<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
_____________________
Commission File Number 0-23078
MAPINFO CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 06-1166630
(State or other jurisdiction of (I.R.S. Employer
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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _____
-----
The number of shares outstanding of the registrant's common stock, $.002 par
value per share, as of May 1, 1996 was 5,688,015.
================================================================================
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MAPINFO CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Income Statements
for the three and six months ended March 31, 1996 and 1995 1
Balance Sheets
as of March 31, 1996 and September 30, 1995 2
Cash Flows Statements
for the six months ended March 31, 1996 and 1995 3
Notes to Financial Statements 4
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 8
ITEM 6. Exhibits and Reports on Form 8-K 8
Signatures 10
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
MAPINFO CORPORATION
INCOME STATEMENTS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended March 31, Ended March 31,
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenues $10,660 $ 9,779 $20,312 $ 18,806
---------- ---------- ---------- ----------
Cost of revenues 2,500 1,823 4,436 3,471
---------- ---------- ---------- ----------
Gross Profit 8,160 7,956 15,876 15,335
---------- ---------- ---------- ----------
Operating expenses:
Research and development 1,899 1,554 3,389 2,946
Selling and marketing 4,844 4,033 9,993 7,797
General and administrative 1,472 995 2,728 2,069
---------- ---------- ---------- ----------
Total operating expenses 8,215 6,582 16,110 12,812
---------- ---------- ---------- ----------
Operating income(loss) (55) 1,374 (234) 2,523
Other income(expense)- net 225 241 598 464
---------- ---------- ---------- ----------
Income before income taxes 170 1,615 364 2,987
Provision for income taxes 20 468 78 966
---------- ---------- ---------- ----------
Net income $ 150 $ 1,147 $ 286 $ 2,021
========== ========== ========== ==========
Earnings per share
Primary $ 0.03 $ 0.20 $ 0.05 $ 0.35
Fully diluted $ 0.03 $ 0.20 $ 0.05 $ 0.35
Weighted average shares outstanding
Primary 5,809 5,845 5,831 5,811
Fully 5,809 5,870 5,831 5,853
</TABLE>
See accompanying notes.
<PAGE>
MAPINFO CORPORATION
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
-------------- ---------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 10,506 $14,846
Short-term investments, at cost 17,171 14,970
Accounts receivable, less allowance of $1,380 and $949
at March 31, 1996 and September 30, 1995, respectively 8,940 9,527
Inventories 1,075 241
Other current assets 1,313 1,148
Deferred income taxes 893 893
---------- -----------
Total current assets 39,898 41,625
Property and equipment - net 4,720 3,564
Product development costs - net 928 542
Intangibles and other assets 700 691
---------- ----------
Total assets $ 46,246 $46,422
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,723 $ 1,542
Accrued expenses 3,873 4,721
Deferred revenue 1,068 970
Income taxes payable 22 107
---------- ----------
Total current liabilities 6,686 7,340
Other non-current liabilities 159 268
Deferred income taxes 118 118
---------- ----------
Total liabilities 6,963 7,726
---------- ----------
Stockholders' Equity
Common stock, $0.002 par value 11 11
Paid in capital 29,164 28,846
Retained earnings 10,133 9,847
Translation adjustment (24) (7)
---------- ----------
39,284 38,697
Less treasury stock, at cost, 2 shares 1 1
---------- ----------
Total stockholders' equity 39,283 38,696
---------- ----------
Total liabilities and stockholders' equity $ 46,246 $46,422
========== ==========
</TABLE>
See accompanying notes.
<PAGE>
MAPINFO CORPORATION
CASH FLOWS STATEMENTS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net income $ 286 $2,021
Depreciation and amortization 1,343 846
Allowance for doubtful accounts, sales returns and inventory 570 465
Changes in operating assets and liabilities
Accounts receivable 155 (2,789)
Inventories (973) (17)
Other current assets (165) (215)
Current liabilities (752) 654
Deferred revenue 63
------------- -------------
NET CASH FROM OPERATIONS 527 965
------------- -------------
CASH FLOWS (USED FOR) INVESTMENTS
Additions to property and equipment (2,173) (1,128)
Capitalized product development costs (656) (177)
Short-term investments (2,201) 463
Other assets (68) (200)
-------------- -------------
NET CASH (USED FOR) INVESTMENTS (5,098) (1,042)
-------------- -------------
CASH FLOWS FROM FINANCING
Payments on notes payable, long term debt and capital leases (70) (106)
Proceeds from exercise of options and ESPP stock purchases 318 1,077
------------- -------------
NET CASH FROM FINANCING 248 971
------------- -------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (17) -
------------- -------------
NET CHANGE IN CASH AND EQUIVALENTS (4,340) 894
Cash and equivalents, beginning of period 14,846 9,306
------------- -------------
Cash and equivalents, end of period $10,506 $10,200
============= =============
</TABLE>
See accompanying notes.
