<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 June 30, 1997
---------------------
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 August 1, 1997 was 5,879,621.
================================================================================
<PAGE>
MAPINFO CORPORATION
FORM 10-Q
For the Quarter Ended June 30, 1997
INDEX
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Income Statements
for the three and nine months ended June 30, 1997 and 1996 1
Balance Sheets
as of June 30, 1997 and September 30, 1996 2
Cash Flows Statements
for the nine months ended June 30, 1997 and 1996 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 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
MapInfo Corporation and Subsidiaries
Income Statements
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended June 30, Ended June 30,
------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $12,160 $10,164 $34,491 $30,476
Cost of revenues 2,600 2,495 7,164 6,931
-------- -------- -------- --------
Gross profit 9,560 7,669 27,327 23,545
-------- -------- -------- --------
Operating expenses:
Research and development 2,458 1,847 6,754 5,236
Selling and marketing 5,427 4,429 16,927 14,423
General and administrative 1,733 1,499 5,075 4,227
-------- -------- -------- --------
Total operating expenses 9,618 7,775 28,756 23,886
-------- -------- -------- --------
Operating loss (58) (106) (1,429) (341)
Other income-net 269 235 613 834
-------- -------- -------- --------
Income (loss) before income taxes 211 129 (816) 493
Income tax provision (benefit) 44 26 (172) 105
-------- -------- -------- --------
Net income (loss) $ 167 $ 103 $ (644) $ 388
======== ======== ======== ========
Earnings (loss) per share
Primary $ 0.03 $ 0.02 $ (0.11) $ 0.07
Fully diluted $ 0.03 $ 0.02 $ (0.11) $ 0.07
Weighted average shares outstanding
Primary 5,928 5,873 5,803 5,866
Fully diluted 5,928 5,873 5,803 5,866
</TABLE>
See accompanying notes.
1
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MapInfo Corporation and Subsidiaries
Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
June 30, September 30,
1997 1996
--------------- --------------
<S> <C> <C>
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 28,561 $ 27,104
Short-term investments, at cost 2,443 4,795
Accounts receivable, less allowance of $1,489 and $1,249
at June 30, 1997 and September 30, 1996, respectively 7,541 7,581
Inventories, net 942 1,021
Other current assets 1,418 844
Income taxes receivable 100 260
Deferred income taxes 1,025 845
--------------- --------------
Total current assets 42,030 42,450
Property and equipment - net 4,165 4,685
Product development costs - net 1,974 1,115
Deferred income taxes 385 385
Intangibles and other assets 857 456
--------------- --------------
Total assets $ 49,411 $ 49,091
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,233 $ 1,751
Accrued expenses 5,359 4,820
Deferred revenue 2,215 1,451
Income taxes payable 309 536
--------------- --------------
Total current liabilities 9,116 8,558
Other non-current liabilities 239 138
--------------- --------------
Total liabilities 9,355 8,696
--------------- --------------
Stockholders' Equity:
Common stock, $0.002 par value 12 12
Paid-in capital 30,260 29,824
Retained earnings 9,903 10,547
Translation adjustment 102 13
--------------- --------------
40,277 40,396
Less treasury stock, at cost
22 shares in 1997 and 2 shares in 1996 221 1
--------------- --------------
Total stockholders' equity 40,056 40,395
--------------- --------------
Total liabilities and stockholders' equity $ 49,411 $ 49,091
=============== ==============
</TABLE>
See accompanying notes.
