------- ---------
Total net product revenue.......... $9,840 100 % $12,624 100 %
========= ========= ========= =========
Net product revenues decreased $2,784,000, or 22% for the six months
ended June 30, 2000 compared with the six months ended June 30, 1999. The
decline is due to the same factors that caused the quarter over quarter
decrease.
Net service revenue
Net service revenue primarily comprises fees that entitle our
customers to the right to receive product revision upgrades and updates as
and when they become available, telephone support and consulting services.
Net service revenue increased 17% to $6,282,000 for the three months
ended June 30, 2000, from $5,384,000 for the three months ended June 30,
1999, due to increased amortization of license maintenance and telephone
support, due to the relatively larger deferred revenue balances at the end
of 1999 and the growth in the consulting business.
Net service revenue increased 19% to $12,713,000 for the six months
ended June 30, 2000, from $10,656,000 for the six months ended June 30,
1999, primarily due to a growth in the consulting business following the
acquisition of Raima Corporation in June 1999 and increased amortization
of license maintenance and telephone support, due to the relatively larger
deferred revenue balances at the end of 1999.
Total net revenues by geographic region
The following table presents a summary of operations by geographic
region for the three months ended June 30, 2000 and June 30, 1999.
Revenues have been allocated to geographic regions based primarily upon
destination of product shipment.
Three Months Ended June 30,
---------------------------------------
2000 1999
------------------- -------------------
(in % of (in % of
thousands) total thousands) total
North America........................ $4,226 42 % $4,164 38 %
Europe............................... 4,705 46 5,474 50
Rest of the world.................... 1,218 12 1,273 12
--------- --------- --------- ---------
Total net revenues................. $10,149 100 % $10,911 100 %
========= ========= ========= =========
North American net revenues and revenues from the rest of the world
remained relatively flat for the three months ended June 30, 2000,
compared with the three months ended June 30, 1999, while European net
revenues fell 14% for the same periods. The drop in European net revenue
primarily reflects the decline in SQLBase revenue, reflecting a shift in
customer demand to scalable Web-centric database environments and
associated competitive pressures. The North American market was not immune
to the same shift in demand to Web-centric database environments, however
the revenues in North America also reflect an increase in sales of our
Velocis Database Server, a scalable database server used largely in Web-
centric applications and RDM, a small footprint embedded database, which
is used primarily in embedded device applications.
The following table presents a summary of operations by geographic
region for the six months ended June 30, 2000 and June 30, 1999:
Six Months Ended June 30,
---------------------------------------
2000 1999
------------------- -------------------
(in % of (in % of
thousands) total thousands) total
North America........................ $9,301 41 % $9,804 42 %
Europe............................... 10,728 48 11,185 48
Rest of the world.................... 2,524 11 2,291 10
--------- --------- --------- ---------
Total net revenues................. $22,553 100 % $23,280 100 %
========= ========= ========= =========
North American net revenues fell 5% and European net revenues fell
4% for the six months ended June 30, 2000, compared with the six months
ended June 30, 1999. Significant declines in SQLBase sales affected the
results for both of these major markets. The revenues in North America
reflected increases in sales of our Velocis Database Server and RDM
products, while the European results reflected increases in our consulting
and other service revenues for the six months ended June 30, 2000 compared
with the six months ended June 30, 1999.
Cost of net product revenues
Cost of product revenue includes the cost of production and the
amortization of capitalized software. Cost of production includes the cost
of subcontracted production and royalties for third party software. The
table below presents these costs for the three and six months ended June
30, 2000 and June 30, 1999:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(in thousands)
Cost of production.................... $539 $826 $811 $1,342
Amortization of capitalized software.. 166 298 322 619
--------- --------- --------- ---------
Total cost of product revenues...... $705 $1,124 $1,133 $1,961
========= ========= ========= =========
As a percentage of net product
revenues............................ 18% 20% 12% 16%
========= ========= ========= =========
As a percentage of net product
revenues, excluding amortization
of capitalized software............. 14% 15% 8% 11%
========= ========= ========= =========
The decrease in cost of production was due principally to lower
royalty costs for the three months ended June 30, 2000, compared with the
three months ended June 30, 1999. Cost of product revenue as a percentage
of net product revenue decreased to 18% for the three months ended June
30, 2000, from 20% for the three months ended June 30, 1999, due to both
lower amortization of capitalized software and lower royalty costs for the
three months ended June 30, 2000, compared with the three months ended
June 30, 1999.
