<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from
------------ to
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Commission file number: 0-28346
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OPENVISION TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 94-3161663
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
7133 KOLL CENTER PARKWAY
PLEASANTON, CALIFORNIA 94566
(510) 426-6400
(Address, including zip code, of Registrant's
principal executive offices and telephone
number, including area code)
------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___________
The number of shares outstanding of the Registrant's Common Stock on January 31,
1997 was 18,724,994 shares.
The Exhibit Index is located on page 21. This is page 1 of 21 pages.
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OPENVISION TECHNOLOGIES, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I CONDENSED FINANCIAL INFORMATION
Item 1. Condensed Financial Statements...........................................
Condensed Consolidated Balance Sheets as of December 31, 1996 and June
30, 1996................................................................. 3
Condensed Consolidated Statements of Operations for the Three Months and
Six Months Ended December 31, 1996 and 1995.............................. 4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
December 31, 1996 and 1995............................................... 5
Notes to Condensed Consolidated Financial Statements..................... 6
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 7
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders...................... 20
Item 6. Exhibits and Reports on Form 8-K......................................... 20
SIGNATURE.......................................................................... 21
</TABLE>
2
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OPENVISION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1996
------------ --------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................................... $ 12,144 $ 16,888
Short-term investments............................................. 18,483 13,667
Accounts receivable, less allowance for doubtful accounts of $497
at December 31, 1996, and $484 at June 30, 1996................. 11,706 9,446
Other current assets............................................... 840 576
-------- --------
Total current assets....................................... 43,173 40,577
Property and equipment, net.......................................... 2,713 2,590
Note receivable from officer......................................... 418 418
Other assets......................................................... 429 363
-------- --------
Total assets............................................... $ 46,733 $ 43,948
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 949 $ 1,612
Accrued compensation and related expenses.......................... 1,571 1,592
Accrued interest................................................... 133 119
Other accrued liabilities.......................................... 2,955 2,606
Deferred revenue................................................... 7,312 6,262
Current portion of notes payable................................... 149 149
-------- --------
Total current liabilities.................................. 13,069 12,340
Notes payable, less current portion.................................. 463 463
Stockholders' equity
Common stock....................................................... 19 19
Additional paid-in capital......................................... 110,507 109,584
Accumulated deficit................................................ (76,683) (77,773)
Notes receivable from stockholders................................. (282) (302)
Deferred compensation.............................................. (97) (113)
Foreign currency translation adjustment............................ (263) (270)
-------- --------
Total stockholders' equity................................. 33,201 31,145
-------- --------
Total liabilities and stockholders' equity................. $ 46,733 $ 43,948
======== ========
</TABLE>
See accompanying notes.
3
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OPENVISION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenue:
License......................................... $ 8,169 $ 5,443 $13,838 $ 8,838
Service......................................... 2,875 1,908 5,414 3,653
------ ------- ------- -------
Total net revenue............................ 11,044 7,351 19,252 12,491
Cost of revenue:
License......................................... 618 376 1,152 624
Service......................................... 651 551 1,227 1,111
------ ------- ------- -------
Total cost of revenue........................ 1,269 927 2,379 1,735
------ ------- ------- -------
Gross profit...................................... 9,775 6,424 16,873 10,756
Operating expenses:
Selling and marketing........................... 5,335 3,678 9,695 7,057
Research and development........................ 2,384 1,486 4,533 2,930
General and administrative...................... 1,091 1,046 1,990 2,258
------ ------- ------- -------
Total operating expenses..................... 8,810 6,210 16,218 12,245
------ ------- ------- -------
Income (loss) from operations..................... 965 214 655 (1,489)
Other income (expense), net....................... 345 (184) 771 (292)
------ ------- ------- -------
Income (loss) before income taxes................. 1,310 30 1,426 (1,781)
Provision for income taxes........................ 336 -- 336 --
------ ------- ------- -------
Net income (loss)................................. $ 974 $ 30 $ 1,090 $(1,781)
====== ======= ======= =======
Pro forma net income (loss) per share............. $ 0.05 $ 0.00 $ 0.06 $ (0.11)
------ ------- ------- -------
Pro forma shares used in per share calculations... 19,723 15,773 19,633 15,773
====== ======= ======= =======
</TABLE>
See accompanying notes.
4
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OPENVISION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................................ $ 1,090 $(1,781)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization.......................................... 933 883
Changes in operating assets and liabilities:
Accounts receivable.................................................... (2,260) (3,123)
Other assets........................................................... (330) 42
Deferred revenue....................................................... 1,050 109
Accounts payable....................................................... (663) (348)
Accrued compensation and related expenses.............................. (21) (125)
Other accrued liabilities.............................................. 363 201
------- -------
Net cash provided by (used in) operating activities...................... 162 (4,142)
INVESTING ACTIVITIES
Additions to equipment and improvements.................................. (1,040) (182)
Note receivable from officer............................................. -- (68)
Purchase of short-term investments....................................... (4,816) --
------- -------
Net cash used in investing activities.................................... (5,856) (250)
FINANCING ACTIVITIES
Borrowings under bank line of credit, net................................ -- 2,061
Proceeds from issuance of common stock................................... 923 61
Payments of notes payable................................................ -- (672)
Payments on notes receivable from stockholders........................... 20 18
------- -------
Net cash provided by financing activities................................ 943 1,468
Effect of exchange rates on cash and equivalents......................... 7 23
------- -------
Net decrease in cash and cash equivalents................................ (4,744) (2,901)
Cash and cash equivalents at beginning of period......................... 16,888 4,083
------- -------
Cash and cash equivalents at end of period............................... $12,144 $ 1,182
------- -------
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest................................................... $ -- $ 105
</TABLE>
See accompanying notes.
5
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OPENVISION TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated financial
statements reflect all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position, results of
operations and cash flows of OpenVision Technologies, Inc. ("OpenVision" or "the
Company"). The results for the interim periods presented are not necessarily
indicative of the results that may be expected for any future period. The notes
to the consolidated financial statements included in the 1996 Report on Form
10-K should be read in conjunction with these condensed consolidated financial
statements. The condensed consolidated balance sheet at June 30, 1996 was
derived from audited financial statements, however; it does not include all
disclosures required by generally accepted accounting principles.