2
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MapInfo Corporation and Subsidiaries
Cash Flows Statements
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine months ended June 30,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operations
Net income (loss) $ (644) $ 388
Depreciation and amortization 3,109 2,161
Allowance for doubtful accounts,
returns and inventory reserves 317 394
Provision for deferred income taxes (241) -
Changes in operating assets and liabilities:
Accounts receivable (171) 1,834
Inventories 75 (815)
Other current assets (752) 146
Current liabilities (95) (1,264)
Deferred revenue 892 154
-------- --------
Net cash from operations 2,490 2,998
-------- --------
Cash flows from (used for) investments
Additions to property and equipment (1,738) (2,833)
Acquisition of SpatialWare technology (1,440) -
Capitalized product development costs (295) (1,054)
Short-term investments and other assets 2,352 1,433
-------- --------
Net cash used for investments (1,121) (2,454)
-------- --------
Cash flows from (used for) financing
Payments on notes payable, long term
debt and capital leases (95) (63)
Repurchase of common stock for treasury (220) -
Proceeds from exercise of options and
ESPP stock purchases 431 575
-------- --------
Net cash from financing 116 512
-------- --------
Effect of exchange rate changes on cash
and cash equivalents (28) (23)
-------- --------
Net change in cash and equivalents 1,457 1,033
Cash and equivalents, beginning of
period 27,104 14,846
-------- --------
Cash and equivalents, end of period $28,561 $15,879
-------- --------
</TABLE>
See accompanying notes.
3
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MapInfo Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
1. Basis of Presentation
In the opinion of management, the accompanying interim balance sheets and
related 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 and liabilities and disclosure of
contingent assets and 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.
2. Earnings Per Share
Earnings per share are 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.
3. New 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 did
not affect 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 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. Effective December 31, 1997, the Company will
be required to implement Financial Accounting Standard No.128 - "Earnings per
Share". This standard replaces the presentation of primary earnings per share
(EPS) with a presentation of basic EPS. It also requires dual presentation of
basic and diluted EPS on the face of the income statement and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. Management has not
yet made a determination of the impact, if any, that the adoption of this
standard would have on the consolidated financial statements.
4. Common Stock Repurchase Program
The Board of Directors has authorized the Company to implement a Common Stock
repurchase program under which the Company is authorized to purchase a maximum
of $5,000,000 of Common Stock on the open market or in negotiated transactions
from time to time. The program will remain in effect until September 30, 1997
unless discontinued earlier by the Board of Directors. The Company intends to
use the repurchased shares for issuance upon the exercise of employee stock
options, purchases under the Company's stock purchase plan, or other corporate
purposes. In the quarter ended June 30, 1997, 20,000 shares were
repurchased at an average purchase price of $11.00 per share.
4
<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
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.
In April 1997, the Company established a new corporate structure to support its
expanded product line and strategic focus on enterprise-wide market
opportunities. In addition to continuing to focus on the core desktop product
line, four new business units were established with profit and loss
responsibility to deliver mapping products, services and solutions that address
customer needs: Developer Tools, Data Products, SpatialWare and Internet. The
Company will focus on five core vertical industries where mapping technology can
improve competitiveness and increase profitability. These are
telecommunications, financial services, government, retail and utilities.
Revenues
Revenues of $12.2 million for the third quarter of fiscal 1997 increased 20%
over revenues of $10.2 million reported in the year earlier period. The increase
in revenues was primarily attributable to increased unit sales of the Company's
software and data products in the Americas and Europe. In the Americas, the
increase in revenues was primarily attributable to increased production from the
inside sales group and, in general, improved execution throughout the sales and
marketing organization. In Japan, revenues declined in the third quarter due to
a one quarter transitional change in a contract renewal with the Company's long-
time master distributor, Mitsui Zosen Systems Research. The contract provides
for minimum guaranteed royalties through the end of calendar 1998. For the nine
months ended June 30, 1997, revenues increased to $34.5 million, a 13% increase
over the corresponding prior year period. The year to date increase in revenues
is primarily attributable to increased unit sales of the Company's software and
data products in Europe and from the sale of recently-introduced products. The
sale of recently-introduced products, ProServer, SpatialWare and MapX,
contributed $750 thousand and $2.4 million in revenues for the third quarter and
fiscal year to date, respectively.
Cost of Revenues, Operating Expenses, and Income Taxes
Cost of revenues decreased from 24.5% of revenues in the third quarter of fiscal
1996 to 21.4% of revenues in the third quarter of fiscal 1997. As a result, the
gross profit margin increased from 75.5% in the third quarter of fiscal 1996 to
78.6% in the third quarter of fiscal 1997. The improvement in gross profit
margin in the third quarter was primarily attributable to the increased
percentage of software sales under volume license arrangements and lower
material costs. For the nine months ended June 30, 1997, the gross profit margin
increased to 79.2%, up from 77.3% in the corresponding prior year period.