We capitalize internal software development costs which are eligible
for capitalization from the time that a project reaches technological
feasibility until the time that the products derived from the project are
released for sale. Software purchased from third parties and included in
our products is also capitalized if technological feasibility for the
project has been reached at the time of purchase. These capitalized costs
are then amortized ratably over the useful life of the products, which is
generally estimated to be two to three years.
The decrease in the amortization of the capitalized software costs
for the three months ended June 30, 2000 as compared with the three months
ended June 30, 1999 is primarily due to software purchased from third
parties and previously higher levels of internally capitalized costs
becoming fully amortized during 1999.
Cost of product revenue as a percentage of net product revenue
decreased to 12% for the six months ended June 30, 2000, from 16% for the
six months ended June 30, 1999, due to the same factors that caused the
quarter over quarter decrease.
Cost of net service revenue
Cost of service consists primarily of personnel costs related to
product license maintenance, training and technical support. The table
below presents these costs for the three and six months ended June 30,
2000 and June 30, 1999:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(in thousands)
Total cost of service revenues........ $638 $944 $1,391 $1,900
========= ========= ========= =========
As a percentage of net service
revenues............................ 10% 18% 11% 18%
========= ========= ========= =========
The decrease in the actual cost of service and the relative
percentage of the cost of service revenues is primarily due to a reduction
in headcount in the respective periods. By the end of 1999 we reorganized
our support department by completing the transfer of previously out-
sourced support functions back to our in-house employees, resulting in a
lower cost base while maintaining or improving service levels.
Amortization of acquired technology
In June 1999, we capitalized $2,670,000 of acquired technology as
part of the acquisition of Raima Corporation. In the three months ended
June 30, 2000, the associated amortization expense was $134,000, and in
the six months ended June 30, 2000, the associated amortization expense
was $267,000.
Sales and marketing expenses
Sales and marketing expenses consist principally of salaries, sales
commissions and costs of advertising and marketing campaigns. The table
below presents these costs for the three and six months ended June 30,
2000 and June 30, 1999:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(in thousands)
Total sales and marketing expenses.... $8,202 $6,643 $15,970 $13,179
========= ========= ========= =========
As a percentage of total net
revenues............................ 81% 61% 71% 57%
========= ========= ========= =========
Sales and marketing expense increased for the three and six months
ended June 30, 2000 compared to the three and six months ended June 30,
1999, primarily due to an increase in staffing in our sales and marketing
organizations in preparation for the new product releases in the second
quarter of 2000, additional marketing costs associated with the launching
of these new products and the acquisition of Raima Corporation towards the
end of the second quarter of 1999.
Engineering and product development expenses
The table below presents gross engineering and product development
expenses, capitalized software development costs, and net engineering and
product development expenses in dollar amounts and as a percentage of net
revenue for the three and six months ended June 30, 2000 and June 30,
1999:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(in thousands)
Gross engineering and product
development costs................... $2,798 $2,419 $5,542 $4,610
Capitalized software
development costs................... (937) (79) (1,638) (255)
--------- --------- --------- ---------
Net engineering and product
development costs................... $1,861 $2,340 $3,904 $4,355
========= ========= ========= =========
As a percentage of net revenues:
Gross engineering and product
development costs................... 28% 22% 25% 20%
========= ========= ========= =========
Net engineering and product
development costs................... 18% 21% 17% 19%
========= ========= ========= =========
Net engineering and product development expenses for the three
months ended June 30, 2000 decreased $479,000, or 20%, compared with the
three months ended June 30, 1999, due to the increase in capitalized
software development costs. The increase in the gross engineering and
product development expenses of $379,000, or 16%, for the three months
ended June 30, 2000 compared with the three months ended June 30, 1999 is
due primarily to an increase in research and development outsourced to
third party software development organizations as we expand our efforts to
further leverage core technologies into next generation products.
