<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
----------------
Commission File Number 0-23078
MAPINFO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
NEW YORK 06-1166630
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
----------------
ONE GLOBAL VIEW
TROY, NEW YORK 12180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (518) 285-6000
----------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock,
$.002 Par Value Per Share
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 [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [_]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $49,893,930 based on the closing price of the
Common Stock on the Nasdaq National Market on December 23, 1996.
The number of shares outstanding of the registrant's common stock, $.002 par
value per share as of December 23, 1996 was 5,775,862.
DOCUMENTS INCORPORATED BY REFERENCE
10-K
DOCUMENT DESCRIPTION PART
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Specifically Identified Portions of the Registrant's Proxy Statement
for the Annual Meeting of Shareholders to be held on February 13,
1997................................................................ III
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<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
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MapInfo Corporation (the "Company" or "MapInfo") designs, develops, markets,
licenses, and supports mapping software products, application development
tools, and data products, together with a range of consulting, training and
technical support services. These products and services enable business users
worldwide to correlate, visualize, and analyze corporate data using the common
theme of geography to help solve business problems related to sales and
marketing analysis, site selection, asset management, risk analysis, routing
and logistics, among others. By overlaying corporate data on any of the
thousands of digital maps sold by the Company or its data partners,
organizations can use geographic or demographic information as a framework for
viewing, interpreting and managing data.
MapInfo's business strategy emphasizes the development of a broad range of
mapping software products for business use, marketed through multiple channels
of distribution. Products range from stand-alone software for the desktop PC,
to development tools for creating custom applications for the PC,
client/server, Internet and other networked environments. MapInfo software
products operate in a multi-platform environment and permit file sharing of
geographic and demographic data across products and platforms. There are
currently over 400 third-party applications for use with MapInfo software.
BACKGROUND
- - - - - - - - - - ----------
In today's business environment, organizations are under constant competitive
pressure to acquire and retain customers, reduce costs, and improve operating
efficiencies. Many businesses are turning to information technology to meet
these challenges, yet in many cases organizations are overwhelmed by the vast
amount of data available to them, or have difficulty accessing and organizing
data to effectively make decisions. In order to meet their business goals and
manage the information overload, many companies are reengineering common
business practices by turning to networked systems and distributed computing,
and providing information to managers at all levels within an organization.
Using geography as a common theme to manage information has become an
increasingly important way to leverage information technology across an
organization. A significant amount of all corporate data has a geographic
component, such as an address or postal code. By using the geographic
component and positioning data on maps according to geographic relationships,
mapping software enables users to visualize trends and patterns not previously
recognized and can make such data easier to use and understand. For many
businesses, mapping software provides a cost effective solution to improve
their decision-making process.
PRODUCTS AND SERVICES
- - - - - - - - - - ---------------------
The Company offers a range of mapping software and data products, in addition
to services that include consulting, training, and technical support for both
end users and developers.
SOFTWARE PRODUCTS
- - - - - - - - - - -----------------
MAPINFO PROFESSIONAL 4.1
MapInfo Professional 4.1 is a full-featured, customizable mapping software
package for businesses and GIS analysts. It includes a wide range of data
visualization, management and analysis tools, plus open database connectivity
(ODBC) to directly access corporate databases. It is compatible with
Microsoft's OLE technology, allowing MapInfo maps to be easily integrated into
other applications. MapInfo Professional can be customized for specific
industry uses.
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MAPINFO DESKTOP
Introduced in March 1996, MapInfo Desktop is a desktop mapping software
package for visualizing and analyzing various data types stored on an
individual user's computer. MapInfo Desktop contains a subset of MapInfo
Professional functionality; it offers an easy migration path to MapInfo
Professional for users as their mapping needs become more sophisticated.
MAPBASIC DEVELOPMENT ENVIRONMENT
The MapBasic Development Environment consists of a BASIC-like programming
language and other development tools. It is used by IS organizations and
third-party developers to create customized mapping applications for use with
MapInfo Professional. MapBasic can be used to extend or focus the
functionality of MapInfo Professional, modify the user interface to a specific
business need, automate routine operations, and integrate MapInfo Professional
with other applications.
MAPINFO PROSERVER
MapInfo ProServer is a suite of software and developer tools for creating
Internet/intranet mapping applications. With MapInfo ProServer, the data and
application reside on a server for easy updating and distribution. It allows
end users to access mapping through standard Web browsers or other custom
interfaces using Internet protocols. Introduced in September 1996, the MapInfo
ProServer suite includes MapInfo Professional and MapBasic, in addition to the
MapInfo ProServer software.
MAPINFO MAPX
MapInfo MapX is an OCX component used by developers to embed mapping
functionality into new and existing applications. Developers can work from
within familiar object oriented development environments such as Visual Basic,
PowerBuilder, and Delphi to add a mapping object to an application. End users
can access mapping functionality from their familiar business applications
created by developers. MapInfo MapX was introduced in November 1996.
SPATIALWARE
SpatialWare is a suite of technologies that includes all the software
components needed to store, access, maintain and manage map and other spatial
data in a native Oracle 7.x database system. Capabilities for other relational
database management systems (RDBMS) are anticipated to follow. SpatialWare
allows map/spatial data and core relational business data to be combined into
a single database, providing easy use of both types of data at once in mapping
applications. Through SpatialWare, map/spatial data experiences all the
benefits that an RDBMS provides for other business data such as data
integrity, multi-user access, back-up/recovery, and security. SpatialWare also
provides industry standard SQL-based querying and analysis operations. In
October 1996, MapInfo purchased an exclusive worldwide license to market
SpatialWare technology and an option to acquire the technology. SpatialWare
was not marketed by MapInfo in FY 1996.
DATA PRODUCTS
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The Company develops and markets a wide range of data products that are used
with its mapping software products to enhance an application. The Company's
data products fall into three categories:
. Geocoding products
. Geographic and demographic information products
. Software utilities
GEOCODING PRODUCTS
Geocoding products assign latitude/longitude coordinates to corporate data
containing geographic references so that the data can be accurately placed on
a map and analyzed geographically. MapInfo's geocoding products prepare data
for use in MapInfo Professional and other mapping applications. MAPMARKER is a
geocoding product marketed in the United States. It is available as a client
or server-side product, and includes a developer kit for creating customized
geocoding solutions to fit into specific business processes, such as point-of-
sale applications. MapMarker can batch geocode entire databases or be used
interactively to geocode addresses as they are entered. The Company also
markets geocoders for use in the United Kingdom and Australia.
3
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GEOGRAPHIC AND DEMOGRAPHIC INFORMATION PRODUCTS
The Company offers a broad line of worldwide geographic and demographic
information products for use with MapInfo software. These products compile
extensive quantities of data derived from public and private sources. The
Company often re-engineers this data, and aesthetically enhances it, so that
the resulting data product conforms to MapInfo standards and can be used more
effectively with MapInfo software products. The Company typically pays
royalties to third parties with respect to sales of data products that are
developed by outside sources.
The Company's geographic and demographic data products include the following:
Streets. The Company's street-based data products are based on files available
from the United States Census Bureau. The Company's selection of street maps
includes streets, highways, water boundaries, railroad tracks, bridges and
town boundaries. Address ranges are also included in metropolitan areas. By
overlaying any geocoded database with a street address field, a user can
display each record as a point in its relative location. In addition to data
for the United States, street-level files are available for Canada, Germany,
Italy, Belgium, Sweden, the Netherlands, Switzerland, France, Austria, Moscow
and St. Petersburg-Russia, Barcelona-Spain, Poland, Japan, Australia,
Malaysia, Israel, Mexico, Brazil, Argentina, Chile, Columbia, Venezuela, and
Uruguay.
Boundary Files. The Company's boundary maps allow users to shade, color, or
add symbols that represent important information or business data contained in
these areas. These boundaries include ZIP Code areas, states, counties, census
tracks, block groups and Congressional districts in the United States, and
other country-specific boundaries such as postcodes, provinces, cantons,
landers, and prefectures.
Demographic Data. The Company offers thousands of map-compatible demographic
data files for use with MapInfo software. Data available from the Company
includes information relating to population, income, retail activity,
employment, consumer trends and preferences, lifestyles, manufacturing and
other business data, Yellow Pages, and banking and telecommunications data.
Other International Data. The Company offers digital map data with respect to
Canada, the European Community, Asia Pacific and other international regions.
For example, the Company offers maps showing all Canadian highways, showing
European postal code boundaries for 17 countries in Western Europe, and
showing prefecture boundaries for China.
The Company relies in part on strategic partners and independent developers
for the development of specialized data products that use MapInfo software.
Failure by such strategic partners or independent developers to continue to
develop such data products could have a material adverse effect on the
Company's business and results of operations.
SOFTWARE UTILITIES
The Company offers additional software utilities that translate and convert
certain types of GIS files for use in MapInfo applications. These utilities
allow data from other formats to be registered and used in MapInfo software
and allow differing earth coordinate systems to be aligned with each other for
accuracy. The Company also offers a translator application programming
interface (API) to third parties for their development of data format
translators.
SERVICES
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The Company's services include consulting, training, and technical support.
Consulting services are offered to assist customers in developing,
implementing, and maintaining specialized mapping applications. Services
include advisory services, such as project planning, project design and
management, and code review; and software development services, such as custom
programming, application development, and software integration with existing
client software or other software applications. The Company charges for these
services on a fixed
4
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fee or per day basis. The Company also offers a Developer Services program to
assist its network of value-added resellers in designing and developing
applications and in training on new MapInfo products. In addition, the Company
provides product technical support and training classes for its customers.
PRODUCT DEVELOPMENT
- - - - - - - - - - -------------------
The software industry is characterized by extremely rapid changes in
technology, which requires continuous expenditure on product research and
development to enhance existing products and create new products. The Company
believes that the timely development of new products and continuing
enhancements to existing products is essential to maintain its competitive
position in the marketplace. The Company is committed to an open systems,
standards-based product architecture to provide software products that can be
integrated into an existing business technical environment and be adaptable as
the environment changes.
Most of the Company's software products are developed internally. Internal
development allows the Company to maintain close technical control over
products in terms of enhancements and modifications based on customer needs,
and allows the Company to create a family of products that provide natural
migration paths for customers as their mapping needs change.
MARKETING & DISTRIBUTION
- - - - - - - - - - ------------------------
The Company has established multiple distribution channels to reach a broad
array of industries while simultaneously addressing specific vertical markets.
Distribution channels include an indirect channel of value-added resellers and
distributors, a corporate accounts sales force, and a telemarketing sales
group. The Company has field selling offices in eight locations in North
America, three locations in Europe, and three locations in Australia. The
Company also has direct sales offices in China, Hong Kong, Taiwan, and Japan.
The Company's direct sales and marketing organization is complimented by a
network of corporate partners including resellers, system integrators, and
distributors, which purchase the Company's products at a discount for resale
and may provide training, consulting services, application development,
customization, and data products to end users. Outside North America,
distributors are the predominant channel of distribution. These distributors
generally build their own value-added reseller network in addition to directly
selling data products and consulting services.
The Company also has an established network of strategic alliances with
leading software companies including Microsoft, Informix, and Oracle. The
Company conducts joint sales and marketing programs and has technology
agreements with these companies to integrate mapping into their solutions and
gain exposure to a wider range of potential customers.
To build corporate identity and generate demand in support of the sales
effort, the Company conducts comprehensive marketing programs, which include
advertising, public relations, trade shows, direct mail, MapInfo Magazine,
Web-based promotions, and ongoing communications to customers about new
products. The Company additionally offers cooperative advertising and other
marketing support to its value-added reseller partners. The Company sponsors
an annual reseller's conference, which generates communication and support for
the reseller network. The Company also sponsors European and Asia Pacific
partner conferences, which foster communication and support on an
international level.
The Company markets its products to the business mapping market. Until
recently, the business mapping market consisted of mapping software
applications for the PC. Today, organizations seeking more widespread
deployment of critical business applications are demanding mapping solutions
for networks, including Internet/intranet and data warehouses. They are also
demanding tools that integrate mapping functionality into other applications,
and tools to manage complex geo-spatial data. The Company has recently
expanded its product offerings beyond the desktop market to the enterprise and
Internet/intranet markets. Sales to the enterprise and Internet/intranet
markets are directed to different decision makers within customer
organizations and require different selling and marketing programs than are
used in the desktop market.
5
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COMPETITION
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The Company encounters significant competition from various companies offering
mapping software. This includes Environmental Systems Research Institute,
Small World, Tactician and others.
INTELLECTUAL PROPERTY
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The Company regards its software as proprietary and attempts to protect it
with a combination of copyright, trademark and trade secret laws, employee and
third party non-disclosure agreements, and other methods of protection.
Despite these precautions, it may be possible for unauthorized third parties
to copy certain portions of the Company's products or reverse engineer or
obtain and use information the Company regards as proprietary. While the
Company's competitive position may be affected by its ability to protect its
proprietary information, the Company believes the trademark and copyright
protections are less significant to the Company's success than other factors
such as the knowledge and ability and experience of the Company's personnel,
name recognition and ongoing product development and support.