<PAGE>
MAPINFO CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying balance sheets and related
interim statements of income and cash flows include all adjustments (consisting
only of normal recurring items) necessary for their fair presentation. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues, and expenses.
Actual results could differ from those estimates. Interim results are not
necessarily indicative of results for a full year. The information included in
this Form 10-Q should be read in conjunction with Management's Discussion and
Analysis of financial statements and notes thereto included in the MapInfo
Corporation 1995 Annual Report on Form 10-K.
2. EARNINGS PER SHARE
Earnings per share is computed on the basis of the weighted average number of
common shares outstanding and the dilutive effect of outstanding stock options,
using the treasury stock method.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
MapInfo Corporation develops, manufactures, markets, licenses and supports
desktop mapping software, mapping application development tools, and geographic
and demographic information products for personal computers, workstations, and
servers on a worldwide basis.
REVENUES
Revenues of $10.7 million for the second quarter of fiscal 1996 increased 9%
over revenues of $9.8 million reported in the year earlier period. For the six
months ended March 31, 1996, revenues increased to $20.3 million, an 8% increase
over the corresponding period in the prior year. The increase in net revenues in
the second quarter and six months ended March 31, 1996 was primarily
attributable to increased unit sales of the Company's software products in Asia-
Pacific and European markets and the acquisition of the Company's Australian
distributor in the fourth quarter of fiscal 1995, offsetting a decline in
revenues in North America. Sales to one distributor represented 8% of revenues
in the quarter and six months ended March 31, 1996. Revenues outside North
America increased from 32% of revenues in the second fiscal quarter of 1995 to
50% of revenues in the second fiscal quarter of 1996. The decrease in North
American revenues is primarily attributable to low productivity from the North
American field sales organization, changing market conditions, and the continued
shift to an indirect distribution model. New products introduced in North
America in the first half included MapInfo Professional, released in December
1995 and MapInfo Desktop, released in February 1996. International translations
of MapInfo Professional were released in March 1996.
COST OF REVENUES, OPERATING EXPENSES, AND INCOME TAXES
Cost of revenues as a percentage of revenues increased from 18.6% of revenues in
the second quarter of fiscal 1995 to 23.5% of revenues in the second quarter of
fiscal 1996. As a result, the gross profit margin decreased from 81.4% in the
second quarter of fiscal 1995 to 76.5% in the first quarter of fiscal 1996. For
the six months ended March 31, 1996, the gross profit margin decreased to 78.2%
from 81.5% in the corresponding prior year period. The decline in gross profit
margins is primarily attributable to the revenue mix in North America and, with
respect to MapInfo Professional, the cost of the upgrade campaign, promotional
copies, and higher unit material costs.
Research and development expenses increased 22% to $1.9 million, or 17.8% of
revenues in the second quarter of fiscal 1996 from $1.6 million or 15.9% of
revenues in the corresponding prior year period. Fiscal year to date
expenditures increased 15% to $3.4 million from $2.9 million in the prior
period. The increase in research and development expenses resulted primarily
from the planned hiring of software engineers and the associated support costs
as the Company accelerates product development activities in response to
changing market conditions.
<PAGE>
Selling and marketing expenses increased 20% to $4.8 million in the second
quarter of fiscal 1996 from $4.0 million in the corresponding quarter of fiscal
1995. As a percentage of revenues, selling and marketing expenses were 45.4% and
41.2% in the second quarters of fiscal 1996 and 1995. For the six months ended
March 31, 1996, selling and marketing expenses increased 28% to $10 million, up
from $7.8 million in the comparable prior year period. As a percentage of
revenues, selling and marketing expenses were 49.2% and 41.5% for the first half
of fiscal 1996 and 1995. The increase in selling and marketing expenses was
primarily due to marketing costs associated with the launch of MapInfo
Professional, the expansion of sales activities in international markets,
selling and marketing costs in Australia following the Company's acquisition of
its master distributor, and selling costs in Japan where a sales office was
established in May 1995.