Capitalized software development costs increased 1086% for the three
months ended June 30, 2000 compared with the three months ended June 30,
1999 due to five product releases having reached technological feasibility
prior or during the three months ended June 30, 2000, compared to one
product at comparable stages of development in the prior year.
Net engineering and product development expenses for the six months
ended June 30, 2000 decreased $451,000, or 10%, compared with the six
months ended June 30, 1999, also due to increases in capitalized software
development costs. The increase in the gross engineering and product
development expenses of $932,000, or 20%, for the six months ended June
30, 2000 compared with the six months ended June 30, 1999 is due primarily
to an increase in research and development undertaken by outside software
houses as we expand our efforts to leverage core technologies into next
generation products, combined with increased personnel related costs as a
result of the additional workforce of Raima Corporation, which we acquired
in June 1999.
Capitalized software development costs increased 542% for the six
months ended June 30, 2000 compared with the six months ended June 30,
1999 due more product releases having reached technological feasibility in
the six months ended June 30, 2000 compared with the six months ended June
30, 1999.
We believe that the development of new products and the enhancement
of existing products are essential to our continued success, and we intend
to continue to devote substantial resources to new product development.
General and administrative expenses
General and administrative expenses consist primarily of staffing
and related expenses, rent and facilities expense, depreciation, and
outside services. The table below presents these costs for the three and
six months ended June 30, 2000 and June 30, 1999:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(in thousands)
Total general and administrative
expenses............................ $2,871 $2,679 $5,065 $4,296
========= ========= ========= =========
As a percentage of total net
revenues............................ 28% 25% 22% 18%
========= ========= ========= =========
General and administrative expenses increased $192,000, or 7% for
the three months ended June 30, 2000 compared with the three months ended
June 30, 1999 primarily due to costs associated with relisting on the
Nasdaq National Market, preparing and mailing our Annual Report on Form
10-K and proxy materials.
Amortization of goodwill and workforce intangible
As part of the June 1999 acquisition of Raima Corporation we
capitalized $3,646,000 of goodwill, which is being amortized over its
period of benefit of 5 years, and $670,000 of workforce intangible which
is being amortized over its period of benefit of 3 years. For the three
months ended June 30, 2000, goodwill amortization expense was $445,000 and
the workforce intangible amortization expense was $56,000. For the six
months ended June 30, 2000, goodwill amortization expense was $597,000 and
the workforce intangible amortization expense was $112,000.
Other income (expense), net
Other income (expense), net is comprised of interest income,
interest expense and losses on foreign currency transactions. For the
three months ended June 30, 2000 other income (expense), net increased
$261,000 to other income, net of $59,000 from other expense, net of
$202,000 in the same three months of the prior year. This increase is due
to higher interest income, resulting from larger cash balances on deposit
following the receipt of funds from the December 1999 private placement of
preferred stock and exercises of common stock options and warrants.
For the six months ended June 30, 2000 other income (expense), net
increased $683,000 to other income, net of $182,000 from other expense,
net of $501,000 in the same six months of the prior year. This increase
is due to higher interest income, resulting from larger cash balances on
deposit following the receipt of funds from the December 1999 private
placement of preferred stock and exercises of common stock options and
warrants and from favorable foreign exchange rates in the first quarter of
2000 as compared with the first quarter of 1999.
Provision for income taxes
The provision for income taxes primarily relates to foreign
withholding taxes. Due to our net losses and the availability of net
operating loss carryforwards arising in prior years, no provision for U.S.
income taxes was made for the three-month or six-month periods ended June
30, 2000 and June 30, 1999.
Liquidity and Capital Resources:
Cash flows
Six Months Ended
June 30,
-------------------
2000 1999
--------- ---------
(in thousands)
Cash and cash equivalents at
beginning of period.................$ 20,614 $ 6,414
Net cash (used in) provided by:
Operating activites................. (2,496) 1,377
Investing activities................ (2,418) (90)
Financing activities................ 2,187 45
Effect of exchange rate changes
on cash and cash equivalents......... 70 167
--------- ---------
Cash and cash equivalents at
end of period.......................$ 17,957 $ 7,913
========= =========
Net cash from operating activities decreased $3,873,000 in the six
months ended June 30, 2000 compared with the same period in 1999. This
decrease is primarily due to the larger operating loss incurred in the
first half of 2000 and larger reduction in deferred revenue in the six
months ended June 30, 2000 compared with the same period in 1999.