NOTE 2. PER SHARE DATA
Except as noted below, net income (loss) per share is computed using the
weighted average number of shares of common stock outstanding. Common equivalent
shares from convertible preferred stock (using the as-if converted method) and
from stock options and warrants (using the treasury stock method) have been
excluded from computations when antidilutive, except that pursuant to the
Securities and Exchange Commission Staff Accounting Bulletins, common and common
equivalent shares issued by the Company at prices below the initial public
offering price during the twelve-month period prior to the initial public
offering have been included in the calculation as if they were outstanding for
all periods presented through March 31, 1996 (using the treasury stock method).
Per share information calculated on this basis is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------ ------------------
1996 1995 1996 1995
------- ------ ------- ------
<S> <C> <C> <C> <C>
Net income (loss) per share................. $ 0.05 $ 0.00 $ 0.06 $(0.24)
Shares used in computing net income (loss)
per share (in thousands).................. 19,723 7,468 19,633 7,468
</TABLE>
The pro forma calculation of net loss per share presented in the condensed
consolidated statements of operations is computed as described above and also
gives retroactive effect to the assumed conversion of all outstanding shares of
convertible preferred stock into common stock upon the closing of the Company's
initial public offering using the as-if converted method.
NOTE 3. SUBSEQUENT EVENT
On January 13, 1997, the Company entered into an Agreement and Plan of
Reorganization (the "Agreement") with VERITAS Software Corporation, a California
corporation ("VERITAS"), a publicly-held company that develops, markets and
supports advanced storage management and high availability software products for
open system environments, and VERITAS Software Corporation, a Delaware
corporation ("New VERITAS"), a wholly owned subsidiary of VERITAS, pursuant to
which OpenVision will become a wholly owned subsidiary of New VERITAS (the
"Merger"). Under the terms of the Agreement, each share of the Company's Common
Stock and Class B Common Stock will be converted into a fraction of a share of
New VERITAS Common Stock equal to a fraction, the numerator of which is
7,500,000, and the denominator of which is 73,000 plus the total number of
shares of the Company's Common Stock and Class B Common Stock outstanding plus
the total number of shares of the Company's Common Stock issuable upon exercise
of outstanding options and warrants. Each outstanding option and warrant to
purchase the Company's Common Stock will be converted into an option to purchase
New VERITAS Common Stock at an adjusted exercise price. Consummation of the
Merger is conditioned upon the affirmative vote of each company's stockholders,
among other conditions. The Board of Directors of the Company has unanimously
approved the Agreement and transactions contemplated thereby. A special meeting
of the Company's stockholders will be held to consider and vote upon the
proposed Agreement and other related matters.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION
The discussion in this report on Form 10-Q contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in "Factors That May Affect Future Results"
contained herein and in the Company's other filings with the Securities and
Exchange Commission, including but not limited to those discussed under the
heading "Factors That May Affect Future Results", "Market for Registrant's
Common Equity and Related Stockholder Matters", and "Other Financial
Considerations" in the Company's 1996 Report on Form 10-K.
RESULTS OF OPERATIONS
OVERVIEW
OpenVision provides systems management applications and services for
client/server computing environments. OpenVision's AXXiON (pronounced "action")
products address three essential areas of systems management -- storage,
operations and security. The Company's highly scalable products can be used
independently and certain products can be combined to provide interoperable
client/server systems management solutions. AXXiON products offer centralized
administration with a high degree of automation, enabling customers to manage
complex, distributed environments cost-effectively by increasing system
administrator productivity and system availability. The Company also provides a
comprehensive range of services to assist customers in planning and implementing
systems management solutions. The Company markets the AXXiON products and
associated services through a combination of direct sales and indirect channels
(resellers, VARs, hardware distributors, application software vendors and
systems integrators).
7
<PAGE> 8
RESULTS OF OPERATIONS
The following tables set forth, for the periods indicated, the percentage
of total revenue represented by certain line items from the Company's condensed
consolidated statement of operations for the three months and six months ended
December 31, 1996 and 1995, respectively, and the percentage change from the
comparative period:
<TABLE>
<CAPTION>
PERCENTAGE OF PERIOD-TO-PERIOD
TOTAL REVENUE PERCENTAGE CHANGE
------------------- ---------------------
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------- ---------------------
1996 1995 1996 COMPARED TO 1995
---- ---- ---------------------
<S> <C> <C> <C>
Net revenue:
License.................................. 74% 74% 50%
Service.................................. 26 26 51%
--- --- ---
Total net revenue................ 100 100 50%
Cost of revenue:
License.................................. 5 5 64%
Service.................................. 6 8 18%
--- --- ---
Total cost of revenue............ 11 13 37%
--- --- ---
Gross profit............................... 89 87 52%
Operating expenses:
Selling and marketing.................... 48 50 45%
Research and development................. 22 20 60%
General and administrative............... 10 14 4%
--- --- ---
Total operating expenses......... 80 84 42%
--- ---
Income from operations..................... 9 3
Other income (expense), net................ 3 (3)
Provision for income taxes................. (3) --
--- ---
Net income................................. 9% 0%
--- ---
Gross margin:
License.................................. 92% 93%
Service.................................. 77% 71%
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
PERCENTAGE OF PERIOD-TO-PERIOD
TOTAL REVENUE PERCENTAGE CHANGE
------------------- ---------------------
SIX MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------- ---------------------
1996 1995 1996 COMPARED TO 1995
---- ---- ---------------------
<S> <C> <C> <C>
Net revenue:
License.................................. 72% 71% 57%
Service.................................. 28 29 48%
--- --- ---
Total net revenue................ 100 100 54%
Cost of revenue:
License.................................. 6 5 85%
Service.................................. 6 9 10%
--- --- ---
Total cost of revenue............ 12 14 37%
--- --- ---
Gross profit............................... 88 86 57%
Operating expenses:
Selling and marketing.................... 50 56 37%
Research and development................. 24 24 55%
General and administrative............... 10 18 (12)%
--- --- ---
Total operating expenses......... 84 98 32%
--- ---
Income (loss) from operations.............. 4 (12)
Other income (expense), net................ 4 (2)
Provision for income taxes................. (2) --
Net income (loss).......................... 6% (14)%
Gross margin:
License.................................. 92% 93%
Service.................................. 77% 70%
</TABLE>
Net Revenue
Total net revenue increased 50% from $7.4 million for the three months
ended December 31, 1995, to $11.0 million for the three months ended December
31, 1996, and increased 54% from $12.5 million for the six months ended December
31, 1995, to $19.3 million for the six months ended December 31, 1996. The
Company believes that the percentage increases in total revenue achieved in
these periods are not indicative of future results. The Company's revenue is
comprised of license revenue and service revenue. Growth in license revenue has
been driven primarily by increasing market acceptance of the Company's products
and introduction of new products. Service revenue is derived primarily from
contracts for software maintenance and technical support and, to a lesser
extent, consulting and training services. The growth in service revenue has been
driven primarily by increased sales of service and support contracts on new
license sales and, to a lesser extent, by increasing renewals of these contracts
as the Company's installed base of licenses has increased. License revenue for
the three months ended December 31, 1996 and the three months ended December 31,
1995 represented 74% of total net revenue. License revenue for the six months
ended December 31, 1996 increased to 72% of total net revenue from 71% for the
six months ended December 31, 1995.
