SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
Commission File Number 0-25472
VIASOFT, INC.
(Exact name of Registrant as specified in its charter)
Delaware 94-2892506
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3033 North 44th Street, Phoenix, Arizona 85018
(Address of principal executive offices) (Zip Code)
(602) 952-0050
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
As of April 30, 1996, there were outstanding 8,278,535 shares of Common Stock,
par value $.001 per share, of VIASOFT, Inc.
<PAGE>
VIASOFT, INC. AND SUBSIDIARIES
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets as of March 31, 1996
and June 30, 1995
3
Statements of Operations for the three and
nine months ended March 31, 1996 and 1995 4
Statements of Cash Flows for the nine
months ended March 31, 1996 and 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 15
<PAGE>
<TABLE>
VIASOFT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
( in thousands, except share data)
<CAPTION>
March 31, June 30,
1996 1995
-------- --------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,077 $ 7,680
Investments, at amortized cost 21,404 12,875
Accounts receivable (less allowance for doubtful accounts
of $294 and $391, respectively) 10,363 8,686
Prepaid expenses and other 545 673
-------- --------
Total current assets 37,389 29,914
-------- --------
Furniture and equipment:
Computer equipment 2,506 1,818
Office furniture and equipment and leasehold improvements 1,762 1,585
Capitalized leased equipment 263 587
-------- --------
Total furniture and equipment 4,531 3,990
Less: Accumulated depreciation (2,714) (2,335)
-------- --------
Furniture and equipment, net 1,817 1,655
-------- --------
Other assets:
Accounts receivable due after one year 45 336
Prepaid royalties 300 68
Deferred tax assets 52 252
Deposits and other 466 358
Cost in excess of net assets acquired, net -- 31
-------- --------
Total other assets 863 1,045
-------- --------
Total assets $ 40,069 $ 32,614
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,064 $ 481
Accrued compensation 1,087 866
Accrued income taxes 649 78
Other accrued expenses 2,423 1,969
Deferred revenue 9,157 8,482
Current maturities of obligations under capital leases 27 88
-------- --------
Total current liabilities 14,407 11,964
-------- --------
Deferred revenue, recognized after one year 385 185
-------- --------
Obligations under capital leases, less current maturities 23 42
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 2,000,000 shares authorized,
no shares issued or outstanding -- --
Common stock, $.001 par value, 24,000,000 shares authorized,
8,174,044 and 7,974,548 shares issued and outstanding at
December 31 and June 30, 1995, respectively 8 8
Capital in excess of par value 27,180 26,362
Common stock subscriptions receivable (60) (258)
Accumulated deficit (1,859) (5,711)
Cumulative translation adjustment 13 22
Less cost of common stock in treasury, 997 shares at March 31, 1996
and none at June 30, 1995 (28) --
-------- --------
Total stockholders' equity 25,254 20,423
-------- --------
Total liabilities and stockholders' equity $ 40,069 $ 32,614
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
<TABLE>
VIASOFT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
( in thousands, except per share data)
(unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software license fees $ 3,977 $ 3,369 $ 12,253 $ 10,039
Maintenance fees 3,608 3,011 10,487 8,827
Professional services fees 2,748 1,177 6,223 2,941
Other 28 48 95 129
-------- -------- -------- --------
Total revenue 10,361 7,605 29,058 21,936
-------- -------- -------- --------
Operating cost and expense:
Cost of software license and
maintenance fees 683 642 2,139 2,010
Cost of professional services fees 1,833 1,019 4,812 2,737
Sales and marketing 4,271 3,537 12,136 9,838
Research and development 1,030 768 3,075 2,319
General and administrative 1,174 625 2,699 1,932
-------- -------- -------- --------
Total operating cost and expense 8,991 6,591 24,861 18,836
-------- -------- -------- --------
Income from operations 1,370 1,014 4,197 3,100
-------- -------- -------- --------
Other income (expense):
Interest income 378 124 1,005 219
Interest expense (4) (8) (9) (23)
Other income (expense), net (42) (29) (45) (47)
-------- -------- -------- --------
Total other income 332 87 951 149
-------- -------- -------- --------
Income before income taxes 1,702 1,101 5,148 3,249
Provision for income taxes 432 55 1,297 302
-------- -------- -------- --------
Net income $ 1,270 $ 1,046 $ 3,851 $ 2,947
======== ======== ======== ========
Earnings per common and
common share equivalent $ 0.15 $ 0.14 $ 0.45 $ 0.43
======== ======== ======== ========
Weighted average number of common
and common share equivalents
outstanding 8,639 7,259 8,610 6,879
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
<TABLE>
VIASOFT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
( in thousands)
(unaudited)
<CAPTION>
Nine Months Ended
March 31
--------------------
1996 1995
-------- --------
<S> <C> <C>
Operating activities:
Net income $ 3,851 $ 2,947
-------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 506 491
Loss on disposal of assets 7 16
Compensation expense related to employee stock option plan 202 --
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable (1,386) 1,008
Increase in prepaid royalties and expenses (103) (207)
(Increase)Decrease in deferred tax assets 200 (172)
Increase in deposits and other (62) (277)
Increase in accrued income taxes 609 10
Increase in accounts payable and other accrued expenses 1,056 134
Increase(Decrease) in accrued compensation 221 (434)
Increase(Decrease) in deferred revenue 818 (16)
-------- --------
Total adjustments 2,068 553
-------- --------
Net cash provided by operating activities 5,919 3,500