Net cash used in investing activities increased $2,328,000 in the
six months ended June 30, 2000 compared with the six months ended June
30, 1999. This increase is primarily attributed to higher levels of
capitalization of software development costs due to more product releases
reaching technological feasibility in the six months ended June 30, 2000
compared with the same period in 1999, and due to higher levels of
spending on property and equipment resulting from the relocation of two
offices in the first half of 2000 following the expiration of their
building leases.
Net cash from financing activities increased $2,142,000 in the six
months ended June 30, 2000 compared with the six months ended June 30,
1999. This is largely due to cash received from the exercises of common
stock options and warrants.
We believe that expected cash flows from operations and existing
cash balances will be sufficient to meet our currently anticipated
working capital and capital expenditure requirements for the next 12
months. We may, however, choose to raise cash for operational or other
needs sometime in the future. If we need further financing, there can be
no assurance that it will be available on reasonable terms or at all.
Any additional equity financing will result in dilution to our
stockholders.
Working capital
At June 30, 2000, our working capital, defined as current assets
less current liabilities, decreased $3,488,000, to $10,556,000 from
$14,044,000 at December 31, 1999. This is largely a result of an
increase in cash used in operating activities and a reduction in accounts
receivable partly offset by a reduction in deferred revenue.
Excluding the impact of deferred product and support revenue of
$12,484,000, at June 30, 2000 our working capital was $23,040,000.
Deferred product and service revenue reflects a delay in recognition of
revenue in accordance with contractual agreements and requires minimal
future monetary resources of Centura.
Our capital requirements also may be affected by acquisitions of
businesses, products and technologies that are complementary to our
business, which we may consider from time to time. We regularly evaluate
such opportunities. Any such transaction, if consummated, may further
reduce our working capital or require the issuance of our common stock.
Foreign currency forward contracts
As part of a program to reduce the financial exposure arising from
foreign denominated monetary assets and liabilities, at June 30, 2000 we
had $4,010,000 in unsecured foreign currency forward contracts which were
denominated in four European currencies: German Deutschemarks, British
Pounds Sterling, Dutch Guilders and Italian Lire, as well as Australian
Dollars.
Debt financing
In February 2000, we amended our $5,000,000 asset based loan
facility. Under this amended agreement, we may borrow up to $5,000,000,
collateralized by our accounts receivable, combined with a $500,000
capital equipment facility. The loan balance is limited to the lower of
$5,000,000, or 85% of our eligible receivables derived from customers
located in the United States and the United Kingdom, plus 25% of our
eligible receivables derived from approved customers located outside the
United States and the United Kingdom. The interest rate is 2.0% above
the Bank of America Reference Rate, with provisions for a reduced
interest rate if we achieve certain financial covenants. This agreement
matures at the end of January 2002, at which time we have the option to
renew the agreement for an additional one-year term. If we choose to
terminate this agreement prior to January 2002, we will incur an early
termination fee of $50,000.
At June 30, 2000, we had drawn $2,605,000 on the loan facility and
were paying an interest rate of 2.0% above the Bank of America Reference
Rate of 9.5%.
Recent Accounting Pronouncements:
In March 2000, the Financial Standards Board issued Interpretation
No. 44, or FIN 44, "Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No. 25". FIN 44 clarifies
the application of Opinion 25 for (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether
a plan qualifies as a noncompensatory plan, (c) the accounting
consequences of various modifications to the terms of a previously fixed
stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 is effective July
1, 2000, but certain conclusions cover specific events that occur after
either December 15, 1998, or January 12, 2000. We believe that the
effects of the provisions which are specific to events after December 15,
1998 and January 12, 2000 will not have a material effect on our
financial position and results of operation on adoption of FIN 44. We are
currently evaluating the impact of the adoption of the remaining
provisions of FIN 44 on our financial position and results of operations.