The Company supplies MapInfo software products primarily under shrinkwrap
licenses. Shrinkwrap licenses are not negotiated with or signed by individual
licensees and take effect upon the opening of the product package. Certain
provisions of such licenses, including provisions protecting against
unauthorized use, copying, transfer and disclosure of the license program, may
be unenforceable under the laws of certain jurisdictions. In addition, the
laws of some foreign countries do not protect the Company's proprietary rights
to the same extent as do the laws of the United States. Accordingly, the
Company supplies its MapInfo products using a hardware access key in many
countries. There can be no assurance that third parties will not assert
infringement claims against the Company in the future with respect to current
or future products. Any such assertion could require the Company to enter into
royalty arrangements or result in costly litigation.
ITEM 2. PROPERTIES
The Company leases two premises totaling approximately 102,000 square feet of
office space in the Rensselaer Technology Park in Troy, New York, which leases
expire in 2002 and 2004. These offices house the corporate headquarters, the
principal research and development center and the principal sales, marketing
and administrative staff for the Americas. In addition, the Company leases
eight sales offices in the United States, three sales offices in Europe, three
sales offices in Australia, and a sales support office in Japan.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during
the last quarter of the fiscal year ended September 30, 1996.
6
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EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth (i) the name and age of each present executive
officer of the Company, (ii) the position(s) presently held by each person
named, and (iii) the principal occupations held by each person named for at
least the past five years.
<TABLE>
<CAPTION>
Executive Officer Age Position
----------------- --- --------
<S> <C> <C>
Michael D. Marvin 51 Chairman of the Board
John C. Cavalier 57 President and Chief Executive Officer
John F. Haller 32 Vice President-Technology and Secretary
D. Joseph Gersuk 46 Vice President, Treasurer and Chief Financial Officer
Elizabeth A.Ireland 38 Vice President-Marketing
F. Steven Weick 51 Vice President-Engineering
</TABLE>
Mr. Marvin has served as Chairman of the Board since 1992 and served as acting
President and Chief Executive Officer from September 1, 1996 upon the
announced resignation of the Company's former President and Chief Executive
Officer, to November 1, 1996. From 1987 to 1992, Mr. Marvin served as Chief
Executive Officer of the Company. Mr. Marvin is a partner in Exponential
Business Development Co., a seed capital company. He is a director of Project
Software & Development, Inc. and various private companies. He is also Vice
Chairman of the New York Software Alliance.
Mr. Cavalier began serving as President and Chief Executive Officer on
November 1, 1996. From 1993 to 1996, Mr. Cavalier served as President and
Chief Executive Officer of Antares Alliance Group. From 1990 to 1992, Mr.
Cavalier was President and Chief Executive Officer of Bimillenium Corporation.
Mr. Cavalier is a director of Focus Enhancements Incorporated.
Mr. Haller, a founder of the Company, has served as Vice President-Technology
and Secretary since the Company's inception in 1986.
Mr. Gersuk has served as Vice President, Treasurer and Chief Financial Officer
since October 1994. From November 1992 to October 1994, Mr. Gersuk was a
director of and employed by DataEase Sapphire International Inc., a computer
software company, as Vice President and Chief Financial Officer. From 1986 to
1992, Mr. Gersuk served as Vice President and Chief Financial Officer of a
subsidiary of The Penn Central Corporation engaged in the non-destructive
testing business, and its successor through acquisition, Stavely NDT
Technologies Inc.
Ms. Ireland has been employed by the Company since 1988 and has served as Vice
President-Marketing since 1995. Prior to assuming her role as Vice President-
Marketing, Ms. Ireland served as Vice President- Business Development and
Information Products.
Mr. Weick has served as Vice President-Engineering since February 1995. Mr.
Weick was employed by Sapiens/SmartStar International most recently as Vice
President, Development in 1994 and from 1992 to 1993 was employed by Hewlett
Packard as a Consultant. From 1985 to 1990, Mr. Weick served as Vice
President, Communications Hardware and Software Development for Tandem
Computers.
7
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PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the Nasdaq National Market under the
symbol MAPS. The table below shows the high and low trading prices of the
Common Stock during the fiscal years ended September 30, 1995 and 1996.
<TABLE>
<CAPTION>
1995
-------------
PERIOD HIGH LOW
------ ------ ------
<S> <C> <C>
First Quarter................................................ $26.25 $16.50
Second Quarter............................................... $31.75 $22.50
Third Quarter................................................ $40.00 $29.00
Fourth Quarter............................................... $37.00 $19.25
<CAPTION>
1996
-------------
PERIOD HIGH LOW
------ ------ ------
<S> <C> <C>
First Quarter................................................ $23.25 $17.75
Second Quarter............................................... $21.00 $ 9.50
Third Quarter................................................ $18.00 $ 7.50
Fourth Quarter............................................... $13.00 $ 9.50
</TABLE>
The approximate number of holders of record of the Company's Common Stock at
December 1, 1996 was 470. This number does not include stockholders for whom
shares were held in nominee name.
The Company has never declared or paid cash dividends on its capital stock and
currently intends to retain all available funds for use in the operation of
its business. The Company does not anticipate paying cash dividends in the
foreseeable future.
8
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year ended September 30,
---------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
(in thousands, except earnings per share )
<S> <C> <C> <C> <C> <C>
Income Statement data:
Net revenues $ 10,584 $ 18,435 $ 29,720 $ 40,041 $ 41,532
Cost of revenues 2,735 4,018 6,190 7,725 9,360
-------- -------- -------- -------- --------
Gross profit 7,849 14,417 23,530 32,316 32,172
-------- -------- -------- -------- --------
Operating expenses:
Research and development 1,576 2,672 4,102 5,752 6,984
Selling and marketing 4,596 7,069 11,736 17,541 19,565
General and administrative 1,126 1,802 3,077 4,749 5,688
-------- -------- -------- -------- --------
Total operating expenses 7,298 11,543 18,915 28,042 32,237
-------- -------- -------- -------- --------
Operating income (loss) 551 2,874 4,615 4,274 (65)
Other income (expense), net 53 (131) 406 1,035 975
-------- -------- -------- -------- --------
Income before provision for
income taxes 604 2,743 5,021 5,309 910
Provision for income taxes 190 1,014 1,823 1,513 203
-------- -------- -------- -------- --------
Net income $ 414 $ 1,729 $ 3,198 $ 3,796 $ 707
======== ======== ======== ======== ========
Earnings per share:
Primary $ 0.10 $ 0.41 $ 0.61 $ 0.65 $ 0.12
Fully diluted $ 0.10 $ 0.39 $ 0.61 $ 0.65 $ 0.12
Weighted average shares
outstanding:
Primary 4,052 4,219 5,231 5,841 5,865
Fully diluted 4,052 4,464 5,236 5,841 5,865
Balance Sheet data:
Total assets $ 6,219 $ 10,383 $ 37,254 $ 46,422 $ 49,091
Long-term obligations, less
current portion $ 460 $ 549 $ 265 $ 95 $ 17
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(in thousands, except earnings per share)
OVERVIEW
MapInfo develops, manufactures, markets, licenses and supports business
mapping software and data products on a worldwide basis. The Company's
products and services include software, application development tools,
geographic and demographic data products, consulting services, training and
technical support for personal computers, workstations, and servers. The
Company has organized its operations into three principal operating units: the
Americas (North, Central and South America), Europe, and Asia Pacific.
RESULTS OF OPERATIONS FOR 1994, 1995 AND 1996
NET REVENUES
<TABLE>
<CAPTION>
1994 Change 1995 Change 1996
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Software and data products $26,981 34% $36,070 3% $36,980
Services 2,739 45% 3,971 15% 4,552
------------------------------------------------------------------
Net revenues $29,720 35% $40,041 4% $41,532
------------------------------------------------------------------
</TABLE>
In 1996, the increase in revenues was due to increased unit sales of software
and data products in Asia Pacific and Europe, including the increased sales
resulting from the acquisition of the Company's master distributor in
Australia in August 1995. This offset a decline in revenues in the Americas
primarily due to decreased unit sales of some software and data products, a
shift in the mix of products sold toward lower-priced products, decreased
technology licensing and development fees, and decreased services revenues. In
the Americas, the decline in revenues in 1996 resulted from a combination of
factors, including the shift from a primarily-direct to a primarily-indirect
distribution model, lower productivity from the reseller channel, attrition in
the field sales organization, and changing market conditions. In 1995, the
increase in revenues was primarily due to increased unit sales of software
products in Asia Pacific and Europe, increased technology licensing and
development fees and increased services revenues in the Americas. The Americas
represented 81%, 70% and 52% of Company revenues in 1994, 1995 and 1996. Asia
Pacific represented 6%, 12% and 24% of Company revenues in 1994, 1995 and
1996. Europe represented 13%, 18% and 24% of Company revenues in 1994, 1995
and 1996. Sales to one distributor in the Asia Pacific region represented 7%
and 9% of total net revenues in 1995 and 1996. The next scheduled
expiration/renewal date for the distribution contract with this distributor is
March 1, 1997. There can be no assurance that this contract will be renewed.
The Company's operating results are affected by exchange rates. Approximately
8%, 10%, and 25% of the Company's revenues were collected in foreign
currencies during 1994, 1995 and 1996. The impact of exchange rates on net
income is less than on revenues, as some of the Company's international
operating expenses are also incurred in local currencies. To date, the impact
of exchange rates has not been significant.
COST OF REVENUES
<TABLE>
<CAPTION>
1994 Change 1995 Change 1996
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost of revenues $6,190 25% $7,725 21% $9,360
Percentage of net revenues 20.8% 19.3% 22.5%
---------------------------------------------------------------
</TABLE>
Cost of revenues as a percentage of net revenues increased in 1996 due to
lower technology licensing and development fees, the cost of bundling other
software products with MapInfo Professional, and the write-off of obsolete
inventory. The percentage decreased in 1995 compared to 1994 due to increased
technology licensing and development fees and increased profitability of
services.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED
(in thousands, except earnings per share)
OPERATING EXPENSES
<TABLE>
<CAPTION>
1994 Change 1995 Change 1996
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Research and development $ 4,102 40% $ 5,752 21% $ 6,984
Percentage of net revenues 13.8% 14.4% 16.8%
------------------------------------------------------------------
Selling and marketing $11,736 49% $17,541 12% $19,565
Percentage of net revenues 39.5% 43.8% 47.1%
------------------------------------------------------------------
General and administrative $ 3,077 54% $ 4,749 20% $ 5,688
Percentage of net revenues 10.4% 11.9% 13.7%
------------------------------------------------------------------
</TABLE>
Research and development costs increased in 1996 due to increased headcount,
higher compensation costs following a competitive review, and higher
depreciation and amortization expense in support of the Company's efforts to
accelerate product development. The increases in 1995 expenses resulted
primarily from the planned addition of software developers, documentation and
quality assurance engineers, and the associated support costs. Research and
development headcount increased from 65 at September 30, 1994 to 83 at the end
of 1995 to 89 at the end of 1996. Capitalized product development costs were
$569, $594, and $1,316 in 1994, 1995 and 1996, respectively. These amounts
represented 12%, 9% and 16% of total research and development costs in 1994,
1995 and 1996.
Selling and marketing expenses increased in 1996 primarily due to operating
costs in Australia and the costs of an office in Tokyo to support the
Company's master distributor in Japan. In the Americas, selling and marketing
expenses increased slightly, but represented a significantly greater
percentage of the Americas' revenues compared to 1995 due to the decline in
revenues described earlier. In 1995, selling and marketing expenses increased
at a faster rate than revenues due to the planned increase in marketing
programs worldwide and increased sales headcount in Europe and Asia Pacific.
General and administrative expenses increased in 1996 primarily due to
operating costs in Australia and increased costs in the United Kingdom in
support of the expansion of European operations. The increase in 1995 was
primarily attributable to additional infrastructure costs to support the
Company's domestic and international growth and the expenses associated with a
public company.
OTHER INCOME, NET
<TABLE>
<CAPTION>
1994 Change 1995 Change 1996
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Other income, net $ 406 155% $1,035 -6% $ 975
----------------------------------------------------------------------------
Other income consisted mainly of interest income of $587, $1,141, and $1,206
in 1994, 1995 and 1996. Interest income was derived from the investment of the
proceeds from the Company's initial public offering and excess cash flows from
operations. Interest income was offset by interest expense, foreign currency
losses and other expenses of $181, $106, and $231 in 1994, 1995 and 1996.