Research and development expenses increased 33.1% to $2.5 million or 20.2% of
revenues in the third quarter of fiscal 1997 from $1.8 million or 18.2% of
revenues in the corresponding prior year period. Fiscal year to date R&D
expenses increased 29% to $6.8 million from $5.2 million in the prior year.
These increases are primarily due to increased headcount resulting from the
acquisition of SpatialWare and other new product development costs.
Selling and marketing expenses increased 22.5% to $5.4 million in the third
quarter of fiscal 1997 from $4.4 million in the corresponding quarter of fiscal
1996. As a percentage of revenues, selling and marketing expenses were 44.6%
and 43.6% of revenues in the third quarters of fiscal 1997 and 1996,
respectively. For the nine months ended June 30, 1997 and 1996, selling and
5
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marketing expenses increased 17.4% to $16.9 million from $14.4 million. As a
percentage of revenues, selling and marketing expenses were 49.1% and 47.3% for
the nine months ended June 30, 1997 and June 30, 1996, respectively. The
increase in selling and marketing expenses in the third quarter was primarily
attributable to the costs of launching new products, including Spatialware,
Developer Tools and Internet, and other costs associated with the enterprise
strategy. In the nine months ended June 30, 1997, the increase was primarily
attributable to increases in headcount in Europe and the Americas, increased
sales and marketing activities in Europe, and the costs of launching new
products.
General and administrative expenses of $1.7 million were 14.3% of revenues in
the third quarter of fiscal 1997 compared to $1.5 million or 14.7% of revenues
in the third quarter of fiscal 1996. General and administrative expenses were
$5.1 million and $4.2 million for the nine months ended June 30, 1997 and 1996,
respectively, representing 14.7% and 13.9% of revenues in the respective period.
The increase in general and administrative expenses reflects increased
compensation costs, higher professional fees and increased MIS costs in the
Company's domestic and international operations.
The fiscal year to date decline in other income is primarily due to $176
thousand in foreign currency losses in 1997 compared to $21 thousand in foreign
currency gains in 1996.
The effective income tax rate was 21% in the third quarter of fiscal 1997
compared to 20% in the third quarter of fiscal 1996. For the nine months
ended June 30, 1997 and 1996, the effective income tax rate was 21%.
Financial Condition
The Company's cash and short-term investments totaled $31.0 million at June 30,
1997, compared to $31.9 million at September 30, 1996. At June 30, 1997 the
portfolio was invested primarily in short-term, liquid, taxable 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 1998. There were no outstanding
borrowings under either facility at June 30, 1997.
Cash from operations was $2.5 million for the nine months ended June 30, 1997,
compared to $3.0 million for the corresponding period in the prior year. Cash
used for investments of $1.1 million included $1.4 million for the acquisition
of SpatialWare from Unisys Corporation and $1.7 million in purchases of computer
and other equipment, and was offset by, among other things, increased sales of
short-term investments of $2.4 million.
The Board of Directors has authorized the Company to implement a Common Stock
repurchase program under which the Company is authorized to purchase a maximum
of $5,000,000 of Common Stock on the open market or in negotiated transactions
from time to time. The program will remain in effect until September 30, 1997
unless discontinued earlier by the Board of Directors. The Company intends to
use the repurchased shares for issuance upon the exercise of employee stock
options, purchases under the Company's stock purchase plan, or other corporate
purposes. In the quarter ended June 30, 1997, 20,000 shares were repurchased
under this program at an average purchase price of $11.00 per share.
6
<PAGE>
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.
Certain Factors That May Affect Future Results
This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q and presented elsewhere by management from
time to time.
In addition to the other information in this Quarterly Report on Form 10-Q, 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
7
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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
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 the success of this strategy.
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. 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.
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. The Company derives a portion of its
product revenues from technology development and licensing fees from customers
that embed 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.
8
<PAGE>
Risks associated with international operations. Revenues outside the Americas
were 49% of revenues in the nine months ended June 30, 1997 and 48% of revenues
for the corresponding period in the prior year. 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.