In December 1999, the Securities and Exchange Commission, or SEC,
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements", or SAB 101. SAB 101 provides guidance for revenue
recognition under certain circumstances. In June 2000, the SEC issued
SAB No. 101B to defer the effective date of implementation of SAB 101
until the fourth quarter of fiscal 2000. We are currently reviewing the
effect of SAB 101 on our consolidated results of operations, financial
position and cash flows.
In June 1998, the Financial Accounting Standards Board, or FASB,
issued FAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended in June 2000 by FAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities", which
requires the recognition of all derivatives as assets or liabilities on
the balance sheet and measurement of those instruments at fair value.
Changes in fair value of derivatives are recorded in earnings or other
comprehensive income depending upon the intended use of the derivative
and the resulting designation. The effective date of this statement has
been delayed to fiscal years beginning after June 15, 2000. We are
currently reviewing the impact of adoption of this statement on our
consolidated results of operations, financial position and cash flows.
Factors That May Affect Future Results:
We have experienced in the past, and expect in the future to
continue to experience, significant fluctuations in quarterly operating
results. We have at times recognized a substantial portion of our net
revenues in the last month or last few weeks of a quarter. We generally
ship products as orders are received and, therefore, have little or no
backlog. As a result, quarterly sales and operating results generally
depend on a number of factors that are difficult to forecast, including,
among others, the volume and timing of and ability to fulfill orders
received within the quarter.
Operating results also may fluctuate due to the following factors:
- demand for our products;
- introduction, localization or enhancement of our products and our
competitors' products;
- market acceptance of new products;
- reviews in the industry press concerning the our products or our
competitors;
- changes or anticipated changes in our pricing our competitors' pricing;
- mix of distribution channels through which products are sold;
- mix of products sold; and
- general economic conditions.
As a result, we believe that period-to-period comparisons of our
results of operations are not necessarily meaningful and should not be
relied upon as any indication of future performance.
In addition, because our staffing and other operating expenses are
based in part on anticipated net revenues, a substantial portion of which
may not be generated until the end of each quarter, delays in the receipt
or shipment of orders and ability to achieve anticipated revenue levels
can cause significant variations in operating results from quarter to
quarter. We may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Accordingly, any
significant shortfall in sales of our products in relation to our
expectations could have an immediate adverse impact on our business,
operating results and financial condition. In addition, we currently
intend to increase our operating expenses to fund greater levels of sales
and marketing operations and expand distribution channels. To the extent
that such expenses proceed or are not subsequently followed by increased
net revenues, our business, operating results and financial condition
could be materially and adversely affected.
In the future, we may make acquisitions of complementary companies,
products or technologies. Managing acquired businesses entails numerous
operational and financial risks, including difficulties in assimilating
acquired operations, diversion of management's attention to other
business concerns, amortization of acquired intangible assets and
potential loss of key employees or customers of acquired operations.
There can be no assurance that we will be able to effectively complete or
integrate acquisitions, and failure to do so could have a material
adverse effect on our operating results. At this time, we have no
understanding or agreement with any other entity regarding any potential
acquisition or combination, the consummation of which is probable.
In addition, our quarterly operating results will depend on a
number of other factors that are difficult to forecast, including, but
not limited to the following risk factors.
Fluctuations in our quarterly and annual results may adversely affect our
stock price.
Our quarterly and annual operating results have fluctuated
significantly in the past and may continue to do so in the future. We have
reported losses for the first two quarters of 2000, and we expect losses
to continue for the second half of fiscal 2000. On an annual basis, we
reported a loss of $3.2 million in 1999, a profit of $2.1 million in 1998
and a loss of $0.6 million for 1997. Our future operating results may be
below the expectations of public market analysts or investors. We also may
not learn of, or be able to confirm, revenue or earnings shortfalls until
late in the fiscal quarter or following the end of the quarter and
consequently may not be able to adjust spending in a timely manner to
compensate for the shortfalls. Accordingly, any significant shortfall in
sales of our products or services in relation to our expectations or those
of analysts or investors, could have an immediate adverse impact on the
price of our common stock.
A number of factors are likely to cause variations in our quarterly
and annual results. From time to time, we or our competitors may announce
new products, product versions, capabilities or technologies that have the
potential to replace or shorten the life cycles of our existing products.