PROVISION FOR INCOME TAXES
<CAPTION>
1994 Change 1995 Change 1996
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for income taxes $1,823 -17% $1,513 -87% $ 203
Effective tax rate 36.3% 28.5% 22.3%
----------------------------------------------------------------------------
</TABLE>
The effective tax rate decreased in 1996 primarily due to an increased portion
of pre-tax income derived from tax-exempt investment income. In 1995, the
decrease was due to increased research and development credits and increased
tax-exempt investment income.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED
(in thousands, except earnings per share)
NET INCOME AND EARNINGS PER SHARE
<TABLE>
<CAPTION>
1994 Change 1995 Change 1996
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income $3,198 19% $3,796 -81% $ 707
Percentage of net revenues 10.8% 9.5% 1.7%
Earnings per share $ 0.61 7% $ 0.65 -82% $0.12
--------------------------------------------------------------
</TABLE>
FINANCIAL CONDITION
The Company's cash and short-term investments totaled $31.9 million at
September 30, 1996, and represented 65% of total assets. The portfolio is
invested primarily in short-term, liquid, tax-exempt securities.
MapInfo has no material long-term debt. The Company has a $20 million credit
facility with a bank that expires in December 1997 and a $10 million credit
facility with a bank that expires in January 1997. There were no outstanding
borrowings under either facility at September 30, 1996.
Cash generated from operations was $2.0 million, $3.3 million, and $6.1
million in 1994, 1995 and 1996, respectively. Inventories increased from $241
at September 30, 1995 to $1.0 million at September 30, 1996. The increase was
due to increased inventories in Europe and Asia in support of increased sales
in those markets and the effect of broadening the product line in 1996.
In 1996, cash used for investments in property and equipment totaled $3.4
million, of which approximately $.9 million was used to furnish the new
research and development center. Additions to property and equipment in
support of the Company's research and development activities and international
expansion are expected to continue.
Cash generated from financing activities included the exercise of stock
options and share purchases under the Employee Stock Purchase Plan which
resulted in proceeds of $156, $806 and $593 in 1994, 1995 and 1996. In
February 1994, the Company completed an initial public offering of Common
Stock which resulted in net proceeds to the Company of approximately $23
million.
Management believes existing cash and short-term investments together with
funds generated from operations should be sufficient to meet the Company's
operating requirements for the next twelve months.
SPATIALWARE AGREEMENT
Pursuant to an Agreement dated October 2, 1996, the Company acquired an
exclusive, worldwide license to distribute and sub-license SpatialWare
technology from Unisys Corporation for a six month period. Under the
Agreement, the Company also acquired an option to purchase the underlying
intellectual property and certain fixed assets and to employ the staff of
people engaged in the development, sales and marketing of SpatialWare in
Canada, the United States, and Europe. Purchase consideration was $1,439 in
cash at closing and is a nominal amount upon the exercise of the purchase
option. The Company will include these amounts in capitalized product
development costs. The purchase option is exercisable until April 2, 1997.
During the option period, the Company will direct the development, marketing
and sales efforts of the SpatialWare business.
In the event the option is exercised, the Company will make contingent cash
payments to Unisys based on revenues generated by the SpatialWare business, up
to a maximum of $1,500. In the event the option is not exercised, the Company
will pay Unisys $350, and this amount, together with the original $1,439
purchase price, would be charged to operations.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED
(in thousands, except earnings per share)
OUTLOOK: ISSUES AND RISKS
This Annual Report on Form 10-K contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," and
similar expressions are intended to identify forward-looking statements. The
following important factors, among others, could cause actual results to
differ materially from those indicated by forward-looking statements made in
this Annual Report on Form 10-K and presented elsewhere by management from
time to time.
In addition to the other information in this Annual Report on Form 10-K, the
following issues and risks, among others, should be considered in evaluating
MapInfo's outlook and future.
NEW PRODUCTS AND TECHNOLOGICAL CHANGE. The mapping software business is
characterized by extremely rapid technological change, evolving industry
standards, and frequent new product introductions. These conditions require
continuous expenditures on product research and development to enhance
existing products and to create new products. The Company believes that the
timely development of new products and continuing enhancements to existing
products is essential to maintain its competitive position in the marketplace.
Between September and December 1996, the Company introduced three new
products, ProServer, SpatialWare and MapX. The Company's future success
depends, in part, upon customer and market acceptance of these new products.
Any failure to achieve acceptance of these and other new product offerings
could have a material adverse effect on the Company's business and results of
operations. There can be no assurance that the Company will successfully
complete the development of new or enhanced products or successfully manage
transitions from one product release to the next.
COMPETITION. The Company encounters significant competition in the market for
business mapping systems. Increased competition may lead to pricing pressures
that could adversely affect the Company's gross margins. Prices of software in
Europe and Asia are generally higher than in the Americas to cover
localization costs and higher costs of distribution. Such price uplifts could
erode in the future.
RELIANCE ON THIRD PARTIES. The Company relies in part on strategic partners
and independent developers for the development of specialized data products
that use MapInfo software. Failure by such strategic partners or independent
developers to continue to develop such data products, or changes in the
contractual arrangements with such strategic partners or independent
developers, could have a material adverse effect on the Company's business and
results of operations.
EXPANSION TO ENTERPRISE MARKET. The Company has previously marketed its
products primarily in the desktop mapping market. The Company has recently
expanded its product offerings beyond the desktop market to the enterprise and
Internet/intranet markets. Sales to the enterprise and Internet/intranet
markets are directed to different decision makers within customer
organizations and require different selling and marketing programs than are
used in the desktop market. The failure of these products to achieve market
acceptance could have a material adverse effect on the Company's business and
results of operations.
PRICES. Future prices the Company is able to obtain for its products may
decrease from previous levels depending upon market or competitive pressures
or distribution channel factors.
SHIFT IN DISTRIBUTION MODEL. At the beginning of 1995, the Company implemented
a sales and marketing strategy in the Americas that placed increased emphasis
on third party distribution channels, principally using value added resellers,
for selling the Company's products and services in the Americas. This resulted
in an increasing percentage of the Americas revenues coming from value added
resellers and a decreasing percentage of revenues coming from direct sales
efforts. The average selling prices of the Company's products when sold to
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED
(in thousands, except earnings per share)
value added resellers are typically lower than the average selling prices
realized by the Company when selling through direct sales channels. The
Company's future success will depend, in part, on its ability to grow revenues
in the Americas.
INTELLECTUAL PROPERTY RIGHTS. The Company regards its software as proprietary
and attempts to protect it with a combination of copyright, trademark and
trade secret laws, employee and third party non-disclosure agreements, and
other methods of protection. Despite these precautions, it may be possible for
unauthorized third parties to copy certain portions of the Company's products
or reverse engineer or obtain and use information the Company regards as
proprietary. In addition, the Company's shrinkwrap licenses, under which the
Company licenses its products, may be unenforceable under the laws of certain
jurisdictions and the laws of some foreign countries do not protect the
Company's proprietary rights to the same extent as do the laws of the United
States. Any misappropriation of the Company's intellectual property could have
a material adverse effect on the Company's business and results of operations.
Furthermore, there can be no assurance that third parties will not assert
infringement claims against the Company in the future with respect to current
or future products. Any such assertion could require the Company to enter into
royalty arrangements or result in costly litigation.
TECHNOLOGY DEVELOPMENT AND LICENSING FEES. In 1995 and to a lesser degree in
1996, the Company derived a portion of its product revenues from technology
development and licensing fees from customers that embedded MapInfo technology
into their own software applications. While the Company continues to invest in
research and development, there can be no assurance that such technology
development and licensing fees will continue in the future.
COST OF REVENUES. Cost of revenues varies with the mix of technology
development and licensing fees, product revenues, and services revenues, as
well as with the distribution channel mix. Cost of revenues as a percentage of
net revenues increased from 19.3% in fiscal 1995 to 22.5% in fiscal 1996.
Changes in the revenue mix, as well as the distribution model, may continue to
affect cost of revenues as a percentage of net revenues in the future.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. Revenues outside the Americas
increased from 30% of revenues in fiscal 1995 to 48% of revenues in fiscal
1996. The international portion of the Company's business is subject to a
number of inherent risks, including the difficulties in building and managing
international operations, difficulties in localizing products and translating
documentation into international languages, fluctuations in the value of
international currencies, fluctuating import/export duties and quotas, and
unexpected regulatory, economic, or political changes in international
markets. Changes in international business conditions could have a material
adverse effect on the Company's business and results of operations.
ACCOUNTING STANDARDS. Statement of Financial Accounting Standards No. 121-
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" is effective for fiscal years beginning after December 15,
1995. The Company adopted this Statement on October 1, 1996. The adoption of
this Statement is not expected to have a material effect on the Company's
financial condition or results of operations. Statement of Financial
Accounting Standards No. 123-"Accounting for Stock-Based Compensation" is
effective for fiscal years beginning after December 15, 1995. The Company
adopted this Statement on October 1, 1996. The Company has elected to continue
to apply APB Opinion No. 25 in accounting for its stock-based compensation
arrangements. The information for pro-forma disclosure is presently not known.
14
<PAGE>
QUARTERLY FINANCIAL INFORMATION (unaudited)
(in thousands, except earnings per share)
This information has been derived from unaudited quarterly consolidated
financial statements that, in the opinion of management include all normal
recurring adjustments necessary for a fair presentation of such information.
The operating results for any quarter are not necessarily indicative of
results for any future period.
<TABLE>
<CAPTION>
Three months ended
----------------------------------------------------------------------------
Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30,
1994 1995 1995 1995 1995 1996 1996 1996
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $ 9,027 $ 9,779 $ 9,953 $ 11,282 $ 9,652 $ 10,660 $ 10,164 $ 11,056
Cost of revenues 1,648 1,823 1,855 2,399 1,936 2,500 2,495 2,429
---------------------------------------------------------------------------------
Gross profit 7,379 7,956 8,098 8,883 7,716 8,160 7,669 8,627
Operating expenses 6,230 6,582 7,389 7,841 7,895 8,215 7,775 8,352
---------------------------------------------------------------------------------
Operating income(loss) 1,149 1,374 709 1,042 (179) (55) (106) 275
Other income, net 223 241 295 276 373 225 235 142
---------------------------------------------------------------------------------
Income before taxes 1,372 1,615 1,004 1,318 194 170 129 417
Provision for income
taxes 498 468 201 346 58 20 26 99
---------------------------------------------------------------------------------
Net income $ 874 $ 1,147 $ 803 $ 972 $ 136 $ 150 $ 103 $ 318
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Earnings per share:
Primary $ 0.15 $ 0.20 $ 0.14 $ 0.17 $ 0.02 $ 0.03 $ 0.02 $ 0.05
Fully diluted $ 0.15 $ 0.20 $ 0.13 $ 0.17 $ 0.02 $ 0.03 $ 0.02 $ 0.05
Weighted average shares:
outstanding:
Primary 5,754 5,845 5,939 5,845 5,832 5,809 5,873 5,844
Fully diluted 5,785 5,870 5,954 5,845 5,832 5,809 5,873 5,844
</TABLE>
15
<PAGE>
MAPINFO CORPORATION
ANNUAL REPORT ON FORM 10-K
YEAR ENDED SEPTEMBER 30, 1996
ITEM 8
FINANCIAL STATEMENTS
16
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 8:
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Accountants 18
Consolidated Statements of Income for the years ended September 30, 1994,
1995 and 1996 19
Consolidated Balance Sheets as of September 30, 1995 and 1996 20
Consolidated Statements of Stockholders' Equity for the years ended
September 30, 1994, 1995 and 1996 21
Consolidated Statements of Cash Flows for the years ended September 30,
1994, 1995 and 1996 22
Notes to Consolidated Financial Statements 23
</TABLE>
17
<PAGE>
[LOGO OF COOPERS & LYBRAND APPEARS HERE]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Maplnfo Corporation and Subsidiaries
We have audited the consolidated financial statements and the financial
statement schedule of MapInfo Corporation and Subsidiaries listed in Item
14(a) of this Form 10-K. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of MapInfo
Corporation and Subsidiaries as of September 30, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended September 30, 1996 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Albany, New York
November 5, 1996
18
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------
1994 1995 1996
-------- -------- --------
(in thousands, except
earnings per share)
<S> <C> <C> <C>
Net revenues:
Products $ 26,981 $ 36,070 $ 36,980
Services 2,739 3,971 4,552
-------- -------- --------
Total net revenues 29,720 40,041 41,532
-------- -------- --------
Cost of revenues:
Products 4,035 5,024 6,546
Services 2,155 2,701 2,814
-------- -------- --------
Total cost of revenues 6,190 7,725 9,360
-------- -------- --------
Gross profit 23,530 32,316 32,172
-------- -------- --------
Operating expenses:
Research and development 4,102 5,752 6,984
Selling and marketing 11,736 17,541 19,565
General and administrative 3,077 4,749 5,688
-------- -------- --------
Total operating expenses 18,915 28,042 32,237
-------- -------- --------
Operating income (loss) 4,615 4,274 (65)
Other income, net 406 1,035 975
-------- -------- --------
Income before provision for income taxes 5,021 5,309 910
Provision for income taxes 1,823 1,513 203
-------- -------- --------
Net income $ 3,198 $ 3,796 $ 707
======== ======== ========
Earnings per share:
Primary $ 0.61 $ 0.65 $ 0.12
Fully diluted $ 0.61 $ 0.65 $ 0.12
Weighted average shares outstanding:
Primary 5,231 5,841 5,865
Fully diluted 5,236 5,841 5,865
</TABLE>
See accompanying notes.