-------- --------
Investing activities:
Capital expenditures (676) (496)
Purchase of investments (34,219) (12,135)
Investment maturities 25,675 --
-------- --------
Net cash used in investing activities (9,220) (12,631)
-------- --------
Financing activities:
Principal payments under equipment lease obligations (80) (146)
Net proceeds from initial public offering -- 12,140
Purchase of treasury stock (28) --
Proceeds from issuance of common stock 616 35
Payments received on common stock subscriptions receivable 199 7
-------- --------
Net cash provided by (used in) financing activities 707 12,036
-------- --------
Effect of exchange rate changes on cash (9) 16
-------- --------
Net decrease in cash and cash equivalents (2,603) 2,921
Cash and cash equivalents, beginning period 7,680 4,099
-------- --------
Cash and cash equivalents, end of period $ 5,077 $ 7,020
======== ========
Supplemental cash flow information:
Interest paid $ 9 $ 23
Income taxes paid 383 500
Capital lease obligations incurred -- 77
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
VIASOFT, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Nine months Ended March 31, 1996
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of VIASOFT, Inc. and its wholly owned subsidiaries (the "Company")
after elimination of all significant intercompany balances and transactions. The
accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q. Accordingly, they do not include
all the information and footnotes required by generally accepted accounting
principles ("GAAP") for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary for a fair presentation of the results for the interim periods
presented have been made. The results for the nine month period ended March 31,
1996 may not necessarily be indicative of the results for the entire year. These
financial statements should be read in conjunction with the consolidated audited
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended June 30, 1995.
Cash and Cash Equivalents and Investments
The Company's policy is to invest cash in excess of operating requirements
in income-producing investments. Temporary cash investments are all highly
liquid investments with maturities of three months or less when purchased and
are considered to be cash equivalents for the statement of cash flows purposes.
Investments in commercial paper, banker's acceptances, government-backed
securities, and US Treasury bills, all of which are stated at amortized cost and
approximate fair market value, are classified as "held-to-maturity" in
accordance with Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities".
Earnings per Common and Common Share Equivalent
Earnings per share is computed by dividing net income by the weighted
average number of common and common share equivalents assumed outstanding during
the period. Primary and fully diluted earnings per share are considered to be
the same in all periods presented. For purposes of these calculations, the
Series B preferred stock, which was converted into 4,423,907 shares of common
stock upon the closing of the Company's initial public offering on March 8,
1995, has been assumed to have been converted on a one-for-three basis into
shares of common stock as of the beginning of each period presented to give
effect to the one-for-three reverse split of the common stock in December, 1994.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations.
Overview
The Company derives its revenue primarily from software license fees,
software maintenance fees, and professional services fees. The Company's
software is licensed primarily to Fortune 1000 companies and similarly sized
businesses and governmental organizations worldwide. Professional services are
provided in conjunction with the license or installation of software products
and are also provided separately to similar organizations. The Company's
products and services are marketed through its United States sales force, both
domestically and in Latin America, and in other international markets through
foreign subsidiaries and independent distributors.
The Company's revenue and operating results are subject to quarterly and
other fluctuations resulting from a variety of factors, including the effect of
budgeting and purchasing practices of its customers, the length of the customer
evaluation process for Company products, the timing of customer system
conversions, and, to a lesser extent, the Company's sales commission practices,
which are based partly on quarterly incentives and annual quotas, and other
factors. The Company's professional services revenue tends to fluctuate due to
the completion or commencement of significant projects, which may continue over
multiple quarters, the number of working days in a quarter and the utilization
rate of professional services personnel. The Company has little or no backlog.
Therefore, quarterly revenue and operating results depend primarily on the
volume and timing of orders received during the quarter, which are difficult to
forecast. The Company has often recognized a substantial portion of its license
revenue in the last month of the quarter, frequently in the last week. A
significant portion of the Company's operating expenses is relatively fixed,
since personnel levels and other expenses are based upon anticipated revenues.
Because a substantial portion of these revenues may not be generated until the
end of each quarter, the Company may not be able to reduce spending in response
to sales shortfalls or delays. These important factors can cause significant
variation in operating results from quarter to quarter. The Company believes
that quarter to quarter comparisons of its financial results are not necessarily
meaningful and should not be relied upon as an indication of future performance.