The announcement of currently planned or other new products may also
cause customers to delay their purchasing decisions in anticipation of
such products. We may therefore occasionally experience a reduction in
demand for our existing products and decreased sales.
In addition, our revenue recognition in some cases is dependent upon
the business activities of our customers and the timely and accurate
reporting of their activities to us, which makes predictability of the
related revenue extremely uncertain. For example, many of our product
licensing arrangements are subject to revenue recognition on a per-unit
deployed basis including cases where our deferred obligation to such
customers is gradually extinguished. Delays in the introduction or
availability of new hardware and software products from third parties may
also negatively affect sales of our products.
Seasonal factors, including year and quarter end purchasing and the
timing of marketing activities, such as industry conventions and
tradeshows, may cause our operating results to fluctuate. Although we have
operated historically with little or no backlog of traditional boxed
product shipments, we have experienced a seasonal pattern of product
revenue, contributing to variation in quarterly worldwide product revenues
and operating results. We have generally realized lower revenues in the
first quarter as compared with the immediately preceding fourth quarter of
any given year and lower European revenues in the third quarter as
compared to the rest of the year. We have also experienced a pattern of
recording a substantial portion of our revenues in the third month of a
quarter. As a result, product revenues in any quarter are dependent on
orders booked in the last month. Our staffing and other operating expenses
are based in part on anticipated net revenues, a substantial portion of
which may not be generated until the end of each quarter. Delays in the
receipt or shipment of orders, including delays that may be occasioned by
failures of third party product fulfillment firms to produce and ship
products or the actual loss of product orders, can cause significant
variations in operating results from quarter to quarter.
The lack of timely market delivery of our products and services or the
inability to achieve market acceptance may result in negative publicity
and losses.
The markets for our software products and services are characterized
by rapid technological developments, evolving industry standards, swift
changes in customer requirements and computer operating environments, and
frequent new product introductions and enhancements. If one or more
competitors introduce products that better address customer needs, we may
lose our market position and our revenues will decrease.
In the second quarter of 2000 we have released major new versions of
five of our primary products, eSNAPP, RDM, Velocis Database Server,
db.star and Centura Team Developer, and our success depends on the ability
of these products to perform well in various business hardware and
software application environments, and on the ability of our consulting
organization to successfully assist customers in their solutions
development. Any failure to deliver these products and services as
scheduled or their failure to achieve market acceptance as a result of
competition, rapid technological change, failure to timely release new
versions or upgrades, failure of such upgrades to achieve market
acceptance or otherwise, could result in negative publicity and decreased
sales.
Like many software companies, we have in the past experienced delays
in the development of new products and product versions, which resulted in
loss or delays of product revenues. There can be no assurance that we will
not experience further delays in connection with our current product
development or future development activities.
We are also increasingly dependent on the efforts of third-party
partners, including value-added resellers, and software developers, to
develop, implement, service and support our products. These third parties
increasingly have opportunities to select from a very broad range of
products from our competitors, many of whom have greater resources and
market acceptance than ours. In order for our products and services to
succeed in the market, we must actively recruit and sustain relationships
with these third parties.
Future issuance of our common stock according to option plans or exercise
of warrants will dilute the beneficial ownership of our existing
stockholders, and the sale of such shares could negatively affect our
stock price.
As of June 30, 2000, we had outstanding warrants to purchase
923,000 shares of our common stock and options to purchase 8,007,000
shares of our common stock. Future issuance of such shares of our common
stock according to any of these outstanding securities will dilute the
beneficial ownership of our stockholders. In addition, sales, including
block sales, of a significant number of shares of common stock, or the
potential for such sales, could adversely affect the prevailing stock
market price for our common stock. This effect may be particularly
significant because these shares represent a large percentage of our
total outstanding stock.
Item 3. Quantitative and qualitative disclosure about market risk
We are exposed to market risk from changes in foreign currency
exchange rates and interest rates that could impact our results of
operations and financial condition.
We manage our exposure to foreign currency exchange risk using
derivative financial instruments (forward contracts) as a risk management
tool and not for speculative or trading purposes. We use these foreign
exchange contracts to reduce significant exposure to the risk that the
eventual net cash flows resulting largely from the sale of products and
services to non-U.S. customers will be adversely affected by changes in
exchange rates. These instruments allow us to reduce our overall exposure
to exchange rates as the gains and losses on the contracts offset the
losses and gains on the assets, liabilities and assets being hedged.