New 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 did not affect 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 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. Effective December 31, 1997,
the Company will be required to implement Financial Accounting Standard No.128 -
"Earnings per Share". This standard replaces the presentation of primary
earnings per share (EPS) with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the income statement
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
Management has not yet made a determination of the impact, if any, that the
adoption of this standard would have on the consolidated financial statements.
9
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MapInfo Corporation
Part II. Other Information
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 were filed during the three months ended
June 30, 1997.
10
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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: August 13, 1997 By: /s/ D. Joseph Gersuk
--------------------------
D. Joseph Gersuk,
Executive Vice President,
Finance and International
Operations, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
11
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Exhibit Index
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.13 Amended and restated Employment Agreement dated as of April 1, 1997
by and between the Registrant and D. Joseph Gersuk.
10.14 Employee Intellectual Property, Confidential Information and Non-
Competition Agreement dated April 10, 1997 by and between the
Registrant and D. Joseph Gersuk.
10.31 Unsecured Promissory Note dated June 2, 1997 by and between the
Registrant and John C. Cavalier.
11 Statement regarding computation of per share earnings.
27 Financial Data Schedule.
12
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Exhibit 10.13
AMENDED & RESTATED EMPLOYMENT AGREEMENT
Effective Date of Amended & Restated Employment Agreement: April 1, 1997
Effective Date of Original Agreement: October 18, 1994
This is the Amended & Restated Agreement between the employer, MapInfo
CORPORATION, One Global View, Troy, NY 12180 ("MapInfo"), and D. JOSEPH Gersuk
residing at 33 Cloverfield Drive, Loudonville, NY 12211 ("Gersuk").
1.0 Engagement.
1.1 MapInfo agrees to continue employment of Gersuk, and he agrees to serve,
as the MapInfo Chief Financial Officer with responsibility for (i) overall
MapInfo financial and administrative management, and, until such time as a
Managing Director is engaged for Europe and for the Asia Pacific region, (ii)
direct responsibility for all MapInfo international operations in the region
without such Managing Director.
1.2 Gersuk shall have the title Executive Vice President Finance &
International Operations, as well as being CFO and Treasurer.
2.0 Term/Termination for Cause. The term of this Amended & Restated Agreement
(hereafter "Agreement") shall begin on April 1, 1997, and shall continue until
March 31, 2000, unless terminated by MapInfo at any time for "Cause" in
accordance with any of the following definitions for the purposes of this
Agreement, or inability to perform as set forth in Section 3 below:
2.1 The breach by Gersuk of a material provision of this Agreement,
including but not limited to the failure of Gersuk to provide the services
called for hereunder, or any breach by Gersuk of confidentiality, or violation
of any non-compete agreement; or
2.2 Malfeasance in relation to the company; or
2.3 Upon the conviction of Gersuk for any crime, or because MapInfo
reasonably believes Gersuk may have been, or is, involved in criminal or other
activities of such a nature as could injure the reputation of MapInfo.
2.4 Material failure to perform his duties which failure is not cured within
30 days after notice.
2.5 Moving from the Capital District of New York State other than at the
request of MapInfo..
3.0 Disability Termination: In the event that Gersuk 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 Gersuk. Salary
shall be continued for ninety (90) days after the date the disability commences,
reduced dollar for dollar
13
<PAGE>
by the amount of any disability insurance benefits paid to him by reason of
company owned disability policies.
4.0 Termination Without Cause. If, during the term of this Agreement, Gersuk
is terminated for a reason other than cause, or upon a change in control of
MapInfo and a required change in Gersuk responsibilities and/or location which
he does not accept, then, all unvested options granted under this Agreement
shall vest immediately upon termination, all health insurance benefits shall
continue for one year or until Gersuk has health insurance available through
other employment, and:
4.1 If termination is within the first two years of this Agreement, the
salary due Gersuk for the remainder of the Agreement shall be paid in full; or
4.2 If termination occurs within the third year of this Agreement, MapInfo
will pay Gersuk the higher of $200,000 or salary remaining due under this
Agreement.