19
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
---------------
1995 1996
------- -------
(in thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $14,846 $27,104
Short-term investments, at cost 14,970 4,795
Accounts receivable, less allowance of $949 at September 30,
1995, and $1,249 at September 30, 1996 9,527 7,581
Inventories 241 1,021
Other current assets 1,148 844
Income taxes receivable 260
Deferred income taxes 893 845
------- -------
Total current assets 41,625 42,450
Property and equipment--net 3,564 4,685
Product development costs--net 542 1,115
Deferred income taxes 385
Intangibles and other assets 691 456
------- -------
Total assets $46,422 $49,091
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,542 $ 1,751
Accrued expenses 4,721 4,820
Deferred revenue 970 1,451
Income taxes payable 107 536
------- -------
Total current liabilities 7,340 8,558
Other non-current liabilities 268 138
Deferred income taxes 118
------- -------
Total liabilities 7,726 8,696
------- -------
Commitments (Note 7)
Stockholders' Equity:
Common stock, $.002 par value; 25,000 shares authorized;
5,648 and 5,775 shares issued, respectively 11 12
Preferred stock, $.01 par value; 1,000 shares authorized;
none issued
Paid in capital 28,846 29,824
Retained earnings 9,840 10,547
Translation adjustment 13
------- -------
38,697 40,396
Less treasury stock, at cost, 2 shares 1 1
------- -------
Total stockholders' equity 38,696 40,395
------- -------
Total liabilities and stockholders' equity $46,422 $49,091
======= =======
</TABLE>
See accompanying notes.
20
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended September 30, 1994, 1995 and 1996
<TABLE>
<CAPTION>
Common Stock
---------------- Paid-in Retained Translation Treasury
Shares Amount Capital Earnings Adjustment Stock
------------------------------------------------------
(in thousands, except share data)
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30,
1993 3,982,755 $ 8 $ 2,691 $ 2,846 $(1)
Exercise of options 128,943 156
Initial public offering,
net of offering costs 1,347,500 3 23,095
Tax benefit from option
exercises 571
Net income 3,198
------------------------------------------------------
Balance, September 30,
1994 5,459,198 11 26,513 6,044 (1)
Exercise of options and
sale of stock under the
Employee Stock Purchase
Plan 189,353 806
Tax benefit from option
exercises 1,527
Net income 3,796
------------------------------------------------------
Balance, September 30,
1995 5,648,551 11 28,846 9,840 (1)
Exercise of options and
sale of stock under the
Employee Stock Purchase
Plan 126,429 1 593
Tax benefit from option
exercises 385
Net income 707
Foreign currency $13
------------------------------------------------------
Balance, September 30,
1996 5,774,980 $12 $29,824 $10,547 $13 $(1)
------------------------------------------------------
------------------------------------------------------
</TABLE>
See accompanying notes.
21
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------
1994 1995 1996
-------- ------- -------
(in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM (USED FOR) OPERATIONS
Net income $ 3,198 $ 3,796 $ 707
Depreciation and amortization 1,093 1,983 3,153
Allowance for doubtful accounts and sales re-
turns 120 616 189
Provision for deferred income taxes 92 (816) (455)
Other 16 200
Changes in operating assets and liabilities,
net of acquisition:
Accounts receivable (1,877) (5,492) 1,646
Inventories (207) 482 (669)
Other current assets (628) (145) 304
Accounts payable and accrued expenses 764 2,207 426
Deferred revenue 190 580 429
Income taxes (780) 107 169
-------- ------- -------
NET CASH FROM OPERATIONS 1,981 3,318 6,099
-------- ------- -------
CASH FLOWS FROM (USED FOR) INVESTMENTS
Additions to property and equipment (1,577) (2,002) (3,406)
Capitalized product development costs (569) (594) (1,316)
Purchase of business and other assets (615) (76)
Short-term investments (16,079) 3,283 10,175
-------- ------- -------
NET CASH FROM (USED FOR) INVESTMENTS (18,225) 72 5,377
-------- ------- -------
CASH FLOWS FROM (USED FOR) FINANCING
Payments on notes payable, long-term debt and
capital leases (519) (183) (196)
Proceeds from exercise of stock options and
ESPP purchases 156 806 593
Tax benefit from option exercises 571 1,527 385
Proceeds of issuance of common stock, net 23,098
-------- ------- -------
NET CASH FROM FINANCING 23,306 2,150 782
-------- ------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS 7,062 5,540 12,258
Cash and cash equivalents, beginning of period 2,244 9,306 14,846
-------- ------- -------
Cash and cash equivalents, end of period $ 9,306 $14,846 $27,104
======== ======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMA-
TION
Cash paid during the year for:
Interest $ 88 $ 32 $ 16
Income taxes 1,241 662 170
</TABLE>
See accompanying notes.
22
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company designs, develops, markets, licenses and supports mapping
software products, application development tools, and data products, together
with a range of consulting, training and technical support services. These
products are sold through multiple distribution channels, including an
indirect channel of value-added resellers and distributors, a corporate
account sales force, and a telemarketing sales group. The Company markets its
products worldwide through sales offices in North America, Europe, Australia,
China, Hong Kong, Taiwan and Japan.
Basis of Consolidation
The consolidated financial statements include the accounts of MapInfo
Corporation and its wholly-owned subsidiaries formed in 1994 in Germany and in
1995 in the United Kingdom and Australia. Significant intercompany balances
and transactions have been eliminated.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets & liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For the purpose of the cash flows statements, the Company defines cash and
cash equivalents as cash and investments with original maturities of three
months or less.
Inventories
Inventories are stated at the lower of cost or market as determined on the
average cost method and consist primarily of computer media, user manuals and
software packaging supplies.
Short-term Investments
Short-term investments are stated at amortized cost, which approximates
market value.
Property and Equipment
Property and equipment is stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of the assets (two to
ten years) for financial reporting purposes and accelerated methods for tax
purposes. When assets are sold, retired, or otherwise disposed of, the
applicable costs and accumulated depreciation are removed from the accounts
and the resulting gain or loss is recognized.
Product Development Costs
Product development costs, including product enhancements, are capitalized
after technological feasibility has been established. These costs are reported
at the lower of unamortized cost or net realizable value and are being
amortized on a straight-line basis over two years, the estimated economic life
of the products. Annual amortization under the straight-line method is greater
than the ratio of current gross revenue to total expected product revenues
method. Amortization expense is classified as research and development expense
in the accompanying consolidated statements of income.
23
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Intangible Assets
Intangible assets represents the excess of cost over the fair value of net
assets acquired. Intangible assets are being amortized using the straight-line
method over seven years. The Company continually evaluates the existence of
goodwill impairment on the basis of whether the goodwill is fully recoverable
from projected, undiscounted net cash flows of the related business unit.
Revenue Recognition
Product revenue: Revenue from software license and technology development
fees is recognized upon the later of shipment of product or completion of
significant obligations to customers, if collectibility of the resulting
receivable is probable. Upon the recognition of revenue, all costs associated
with insignificant obligations are accrued.
Postcontract customer support (PCS): Generally, PCS that is bundled with an
initial licensing fee is for one year or less and is recognized together with
the initial licensing fee on delivery of the software, if collectibility of
the resulting receivable is probable and enhancements and the costs of
providing these services are expected to be insignificant. When PCS is sold
under separate agreements, the revenue is recognized ratably over the term of
the agreement.
Reserve for Returns
The Company as a matter of policy provides the buyer the right to return the
product within 30 days, for a refund of the purchase price or replacement of
the product. Accordingly, the Company accrues for estimated future returns.
Income Taxes
Statement of Financial Accounting Standard No. 109-"Accounting for Income
Taxes" requires the use of the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred income taxes are
recognized for the tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable for future years to differences between
financial statement and tax basis of existing assets and liabilities. The
effect of tax rate changes on deferred taxes is recognized in the income tax
provision in the period that includes the enactment date.
Business tax credits are recorded by the flow-through method of accounting,
whereby they are applied as a reduction of income tax expense in the year the
credits are utilized.
Foreign Currency
The assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and the income statements are
translated at the average rate of exchange for the year. Gains or losses
resulting from translating non-U.S. currency financial statements are
accumulated in a separate component of stockholders' equity. Gains and losses
from foreign currency transactions are included in net income.
Computation of Earnings Per Share
Earnings per share is computed using the weighted average number of common
and dilutive common equivalent shares outstanding during the period. Dilutive
common equivalent shares consist of stock options using the treasury stock
method.
24
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(in thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reclassifications
Certain reclassifications have been made to the 1994 and 1995 amounts to
conform with the 1996 presentation.
2. SHORT-TERM INVESTMENTS
The Company's short-term investments consist of debt securities which
includes Government bonds and Municipal bonds with maturity dates of one year
or less. In accordance with SFAS No. 115, these debt securities have been
classified in the accompanying consolidated balance sheets as held-to-maturity
securities and are reported at amortized cost because the Company has the
positive intent and ability to hold these debt securities to maturity.
At September 30, short-term investments consist of the following:
<TABLE>
<CAPTION>
1995 1996
---------------------- ----------------------
Type of Amortized Aggregate Amortized Aggregate
Investment cost market value cost market value
---------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Municipal bonds $12,904 $12,905 $4,759 $4,759
Government bonds 2,066 2,061 36 35
------- ------- ------ ------
$14,970 $14,966 $4,795 $4,794
======= ======= ====== ======
</TABLE>
Included in other income, net is interest income of $587, $1,141, and $1,206,
in 1994, 1995, and 1996, respectively.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
September 30,
----------------
1995 1996
------- -------
<S> <C> <C>
Computer hardware and software $ 5,051 $ 7,365
Equipment 607 945
Furniture and fixtures 778 1,335
Leasehold improvements 85 286
------- -------
6,521 9,931
Accumulated depreciation and amortization (2,957) (5,246)
------- -------
$ 3,564 $ 4,685
======= =======
</TABLE>
Depreciation and amortization expense for the years ended September 30, 1994,
1995 and 1996 was $843, $1,377, and $2,289, respectively.
4. PRODUCT DEVELOPMENT COSTS
Product development costs consist of the following:
<TABLE>
<CAPTION>
September 30,
----------------
1995 1996
------- -------
<S> <C> <C>
Product development costs $ 1,626 $ 2,802
Accumulated amortization (1,084) (1,687)
------- -------
$ 542 $ 1,115
======= =======
</TABLE>
25
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(in thousands)
4. PRODUCT DEVELOPMENT COSTS (CONTINUED)
Capitalized product development costs for the years ended September 30, 1994,
1995, and 1996 was approximately $569, $594, and $1,316, respectively.
Amortization of capitalized product development costs for the years ended
September 30, 1994, 1995, and 1996 was approximately $250, $606, and $743,
respectively.
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
September 30,
-------------
1995 1996
------ ------
<S> <C> <C>
Accrued payroll $ 695 $1,088
Accrued vacation 486 503
Accrued royalties 327 647
Accrued marketing 246 388
Accrued commission 651 296
Accrued other 2,316 1,898
------ ------
$4,721 $4,820
====== ======
</TABLE>
6. LINES OF CREDIT
The Company has a $10 million uncollateralized line of credit with a
commercial bank, none of which was drawn down at September 30, 1995 or 1996.
Interest is at the bank's prime rate. The line of credit expires on January
31, 1997.
The Company has a revolving convertible credit facility with a commercial bank
under which a maximum of $20 million can be borrowed for a two year period and
then converted into a three year term loan. Interest is at the bank's prime
rate, LIBOR plus 1.5%, or a fixed rate, at the Company's option. The credit
facility contains certain financial ratio covenants and is collateralized by
the common stock and distribution agreements of certain subsidiaries. None of
this credit facility was drawn down at September 30, 1996. The facility
expires in December 1997.
7. COMMITMENTS
The Company leases two facilities in the Rensselaer Technology Park totaling
approximately 102,000 square feet of office space. These offices house the
corporate headquarters and the principal research and development center and
the principal sales, marketing and administrative staff for the Americas.
These leases contain a nominal escalation in rental payments over the term of
the lease, and in addition to monthly lease payments, the Company is
responsible for such costs as real estate taxes and maintenance. The Company
may acquire these facilities through the termination of these leases at
negotiated purchase prices. The leases expire in 2002 and 2004.
Future minimum rental payments required under operating leases that have
initial or remaining non-cancelable lease terms in excess of one year as of
September 30, 1996 decline from $1.8 million in 1997 to $1.4 million in 2001.
Total rent expense for the years ended September 30, 1994, 1995 and 1996 was
approximately $653, $722, and $1,665, respectively.