Annual gains and losses in the future may differ materially from
this analysis, however, based on the changes in the timing and amount of
foreign currency exchange rate movements and our actual exposures and
hedges.
At June 30, 2000, we had a total of $4,010,000 in 30-day forward
contracts. The US dollar equivalent balance at June 30, 2000 for each of
the currencies held was as follows: German Deutschemarks ($846,000),
British Pounds Sterling ($2,047,000), Dutch Guilders ($277,000), Italian
Lire ($392,000) and Australian Dollars ($448,000). The carrying value of
these financial instruments approximates their respective fair values.
While we hedge certain foreign currency transactions, the decline in
value of non-U.S. dollar currencies may adversely impact our ability to
contract for sales in U.S. dollars and our products and services may
become more expensive to purchase in U.S. dollars for local customers
doing business in the countries of the affected currencies.
Our international business is also subject to risks customarily
encountered in foreign operations, including changes in a country or
region's political or economic conditions, trade protection measures,
import or export licensing requirements, unexpected changes in regulatory
requirements and natural disasters.
We are subject to interest rate risk on our investment portfolio.
However, our portfolio consisted of only cash and cash equivalents at June
30, 2000, and thus our interest rate risk was immaterial.
We are further subject to interest rate risk on our asset based loan
facility, however we believe that the adverse movements of interest rates
would not have a material effect on our consolidated financial position,
results of operations or cash flows.
PART II. OTHER INFORMATION
Item 1. Legal proceedings
As of June 30, 2000, to the best of our knowledge there were
no pending actions, potential actions, claims or proceedings
against us that could reasonably be expected to result in
damages to us which would have a material adverse effect on
our business, results of operations or financial condition.
We exist in a volatile legal and regulatory environment and it
is not possible to anticipate or estimate the potential
adverse impact of unknown claims or liabilities against us,
our officers and directors, and as such no estimate is made in
our financial statements for such unknown claims or
liabilities.
Item 2. Changes in securities and use of proceeds
Not applicable
Item 3. Defaults upon senior securities
Not applicable
Item 4. Submission of matters to a vote of security holders
We held our Annual Meeting of stockholders on June 15, 2000.
There were present at the meeting, in person or represented
by proxy, the holders of 33,714,121 shares of our common
stock, which represented approximately 86.3% of the
outstanding shares of common stock entitled to vote. The
matters voted on at the meeting and the votes cast were as
follows:
1. Election of directors to serve for the ensuing year or
until their successors are elected and qualified.
Name of Nominee Votes Cast
------------------------------------ ------------
Edward Borey, Jr.................... For 33,515,859
Withheld 198,262
Scott R. Broomfield................. For 33,515,182
Withheld 198,939
Tom Clark........................... For 33,518,883
Withheld 195,238
Jack King........................... For 33,514,085
Withheld 200,036
Philip Koen......................... For 33,131,056
Withheld 583,065
Peter Micciche...................... For 33,124,146
Withheld 589,975
2. The approval of an amendment to Centura's 1995 Stock
Option Plan to increase the number of shares of common
stock reserved for issuance by 1,900,000 shares, to an
aggregate of 6,300,000 shares. There were 32,077,816
shares of common stock voting in favor, 1,513,858 shares
of common stock voting against, 122,447 shares of common
stock abstaining and 0 broker non-votes.
3. The ratification of the appointment of
PricewaterhouseCoopers LLP as our independent public
accountants for the fiscal year-ending December 31, 2000.
There were 33,539,901 shares of common stock voting in
favor, 109,887 shares of common stock voting against,
64,333 shares of common stock abstaining and 0 broker non-
votes.
Item 5. Other information
Not applicable
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
27.1 Financial data schedule
(b) Reports on Form 8-K
Not applicable
CENTURA SOFTWARE CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
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CENTURA SOFTWARE CORPORATION
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Dated: August 11, 2000
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Richard Lucien
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Senior Vice President, Finance and
Chief Financial Officer
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(Principal Financial and Accounting Officer)
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