License Revenue. License revenue increased 50% from $5.4 million for the
three months ended December 31, 1995 to $8.2 million for the three months ended
December 31, 1996. License revenue increased 57% from $8.8 million for the six
months ended December 31, 1995 to $13.8 million for the six months ended
December 31, 1996. The increase in overall license revenue is primarily due to
increased market acceptance of the Company's products and introduction of new
products. In particular, the Company's license revenue from storage products
increased by approximately 125%, accounting for 51% and 70% of license revenue
in the six months ended December 31, 1995 and 1996, respectively. The Company's
AXXiON-HA product license
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revenue increased by approximately 84% from $1.4 million for the six months
ended December 31, 1995 to $2.6 million for the six months ended December 31,
1996.
Service Revenue. Service revenue increased 51% from $1.9 million for the
three months ended December 31, 1995 to $2.9 million for the three months ended
December 31, 1996, and increased 48% from $3.7 million for the six months ended
December 31, 1995 to $5.4 million for the six months ended December 31, 1996,
primarily due to increased sales of service and support contracts on new
licenses, renewal of service and support contracts on existing licenses and, to
a lesser extent, an increase in consulting services revenue.
The Company's international sales are generated primarily through its
international sales subsidiaries. International revenue outside the United
States and Canada, most of which is collectible in foreign currencies, accounted
for 36% and 28% of the Company's revenue in the six months ended December 31,
1996 and 1995, respectively. Since much of the Company's international operating
expenses are also incurred in local currencies, the relative impact of exchange
rates on net income or loss is less than on revenues. Although the Company's
operating and pricing strategies take into account changes in exchange rates
over time, the Company's operating results may be significantly affected in the
short term by fluctuations in foreign currency exchange rates. The Company
believes that its success depends upon continued expansion of its international
operations. The Company currently has sales and service offices in the United
States, Canada, England, Germany and France. The Company also has resellers
located in North America, Europe, Asia Pacific, South America and the Middle
East. International expansion may require that the Company establish additional
foreign offices, hire additional personnel and recruit additional international
resellers. This may necessitate significant management attention and financial
resources and could adversely affect the Company's operating margins. To the
extent the Company is unable to effect these additions efficiently and in a
timely manner, its growth, if any, in international sales will be limited, and
the Company's business, operating results and financial condition could be
materially and adversely affected. There can be no assurance that the Company
will be able to maintain or increase international market demand for its
products.
Cost of Revenue
Cost of license revenue consists primarily of media, manuals, distribution
costs and royalties. Cost of service revenue consists primarily of
personnel-related costs in providing maintenance, technical support, consulting
and training to customers. Gross margin on license revenue is substantially
higher than gross margin on service revenue, reflecting the low materials,
packaging and other costs of software products compared with the relatively high
personnel costs associated with providing maintenance, technical support,
consulting and training services. Cost of service revenue also varies based upon
the mix of maintenance, technical support, consulting and training services.
Cost of License Revenue. Cost of license revenue increased 64% from $0.4
million for the three months ended December 31, 1995 to $0.6 million for the
three months ended December 31, 1996, and increased 85% from $0.6 million for
the six months ended December 31, 1995 to $1.2 million for the six months ended
December 31, 1996. Gross margin on license revenue decreased from 93% for the
three months and six months ended December 31, 1995 to 92% for the three months
and six months ended December 31, 1996, primarily due to a greater percentage of
revenue from products with higher royalty rates. The Company does not expect
significant improvements in gross margin on license revenue.
Cost of Service Revenue. Cost of service revenue increase 18% from $0.6
million for the three months ended December 31, 1995 to $0.7 million for the
three months ended December 31, 1996, and increased 10% from $1.1 million for
the six months ended December 31, 1995 to $1.2 million for the six months ended
December 31, 1996. Gross margin on service revenue increased from 71% for the
three months ended December 31, 1995 to 77% for the three months ended December
31, 1996 and increased from 70% for the six months ended December 31, 1995 to
77% for the six months ended December 31, 1996, primarily due to a larger
percentage of higher margin maintenance revenue versus other service revenue.
10
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Operating Expenses
Selling and Marketing. Selling and marketing expenses consist primarily of
salaries, related benefits, commissions, consultant fees and other costs
associated with the Company's sales and marketing efforts. Selling and marketing
expenses increased 45% from $3.7 million for the three months ended December 31,
1995 to $5.3 million for the three months ended December 31, 1996, and increased
37% from $7.1 million for the six months ended December 31, 1995 to $9.7 million
for the six months ended December 31, 1996. As a percentage of total net
revenue, selling and marketing expenses decreased from 50% for the three months
ended December 31, 1995 to 48% for the three months ended December 31, 1996, and
decreased from 56% for the six months ended December 31, 1995 to 50% for the six
months ended December 31, 1996. The increase in absolute dollars is primarily
attributable to increased sales and marketing staffing. The Company intends to
continue to expand its global sales and marketing infrastructure. Accordingly,
the Company expects its selling and marketing expenses to increase in the
future, although such expenses may decline as a percentage of total net revenue
to the extent revenue increases.