The Company's ability to compete successfully in the sale of both its
products and services will depend in large part upon its ability to successfully
implement its strategy of selling products and services as a total solution as
well as its ability to attract new customers, sell new products and services,
deliver and support product enhancements to its existing customers, and respond
effectively to continuing technological change by developing new products and
services. If license sales, maintenance renewals, or pricing levels of the
Company's primary product line, Existing Systems WorkbenchTM ("ESW") products
were to decline materially, whether as a result of technological change,
competition, or any other factors, the Company's business, results of operations
and financial condition would be adversely affected.
7
<PAGE>
The Company's estimates of commercial availability of its products are
subject to change, based on factors not within the Company's control, such as
the availability of suitable beta test sites, customer requirements, and test
results, among others.
The foregoing important factors, together with others previously described
in the Company filings with the Securities and Exchange Commission, could cause
the Company's results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company.
Comparison of Three Months Ended March 31, 1996 and March 31, 1995
Revenues. Total revenues were $10,361,000 for the three months ended March
31, 1996, an increase of approximately 36% from $7,605,000 for the three months
ended March 31, 1995. Software license fees were $3,977,000 for the three months
ended March 31, 1996, an increase of approximately 18% from $3,369,000 for the
three months ended March 31, 1995. The increase in software license fees was
primarily a result of strong domestic revenues which increased 33% in the third
quarter of fiscal 1996 compared to the same period in fiscal 1995. Domestic
software license revenues were $2,986,000 for the third quarter of fiscal 1996,
as compared to $2,246,000 in the third quarter of fiscal 1995. Management
believes that domestic license sales continue to improve based on the growing
awareness and interest in the market for the Company's combined product and
solution offerings, most significantly for the Year 2000 date change problem.
International license revenues declined 12% in the third quarter of fiscal 1996
as compared to the same period in fiscal 1995. The decrease was primarily a
result of lower sales from the Company's distributors, principally in the Asian
and France regions. Maintenance fees were $3,608,000 for the third quarter of
fiscal 1996, an increase of 20% from $3,011,000 for the same period in fiscal
1995, as a result of new software licenses, and, to a lesser extent, customer
system upgrades and increases in the fees charged for annual maintenance.
Professional services fees were $2,748,000 for the third quarter of fiscal 1996,
an increase of 133% from $1,177,000 for the same period in fiscal 1995. The
Company continued to expand its professional services business to meet the
growing demand for VIASOFT's Enterprise 2000SM solution offerings created by the
Year 2000 date change problem. Enterprise 2000 solution offerings comprised 73%
of the Company's professional services revenues in the third quarter of fiscal
1996. Additionally, revenue from the Company's education services continued to
grow in the third quarter of fiscal 1996 to $426,000, improving 81% over
$236,000 for the same period in fiscal 1995, primarily as a result of a renewed
focus on the sale of education services.
In connection with the growing demand for its Year 2000 solutions and in
order to reach additional markets, the Company continues to expand its Solution
Provider Program. VIASOFT's Solution Provider Program licenses VIASOFT's
Enterprise 2000SM solution offerings (consisting of VIASOFT's Impact 2000SM,
VIASOFT's Plan 2000SM, and VIASOFT's Operation 2000SM) to third party Solution
Providers, generally consulting services companies, in exchange for royalties.
Royalty revenue related to this program is included in professional services
revenue and was insignificant for the quarter. As of March 31, 1996, the Company
had twelve Solution Providers worldwide.
8
<PAGE>
Cost of Revenues. Cost of software license and maintenance fees, which
includes royalties, cost of customer support and product packaging and
documentation, was $683,000 in the third quarter of fiscal 1996, an increase of
6% from $642,000 in the third quarter of fiscal 1995. The increase in expense
was primarily attributable to an increase in the average number of personnel
devoted to customer support and increased product documentation related to new
product releases. Cost of software license and maintenance fees as a percentage
of total revenues decreased to 7% in the third quarter of fiscal 1996 from 8%
for the same period in fiscal 1995.
Cost of professional services fees consists principally of personnel costs,
third party subcontracting fees, and other costs related to the professional
services business. The cost of professional services fees was $1,833,000 for the
three months ended March 31, 1996, an increase of approximately 80% from
$1,019,000 for the three months ended March 31, 1995. The increase in expenses
is a result of the additional personnel hired and their related costs as well as
third party costs to deliver the Company's solutions in response to increased
customer demand, both domestically and internationally. The gross margin on
professional services fees improved to 33% in the third quarter of fiscal 1996
compared to 13% for the same period in fiscal 1995. This margin improvement
reflects the Company's focus on improving the management and delivery of its
solution offerings.