5.0 Services. Gersuk shall devote his best and full-time efforts to fulfilling
his responsibilities to MapInfo. He shall use his individual expertise to the
extent possible for effective financial and administrative operation of the
company, as well as the growth of the business, subject to the control,
discretion and approval of the Chief Executive Officer. In the performance of
his duties, he shall make his office in the U.S. headquarters of MapInfo.
6.0 Compensation. As compensation for services rendered from April 1, 1997 on,
MapInfo shall pay and provide the following to Gersuk:
6.1 A base salary of Two Hundred & Nine Thousand Dollars ($209,000.00) per
year.
6.2 Incentive earnings potential of up to forty-five per cent (45%) of base
salary, consisting of two components: (1) two-thirds based on the performance
of the Corporation in accordance with the applicable MapInfo Executive Incentive
Compensation Program (hereafter "MEICP"); and (2) one-third based on Gersuk
achieving his MBO's (e.g. keeping expenses within budget approvals), as such
objectives, both corporate and personal, are set by the MapInfo Chief Executive
Officer in conference with Gersuk, all subject to the following:
6.2.1 Prior to or early in each quarter, MBO's will be agreed upon
jointly and recorded.
6.2.2 Incentive payments earned will be paid quarterly, by the end of the
month after the close of the applicable quarter and in accordance with the
MEICP for '97, and as it may be amended for subsequent years.
6.3 Total cash compensation shall be a maximum of Three Hundred and Three
Thousand ($303,050) per year, if maximum EPS and all MBO's are met.
6.4 The Gersuk compensation plan shall be reviewed on or before each
anniversary of employment with MapInfo, and increased as and if appropriate.
6.5 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.
14
<PAGE>
6.6 Twenty-four thousand (24,000) additional non qualified stock options,
exercisable at the MapInfo NASDQ listed closing price on the date this Agreement
is executed by both parties, to vest in equal amounts over a four year period,
commencing with 6,000 vesting one year following such Agreement execution.
7.0 Expenses. In addition to the compensation provided for above, Gersuk 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.
8.0 Non-competition. Gersuk shall sign the annexed Employee Intellectual
Property, Confidentiality and Non-Competition Agreement (Schedule A) as a
condition of his continued employment under the amended terms of this Agreement.
9.0 Amendment. This Agreement shall be amended only in writing, signed by
Gersuk and MapInfo's Chief Executive Officer.
10.0 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.
11.0 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
Maplnfo's assets and business or into which MapInfo may be consolidated or
merged, and Gersuk, his heirs, executors, administrators and legal
representatives. Gersuk may assign his right to payment under this Agreement,
but not his obligations under this Agreement.
12.0 Entire Agreement. This Agreement is the complete and entire agreement of
the parties regarding the subject matter hereof, and supersedes all prior
agreements between the parties. There are no oral agreements or other writings
related to the matters set forth herein.
13.0 Governing Law. This Agreement shall be governed by the laws of New York
State, and venue for any legal action shall be Supreme Court, Albany or
Rensselaer County.
MapInfo CORPORATION
/s/ John C. Cavalier
-----------------------------------
Date: 4/10/97 John C. Cavalier
--------------- President & Chief Executive Officer
/s/ D. Joseph Gersuk
-----------------------------------
Date: 4/10/97 D. Joseph Gersuk
---------------
15
<PAGE>
Exhibit 10.14
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.
(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
16
<PAGE>
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/ Sally A. Rice /s/ D. Joseph Gersuk 4/10/97
- ------------------------------ -----------------------------------
Witness signature Employee signature and date signed
Sally A. Rice D. Joseph Gersuk ###-##-####
- ------------------------------ -----------------------------------
Print name of Witness Print name & Social Security #
of Employee
- --------------------------------------------------------------------------------
Items entered by the Employee in the following sections must be acceptable to
MapInfo. If MapInfo does not accept such exclusions, or believes MapInfo
employment might create a conflict, the offer of employment associated herewith
may be withdrawn in MapInfo's sole discretion, and MapInfo shall incur no
liability as a result of such withdrawal.
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:
17
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
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)
Accepted by MapInfo Corporation ___________________ Date: ____________________
Name/Title ___________________
.......................