Research and Development. Research and development expenses consist
primarily of salaries, related benefits, third-party consultant fees and other
costs. Research and development expenses increased 60% from $1.5 million for the
three months ended December 31, 1995 to $2.4 million for the three months ended
December 31, 1996, and increased 55% from $2.9 million for the six months ended
December 31, 1995 to $4.5 million for the six months ended December 31, 1996,
primarily reflecting increased staffing levels. Research and development
expenses as a percentage of revenue remained fairly constant between these three
month and six month comparative periods. The Company believes that a significant
level of research and development investment is required to remain competitive
and expects such expenses will increase in future periods, although such
expenses may decline as a percentage of total net revenue to the extent revenue
increases.
General and Administrative. General and administrative expenses consist
primarily of salaries and related benefits, and fees for professional services,
such as legal and accounting services. General and administrative expenses
increased 4% from $1.0 million for the three months ended December 31, 1995 to
$1.1 million for the three months ended December 31, 1996, and decreased 12%
from $2.3 million for the six months ended December 31, 1995 to $2.0 million for
the six months ended December 31, 1996. The increase in the three month
comparisons was primarily due to additional costs associated with being a public
company, and the decrease in the six months comparative periods was primarily
due to lower amounts attributable to external professional services. General and
administrative expenses as a percentage of total net revenue decreased between
the three month periods from 14% to 10%, and decreased between the six month
periods from 18% to 10%. General and administrative expenses are expected to
increase in future periods to the extent the Company expands its operations and
as a result of costs associated with being a public company, but may continue to
decline as a percentage of total net revenue.
Other Income (Expense), Net. Other income (expense), net increased from a
net other expense of $0.2 million for the three months ended December 31, 1995
to a net other income of $0.3 million for the three months ended December 31,
1996, and increased from a net other expense of $0.3 million for the six months
ended December 31, 1995 to a net other income of $0.8 million for six months
ended December 31, 1996, due primarily to the repayment of debt and to interest
income attributable to the higher level of funds available for investment
following the Company's initial public offering in May 1996.
Income Taxes. The Company accounts for its income taxes under Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." Under SFAS 109, deferred tax liabilities and assets are recognized for
the expected future tax consequences of temporary differences between the
carrying amount of assets and liabilities for financial reporting and the
amounts used for income taxes. At December 31, 1996, the Company had
approximately $28 million of gross deferred tax assets comprised primarily of
net operating loss carryforwards. In the three months ended December 31, 1996,
the Company recorded its first tax provision for income taxes, totaling $0.3
million. This provision resulted primarily from the Company exhausting operating
loss carryforwards in certain foreign tax jurisdictions. To the extent that
11
<PAGE> 12
the Company continues generating taxable income in such tax jurisdictions,
additional future tax provisions will be recorded.
The Company believes that, based on a number of factors, the available
objective evidence creates sufficient uncertainty regarding the realizability of
the deferred tax assets such that a full valuation allowance has been recorded.
These factors include the Company's history of net losses since inception, the
Company's limited profitability in recent periods, the fact that the market in
which the Company competes is intensely competitive and characterized by rapidly
changing technology, and the uncertainty regarding market acceptance of new
versions of the Company's AXXiON products. The Company will continue to assess
the realizability of the deferred tax assets based on actual and forecasted
operating results.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and short-term investments totaled
$30.6 million at December 31, 1996 and represented 66% of total assets. Cash and
cash equivalents are highly liquid with original maturities of ninety days or
less. Short-term investments consist mainly of investment grade commercial
paper. At December 31, 1996, the Company had $0.5 million of long-term debt and
stockholders' equity was approximately $33.2 million.
Net cash provided from operating activities increased to $0.2 million in
the six months ended December 31, 1996 from a net use of cash of $4.1 million in
the six months ended December 31, 1995. The improvement in cash provided from
operating activities resulted primarily from net income in the six months ended
December 31, 1996, compared to a net loss in the six months ended December 31,
1995, and a $1.0 million increase in deferred revenue in the six months ended
December 31, 1996.
OpenVision's investing activities used cash of $5.9 million in the six
months ended December 31, 1996 primarily from the purchase of short-term
investments of $4.8 million, and capital expenditures of $1.0 million. The
Company's investing activities used cash of $0.3 million in the six months ended
December 31, 1995 and consisted primarily of capital expenditures.
The Company believes that its current cash, cash equivalents, and
short-term investment balances and cash flow from operations, if any, will be
sufficient to meet the Company's working capital and capital expenditure
requirements for at least the next twelve months. Thereafter, the Company may
require additional funds to support its working capital requirements or for
other purposes and may seek to raise such additional funds through public or
private equity financing or from other sources. There can be no assurance that
additional financing will be available at all or that, if available, such
financing will be obtainable on terms favorable to the Company.
FACTORS THAT MAY AFFECT FUTURE RESULTS
In addition to other information in this Report on Form 10-Q, the following
factors should be considered carefully in evaluating the Company and its
business.
Risk of Significant Fluctuations in Quarterly Operating Results. The
Company has experienced, and expects to continue to experience, significant
fluctuations in quarterly operating results that may be caused by many factors,
including, among others: the size and timing of orders; development and
introduction of new operating systems that require additional development
efforts, introduction or enhancement of products by the Company or its
competitors; changes in pricing policy of the Company or its competitors;
increased competition; technological changes in computer systems and
environments; the ability of the Company to timely develop, introduce and market
new products; quality control of products sold; market readiness to deploy
systems management products for distributed computing environments; market
acceptance of new products and product enhancements; seasonality of revenue;
customer order deferrals in anticipation of new products and product
enhancements; the Company's success in expanding its sales and marketing
programs; personnel changes; foreign currency exchange rates; mix of products
sold; acquisition costs; and general economic conditions. The Company's
operating results are highly sensitive to the timing of larger orders. Orders
typically range from a few thousand dollars to several hundred thousand dollars.