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions and related benefits, travel and administrative costs
allocated to the Company's sales and marketing personnel, as well as marketing
costs. Sales and marketing expenses were $4,271,000 in the third quarter of
fiscal 1996, an increase of approximately 21% from $3,537,000 in the same period
of fiscal 1995. This increase is attributable primarily to increased personnel,
higher salaries, increased commissions as a result of increased sales, higher
travel costs primarily related to the increase in personnel, and increased sales
incentive costs. In addition, bad debt expense in the third quarter of fiscal
1995 included a $200,000 increase in the reserve to provide for a specific
account which was subsequently resolved. Sales and marketing expenses as a
percentage of total revenues declined to 41% in the third quarter of fiscal 1996
compared to 47% in the third quarter of fiscal 1995 due primarily to the
increase in revenues.
Research and Development. Research and development expenditures consist
primarily of personnel costs of the research and development staff, third party
development costs, and the facilities, computing, benefits, and other
administrative costs allocated to the research and development staff. Total
expenditures for research and development were $1,030,000 for the three months
ended March 31, 1996, an increase of 34% from $768,000 for the three months
ended March 31, 1995. These increases were due to an increase in personnel and
their related costs, as well as additional third party development costs and the
licensing or development of certain externally produced software. The additional
expenditures for personnel and external development costs are in line with the
Company's strategy to continue to improve its current product line through
enhancements and new releases as well as to add additional products to its
current offerings. (See further discussion on Research and Development on page
12). As a percentage of sales, research and development costs for the quarter
ended March 31, 1996, remained constant at 10%, compared to the same period a
year ago.
9
<PAGE>
General and Administrative. General and administrative expenses include the
costs of finance and accounting, human resources, legal services, corporate
information systems and other administrative functions of the Company. General
and administrative expenses were $1,174,000 in the third quarter of fiscal 1996,
representing an increase of 88% as compared to $625,000 in the same period of
fiscal 1995. In the third quarter of fiscal 1996, the Company incurred
approximately $350,000 in one time charges, consisting primarily of severance
and relocation costs, related to a change in the Chief Financial Officer
position which occurred during the quarter. Without these one time costs,
general and administrative expenses would have increased 32%. These increases
were primarily attributable to additional personnel, consulting costs, as well
as general salary increases. As a percentage of total revenues, general and
administrative expenses increased to 11% for the third quarter of fiscal 1996
from 8% for the third quarter of fiscal 1995 due primarily to the one time costs
discussed above.
Other Income (Expense). Interest income in the third quarter of fiscal 1996
was $378,000, compared to $124,000 in the third quarter of fiscal 1995. This
increase was due primarily to an increase in funds available for short term
investment as a result of the Company's initial public offering in March 1995
and from cash generated from operations.
Provision for Income Taxes. The provision for income taxes was $432,000 and
$55,000, resulting in effective tax rates of 25% and 5%, in the third quarter of
fiscal 1996 and 1995, respectively. The Company's effective tax rates were
affected by the availability of net operating loss carryforwards and certain tax
credit carryforwards, which will effectively eliminate the Company's liability
for federal taxes for a portion of fiscal 1996 and did eliminate the Company's
federal tax liability for the entire year in fiscal 1995 .
Comparison of Nine Months Ended March 31, 1996 and March 31, 1995
Revenues. Total revenues were $29,058,000 for the nine months ended March
31, 1996, an increase of approximately 32% from $21,936,000 for the nine months
ended March 31, 1995. Software license fees were $12,253,000 for the nine months
ended March 31, 1996, an increase of approximately 22% from $10,039,000 for the
nine months ended March 31, 1995. Software license revenues increased for both
domestic and international businesses in the first nine months of fiscal 1996
compared to the same period in fiscal 1995. Domestic software license revenues
were $8,552,000 for the first nine months of fiscal 1996, a 20% increase from
domestic license revenues of $7,133,000 in the first nine months of fiscal 1995.
International software license revenue was $3,701,000 for the first nine months
of fiscal 1996, an increase of 27% over the $2,906,000 in international license
revenues for the same period in fiscal 1995. This increase was attributable
primarily to a 31% increase in sales of licenses by the Company's international
direct channels and a 23% increase from its distributors, principally in Spain.
Maintenance fees were $10,487,000 for the first nine months of fiscal 1996, an
increase of 19% from $8,827,000 for the same period in fiscal 1995, as a result
of new software licenses, customer system upgrades and increases in the fees
charged for annual maintenance. Professional services fees were $6,223,000 for
the first nine months of fiscal 1996, an increase of 112%
10
<PAGE>
from $2,941,000 for the same period in fiscal 1995. The Company continues to
expand its professional services business to meet the growing demand created by
the Year 2000 date change problem for VIASOFT's Enterprise 2000SM solution
offerings. Enterprise 2000 solution offerings comprised 65% of the Company's
professional services revenues for the nine months in fiscal 1996. Additionally,
revenue from the Company's education services continued to grow in fiscal 1996,
improving 64% from $622,000 in the same period in fiscal 1995, primarily as a
result of a renewed focus on the sale of education services.