26
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(in thousands)
8. INCOME TAXES
Income tax expense consists of:
<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------
1994 1995 1996
--------- --------- --------
<S> <C> <C> <C>
Current:
Federal $ 1,463 $ 1,742 $ 484
State 256 548 (50)
Foreign 12 39 224
--------- --------- ------
1,731 2,329 658
Deferred income taxes:
Federal 68 (664) (422)
State 24 (152) 28
Foreign (61)
--------- --------- ------
92 (816) (455)
--------- --------- ------
Income tax expense $ 1,823 $ 1,513 $ 203
========= ========= ======
</TABLE>
The provision for income taxes has been reduced for research and development
tax credits of approximately $108, $246, and $65 in 1994, 1995 and 1996,
respectively. At September 30, 1996, the Company has approximately $287 of
research and development tax credit carryforwards which begin to expire in
2009 and approximately $92 of alternative minimum tax credit carryforwards
which have no expiration date.
The provision for income taxes differs from the amount computed by applying
the U.S. federal statutory income tax rate of 34% as follows:
<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Federal statutory income tax rate 34% 34% 34%
State taxes 3 5 2
Non-U.S. tax rates and other foreign charges 24
Tax-exempt investment income (6) (42)
Research and development credit (2) (5) (7)
Non-deductible expenses and other 1.3 0.5 11.3
-------- -------- --------
36.3% 28.5% 22.3%
======== ======== ========
</TABLE>
U.S. income before taxes was $4,935, $5,496, and $684 for the years ended
September 30, 1994, 1995 and 1996, respectively.
27
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(in thousands)
8. INCOME TAXES--(CONTINUED)
Deferred income taxes recorded in the consolidated balance sheets at
September 30, 1995 and 1996 consist of the following temporary differences:
<TABLE>
<CAPTION>
1995 1996
---- ------
<S> <C> <C>
Current deferred tax assets:
Accrued expenses $605 $ 513
Bad debt reserve 44 106
Inventory 42 31
Allowance for returns 202 195
---- ------
Net current deferred tax assets 893 845
Long term deferred tax assets (liabilities):
Capitalized product development costs (210) (269)
Tax credit carryovers 379
Property and equipment (42) 73
Accrued expenses 87 113
Other non-current assets 47 89
---- ------
Net long term deferred tax asset (liability) (118) 385
---- ------
Net deferred tax asset $775 $1,230
==== ======
</TABLE>
There are no valuation allowances recorded against the Company's deferred tax
assets, as it is more likely than not that all future tax benefits will be
realized against future taxable income. However, the amount of deferred tax
assets, considered realizable could be reduced in the near term if estimates
of future taxable income are reduced.
9. STOCK OPTIONS
The 1993 Stock Incentive Plan has 925,000 shares reserved for issuance to
employees. Stock option activity under this plan is as follows:
<TABLE>
<CAPTION>
Outstanding Options
--------------------------
Shares Number Price
Available of per
for Grant Shares Share
--------------------------------------
<S> <C> <C> <C>
Initial shares reserved 400,000
Options granted (120,116) 120,116 $18.50 to $24.00
Options forfeited 4,583 (4,583) $19.00
Options exercised (17) $19.00
--------------------------------------
Balance, September 30, 1994 284,467 115,516 $18.50 to $24.00
--------------------------------------
Additional shares reserved 275,000
Options granted (266,400) 266,400 $17.25 to $35.25
Options forfeited 36,051 (36,051) $18.50 to $26.00
Options exercised (5,522) $18.50 to $21.50
--------------------------------------
Balance, September 30, 1995 329,118 340,343 $17.25 to $35.25
--------------------------------------
Additional shares reserved 250,000
Options granted (698,035) 698,035 $9.625 to $20.00
Options forfeited 480,017 (480,017) $12.00 to $35.25
Options exercised (2,398) $12.00 to $19.00
--------------------------------------
Balance, September 30, 1996 361,100 555,963 $9.625 to $30.25
======================================
</TABLE>
28
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(in thousands)
9. STOCK OPTIONS--(CONTINUED)
Under the 1993 Stock Incentive Plan options to purchase 7,306, 41,322 and
53,715 shares of common stock were exercisable at September 30, 1994, 1995 and
1996, respectively.
In March 1996, the Company repriced certain options granted to employees under
this plan on a four-for-five basis. Option holders, holding options to
purchase an aggregate of 327,177 shares with exercise prices ranging from
$17.25 to $35.25 per share were issued 267,741 new options with an exercise
price of $12.00 per share, the closing price of the Company's common stock on
the date of the repricing. The options granted and forfeited as a result of
this repricing are included in the table above.
The 1993 Director Stock Option Plan has 20,000 shares reserved for issuance to
non-employee directors. As of September 30, 1996, options to purchase 15,836
shares at prices ranging from $11.00 to $25.00 have been granted under the
Director Stock Option Plan. In 1995, options for 1,818 shares were exercised
at $11.00. There were no options exercised under this plan in 1994 and 1996.
Options for 14,018 shares at prices ranging from $11.00 to $25.00 remain
outstanding, of which options for 5,018 shares are exercisable at September
30, 1996.
In addition, the Company has two non-qualified stock option plans (Plan I and
II) with six and ten year terms. Options for 60,393, 158,085 and 71,883 shares
were exercised under Plans I and II at prices ranging from $1.00 to $11.00 for
the years ending September 30, 1994 and 1995, respectively, and at prices
ranging from $1.74 to $9.00 for the year ended September 30, 1996. Options for
114,286 shares at prices ranging from $1.74 to $11.00 remain outstanding and
options for 58,934 shares are exercisable at September 30, 1996. No further
options will be granted under Plans I and II.
In addition, the Company has various non-qualified stock option arrangements
with certain employees of the Company, under which 258,033 shares were
granted. At September 30, 1996, options for 19,500 shares are vested and
remain exercisable at $0.02 per share. Options for 68,533 were exercised at
prices ranging from $0.02 to $1.74 in 1994, no options were exercised in 1995,
and 10,000 options were exercised at $0.02 per share in 1996.
10. DEFERRED COMPENSATION (401(K)) PLAN
The Company has a deferred compensation (401(k)) plan which covers
substantially all U.S.-based employees who have met certain service
requirements. Employees may contribute up to 17% of their annual salary (up to
the maximum established by the IRS each year) to the plan. Beginning April 1,
1994, the Company may at its option contribute up to 50% of the first one
thousand dollars contributed by each employee to the plan. Deferred
compensation expense for the years ended September 30, 1994, 1995 and 1996 was
$66, $94 and $110, respectively.
29
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(in thousands)
11. EMPLOYEE STOCK PURCHASE PLAN
The 1993 Employee Stock Purchase Plan permits eligible employees to
purchase, at a 15% discount, common stock of the Company up to 10% of their
pay. The Company has reserved 100,000 shares of common stock for issuance
under this plan. Activity under the Plan is as follows:
<TABLE>
<CAPTION>
Shares
available Price
for issuance Per Share
------------ ----------------
<S> <C> <C>
Initial shares reserved 100,000
1995 Purchases (23,508) $15.73 to $17.00
-------
Balance, September 30, 1995 76,492
1996 Purchases (42,148) $ 9.56 to $10.20
-------
Balance, September 30, 1996 34,344
=======
</TABLE>
12. CONCENTRATION OF CREDIT RISK
The Company's investment portfolio is diversified and consists of short-term
investment grade securities. At September 30, 1996, the Company had $397 in
U.S. banks in excess of insured limits and $790 in uninsured foreign banks.
The Company sells a significant portion of its product through third-party
distributors. Sales to one distributor represented 9% of total net revenues
for the year ended September 30, 1996, and 10% of total accounts receivable at
September 30, 1996. The next scheduled expiration/renewal date for this
distribution contract is March 1, 1997. There can be no assurance that this
distribution contract will be renewed.
13. BUSINESS SEGMENT AND INTERNATIONAL OPERATIONS
The Company operates in one industry segment consisting of the development,
marketing, licensing and support of mapping software and data products.
Summarized information relating to international operations is as follows:
<TABLE>
<CAPTION>
September 30,
-----------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Sales to unaffiliated customers:
United States $21,696 $26,298 $19,688
Europe 1,961 3,457 10,067
Australia 607 5,127
Export sales from United States 6,063 9,679 6,650
------- ------- -------
Total sales to unaffiliated customers $29,720 $40,041 $41,532
======= ======= =======
Operating income (loss)
United States $ 4,394 $ 3,017 $ (473)
Europe 221 1,240 366
Australia 17 42
------- ------- -------
Total operating income (loss) $ 4,615 $ 4,274 $ (65)
======= ======= =======
Identifiable assets
United States $36,069 $41,815 $42,367
Europe 1,185 3,110 4,980
Australia 1,497 1,744
------- ------- -------
Total identifiable assets $37,254 $46,422 $49,091
======= ======= =======
</TABLE>
30
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(in thousands)
13. BUSINESS SEGMENT AND INTERNATIONAL OPERATIONS (CONTINUED)
Export sales from the United States include sales primarily to Canada, Japan,
Hong Kong, and, for the first half of 1995, Europe. Individual country
revenues do not equal or exceed 10% of total revenues. Revenues outside the
Americas increased from 30% of revenues in fiscal 1995 to 48% of revenues in
fiscal 1996. The international portion of the Company's business is subject to
a number of inherent risks, including the difficulties in building and
managing international operations, difficulties in localizing products and
translating documentation into international languages, fluctuations in the
value of international currencies, fluctuating import/export duties and
quotas, and unexpected regulatory, economic, or political changes in
international markets. Changes in international business conditions could have
a material adverse effect on the Company's business and results of operations
in the near term.
14. ACQUISITION
Pursuant to an Asset Purchase Agreement dated August 3, 1995, the Company
purchased assets approximating $824 of its master distributor in Australia,
Peripheral Systems Pty Ltd., an Australian corporation. Purchase consideration
was $330, payable in cash, the assumption of liabilities approximating $116,
and an additional cash payment of $378, paid in February 1996. The acquisition
was accounted for under the purchase method. The results of operations include
the acquired business from date of acquisition.
15. OTHER DEVELOPMENTS
Statement of Financial Accounting Standards No. 121-"Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
is effective for fiscal years beginning after December 15, 1995. The Company
adopted this Statement on October 1, 1996. The adoption of this Statement is
not expected to have a material effect on the Company's financial condition or
results of operations. Statement of Financial Accounting Standards No. 123-
"Accounting for Stock-Based Compensation" is effective for fiscal years
beginning after December 15, 1995. The Company adopted this Statement on
October 1, 1996. The Company has elected to continue to apply APB Opinion No.
25 in accounting for its stock-based compensation arrangements. The
information for pro-forma disclosure is presently not known.
16. SUBSEQUENT EVENT
Pursuant to an Agreement dated October 2, 1996, the Company acquired an
exclusive, worldwide license to distribute and sub-license SpatialWare
technology from Unisys Corporation for a six month period. Under the
Agreement, the Company also acquired an option to purchase the underlying
intellectual property and certain fixed assets and to employ the staff of
people engaged in the development, sales and marketing of SpatialWare in
Canada, the United States, and Europe. Purchase consideration was $1,439 in
cash at closing and is a nominal amount upon the exercise of the purchase
option. The Company will include these amounts in capitalized product
development costs. The purchase option is exercisable until April 2, 1997.
During the option period, the Company will direct the development, marketing
and sales efforts of the SpatialWare business.
In the event the option is exercised, the Company will make contingent cash
payments to Unisys based on revenues generated by the SpatialWare business, up
to a maximum of $1,500. In the event the option is not exercised, the Company
will pay Unisys $350, and this amount, together with the original $1,439
purchase price, would be charged to operations.
31
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The response to this item is contained in part under the caption "Executive
Officers of the Company" in Part I hereof, and the remainder is contained in
the Company's Proxy Statement for the Annual Meeting of Shareholders to be
held on February 13, 1997 (the "1997 Proxy Statement") under the caption
"Election of Directors" and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The response to this item is contained in the Company's 1997 Proxy Statement
under the captions "Director Compensation," "Executive Compensation,"
"Compensation Committee Interlocks and Insider Participation," "Other Matters"
and "Section 16(a) Beneficial Ownership Reporting Compliance" and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The response to this item is contained in the Company's 1997 Proxy Statement
under the caption "Beneficial Ownership of Common Stock" and is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The response to this item is contained in the Company's 1997 Proxy Statement
under the caption "Compensation Committee Interlocks and Insider
Participation" and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(A) See Item 8 for Index to Consolidated Financial Statements
Consolidated Financial Statement Schedule for the years ended September 30,
1994, 1995 and 1996 included in Item 14(d):
Schedule VIII--Valuation and Qualifying Accounts
Schedules other than those listed above have been omitted since the required
information is not present or not present in amounts sufficient to require
submission of the schedule, or because the information required is included in
the consolidated financial statements and the notes thereto.