18
<PAGE>
Exhibit 10.31
UNSECURED PROMISSORY NOTE
$100,000
- --------
Date of Note: June 2, 1997
------------
Six (6) years after the date of this note, I promise, for value received, to pay
to the order of MapInfo Corporation ("MapInfo"), at One Global View, Troy, NY,
(or such other address as I shall be directed in writing), the sum of One
Hundred Thousand Dollars ($100,000) together with interest at seven and one-
eighth per cent (7 1/8%) per annum.
PERIOD PAYMENTS FROM BONUSES & MAPINFO STOCK SALES: I authorize MapInfo to make
periodic payments on the loan on my behalf by offsets against twenty-five per
cent (25%) of each bonus awarded me by MapInfo, with such payments applied first
to interest due, and then to principal, until the loan has been repaid in full.
Also, if I sell any MapInfo stock owned by me, I promise to pay to MapInfo, upon
receipt, so much of the proceeds of sale as will repay the loan in full, or if
funds received are insufficient for full payment, then I shall repay so much of
the principal and interest due as can be repaid, with payments applied first to
accrued interest and then to principal. If I am selling stock obtained by
exercise of MapInfo stock options, the proceeds to be paid MapInfo shall be net
of both my tax liabilities from the exercise and sale, and the option exercise
price paid by me.
ENTIRE PAYMENT DUE: I agree that the entire remaining principal balance on the
loan, together with interest, shall be immediately due and payable upon the
earliest to occur of the following:
1) Termination of my MapInfo employment voluntarily or for cause, or
cessation of my MapInfo employment due to disability or death;
2) Sale of my Loudonville residence purchased in 1997; or
3) June 2, 2003.
PREPAYMENT: I may prepay this note at any time, or from time to time, in whole
or in part, without penalty.
DEFAULT REMEDIES: In case of default in the payment of this note, MapInfo, at
its option, may accelerate this note and declare the entire remainder due and
payable, with the right to collect from me the balance owed of principal and
interest, and all reasonable costs and expenses of collection including but not
limited to reasonable attorneys fees.
NAME OF BORROWER
/s/ John C. Cavalier
----------------------------
John C. Cavalier
19
<PAGE>
Exhibit 11
MapInfo Corporation and Subsidiaries
Exhibit 11 Statement Regarding Computation of Per Share Earnings
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended June 30, Ended June 30,
----------------- ---------------------
1997 1996 1997 1996
------- ------- ------- --------
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 5,847 5,702 5,803 5,672
Net effect of dilutive stock options - based on the
treasury stock method using average market price 81 171 --* 194
------- ------- ------- --------
Total 5,928 5,873 5,803 5,866
======= ======= ======= ========
Net income (loss) $ 167 $ 103 $ (644) $ 388
======= ======= ======= ========
Earnings (loss) per share $ 0.03 $ 0.02 $(0.11) $ 0.07
======= ======= ======= ========
FULLY DILUTED
Average shares outstanding 5,847 5,702 5,803 5,672
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 81 171 --* 194
------- ------- ------- --------
Total 5,928 5,873 5,803 5,866
======= ======= ======= ========
Net income (loss) $ 167 $ 103 $ (644) $ 388
======= ======= ======= ========
Earnings (loss) per share $ 0.03 $ 0.02 $(0.11) $ 0.07
======= ======= ======= ========
</TABLE>
* Due to the net loss for the nine months ended June 30, 1997 stock options are
anti-dilutive and therefore have been excluded from the above calculation.
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INCOME
STATEMENT AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 28,561
<SECURITIES> 2,443
<RECEIVABLES> 7,541
<ALLOWANCES> 1,489
<INVENTORY> 942
<CURRENT-ASSETS> 42,030
<PP&E> 4,165
<DEPRECIATION> 764
<TOTAL-ASSETS> 49,411
<CURRENT-LIABILITIES> 9,116
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 40,044
<TOTAL-LIABILITY-AND-EQUITY> 49,411
<SALES> 12,160
<TOTAL-REVENUES> 12,160
<CGS> 2,600
<TOTAL-COSTS> 9,618
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 211
<INCOME-TAX> 44
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 167
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