Revenue is difficult to
12
<PAGE> 13
forecast because the client/server systems management software market is an
emerging market that is highly fragmented and subject to rapid change. The
Company's revenue in its first fiscal quarter is typically lower than its
revenue in the immediately preceding quarter ended June 30, due to seasonality
in customer buying patterns and the structure of the Company's sales commission
programs, which can increase sales incentives, in the Company's fourth fiscal
quarter. The Company expects this seasonality to continue. The Company's sales
cycle varies substantially from customer to customer. The Company has had net
income only in each of the five quarters ended December 31, 1996, and there can
be no assurance that the Company will have net income in future quarters or on
an annual basis.
The Company's future revenue is difficult to predict, and the Company has
in the past not achieved its revenue expectations. Because the Company generally
ships software products within a short period after receipt of an order, it
typically does not have a material backlog of unfilled orders, and revenue in
any quarter is substantially dependent on orders booked and shipped in that
quarter. In addition, the Company typically recognizes a significant portion of
license revenue in the last two weeks of a quarter. The Company's expense levels
are based, in part, on its expectations as to future revenue and to a large
extent are fixed in the short term. The Company expects to increase expense
levels in each of the next several quarters primarily to support increased sales
and marketing efforts and research and development efforts. The Company is
unable to adjust expenses in the short term to compensate for any unexpected
revenue shortfall. Accordingly, any significant shortfall of revenue in relation
to the Company's expectations or any material delay of customer orders would
have an immediate adverse effect on its business, operating results and
financial condition and on the Company's ability to achieve or maintain
profitability. As a result of all of these factors, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
Furthermore, it is possible that in future quarters the Company's operating
results may be below the expectations of public market analysts and investors.
In such event, the price of the Company's Common Stock would be materially and
adversely affected.
Accumulated Deficit; Uncertain Profitability; Limited Operating History;
Early Stage of Development and Deployment. The Company was incorporated in 1992
and did not begin shipping products until March 1993. Accordingly, the Company
has a very limited operating history, which makes the prediction of future
results difficult or impossible. The Company has incurred significant net losses
since its inception, and the Company had an accumulated deficit of approximately
$76.7 million at December 31, 1996. Although the Company achieved net income in
each of the five quarters ended December 31, 1996, there can be no assurance
that the Company will continue to be profitable in any future period and recent
operating results should not be considered indicative of future financial
performance. The Company is subject to the risks inherent in the operation of a
new business enterprise, and there can be no assurance that the Company will be
able to successfully address these risks.
Although the Company's strategy is to derive a significant portion of its
revenue from the licensing of software, the Company's revenue to date has been
limited. The Company's software products are designed for client/server
computing environments, which have been utilized only for the past several
years. The Company's product strategy is initially to integrate selected product
pairs to enhance systems management functionality and to integrate certain
products throughout its entire product line through the availability of a common
set of services by late 1997. Currently the Company is in process of this
product integration. The success of the Company's strategy is dependent in
significant part on its ability to integrate its products as planned and on the
Company's software products achieving market acceptance by end users and
hardware and software vendors. No assurance can be given that the Company will
successfully integrate its products as planned or that the Company's software
products will achieve market acceptance. The success of the Company's strategy
is also dependent on the Company's ability to expand its direct sales, service
and marketing organizations and to establish indirect distribution channels,
including resellers, VARs, hardware distributors, application software vendors
and systems integrators. If the Company is unable to expand its direct sales,
service and marketing organizations and develop appropriate distribution
channels on a timely basis, the Company's business, operating results and
financial condition would be materially adversely affected.
13
<PAGE> 14
Risks Relating to Merger with VERITAS. On January 13, 1997, the Company
entered into an Agreement and Plan of Reorganization (the "Agreement") with
VERITAS Software Corporation, a California corporation ("VERITAS"), a
publicly-held company that develops, markets and supports advanced storage
management and high availability software products for open system environments,
and Software Corporation, a Delaware corporation ("New VERITAS"), a wholly owned
subsidiary of VERITAS, pursuant to which OpenVision will become a wholly owned
subsidiary of New VERITAS (the "Merger"). Consummation of the Merger is
conditioned upon the affirmative vote of each company's stockholders, among
other conditions. The announcement and consummation of the Merger may cause
employees of the Company to seek employment elsewhere, particularly in light of
the planned consolidation of the combined company's Northern California
facilities, and could cause customers to delay or cancel orders for products as
a result of uncertainty over the integration and continued support of the
combined company's products. If the Merger is not consummated, there can be no
assurance that the Company would be able to retain employees who had decided to
leave or quickly replace employees that have left or customers who had decided
to cancel or delay orders. Furthermore, if the Merger were not consummated, the
Company would recognize significant expenses relating to the Merger, which would
adversely affect the Company's operating results in the quarter in which the
Merger was terminated, and the price of the Company's Common Stock would likely
decline, since the stock price rose when the Merger was announced in
anticipation of the perceived premium offered by VERITAS relative to the price
of the Company's Common Stock at the time. As a result of the foregoing factors,
the failure to consummate the Merger, for any reason, could have a material
adverse effect on both the Company's business, operating results and financial
condition and the price of its Common Stock.
Volatility of Stock Price. The market price for the Company's Common Stock
is highly volatile. The trading price of the Company's Common Stock could be
subject to wide fluctuations in response to quarterly variations in operating
and financial results, announcements of technological innovations, new products,
new customer relationships or new strategic relationships by the Company or its
competitors, changes in prices of the Company's or its competitors' products and
services, changes in product mix, changes in revenue and revenue growth rates
for the Company. Statements or changes in opinions, ratings, or earnings
estimates made by brokerage firms or industry analysts relating to the market in
which the Company does business or relating to OpenVision specifically, have
resulted, and could in the future result, in an immediate and adverse effect on
the market price of the Company's Common Stock. In addition, the stock market
has from time to time experienced extreme price and volume fluctuations which
have particularly affected the market price for the securities of many
high-technology companies and which often have been unrelated to the operating
performance of these companies. The broad market fluctuations may adversely
affect the market price of the Company's Common Stock.