Cost of Revenues. Cost of software license and maintenance fees was
$2,139,000 in the first nine months of fiscal 1996, an increase of 6% from
$2,010,000 in the first nine months of fiscal 1995. The increase in expense was
attributable to the following: general salary increases and an increase in the
average number of personnel devoted to customer support offset in part by a
reduction in royalties expense related to the ESW/PC agreement (see below). Cost
of software license and maintenance fees as a percentage of total revenues
decreased to 7% in the first nine months of fiscal 1996 from 9% for the same
period in fiscal 1995.
ESW/PC is licensed from SEEC, Inc., a privately held software company, and
marketed under the VIASOFT label pursuant to an agreement that provides for
certain minimum prepaid royalties. During the quarters ended December 31, 1995
and 1994, the Company evaluated the remaining balance of the prepaid royalties
under the ESW/PC agreement in light of the actual license and maintenance
revenues to date as well as estimated license and maintenance revenues, and
determined that adjustments of approximately $100,000 and $250,000,
respectively, were necessary to state the prepaid royalties at their estimated
net realizable values at December 31, 1995 and 1994, respectively. In addition,
commencing in the second quarter of fiscal 1995, the Company began amortizing
prepaid royalties under the agreement based on the greater of the amount
determined on a straight-line basis over the 26 months remaining in the initial
3-year contract term, or actual royalties incurred on license and maintenance
revenues. As a result of these adjustments, royalty expense decreased year to
date in fiscal 1996 to $384,000 as compared to $467,000 for the same period in
fiscal 1995.
The cost of professional services fees was $4,812,000 for the nine months
ended March 31, 1996, an increase of approximately 76% from $2,737,000 for the
nine months ended March 31, 1995. The increase in expenses is a result of the
additional personnel hired and their related costs as well as additional third
party subcontractor fees to deliver the Company's solutions in response to
customer demand, both domestically and internationally. The gross margin on
professional services fees improved to 23% in the first nine months of fiscal
1996 as compared to 7% for the same period in fiscal 1995. As was noted above,
the margin improvement reflects the Company's continued focus on improving the
management and delivery of its solution offerings.
Sales and Marketing. Sales and marketing expenses were $12,136,000 in the
first nine months of fiscal 1996, an increase of approximately 23% from
$9,838,000 in the same period of fiscal 1995. This increase is attributable
primarily to increased personnel, higher salaries, increased travel expenses
primarily related to the increase in personnel, and increased sales incentive
costs. In addition, bad debt
11
<PAGE>
expense in the third quarter of fiscal 1995 included a $200,000 increase in the
reserve to provide for a specific account which was subsequently resolved. Sales
and marketing expenses as a percentage of total revenues declined to 42% in the
first nine months of fiscal 1996 compared to 45% in the first nine months of
fiscal 1995 due primarily to the increase in revenues.
Research and Development. The Company continues to invest resources in
developing new products, as well as updating its existing products through
enhancements and new releases. VIASOFT's Estimate 2000TM ("Estimate 2000") which
was made commercially available in March, 1996, is a product that allows a
customer to assess the impact of the Year 2000 millennium change on its
application systems, in terms of code as well as the estimated cost and
resources required to make those changes. Also made commercially available in
March was a new option for VIA/SmartTestTM - Test Coverage Analysis ("TCA"). TCA
gives a VIA/SmartTest customer the ability to measure and analyze the quality of
the testing across a group of programs by a suite of test cases.
Total expenditures for research and development were $3,075,000 for the
nine months ended March 31, 1996, an increase of 33% from $2,319,000 for the
nine months ended March 31, 1995. This increase was due to the hiring of
additional personnel and their related costs, as well as additional third party
development costs. As a percentage of sales, research and development costs
remained consistent at 11% for the first nine months of fiscal 1996 and 1995.
General and Administrative. General and administrative expenses were
$2,699,000 in the first nine months of fiscal 1996, representing an increase of
40% as compared to $1,932,000 in the same period of fiscal 1995. In the third
quarter of fiscal 1996, the Company incurred approximately $350,000 in one time
charges, consisting primarily of severance and relocation costs, related to a
change in the Chief Financial Officer position which occurred during the
quarter. Without these one time costs, general and administrative expenses would
have increased 22%. Excluding the one time charge, the increases were due to
general salary increases, additional personnel and the related costs associated
with those personnel and consulting costs. As a percentage of total revenues,
general and administrative expenses remained constant at 9% for the first nine
months of fiscal 1996 as compared to the same period in fiscal 1995.
Other Income (Expense). Interest income in the first nine months of fiscal
1996 was $1,005,000, compared to $219,000 in the first nine months of fiscal
1995. This increase was due primarily to an increase in funds available for
short term investment as a result of the Company's initial public offering and,
to a lesser extent, from cash generated from operations.