General and administrative expenses of $1.5 million were 13.8% of revenues in
the second quarter of fiscal 1996 compared to $1.0 million or 10.2% of revenues
in the second quarter of fiscal 1995. General and administrative expenses were
$2.7 million and $2.1 million for the first half of fiscal 1996 and 1995,
respectively, representing 13.4% and 11.0% of revenues in the respective period.
The increase in expense reflects the costs of establishing decentralized
accounting and support operations in Europe, general and administrative costs in
Australia following the Company's acquisition of its master distributor, and
additional infrastructure costs to support the Company's North American
operations.
In February 1996, the Company first occupied a 60,000 square foot office
building constructed for it's use on land adjacent to the MapInfo headquarters
facility in the Rensselaer Technology Park in Troy, New York. The building is
under lease from RPI and will enable the Company to locate all its research and
development activities in a single, custom designed facility. Upon occupancy, a
16,000 square foot facility in downtown Troy was vacated.
The effective income tax rate was 12% in the second quarter of fiscal 1996 and
29% in the corresponding quarter in fiscal 1995. For the six months ended March
31, 1996 and 1995, the effective income tax rate was 21% and 32%, respectively.
The decrease in the Company's effective tax rate is due to the increased portion
of pre-tax income represented by tax-exempt investment income.
FINANCIAL CONDITION
The Company's cash and short-term investments portfolio totaled $27.7 million at
March 31, 1996, and represented 60% of total assets. The portfolio is invested
primarily in short-term, liquid, tax-exempt securities.
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 are no outstanding borrowings under either facility at March
31, 1996. Cash generated from operations for the six months ended March 31, 1996
was $528,000 compared to $965,000 for the six months ended March 31, 1995. Cash
used for investments of $5.1 million for the six months ended March 31, 1996
consisted of $2.1 million in purchases of property and equipment, of which
approximately
<PAGE>
$900,000 was used to furnish the new research and development facility that was
occupied in February 1996, and $2.2 million in purchases of short term
investments.
Inventories increased from $241,000 at September 30, 1995 to $1.1 million at
March 31, 1996. The increase is due to the introduction of MapInfo Professional
and MapInfo Desktop, and inventories held in Scotland and Australia for sale in
the European and Asia Pacific markets.
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 12 months.
There are no material commitments for capital expenditures as of March 31, 1996.
<PAGE>
MAPINFO CORPORATION
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the shareholders of the company was held on February 2,
1996. The following matters were voted on at the shareholders meeting.
<TABLE>
<CAPTION>
Broker
ELECTION OF DIRECTORS: For Against Withheld Abstentions Non-Votes
- -------------------- --- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Michael D. Marvin, Chairman 4,417,292 501,790
Brian D. Owen, President and Chief Executive Officer 4,420,362 498,720
John F. Haller, Secretary 4,414,367 504,715
Laszlo C. Bardos 4,414,475 504,607
John F. Burton 4,410,026 509,056
George C. McNamee 4,410,049 509,033
James A. Perakis 4,434,567 484,515
AMENDMENT TO THE 1993 STOCK INCENTIVE PLAN
- ------------------------------------------
The shares authorized under the 1993 Stock Incentive Plan
were increased from 675,000 shares to 925,000 shares.
Further, in order to qualify certain grants of options as
performance based compensation under Section 162(m)
of the Code, the maximum number of shares of Common
Stock with respect to which options may be granted to any
employee in any calendar year was fixed at 200,000 shares. 3,636,049 1,210,832 16,487 55,714
AMENDMENT TO THE 1993 DIRECTOR STOCK OPTION PLAN
- ------------------------------------------------
The annual option grant under the Director Stock Option Plan
was amended from an option to purchase such number of
shares of Common Stock as is equal to $40,000 divided by the
option exercise price, which was equal to the fair market value
on the date of grant, to an option to purchase 3,000 shares of
Common Stock at an option exercise price equal to the fair
market value of the Common Stock on the date of grant. 3,852,274 972,821 297,303 56,684
RATIFICATION OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL YEAR.
- -----------------------------------------------------------
4,873,875 32,005 13,202
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The exhibits listed in the Exhibit Index filed as part of this report are
filed as part of this report or are included in this report.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the three months ended March
31, 1996.