32
<PAGE>
Listing of Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DEXCRIPTION
----------- -----------
<C> <S>
*3.1 Restated Certificate of Incorporation of the Registrant, as
amended to date.
#3.2 By-Laws of the Registrant, as amended to date.
*4 Specimen Certificate for shares of the Registrant's Common
Stock.
*10.1+ Employee Non-Qualified Stock Option Plan I, as amended to
date.
*10.2+ Employee Non-Qualified Stock Option Plan II, as amended to
date.
#10.3+ 1993 Stock Incentive Plan, as amended to date.
#10.4+ 1993 Director Stock Option Plan, as amended to date.
*10.5 Lease Agreement dated as of August 1, 1993 by and between the
Registrant and Rensselaer Polytechnic Institute.
++10.7+ Amended and Restated Employment Agreement, dated as of
February 14, 1994 by and between the Registrant and Brian D.
Owen.
(degrees)10.8+ Amended and Restated Employment Agreement, dated as of May 2,
1994 by and between the Registrant and Matthew J. Szulik.
*10.9+ Employee Patent, Confidential Information and Non-Competition
Agreement dated as of November 4, 1992 by and between the
Registrant and Brian D. Owen.
*10.10+ Employee Patent, Confidential Information and Non-Competition
Agreement dated as of January 5, 1993 by and between the
Registrant and Matthew J. Szulik.
++10.11+ Employee Patent and Confidential Information Agreement dated
as of May 1, 1988 by and between the Registrant and Michael D.
Marvin.
++10.12+ Employee Patent and Confidential Information Agreement dated
as of May 3, 1988 by and between the Registrant and John F.
Haller.
+++10.13+ Employment Agreement, dated as of October 18, 1994 by and
between the Registrant and D. Joseph Gersuk.
+++10.14+ Employee Patent, Confidential Information and Non-Competition
Agreement dated as of October 20, 1994 by and between the
Registrant and D. Joseph Gersuk.
+++10.15+ Employment Agreement, dated as of February 3, 1995 by and
between the Registrant and Elizabeth A. Ireland.
+++10.16+ Employee Patent, Confidential Information and Non-Competition
Agreement dated as of August 21, 1989 by and between the
Registrant and Elizabeth A. Ireland.
#10.17+ Employment Agreement, dated as of February 6, 1995 by and
between the Registrant and F. Steven Weick.
#10.18+ Employee Patent, Confidential Information and Non-Competition
Agreement dated as of February 7, 1995 by and between the
Registrant and F. Steven Weick.
#10.19 Two Global View Lease. Lease Agreement dated as of January 10,
1995 between Rensselaer Polytechnic Institute and the
Registrant
~10.20+ Amended and restated Employment Agreement dated as of May 16,
1995 by and between the Registrant and Brian D. Owen.
</TABLE>
33
<PAGE>
<TABLE>
<C> <S>
@10.21+ Amended and restated Employment Agreement dated as of May 8, 1996 by
and between the Registrant and Michael D. Marvin.
10.22+ Amended and restated Employment Agreement dated as of September 5,
1996, by and between the Registrant and Brian D. Owen.
10.23+ Amended and restated Employment Agreement dated as of September 30,
1996 by and between the Registrant and Michael D. Marvin.
10.24+ Employment Agreement executed on October 1, 1996 by and between the
Registrant and John C. Cavalier.
10.25+ Employee Patent, Confidential Information and Non-Competition
Agreement dated September 30, 1996 by and between the Registrant and
John C. Cavalier.
10.26+ Amended and restated Employment Agreement dated as of January 11, 1996
by and between the Registrant and D. Joseph Gersuk.
11 Statement regarding computation of per share earnings.
21 Subsidiaries of the Registrant.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule
</TABLE>
- - - - - - - - - - --------
* Incorporated herein by reference from the exhibits to the Registrant's
Registration Statement on Form S-1 (File No. 33-72866).
(degrees)
Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on August 15, 1994.
++ Incorporated herein by reference from the exhibits to the Form 10-K filed
with the Securities and Exchange Commission on December 28, 1994.
+++Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on February 7, 1995.
# Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on May 12, 1995.
~ Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on August 10, 1995.
@ Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on May 15, 1996.
+ Management contract or compensation plan or arrangement required to be
filed pursuant to Item 14(c) of Form 10-K.
(B) Reports on Form 8-K
The Company filed no reports on Form 8-K with the Securities and Exchange
Commission during the fiscal quarter ended September 30, 1996.
34
<PAGE>
MAPINFO CORPORATION
ANNUAL REPORT ON FORM 10-K
YEAR ENDED SEPTEMBER 30, 1996
ITEM 14(D)
FINANCIAL STATEMENT SCHEDULE
35
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE VIII
(in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- ---------- ---------- -------------- ---------- ----------
BALANCE AT ADDITIONS ADDITIONS BALANCE AT
BEGINNING CHARGED TO CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSE OTHER ACCOUNTS DEDUCTIONS PERIOD
----------- ---------- ---------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended September 30,
1994:
Deducted from asset
accounts:
Allowance for doubtful
accounts and sales
returns $213 70 70(2) (20)(1) $ 333
Year ended September 30,
1995:
Deducted from asset
accounts:
Allowance for doubtful
accounts and sales
returns $333 218 466(2) (68)(1) $ 949
Year ended September 30,
1996:
Deducted from asset
accounts:
Allowance for doubtful
accounts and sales
returns $949 301 147(2) (148)(1) $1,249
</TABLE>
- - - - - - - - - - --------
(1)Uncollectible accounts written off.
(2)Allowance for sales returns.
36
<PAGE>
SIGNATURES
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.
MAPINFO CORPORATION
(Registrant)
By: _____________________
John C. Cavalier
President and Chief Executive Officer
Date: ___________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
NAME TITLE DATE
/s/ John C. Cavalier President and Chief December 30,
- - - - - - - - - - ------------------------------------- Executive Officer 1996
John C. Cavalier (Principal
Executive Officer)
/s/ Michael D. Marvin Chairman of the December 30,
- - - - - - - - - - ------------------------------------- Board 1996
Michael D. Marvin
/s/ D. Joseph Gersuk Vice President, December 30,
- - - - - - - - - - ------------------------------------- Treasurer and Chief 1996
D. Joseph Gersuk Financial Officer
(Principal
Financial and
Accounting Officer)
/s/ John F. Haller Vice President- December 30,
- - - - - - - - - - ------------------------------------- Technology and 1996
John F. Haller Director
/s/ Laszlo C. Bardos Director December 30,
- - - - - - - - - - ------------------------------------- 1996
Laszlo C. Bardos
/s/ George C. McNamee Director December 30,
- - - - - - - - - - ------------------------------------- 1996
George C. McNamee
/s/ James A. Perakis Director December 30,
- - - - - - - - - - ------------------------------------- 1996
James A. Perakis
/s/ John F. Burton Director December 30,
- - - - - - - - - - ------------------------------------- 1996
John F. Burton
/s/ Brian D. Owen Director December 30,
- - - - - - - - - - ------------------------------------- 1996
Brian D. Owen
37
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S> <C>
*3.1 Restated Certificate of Incorporation of the Registrant,
as amended to date.
#3.2 By-Laws of the Registrant, as amended to date.
*4 Specimen Certificate for shares of the Registrant's
Common Stock.
*10.1+ Employee Non-Qualified Stock Option Plan I, as amended
to date.
*10.2+ Employee Non-Qualified Stock Option Plan II.
#10.3+ 1993 Stock Incentive Plan.
#10.4+ 1993 Director Stock Option Plan.
*10.5 Lease Agreement dated as of August 1, 1993 by and
between the Registrant and Rensselaer Polytechnic
Institute.
++10.7+ Amended and Restated Employment Agreement, dated as of
February 14, 1994 by and between the Registrant and
Brian D. Owen.
(degrees)10.8+ Amended and Restated Employment Agreement, dated as of
May 2, 1994 by and between the Registrant and Matthew J.
Szulik
*10.9+ Employee Patent, Confidential Information and Non-
Competition Agreement dated as of November 4, 1992 by
and between the Registrant and Brian D. Owen.
*10.10+ Employee Patent, Confidential Information and Non-
Competition Agreement dated as of January 5, 1993 by and
between the Registrant and Matthew J. Szulik.
++10.11+ Employee Patent and Confidential Information Agreement
dated as of May 1, 1988 by and between the Registrant
and Michael D. Marvin.
++10.12+ Employee Patent and Confidential Information Agreement
dated as of May 3, 1988 by and between the Registrant
and John F. Haller.
+++10.13+ Employee Agreement, dated as of October 18, 1994 by and
between the Registrant and D. Joseph Gersuk.
+++10.14+ Employee Patent, Confidential Information and Non-
Competition Agreement dated as of October 20, 1994 by
and between the Registrant and D. Joseph Gersuk.
+++10.15+ Employee Agreement, dated as of February 3, 1995 by and
between the Registrant and Elizabeth A. Ireland.
+++10.16+ Employee Patent, Confidential Information and Non-
Competition Agreement dated as of August 21, 1989 by and
between the Registrant and Elizabeth A. Ireland.
#10.17+ Employment Agreement, dated as of February 6, 1995 by
and between the Registrant and F. Steven Weick.
#10.18+ Employee Patent, Confidential Information and Non-
Competition Agreement dated as of February 7, 1995 by
and between the Registrant and F. Steven Weick.
#10.19 Two Global View Lease. Lease Agreement dated as of
January 10, 1995 between Rensselaer Polytechnic
Institute and the Registrant.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
~10.20+ Amended and restated Employment Agreement dated as of
May 16, 1995 by and between the Registrant and Brian D.
Owen.
@10.21+ Amended and restated Employment Agreement dated as of
May 8, 1996 by and between the Registrant and Michael
D. Marvin.
10.22+ Amended and restated Employment Agreement dated as of
September 5, 1996, by and between the Registrant and
Brian D. Owen.
10.23+ Amended and restated Employment Agreement dated as of
September 30, 1996 by and between the Registrant and
Michael D. Marvin.
10.24+ Employment Agreement dated as of September 28, 1996 by
and between the Registrant and John C. Cavalier.
10.25+ Employee Patent, Confidential Information and Non
Competition Agreement dated September 30, 1996 by and
between the Registrant and John C. Cavalier.
10.26+ Amended and restated Employment Agreement dated as of
January 11, 1996 by and between the Registrant and D.
Joseph Gersuk.
11 Statement regarding computation of per share earnings.
21 Subsidiaries of Registrant.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule
</TABLE>
- - - - - - - - - - --------
* Incorporated herein by reference from the exhibits to the Registrant's
Registration Statement on Form S-1 (File No. 33-72866).
(degrees)
Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on August 15, 1994.
++ Incorporated herein by reference from the exhibits to the Form 10-K filed
with the Securities and Exchange Commission on December 28, 1994.
+++Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on February 7, 1995.
# Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on May 12, 1995.
~ Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on August 10, 1995.
@ Incorporated herein by reference from the exhibits to the Form 10-Q filed
with the Securities and Exchange Commission on May 15, 1996.
+ Management contract or compensation plan or arrangement required to be
filed pursuant to Item 14(c) of Form 10-K.
<PAGE>
EXHIBIT 10.22
September 5, 1996
Brian D. Owen
MapInfo Corporation
One Global View
Troy, NY 12180
Subject: Amendment to Employment Agreement
Dear Brian:
This letter, when signed by you, will constitute an amendment to your November
2, 1992, Amended and Restated Employment agreement with MapInfo. Your salary
shall be paid at an annualized rate of $215,000, retroactive to October 1,
1995.
Your responsibilities shall continue as at present with active participation
in management to terminate on September 30, 1996. Until the earlier of June
30, 1997 or your obtaining new employment, you will remain an employee in an
advisory capacity to the Chairman. Regardless, you will continue to be paid
until June 30, 1997 at the $215,000 annualized rate. While you are an
employee, you will continue to be eligible for coverage under the MapInfo
benefits plans covering medical and dental insurance, life insurance, vision
care, disability coverage, the 401(k) Plan (subject to plan rules), and the
Section 125 Plan. Upon your obtaining new employment, your participation in
these benefits plans will cease. If you have not secured new employment by
July 1, 1997, you will be eligible to purchase medical coverage under COBRA,
the details of which are available from the human resources director.
When you sign this Agreement, you shall return to MapInfo every option you
have been granted at an exercise price above $1.74 per share. All your $1.74
options remain exercisable in accordance with the terms of the November 2,
Amended and Restated Employment Agreement, and the stock option agreement
documents you signed when you received the options. Your official last day of
employment shall be the earlier of June 30, 1997 or your securing new
employment, and shall commence the ninety (90) day stock option exercise
window permitted under the stock option agreement.
Except as specifically stated above, this letter agreement supersedes and
replaces all prior agreements between the Company and you, other than the
following sections of your November 2, 1992 agreement, which survive and
continue in full force and effect: Non-Competition, #5--Expenses, #7--Stock
Options, #10--Indemnity (through the earlier of June 30, 1997 or your
obtaining new employment), #11--Amendment, #12--Notices, #14--Successors and
Assigns, and #16--Governing Law. This contains our entire agreement.