Provision for Income Taxes. The provision for income taxes was $1,297,000
and $302,000, resulting in effective tax rates of 25% and 9%, in the first nine
months of fiscal 1996 and 1995, respectively. The Company's effective tax rates
were affected by the availability of net operating loss carryforwards and
certain tax credit carryforwards, which will effectively eliminate the Company's
liability for federal taxes for a portion of fiscal 1996 and did eliminate the
Company's federal tax liability for the entire year in fiscal 1995.
12
<PAGE>
Liquidity and Capital Resources
At March 31, 1996 the Company had cash and cash equivalents and investments
of $26,481,000, representing an increase of $5,926,000 from the total of
$20,555,000 at June 30, 1995. This overall net increase in cash and investments
resulted primarily from cash generated from operations.
For the first nine months of fiscal 1996, the Company generated cash from
operations of $5,877,000. Net cash provided was composed primarily of net income
and depreciation and amortization plus increases in accounts payable and other
accrued expenses, deferred revenue, accrued income taxes, and accrued
compensation, as well as a decrease in deferred income tax assets, offset by
increases in accounts receivable, prepaids, and deposits and other assets.
The Company's investing activities for the first nine months of fiscal 1996
have used cash of $9,177,000. This use of cash was principally for the purchase
of investments in US Treasury bills, bankers acceptances, government-backed
securities, corporate bonds, and commercial paper, net of maturities. In
addition to the purchase of investments, the Company used cash for the purchase
of capital equipment primarily for furniture, fixtures, and equipment.
The Company's financing activities for the first nine months of fiscal 1996
have provided cash of $707,000. The cash provided was principally from the
issuance of common stock and payments on stock subscriptions receivable, offset
by principal payments on equipment leases and for purchases of treasury stock.
In January, 1996 the Company entered into an agreement with a third party
to provide subcontracting services on certain of the Company's professional
services engagements. The agreement sets forth minimum commitments for the
Company's use of the subcontracting services. The Company is required to pay a
total of $1,640,000 for the period January 1, 1996 through December 31, 1996 and
$464,000 for the period January 1, 1997 through March 31, 1997. The Company will
make monthly payments over the term of the agreement, based upon the number of
billable days worked by the subcontracted consultants at an agreed upon daily
rate. If the total payments made during each period do not meet the minimum
requirement, the Company is required to pay the remaining amount due for each
period in the month following the end of the period. For the quarter ended March
31, 1996, the Company has paid a total of $94,000 under this agreement.
Management believes that the utilization of these resources will increase in the
next quarter.
The Company has a loan agreement with a bank providing a $1,000,000 line of
credit, secured by substantially all the assets of the Company. Interest accrues
on amounts outstanding under the line of credit at the bank's prime rate plus 1
percent; available borrowings are subject to a borrowing base formula based upon
the Company's accounts receivable. The term of the loan agreement extends
through July 2, 1996. The Company did not have any amounts outstanding under
this line of credit at
13
<PAGE>
March 31, 1996. The loan agreement relating to the line of credit prohibits,
without advance bank approval, the payment of dividends on the capital stock of
the Company.
During the first quarter of fiscal 1995, the Company entered into a
$525,000 general office and computer equipment line of credit with a financial
institution which provides for financing up to 90% of the costs of such
equipment domestically. The amount available under the line of credit is reduced
by prior outstanding equipment loans from the financial institution, which
aggregated approximately $49,000 at March 31, 1996. The term of the agreement
extends through September 1997. Additional borrowings under this arrangement, if
any, will bear interest at the three year US Treasury bill rate, plus 4.4
percentage points.
Anticipated capital expenditures for the remainder of the fiscal year are
approximately $277,000, this is in addition to the $633,000 in expenditures
during the fiscal year through March 31, 1996, for furniture, fixtures, and
equipment.
The Company believes that its existing cash and investment balances, cash
generated from operations and available borrowings under the Company's lines of
credit will be sufficient to meet the Company's liquidity needs for at least the
next two years.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is subject to certain legal proceedings and claims that
arise in the conduct of its business. In the opinion of management,
the amount of liability, if any, as a result of these claims and
proceedings is not likely to have a material effect on the financial
condition or results of operations of the Company.
In addition, the Company filed a suit for declaratory judgment
against its former chief financial officer, Alvin E. Holland, Jr., on
April 9, 1996 in the Superior Court of Maricopa County, Phoenix,
Arizona. The Company had dismissed Mr. Holland on April 8, 1996. At
the time of his dismissal, Mr. Holland alleged that he was owed
significant equity compensation under his agreement with the Company
and as a result the Company has requested the court for a declaration
that Mr. Holland's employment was properly terminated for cause and
that the Company owes him no additional compensation. Press reports
have stated Mr. Holland's intention to file counterclaims for
additional compensation, wrongful termination and defamation against
the Company and others, but no answer to the Company's suit or
counterclaim has yet been filed. The Company believes it will prevail
in its lawsuit and intends to vigorously defend any claims brought by
Mr. Holland.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
10.1(1) Severance Agreement between the Company and Albert J. Boos, Jr.