Rapid Technological Change and Requirement for Frequent Product
Transitions. The market for the Company's products is intensely competitive,
highly fragmented and characterized by rapid technological developments,
evolving industry standards and rapid changes in customer requirements. The
introduction of products embodying new technologies, the emergence of new
industry standards or changes in customer requirements could render the
Company's existing products obsolete and unmarketable. As a result, the
Company's success depends upon its ability to continue to enhance existing
products, respond to changing customer requirements and develop and introduce in
a timely manner new products that keep pace with technological developments and
emerging industry standards. Customer requirements include, but are not limited
to, product operability and support across distributed and changing
heterogeneous hardware platforms, operating systems, relational databases and
networks. For example, as certain of the Company's customers start to utilize
WindowsNT or other emerging operating platforms, it will be necessary for the
Company to enhance its AXXiON products to operate on such platforms in order to
meet these customers' requirements. There can be no assurance that the Company's
products will achieve market acceptance or will adequately address the changing
needs of the marketplace or that the Company will be successful in developing
and marketing enhancements to its existing products or new products
incorporating new technology on a timely basis. The Company has in the past
experienced delays in product development, and there can be no assurance that
the Company will not experience further delays in connection with its current
product development or future development activities. If the Company is unable
to develop and introduce new products, or enhancements to existing products, in
a timely manner in response to changing market conditions or customer
14
<PAGE> 15
requirements, the Company's business, operating results and financial condition
will be materially and adversely affected. Because the Company has limited
resources, it must restrict its product development efforts to a relatively
small number of products and operating systems. There can be no assurance that
these efforts will be successful or, even if successful, that any resulting
product or operating system will achieve market acceptance.
Risk of Software Defects; Product Liability. Software products as complex
as those offered by the Company frequently contain errors or defects, especially
when first introduced or when new versions or enhancements are released. Despite
product testing, the Company has in the past released products with defects,
discovered software errors in certain of its new products after introduction and
experienced delayed or lost revenue during the period required to correct these
errors. The Company regularly introduces enhancements to its existing products
and periodically introduces new products. During the three months ended
September 30, 1996, the Company released new versions of its AXXiON-NetBackup
and AXXiON-SecureMax products that incorporate a three-tiered client/server
architecture. There can be no assurance despite testing by the Company and by
current and potential customers, that defects and errors will not be found in
existing products or in new products, versions or enhancements after
commencement of commercial shipments. Any such defects and errors could result
in adverse customer reactions, negative publicity regarding the Company and its
products, harm to the Company's reputation, loss of or delay in market
acceptance or require expensive product changes, any of which could have a
material adverse effect upon the Company's business, operating results and
financial condition.
The Company's license agreements with customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. To the extent the Company relies on "shrink wrap" licenses
that are not signed by licensees and, therefore, may be unenforceable under the
laws of certain jurisdictions, the limitation of liability provisions contained
in such license agreements may not be effective. The Company's products are
generally used to manage data critical to organizations, and, as a result, the
sale and support of products by the Company may entail the risk of product
liability claims. Although the Company maintains errors and omissions product
liability insurance, a successful liability claim brought against the Company
could have a material adverse effect upon the Company's business, operating
results and financial condition.
Intense Competition. The market for client/server systems management
software is intensely competitive, highly fragmented and rapidly changing and in
order to compete, the Company will have to enhance the operability of its
products with one another and develop new products in a timely fashion. The
Company competes primarily with: (i) hardware and software vendors that offer a
management platform or framework to support vendor-created and third-party
systems management applications; (ii) vendors that provide systems management
software for the mainframe environment and are migrating their products to the
client/server environment; (iii) vendors that provide "point" products that
address specific problems and offer specific functionality, such as job
scheduling or security audit tools; and (iv) vendors that provide integrated and
interoperable solutions. The Company believes that its principal competitors
that offer products in all of its product areas--storage, operations and
security--are Computer Associates International, Inc., Hewlett-Packard Company,
IBM Corporation, PLATINUM technology, Inc. and several smaller private
companies. The Company believes that additional principal competitors with
respect to each of the Company's three product areas include: Legato Systems,
Inc., EMC, Arcada Software and Spectra Logic for storage; Novadigm, Inc., IBM
Corporation, BMC Software, Inc., Compuware Corporation and Sun Microsystems,
Inc. for operations; and Axent Technologies, Cybersafe Corporation and Memco
Software Limited for security. In competing with hardware vendors, the Company
may be at a competitive disadvantage because hardware vendors are able to
package combinations of hardware and software, thereby offering the customer a
single-vendor solution at a lower total cost.
Many of the Company's competitors have longer operating histories and have
substantially greater financial, technical, sales, marketing and other
resources, as well as greater name recognition and a larger customer base, than
the Company. The Company's current and future competitors could introduce
products with more features, greater scalability, greater functionality and
lower prices than the Company's products. These competitors could also bundle
existing or new products with other, more established products in order to
15
<PAGE> 16
compete with the Company. The Company's focus on client/server systems
management software may be a disadvantage in competing with vendors that offer a
broader range of products. Moreover, as the client/server systems management
software market develops, a number of companies with significantly greater
resources than those of the Company could attempt to increase their presence in
this market by acquiring or forming strategic alliances with competitors or
business partners of the Company. For example, IBM Corporation purchased Tivoli
Systems Inc., and Computer Associates purchased Cheyenne Software, both
competitors of the Company. In addition, because there are relatively low
barriers to entry for the software market, the Company expects additional
competition from other established and emerging companies. Increased competition
is likely to result in price reductions, reduced gross margins and loss of
market share, any of which could materially and adversely affect the Company's
business, operating results and financial condition. Any material reduction in
the price of the Company's products would negatively affect gross margins and
would require the Company to increase software unit sales in order to maintain
gross profits. There can be no assurance that the Company will be able to
compete successfully against current and future competitors, and the failure to
do so would have a material adverse effect upon the Company's business,
operating results and financial condition.
Product, Increasing Concentration; Dependence on Growth of Market for
Client/Server Systems Management Software and Service. The Company's storage
products accounted for 70% and 51% of the Company's license revenue in the six
months ended December 31, 1996 and 1995, respectively. The Company believes its
storage products will continue to account for a significant portion of its
license revenue in the foreseeable future. The Company's AXXiON-HA product
accounted for 19% and 16% of the Company's license revenue in the six months
ended December 31, 1996 and 1995, respectively. A decline in unit price or
demand for the Company's storage products or its AXXiON-HA product as a result
of competition, technological change or other factors could have a material
adverse effect on the business, operating results and financial condition of the
Company.