MapInfo Corporation Agreed and Accepted:
/s/ Michael D. Marvin /s/ Brian D. Owen
By___________________________________ By___________________________________
Michael D. Marvin Brian D. Owen
Chairman of the Board
<PAGE>
EXHIBIT 10.23
EMPLOYMENT AGREEMENT
Agreement made as of September 30, 1996, between MAPINFO CORPORATION, One
Global View, Troy, New York 12180 ("MapInfo"), and Michael D. Marvin (MARVIN)
residing at 16 Park Hill, Menands, New York 12204.
1. Engagement. MapInfo agrees to employ MARVIN, and he agrees to serve as
the MapInfo Chairman, and acting President and Chief Executive Officer of the
corporation.
2. Term. The term of this Agreement shall begin on October 1, 1996, and
shall continue until terminated in accordance with any of the following. The
current Agreement shall remain in effect until October 1, 1996.
2.1 This Agreement for services shall terminate after a new Company
President/CEO has been hired and that person and the Board determined that
MARVIN's services in the capacity described hereafter are no longer
required. Upon such termination of full time employment:
2.1.1 While he remains Chairman of the Board, MARVIN may, at his
option, continue to occupy his office at MapInfo; and
2.1.2 Whether or not MARVIN remains with MapInfo, the Company for a
period of one year, shall provide MARVIN with full access to, and the
assistance of Kathy Dinardo; and
2.1.3 Kathy Dinardo and MARVIN have the sole responsibility for
terminating this relationship before the end of the transition year.
2.2 This Agreement may be terminated by MapInfo at any time for Cause.
For the purposes of this Agreement, Cause shall be any of the following:
2.2.1 The breach by MARVIN of a material provision of this Agreement,
including but not limited to the failure of MARVIN to provide the
services called for hereunder, or any breach by MARVIN of
confidentiality, or violation of any non-compete agreement; or
2.2.2 Malfeasance in relation to the company; or
2.2.3 Upon the conviction of MARVIN for any crime, or because MapInfo
reasonably believes MARVIN may have been, or is, involved in criminal
or other activities of such a nature as could injure the reputation of
MapInfo.
2.2.4 Material failure to perform his duties which failure is not
cured within 30 days after notice.
2.3 In the event that MARVIN shall be prevented from performing his
duties for a continuous period of three (3) months as a result of a
personal injury, mental or physical disability, or illness, MapInfo may
terminate this Agreement upon twenty (20) day written notice to MARVIN.
Salary shall only be continued for ninety (90) days after the date the
disability commences, reduced dollar for dollar by the amount of any
disability insurance benefits paid to him by reason of company owned
disability policies.
3. Services. MARVIN shall devote his best and full-time efforts to
fulfilling his responsibilities to MapInfo. He shall use his individual
expertise to the extend possible for effective financial and administrative
operation of the company, as well as the growth of the business.
<PAGE>
4. Compensation. As compensation for the services to be rendered MapInfo
shall pay and provide the following to MARVIN:
4.1 A base salary for year one at the rate of Two Hundred and fifty
Thousand Dollars ($250,000.00) per year, and
4.1.2 Bonuses based upon the performance of the Corporation and upon
MARVIN achieving his targeted company fiscal year objectives as
established by the Board of Directors in conference with MARVIN, and
further, upon MARVIN achieving super objectives established by the
Board of Directors, subject to the following:
4.1.2.1 $125,000 in year one, payable quarterly, for achieving
targeted company fiscal year objectives, and
4.1.3 Upon signing, MARVIN shall receive 25,000 shares of MapInfo
stock options vesting March 31, 1997. These options shall remain in
effect as long as MARVIN is employed by the Company.
4.4 Participation in all employee benefit programs, such as medical
insurance, retirement and disability programs, as set forth in the MapInfo
Employee's Manual, and as they may be amended from time to time.
5. Expenses. In addition to the compensation provided for above, MARVIN
shall also be entitled to reimbursement for all reasonable expenses
necessarily incurred by him in the performance of his duties, upon
presentation of vouchers indicating the amount and business purposes.
6. Non-competition. MARVIN shall sign the annexed non-compete agreement as a
condition of his employment.
7. Amendment. This Agreement shall be amended only in writing, signed by
MARVIN and MapInfo's Secretary of the Board.
8. Notices. All notices required or permitted to be given under this
Agreement shall be hand delivered or sent by registered or certified mail,
return requested to the last known address of either party.
9. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon MapInfo, its successors and assigns, including, without
limitation, any corporation which may acquire all or substantially all of
MapInfo's assets and business or into which MapInfo may be consolidated or
merged, and MARVIN, his heirs, executors, administrators and legal
representatives. MARVIN may assign his right to payment under this Agreement,
but not his obligations under this Agreement.
10. Entire Agreement. This Agreement is the entire Agreement of the parties
regarding the subject matter hereof, and supersedes all prior understandings.
There are no oral agreements or other writings related to the matters set
forth herein.
11. Governing Law. This Agreement shall be governed by the laws of New York
State.
MICHAEL D. MARVIN MAPINFO CORPORATION
/s/ Michael D. Marvin /s/ John F. Haller
_____________________________________ By___________________________________
John F. Haller, Secretary
9/30/96
Date: _______________________________ 9/30/96
Date: _______________________________
<PAGE>
EXHIBIT 10.24
EMPLOYMENT AGREEMENT
Agreement made as of September 27, 1996, between MAPINFO CORPORATION, One
Global View, Troy, New York 12180 ("MapInfo" or "Company"), and John C.
Cavalier, an individual residing at 3804 Silver Falls Court, Plano, Texas (the
"Employee").
1. EMPLOYMENT AND TERM.
MapInfo agrees to employ the Employee as President and Chief Executive
Officer of the corporation for a period of two years, beginning on the date
employment commences and ending two years later (the "Contract Expiration
Date"). The Employee agrees to commence such employment on or before November
4, 1996, agrees to aid in managing the operations of MapInfo under the
supervision of the Board of Directors of MapInfo, agrees to serve as a member
of the Board of Directors of the Corporation, agrees to perform such other
services as shall from time to time be assigned to him by the Board of
Directors, and agrees to devote diligently and competently, his entire
business time, skill and attention to such services.
2. COMPENSATION AND BENEFITS.
A. The Employer shall pay to the Employee a salary of not less than
$250,000 per annum. Employee's salary shall be payable in accordance
with the standard payroll practices of the Employer. The Employee's
annual salary may be increased from time to time in accordance with the
normal business practices of the Employer and, if so increased, shall
not thereafter be decreased, except by the mutual agreement of the
parties.
B. The Employer shall reimburse the Employee for all reasonable out-of-
pocket expenses incurred in connection with the performance of his
duties hereunder, payable in accordance with the standard expense
account procedures of the Employer.
C. The Employee shall be entitled to participate on the same basis, subject
to the same qualifications, as other employees of the Employer in any
disability, pension, life insurance, health insurance, hospitalization
and other fringe benefit plans in effect with respect to employees of
the Employer, in accordance with the written terms of said plans which
shall be controlling.
D. The Employer shall purchase such additional medical, disability, life
insurance or any other fringe benefit programs of the Employee's
choosing up to a maximum amount of $20,000 per annum. The income tax
implications of this compensation shall be the responsibility of
Employee.
E. In addition to his salary, the Employee will be eligible to earn each
year during the term of his employment incentive compensation in amounts
to be determined by the Compensation Committee of the Board of Directors
based on the Company's and the Employee's performance during each fiscal
year. $125,000 per annum may be earned, payable quarterly, for achieving
targeted Company and personal objectives and $125,000 per annum may be
earned, payable 45 days after the end of the fiscal year, for achieving
super objectives. Incentive compensation for the fiscal year ending
September 30, 1997 shall be prorated from the Employee's first day of
full time employment under this Agreement. The Employee's annual
incentive compensation target may be increased from time to time in
accordance with the normal business practices of the Employer and, if so
increased, shall not thereafter be decreased, except by the mutual
agreement of the parties.
F. On the earlier of (a) the commencement date of a consulting engagement
between Cavalier and MapInfo and (b) the Employee's first day of
employment, the Employee shall be granted 200,000 non-qualified stock
options under the 1993 Stock Incentive Plan in accordance with the
provisions of the attached plan. The exercise price of the options shall
be the fair market value of MapInfo Common Stock on the date of the
option grant. 25% of such options will vest on each of the four
anniversary dates of the grant date.
<PAGE>
G. To assist in relocation, Employee shall be entitled to borrow up to
$200,000 from MapInfo at no (0%) interest for expenses reasonably
incurred by him in relocating his immediate family, including costs of
selling his present Texas residence, closing costs on the purchase of
new home in the Capital District, moving household goods, temporary
living costs during the relocation period, other reasonable incidental
costs, and the personal tax consequences thereof. One half of such loan
will be forgiven on the one year anniversary date of Employee's
permanent relocation to the Capital District, provided he is employed by
MapInfo at that time. The second half will be forgiven on the second
anniversary date of Employee's permanent relocation to the Capital
District provided he is employed by MapInfo at that time. If the
Employee was terminated by the Employer for other than Cause, the loan
shall be forgiven. In all other instances of termination of employment
prior to that second anniversary date, the loan will be immediately due
and payable.
3. INTELLECTUAL PROPERTY, CONFIDENTIAL INFORMATION AND NON-COMPETITION.
The Employee shall have executed the attached Employee Intellectual
Property, Confidential Information and Non-Competition Agreement prior to
commencement of employment.
4. IRREPARABLE INJURY.
The Employee acknowledges that any violation by him of Article 3 of this
Agreement may cause the Employer irreparable injury. In the event of a breach
or threatened breach by the Employee of the provisions of Article 3 of this
Agreement, the Employer shall be entitled to an injunction restraining the
Employee from violating the terms thereof, from disclosing to any person,
firm, corporation, association or other entity, whether or not the Employee is
then employed by, or an officer, director, or owner thereof, any Proprietary
Information. Nothing herein shall be construed as prohibiting the Employer
from pursuing any other remedies available to it for such breach or threatened
breach, including recovery of damages from the Employee. Both parties hereto
recognize that the services to be rendered by the Employee during the term of
his employment are special, unique and of extraordinary character.
5. EARLY TERMINATION.
A. The Employee's employment hereunder may be terminated prior to the
Contract Expiration Date only under the following circumstances:
1. The death of the Employee;
2. A mental, physical or other disability or condition of the Employee
which renders the Employee incapable of performing his obligations
under this Agreement for a period of three (3) consecutive months;
3. By the Employee for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean (i) a failure by the Employer to comply
with any material provision of this Agreement which has not been
cured within ten (10) days after written notice of such
noncompliance has been given by the Employee to the Employer, or
(ii) a change in control of Employer.
4. By the Employer for Cause. For purposes of this Agreement, the
Employer shall have "Cause" to terminate the Employee's employment
hereunder upon (a) the willful and continued failure by the Employee
to substantially perform his duties hereunder (other than any such
failure resulting from the Employee's incapacity due to physical or
mental illness), or (b) the willful engaging by the Employee in
misconduct which is materially injurious to the Employer, monetarily
or otherwise, or (c) of the willful violation by the Employee of the
provisions of the Nondisclosure Agreement.
B. Any termination of the Employee's employment by the Employer or by the
Employee shall be communicated by written Notice of Termination to the
other party hereto.
<PAGE>
C. "Date of Termination" shall mean (1) if the Employee's employment is
terminated by his death, the date of his death, (2) if the Employee's
employment is terminated by reason of the event specified in subsection
A.2. above, thirty (30) days after Notice of Termination is given
(provided that the Employee shall not have returned to the performance
of his duties on a full-time basis during such thirty (30) day period),
(3) if the Employee's employment is terminated for Cause pursuant to
subsection A.3. above, the date the Notice of Termination is given or
later if so specified in such Notice of Termination, and (4) if the
Employee's employment is terminated for any other reason, the date on
which a Notice of Termination is given. If within thirty (30) days after
any Notice of Termination is given the party receiving such Notice of
Termination notified the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date fixed, either
by arbitration award or by a final judgment, order or decree of a court
of competent jurisdiction.
6. COMPENSATION UPON EARLY TEMINATION OR DISABILITY.
A. During any period that the Employee fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), the Employee shall continue to receive his full
salary at the rate then in effect for such period until his employment
is terminated pursuant to Article 5, subsection A.2. hereof, provided
that payments so made to the Employee during the disability period shall
be reduced by the sum of the amounts, if any, payable to the Employee at
or prior to the time of any such payment under disability benefit plans
of the Employer and which were not previously applied to reduce any such
payment.
B. If the Employee's employment is terminated by his death, the Employer
shall have no further payment obligations to Employee other than those
arising from his employment prior to his death.