<PAGE>
MAPINFO CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAPINFO CORPORATION
Date: May 13, 1996 By: /s/ D. Joseph Gersuk
-------------------------
D. Joseph Gersuk,
Vice President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
MAPINFO CORPORATION
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.21 Employment agreement by and between MapInfo Corporation
and Michael D. Marvin dated May 8, 1996
11 Statement regarding computation of per share
earnings
27 Financial Data Schedule
<PAGE>
EMPLOYMENT AGREEMENT
Agreement effective FEBRUARY 9, 1996 between MAPINFO CORPORATION ("MapInfo" or
"Company"), and MICHAEL D. MARVIN residing at 16 Park Hill, Menands, NY 12204.
The Company and Marvin, in recognition of his assumption of extensive additional
operational responsibilities for MapInfo, agree to all of the following
regarding his employment and compensation:
1.0 SALARY: $125,000 on an annualized basis, together with a bonus of $5,000 per
one cent ($.01) of earnings per share, on a quarterly basis, retroactive to Q2
of FY'96, and continuing for the duration of this Agreement.
2.0 RESPONSIBILITIES: Fundamental inside operations including North America
Sales, Marketing, R&D, Finance, G&A.
3.0 TERMINATION: This Agreement for services shall terminate after a new Company
President/CEO has been hired and that person and the Board determine that
Marvin's services in the capacity described hereafter are no longer required.
Upon such termination of full time employment:
3.1 While he remains Chairman of the Board, Marvin may, at his option,
continue to occupy his office at OGV; and
3.2 Whether or not Marvin remains at OGV, the Company for a period of one
year, shall provide Marvin with full access to, and the assistance of, Kathy
DiNardo; and
3.3 Kathy DiNardo and Marvin have the sole responsibility for terminating
this relationship before the end of the transition year.
4.0 AMENDMENTS. This Agreement shall be amended only in writing, signed by both
parties.
5.0 SUCCESSORS & 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 Maplnfo's assets
and business or into which MapInfo may be consolidated or merged, and Marvin,
his heirs and legal representatives.
6.0. ENTIRE AGREEMENT. This Agreement is the entire agreement of the parties.
There are no oral agreements or other writings related to the matters set forth
herein.
7.0 GOVERNING LAW. This Agreement shall be governed by the laws of New York
State.
MICHAEL D. MARVIN MAPINFO CORPORATION
/s/ Michael D. Marvin By: /s/ John F. Haller
- --------------------------- ---------------------------------
John F. Haller, Secretary
Date: May 8, 1996 Date: May 8, 1996
-------------------- -------------------------
<PAGE>
MAPINFO CORPORATION
EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended March 31, Ended March 31,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- ---------- --------
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 5,664 5,535 5,657 5,509
Net effect of dilutive stock options - based on the
treasury stock method using average market price 145 310 174 302
--------- -------- -------- --------
Total 5,809 5,845 5,831 5,811
========= ======== ======== ========
Net income $ 150 $1,147 $ 286 $2,021
========= ======== ======== ========
Earnings per share $ 0.03 $ 0.20 $ 0.05 $ 0.35
========= ======== ======== ========
FULLY DILUTED
Average shares outstanding 5,664 5,535 5,657 5,509
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 145 335 174 344
--------- -------- -------- --------
Total 5,809 5,870 5,831 5,853
========= ======== ======== ========
Net income $ 150 $1,147 $ 286 $2,021
========= ======== ======== ========
Earnings per share $ 0.03 $ 0.20 $ 0.05 $0.35
========= ======== ======== ========
</TABLE>
<TABLE> <S> <C>
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<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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 10,506
<SECURITIES> 17,171
<RECEIVABLES> 8,940
<ALLOWANCES> 1,380
<INVENTORY> 1,075
<CURRENT-ASSETS> 39,898
<PP&E> 4,720
<DEPRECIATION> 3,971
<TOTAL-ASSETS> 46,246
<CURRENT-LIABILITIES> 6,686
<BONDS> 0
0
0
<COMMON> 11
<OTHER-SE> 39,272
<TOTAL-LIABILITY-AND-EQUITY> 46,246
<SALES> 10,660
<TOTAL-REVENUES> 10,660
<CGS> 2,500
<TOTAL-COSTS> 8,215
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 170
<INCOME-TAX> 20
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