All of the Company's business is in the market for client/server systems
management software and services, which is still an emerging market that is
intensely competitive, highly fragmented and rapidly changing. The Company's
future financial performance will depend in large part on continued growth in
the number of companies adopting client/server technology and systems management
solutions for their client/server computing environments. There can be no
assurance that the market for client/server systems management software and
services will continue to grow. If the client/server systems management software
and services market fails to grow or grows more slowly than the Company
currently anticipates, or in the event of a decline in unit price or demand for
the Company's products, as a result of competition, technological change or
other factors, the Company's business, operating results and financial condition
would be materially and adversely affected. During recent years, segments of the
computer industry have experienced significant economic downturns characterized
by decreased product demand, production over capacity, price erosion, work
slowdowns and layoffs. The Company's financial performance may in the future
experience substantial fluctuations as a consequence of such industry patterns,
general economic conditions affecting the timing of orders, and other factors
affecting capital spending. There can be no assurance that such factors will not
have a material adverse effect on the Company's business, operating results and
financial condition.
Dependence on and Need to Hire Additional Key Personnel; Management of
Growth. The Company's future performance depends to a significant degree upon
the continued service of its key members of management, as well as marketing,
sales, consulting and product development personnel, none of whom are bound by
an employment contract. The Company does not have and does not intend to obtain
key man life insurance on its personnel. The loss of one or more of the
Company's key personnel could have a material adverse effect on the Company's
business, operating results and financial condition. The Company believes its
future success will also depend in large part upon its ability to attract,
assimilate and retain highly skilled management, marketing, sales, consulting
and product development personnel. Competition for such personnel is intense,
and there can be no assurance that the Company can retain its key employees or
that it will be successful in attracting, assimilating and retaining such
personnel in the future. Failure to attract, assimilate and retain key personnel
could have a material adverse effect on the Company's business, operating
results and financial condition.
16
<PAGE> 17
Risks Associated With International Operations. International revenue (from
sales outside the United States and Canada) accounted for 36% and 28% of the
Company's revenue in the six months ended December 31, 1996 and 1995,
respectively. The Company believes that its success depends upon continued
expansion of its international operations. The Company currently has sales and
service offices in the United States, Canada, England, Germany and France. The
Company also has resellers in North America, Europe, Asia Pacific, South America
and the Middle East. International expansion may require that the Company
establish additional foreign offices, hire additional personnel and recruit
additional international resellers. This may require significant management
attention and financial resources and could adversely affect the Company's
operating margins. To the extent the Company is unable to effect these additions
efficiently and in a timely manner, its growth, if any, in international sales
will be limited, and the Company's business, operating results and financial
condition could be materially and adversely affected. There can be no assurance
that the Company will be able to maintain or increase international market
demand for its products.
The Company's international business involves a number of risks, including
lack of acceptance of localized products, cultural differences in the conduct of
business, longer accounts receivable payment cycles, greater difficulty in
accounts receivable collection, seasonality due to the slow-down in European
business activity during the Company's first fiscal quarter, unexpected changes
in regulatory requirements and royalty and withholding taxes that restrict the
repatriation of earnings, tariffs and other trade barriers, and the burden of
complying with a wide variety of foreign laws. The Company's international sales
are generated primarily through its international sales subsidiaries and are
currently denominated in local currency, creating a risk of foreign currency
translation gains and losses. To the extent profit is generated or losses are
incurred in foreign countries, the Company's effective income tax rate may be
materially and adversely affected. In some markets, localization of the
Company's products is essential to achieve market penetration. The Company may
incur substantial costs and experience delays in localizing its products, and
there can be no assurance that any localized product will ever generate
significant revenue. There can be no assurance that any of the factors described
herein will not have a material adverse effect on the Company's future
international sales and, consequently, its business, operating results and
financial condition.
Dependence on Proprietary Technology; Risks of Infringement. The Company's
success depends upon its proprietary technology. The Company relies on a
combination of copyright, trademark and trade secret laws, confidentiality
procedures and licensing arrangements to establish and protect its proprietary
rights. The Company presently has no patents although it has filed several
patent applications. As part of its confidentiality procedures, the Company
generally enters into non-disclosure agreements with its employees, distributors
and corporate partners, and license agreements with respect to its software,
documentation and other proprietary information. Despite these precautions, it
may be possible for a third party to copy or otherwise obtain and use the
Company's products or technology without authorization, or to develop similar
technology independently. Policing unauthorized use of the Company's products is
difficult and although the Company is unable to determine the extent to which
piracy of its software products exists, software piracy can be expected to be a
persistent problem. In selling its products, the Company relies in part on
"shrink wrap" licenses that are not signed by licensees and, therefore, may be
unenforceable under the laws of certain jurisdictions. In addition, effective
protection of intellectual property rights is unavailable or limited in certain
foreign countries. There can be no assurance that the Company's protection of
its proprietary rights, including any patent that may be issued, will be
adequate or that the Company's competitors will not independently develop
similar technology, duplicate the Company's products or design around any
patents issued to the Company or other intellectual property rights.
The Company is not aware that any of its products infringe the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim such infringement by the Company with respect to current or
future products. The Company expects that software product developers 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 in the
industry segment overlaps. Any such claims, with or without merit, could result
in costly litigation that could absorb significant management time, which could
have a material adverse effect on the Company's business, operating results and
financial condition. Such claims might require the Company to enter into royalty
or license agreements. Such royalty or license agreements, if required, may
17
<PAGE> 18
not be available on terms acceptable to the Company or at all, which could have
a material adverse effect upon the Company's business, operating results and
financial condition.