C. If the Employee's employment shall be terminated for Cause, the Employer
shall pay the Employee his full salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, and
any incentive compensation earned under Article 2, section E through the
Date of Termination and the Employer shall have no further obligations
to the Employee under this Agreement.
D. If the Employee shall terminate his employment by resigning for other
than Good Reason, the Employer shall pay the Employee his full salary
through the Date of Termination at that rate in effect at the Notice of
Termination is given, and any incentive compensation earned under
Article 2, section E as of the Date of Termination.
E. If (1) the Employee's employment shall be terminated by MapInfo for
reasons other than pursuant to Article 5, section A.1, A.2 or A.4 hereof
or (2) if the Employee shall terminate his employment for Good Reason,
then
a) the Employer shall pay the Employee his full salary through the Date
of Termination at the rate in effect at the time Notice of
Termination is given, and any incentive compensation earned under
Article 2, section E as of the Date of Termination;
b) the Employer shall, in addition, pay as severance pay to the
Employee a sum equal to the Employee's annual salary in effect at
the Date of Termination in a lump sum on or before the tenth day
following the Date of Termination;
c) and the Employer shall continue the Employee's health and dental
insurance coverage for the one year period following the Date of
Termination on the same terms as provided to other employees of the
Employer.
F. Upon any change in control of the Employer, all outstanding stock
options of Employee to purchase common stock of Employer not theretofore
exercisable by Employee shall be and become immediately exercisable as
of the date of such change in control of Employer for such period and
upon such terms that are provided in the stock option plan.
7. NOTICES.
All communications and notices hereunder shall be in writing.
<PAGE>
8. ENTIRE AGREEMENT.
This Agreement and the agreements and exhibits referred to herein constitute
the entire understanding between that parties and supersede and cancel all
prior agreements or understandings between the parties hereto. No waiver or
modification of the terms hereof shall be valid unless in writing signed by
both parties hereto and only to the extent therein set forth.
9. SUCCESSORS.
A. The Employer will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Employer, by agreement in form
and substance satisfactory to the Employee, to expressly assume and
agree to perform this Agreement in the same manner and to the same
extent that the Employer would be required to perform it if no such
succession had taken place. Failure of the Employer to obtain such
agreement prior to the effectiveness of any such succession shall, at
Employee's option to treat it as such, be a breach of this Agreement,
except that for the purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Employer" shall mean the
Employer as herein above defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement
provided for in this Article 9 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of the law.
B. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, administrators, executors,
personal representatives, successors and assigns; provided, however,
that except as provided in this Article 9, this Agreement may not be
assigned by either of the parties hereto. If the Employee should die
while any amounts would still be payable to him, all such amounts
earned, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Employee's designee or, if there
be no such designee, to the Employee's estate.
10. ARBITRATION.
Except as otherwise provided in Article 4, any dispute or claim relating to
or arising out of the employment of the Employer, whether based on contract or
tort or otherwise, but not including statutory claims, shall be subject to
final and binding arbitration in the State of New York in accordance with the
applicable commercial arbitration rules of the American Arbitration
Association in effect at the time the claim or dispute arose. The arbitrators
shall have jurisdiction to determine any such claim, and may grant any relief
authorized by law for such claim. The arbitrators' decision shall be based on
and supported by written findings of fact and conclusions of law. Any claim or
dispute subject to arbitration shall be deemed waived, and shall be forever
barred, if arbitration is not initiated within twelve (12) months of the date
the claim or dispute first arose.
11. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York without regard to the choice of law provisions
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date and year first written above.
EMPLOYEE:
MAPINFO:
/s/ John C. Cavalier 9/28/96 /s/ Michael D. Marvin 10/1/96
- - - - - - - - - - ------------------------------------- -------------------------------------
John C. Cavalier By __________________________________
<PAGE>
EXHIBIT 10.25
MAPINFO CORPORATION
EMPLOYEE INTELLECTUAL PROPERTY, CONFIDENTIAL INFORMATION AND
NON-COMPETITION AGREEMENT
To the Company:
The term "Company," as used in this Agreement, means MapInfo Corporation
("MapInfo"), Troy, New York, and any and all of its successors, assigns,
present or future subsidiaries, or organizations controlled by, controlling or
under common control with MapInfo, through merger, acquisition or other legal
formation.
In consideration of (1) the fact of my employment, with the Company, in any
capacity and wherever I am located, and (2) the compensation paid by the
Company for my services, I agree to all of the following with regard to:
Intellectual Property Issues:
All inventions, discoveries, concepts, ideas or improvements and
developments (all, collectively, called "Inventions" from here on) relating to
products made or conceived by me (whether made solely by me or jointly with
others) from the time of entering the Company's employ until I leave, (1)
which are along the lines of the business or work of or discussed by, the
Company, or (2) which result from or are suggested by any work which I may do
for or on behalf of the Company, or (3) made on Company time or with Company
resources, shall be and remain the sole and exclusive property of the Company
or its nominees, whether patented or not. Further, I agree:
(A) to disclose Inventions to the Company promptly and fully, and, during
and subsequent to my employment, to assist the Company and its nominees in
every proper way (without charge to the Company, but without expense to me)
to obtain for its or their own benefit intellectual property protection,
including but not limited to patents for such inventions in any and all
countries;
(B) to make and maintain adequate and current written records of all
Inventions, in the form of notes or reports or representations in any form
appropriate, which records shall be and remain the property of and be
available to the Company at all times; and
(C) to deliver promptly to the Company on termination of my employment,
all memoranda, notes, records, reports, manuals, drawings, any other
documents, software, data disks, tapes and other items belonging to the
Company (i.e. all written or other media embodied material obtained at
Company expense or otherwise acquired in connection with the performance of
my work with the Company, whether or not related to any Invention),
including all copies of such materials, which I may possess or have under
my control.
Confidential Information:
Except as the Company may otherwise consent in writing:
(A) not to publish or otherwise disclose or use at any time (except as my
Company duties may require) either during or subsequent to my employment,
any information, knowledge, or data of the Company I may receive or develop
during the course of my employment, relating to business processes,
computer programs, methods, machines, manufactures, Inventions, accounting
methods, information systems, business or financial plans or reports,
customer lists, customer preferences, or other matters which are of a
secret* or confidential* nature;
- - - - - - - - - - --------
* These terms are used in the ordinary sense and do not necessarily refer to
official security classifications of the United States Government.
<PAGE>
(B) to notify the Company in writing before I make any disclosure or
perform or cause to be performed any work for or on behalf of the Company,
which appears to threaten conflict with (1) rights I claim in any Invention
(a) conceived by me or others prior to my employment, or (b) otherwise
outside the scope of this Agreement, or (2) rights of others arising out of
obligations incurred by me (a) prior to this Agreement, or (b) otherwise
outside the scope of this Agreement. In the event of my failure to give
notice under the circumstances specified in (1) of the foregoing, the
Company may assume that no such conflicting invention or idea exists, and I
agree that I will make no claim against the Company with respect to the use
of such Invention in any work or on behalf of the Company. EXCEPT AS
SPECIFICALLY LISTED BELOW, I will not assert any rights under any
Inventions, or know-how related to them, as having been made or acquired by
me prior to my being employed by the Company, or since then and not
otherwise covered by the terms of this Agreement.
Competition to the Company/Solicitation of Employees:
I understand that the Company is engaged in a highly competitive industry I
agree that for the period of my employment with MapInfo Corporation, and for
one year after my last day of MapInfo employment:
1) I shall not work for, consult with or, directly or indirectly, otherwise
perform any services for the following MapInfo competitors (including
parent and subsidiary entities) under whatever future name known and
wherever located: Environmental Systems Research Institute, Inc. of
Redlands, CA; Strategic Mapping, Inc. of Santa Clara, CA; Autodesk, Inc. of
San Rafael, CA; Caliper Corporation of Newton, MA; Integraph Corporation of
Huntsville, Alabama, and, for any mapping related position only, Microsoft
Corporation of Redmond, Washington; and
2) I shall not solicit, or cause to be solicited any MapInfo employee for
employment by any other entity.
Agreement, Governing Law, Other Obligations, Facsimile Signatures:
This Agreement supersedes and replaces any existing agreement which I have
entered into with the Company relating generally to the same subject matter.
This Agreement may not on behalf of or in respect to the Company be changed or
modified, or released, discharged, abandoned or otherwise terminated, in whole
or in part, except by a subsequent written amendment or new agreement signed
by an officer or other authorized executive of the Company and signed by me.
My obligations under this Agreement shall continue during and after Company
employment, and shall be binding obligations on my legal representatives.
This Agreement shall be governed by the laws of New York State, U.S.A., and
the venue to enforce my obligations or for any matter related to this
Agreement, shall be either Albany or Rensselaer County Supreme Court, New
York.
Any facsimile signature on this Agreement shall be accepted as an original
for all purposes.
EXCEPT AS LISTED BELOW, I have no agreements with or obligations to others
in conflict with any of the obligations that I am accepting by signing this
document.
/s/ D. Joseph Gersuk /s/ John C. Cavalier 9/30/96
- - - - - - - - - - ------------------------------------- -------------------------------------
Witness signature Employee signature and date signed
D. Joseph Gersuk John C. Cavalier ###-##-####
- - - - - - - - - - ------------------------------------- -------------------------------------
Print name of Witness Print name & Social Security # of
Employee
<PAGE>
THE FOLLOWING ARE ALL INVENTIONS, DISCOVERIES, CONCEPTS, IDEAS, IMPROVEMENTS,
KNOW-HOW TO WHICH I CLAIM RIGHTS THAT AROSE BEFORE MY EMPLOYMENT BY MAPINFO OR
ARE OTHERWISE NOT COVERED BY THIS AGREEMENT:
- - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - -------------------------------------------------------------------------------
THE FOLLOWING ARE THE ONLY AGREEMENTS OR OBLIGATIONS TO WHICH I AM A PARTY
WHICH MAY BE IN CONFLICT WITH OBLIGATIONS UNDERTAKEN ABOVE:
- - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - -------------------------------------------------------------------------------
- - - - - - - - - - -------------------------------------------------------------------------------
-------------------------------------
(use and sign extra sheets if necessary)
<PAGE>
EXHIBIT 10.26
MEMORANDUM
DATE: January 11, 1996
TO: Human Resources
FROM: Brian D. Owen
RE:
CC: Mike Marvin
Joe Gersuk
Effective January 1, 1996 we will increase Joe Gersuk's base salary by 7.5%
taking his new base salary to $177,375.00 annually. Additionally, we will
grant Joe an additional 10,000 option shares at the current price.
Additionally, we will pay Joe an additional $15,000.00 as a Q2 expense to
offset Joe's expense burden of carrying mortgage payments on his Connecticut
home while also paying rental on his Loudonville home.
In the event of a change of control at MapInfo where Joe did not have a
position of equal authority and responsibility with the surviving corporate
entity, Joe will be entitled to a nine month severance in addition to the
terms and conditions outlined in his employment agreement.
<PAGE>
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
PRIMARY
Average shares outstanding 4,937 5,561 5,691
Net effect of dilutive stock options--based on the
treasury stock method using average market price 294 280 174
-------- -------- --------
Total 5,231 5,841 5,865
======== ======== ========
Net income $ 3,198 $ 3,796 $ 707
======== ======== ========
Earnings per share $ 0.61 $ 0.65 $ 0.12
======== ======== ========
FULLY DILUTED
Average shares outstanding 4,937 5,561 5,691
Net effect of dilutive stock options--based on the
treasury stock method using the year-end market
price, if higher than the average market price 299 280 174
-------- -------- --------
Total 5,236 5,841 5,865
======== ======== ========
Net income $ 3,198 $ 3,796 $ 707
======== ======== ========
Earnings per share $ 0.61 $ 0.65 $ 0.12
======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME JURISDICTION OF INCORPORATION
---- -----------------------------
<S> <C>
MapInfo Limited England
MapInfo GmbH Germany
MapInfo Australia Pty Ltd. Australia
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of MapInfo Corporation on Forms S-8 (File Nos. 33-74660, 33-74662, 33-74664,
33-78406, 33-88780 and 333-4268) of our report dated November 5, 1996, on our
audits of the consolidated financial statements and financial statement
schedule of MapInfo Corporation and Subsidiaries as of September 30, 1995 and
1996, and for the years ended September 30, 1994, 1995, and 1996, which report
is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Albany, New York
December 27, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 27,104
<SECURITIES> 4,795
<RECEIVABLES> 7,581
<ALLOWANCES> 1,249
<INVENTORY> 1,021
<CURRENT-ASSETS> 42,450
<PP&E> 4,685
<DEPRECIATION> 2,289
<TOTAL-ASSETS> 49,091
<CURRENT-LIABILITIES> 8,558
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 40,384
<TOTAL-LIABILITY-AND-EQUITY> 49,091
<SALES> 41,532
<TOTAL-REVENUES> 41,532
<CGS> 9,360
<TOTAL-COSTS> 32,237
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 910
<INCOME-TAX> 203
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 707
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
</TABLE>