11 Computation of Earnings Per Share for the nine month periods
ended March 31, 1996 and 1995.
27 Financial Data Schedule
- ----------------------
(1) Management contract or compensation plan or arrangement
(b) Reports on Form 8-K
None
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
VIASOFT, INC.
Date: May 13, 1996 By /s/ Steven D. Whiteman
----------------------
Steven D. Whiteman
President
Chief Accounting Officer
16
CONFIDENTIAL SEVERANCE AGREEMENT
--------------------------------
This Confidential Severance Agreement ("Agreement") is made in the
State of Arizona by and between Albert J. Boos, Jr. ("Employee"), and VIASOFT,
Inc., a Delaware corporation, its direct and indirect subsidiaries and
affiliates, and its and their respective businesses (the "Company").
RECITALS
--------
WHEREAS, Employee is employed by the Company; and
WHEREAS, the parties have mutually agreed that Employee will resign as
an officer and employee of the Company; and
WHEREAS, the parties desire to express in a written agreement their
mutual agreements, covenants, promises, and understandings with respect to the
termination of Employee's employment relationship.
AGREEMENT
---------
NOW THEREFORE, in consideration of the premises and the mutual
agreements, covenants, and provisions contained in this Agreement, the parties
agree and declare as follows:
1. Termination Of Employment. Employee shall deliver his resignation as
an employee and officer of the Company to be effective as of January 29, 1996
(the "Termination Date"), and the Company shall accept such resignation. The
Company shall pay Employee on or before January 31, 1996, for his regular
existing salary through January 31, 1996, his accrued but unused vacation time
in the amount of $7,338.46 (seven thousand three hundred thirty-eight and 46/100
dollars), net of applicable withholding taxes, and his incentive bonus for the
quarter ending December 31, 1995, in the amount of $3,500.00 (three thousand
five hundred dollars), net of applicable withholding taxes. Employee
acknowledges that following payment of the amounts set forth in the previous
sentence, the Company will have paid Employee all wages and compensation to
which he was entitled as an employee of the Company. The parties acknowledge and
agree that Employee shall not be an employee of the Company after the
Termination Date, notwithstanding Employee's continued receipt of certain sums
as described in this Agreement.
2. Severance Benefits And Conditions.
a. Severance Pay. Upon satisfaction of the conditions described in
paragraph 2(d) below, the Company will: (1) continue paying Employee his
existing salary, net of applicable withholding, through July 31, 1996, on the
Company's regular pay days; and
- --------------------------------------------------------------------------------
Page 1
EXHIBIT 10.1
------------
<PAGE>
(2) continue Employee's group health plan coverage through July 31, 1996, with
Employee's portion of the premium for such coverage deducted from the severance
payments described above. The Company also shall reimburse Employee for any
valid business expenses he incurred prior to January 26, 1996, in accordance
with the Company's Travel and Expense policy, provided the expenses are
submitted to the Company on or before February 29, 1996. The Company also shall
reimburse Employee for amounts, if any, for which Employee is entitled to
reimbursement under the Company's Employee Stock Purchase Plan through and
including the Termination Date.
b. Stock. Effective upon satisfaction of the conditions
described in paragraph 2(d)(1) and 2(d)(2) below, the Company hereby agrees that
the restricted stock agreement and stock option agreements described on Exhibit
A (the "Stock Agreements") are hereby amended to provide for acceleration of
vesting as set forth in such Exhibit, and hereby waives certain rights in
connection with the Stock Agreements as further set forth in such Exhibit. All
other terms and conditions of the Stock Agreements shall remain in full force
and effect.
c. Outplacement Assistance. The Company will be responsible
for the costs that Employee incurs in connection with the use of a professional
outplacement assistance firm, to be designated by Employee; provided, however,
that the Company shall not be obligated under this subparagraph for any costs
for outplacement assistance in excess of $2,500.00 (two thousand five hundred
dollars).
d. Conditions. Employee will be entitled to receive the
severance benefits and other consideration set forth in this Agreement provided
that:
(1) Employee has not revoked this Agreement within
the applicable revocation period described in paragraph 11 below; and
(2) The Company has received written confirmation
from Employee, in the form attached hereto as Exhibit B, dated not earlier than
the day after the expiration of the applicable revocation period described in
paragraph 11 below, that Employee has not revoked and will not revoke this
Agreement; and
(3) Employee makes himself available between the
Termination Date and February 15, 1996, for telephone calls and meetings as
deemed necessary by the Company to ensure an orderly transition, provided that
Employee may exercise any options under the Stock Agreements, as amended,
immediately upon satisfaction of the conditions set forth in subparagraphs
2(d)(1) and (2)(d)(2), above.
e. Consideration. Employee acknowledges that it is not the
Company's usual policy to provide all of the severance benefits and other
consideration set forth in this Agreement, and that he would not be entitled to
those benefits and consideration if he were not releasing his Claims under this
Agreement.