Control By Management and Current Stockholders. At December 31, 1996, the
Company's officers and directors, and their affiliates, in the aggregate,
control approximately 57% of the Company's Common Stock with full voting rights
and beneficially own approximately 64% of the Company's Common Stock. In
particular, Warburg, Pincus Investors, L.P. ("Warburg") controls approximately
47% of the Company's Common Stock with full voting rights and beneficially owns
approximately 55% of the Company's Common Stock. As a result, these stockholders
are able to exercise significant influence over all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. In addition, the Board of Directors has the
authority to issue up to 5,000,000 shares of undesignated Preferred Stock and,
subject to certain limitations, to determine the rights, preferences, privileges
and restrictions, including voting rights, of such shares without any further
vote or action by the stockholders. The voting power of Warburg and the
Company's officers or the issuance of Preferred Stock under certain
circumstances could have the effect of delaying or preventing a change in
control of the Company. The Company has entered into agreements with its
officers and directors indemnifying them against losses they may incur in legal
proceedings arising from their service to the Company.
Past and Future Acquisitions. Between October 1992 and July 1993, the
Company concluded an aggregate of ten acquisitions of companies, divisions of
companies or products. The Company may make additional acquisitions in the
future. Acquisitions of companies, divisions of companies or products entail
numerous risks, including difficulty in successfully assimilating acquired
operations, diversion of management's attention and loss of key employees of
acquired companies. Several of the products acquired required significant
additional development, such as restructuring software codes to support larger
scale environments, porting products to additional operating system platforms,
regression testing and improving network and device support, before they could
be marketed and some failed to generate any revenue for the Company. In
addition, the numerous acquisitions resulted in the Company managing a research
and development effort that was spread over as many as ten development centers.
The distributed research and development effort resulted in redundant capital
equipment needs, overlapping products, disparately developed products that the
Company was unable to integrate or had difficulty integrating, substantial
additional travel, conflicting employee cultures and difficulty implementing and
managing engineering processes and standards setting, all of which had a
material adverse effect on the Company's business, operating results and
financial condition in fiscal 1994 and the first half of fiscal 1995. No
assurance can be given that the Company will not incur these same problems in
future acquisitions. Any such problems could have a material adverse effect on
the Company's business, operating results and financial condition. In addition,
future acquisitions by the Company may result in dilutive issuance of equity
securities, the incurrence of additional debt, large one-time write-offs and the
creation of goodwill or other intangible assets that could result in
amortization expense. These factors could have a material adverse effect on the
Company's business, operating results and financial condition.
18
<PAGE> 19
PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
At the Annual Meeting of Stockholders held November 19, 1996, the
stockholders elected the following directors of the Company:
Thomas J. Connors by a vote of 12,543,686 for and 12,407 withheld.
Michael S. Fields by a vote of 12,542,832 for and 13,261 withheld.
Stewart K.P. Gross by a vote of 12,543,436 for and 12,657 withheld.
William H. Janeway by a vote of 12,543,586 for and 12,507 withheld.
Geoffrey W. Squire by a vote of 12,543,061 for and 13,032 withheld.
Jeanne D. Wohlers by a vote of 12,543,061 for and 13,032 withheld.
The stockholders also approved the appointment of Ernst & Young LLP as the
Company's independent accountants for fiscal 1997 by a vote of 12,539,962 for,
9,800 against, and 6,331 abstain.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) EXHIBITS
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NUMBER
- - ------- ---------------------------------------------------------------------- -----------
<C> <S> <C>
11.1 Statement Re: Computation of Net Income (Loss) Per Share
27.1 Financial Data Schedule (EDGAR only)
</TABLE>
(b) REPORTS ON FORM 8-K No reports on Form 8-K were filed by the registrant
during the quarter ended December 31, 1996.
19
<PAGE> 20
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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 on February 11, 1996.
OPENVISION TECHNOLOGIES, INC.
By: /s/ KENNETH E. LONCHAR
------------------------------------
Kenneth E. Lonchar
Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
20
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ --------------------------------------------------------------------- ------------
<C> <S> <C>
11.1 Statement Re: Computation of Net Income (Loss) Per Share.............
27.1 Financial Data Schedule (EDGAR only).................................
</TABLE>
21
<PAGE> 1
EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION OF NET INCOME (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income (loss)................................ $ 974 $ 30 $ 1,090 $(1,781)
Weighted average common shares outstanding....... 18,656 2,460 18,610 2,460
Common equivalent shares from stock options
(treasury stock method)........................ 1,067 -- 1,023 --
Shares related to Staff Accounting Bulletin Topic
4D Common stock (treasury stock method)........ -- 855 -- 855
Common stock options (treasury stock method)... -- 404 -- 404
Convertible preferred stock (as-if converted
method)..................................... -- 3,749 -- 3,749
------- ------- ------- -------
Total shares for primary and fully diluted net
income (loss) per share........................ 19,723 7,468 19,633 7,468
Net income (loss) per share...................... $ 0.05 $ 0.00 $ 0.06 $ (0.24)
Calculation of shares outstanding for computing
pro forma net income (loss) per share:
Shares used in computing net income (loss) per
share....................................... 19,723 7,468 19,633 7,468
Adjustment to reflect the effect of the assumed
conversion of convertible preferred stock
from the date of issuance (as if converted
method)..................................... -- 8,305 -- 8,305
------- ------- ------- -------
Shares used in computing pro forma net income
(loss) per share............................ 19,723 15,773 19,633 15,773
Pro forma net income (loss) per share............ $ 0.05 $ 0.00 $ 0.06 $ (0.11)
------- ------- ------- -------
</TABLE>
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM A CONDENSED
CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER
ENDED DECEMBER 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 12,144
<SECURITIES> 18,483
<RECEIVABLES> 11,706
<ALLOWANCES> 497
<INVENTORY> 0
<CURRENT-ASSETS> 43,173
<PP&E> 2,713
<DEPRECIATION> 0
<TOTAL-ASSETS> 46,733
<CURRENT-LIABILITIES> 13,069
<BONDS> 0
0
0
<COMMON> 19
<OTHER-SE> 33,182
<TOTAL-LIABILITY-AND-EQUITY> 46,733
<SALES> 13,838
<TOTAL-REVENUES> 19,252
<CGS> 1,152
<TOTAL-COSTS> 2,379
<OTHER-EXPENSES> 16,218
<LOSS-PROVISION> 13
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,426
<INCOME-TAX> 336
<INCOME-CONTINUING> 1,090
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,090
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