- --------------------------------------------------------------------------------
Page 2
<PAGE>
3. Mutual Waiver And Release Of Claims.
------------------------------------
a. Employee covenants not to sue for, and waives and releases
all of his existing rights to, any relief of any kind from the Company, its
insurers, affiliates, divisions, directors, officers, shareholders, employees,
agents, successors, assigns, and members ("the Employer"), including without
limitation all claims that arise out of or that relate to his employment or the
termination of his employment with the Company, all claims that arise out of or
that relate to the statements or actions of the Employer or any contract or
agreement with the Employer, all claims that arise under the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, and the Arizona Civil Rights Act, all claims for relief or other benefits
under any federal, state, or local statute, ordinance, regulation, or rule of
decision, all claims that the Employer engaged in conduct prohibited on any
basis under any federal, state, or local statute, ordinance, regulation, or rule
of decision, and all claims for attorneys' fees, liquidated damages, punitive
damages, costs, and disbursements ("Claims"); provided, however, that this
release does not apply to any rights of Employee accrued through and including
the Termination Date under Employee's Stock Agreements. If Employee breaches the
covenant not to sue described in this paragraph, Employee agrees to indemnify,
hold harmless, and reimburse the Employer for attorneys' fees and costs the
Employer incurs defending Employee's action.
b. The Company covenants not to sue for, and waives and
releases all of its existing rights to, any relief of any kind from Employee,
including without limitation all claims that arise out of or that relate to
Employee's employment or the termination of his employment with the Company, all
claims that arise out of or that relate to the statements or actions of Employee
or any contract or agreement with the Company, all claims for relief or other
benefits under any federal, state, or local statute, ordinance, regulation, or
rule of decision, all claims that Employee engaged in conduct prohibited on any
basis under any federal, state, or local statute, ordinance, regulation, or rule
of decision, and all claims for attorneys' fees, liquidated damages, punitive
damages, costs, and disbursements ("Claims"). If the Company breaches the
covenant not to sue described in this paragraph, the Company agrees to
indemnify, hold harmless, and reimburse Employee for attorneys' fees and costs
Employee incurs defending the Company's action.
4. Indemnification. Notwithstanding any other provision of this
Agreement, the Company agrees to indemnify Employee in accord with Article IX of
the Company's Restated Certificate of Incorporation dated February 23, 1995, and
to do so under the same terms and conditions under which it indemnifies any
other officer or director of the Company in accord with that article.
5. Alteration Of And Amendments To Documents. The Company will use its
best efforts to ensure that the Company's documents and records, going forward,
including documents and records to be filed or required to be filed with any
government authority or
- --------------------------------------------------------------------------------
Page 3
<PAGE>
regulatory agency or body, properly reflect Employee's resignation as an
employee and officer of the Company.
6. Press Release. The parties agree that the Company may issue a press
release in the form attached hereto as Exhibit C.
7. Mutual Confidentiality.
-----------------------
a. General Standard. The parties intend that the terms and
conditions upon which this matter has been settled, including the provisions of
this Agreement ("Confidential Information"), will be forever treated as
confidential. Employee and the Company will not disclose Confidential
Information to any person or entity at any time, except as provided herein.
b. Exceptions.
-----------
(1) It will not be a violation of this Agreement for
Employee to disclose Confidential Information to his attorneys, or as necessary
or advisable in compliance with any disclosure obligations under applicable law
or accounting rules.
(2) It will not be a violation of this Agreement for
Employee to disclose Confidential Information to his spouse, to his accountants,
to his tax planners, or to prospective employers in the course of personal
interviews, provided that if Employee discloses Confidential Information to any
such person, he must simultaneously inform that person that the information is
considered confidential, and request that the person not disclose the
information to any other person.
(3) It will not be a violation of this Agreement for
the Company to disclose Confidential Information to its attorneys, to its
auditors, to its insurers, to its accountants, to its tax planners, to the
Securities and Exchange Commission, National Association of Securities' Dealers,
or other governmental entities or self-regulatory organizations, to its
affiliates, divisions, directors, officers, shareholders, employees,
representatives, or other agents who have a legitimate reason to obtain the
Confidential Information in the course of performing their duties or
responsibilities for the Company, or as necessary or advisable in compliance
with its disclosure obligations under applicable law or accounting rules.
(4) It will not be a violation of this Agreement for
either party to give truthful testimony in response to direct questions asked
pursuant to an enforceable court order obtained after providing notice to the
other party, which order pays due regard to the concerns for confidentiality
expressed by the parties herein.
8. Non-Disparagement. Employee will not disparage, defame, or besmirch
the reputation, character, image, or services of the Company, its affiliates,
divisions, directors,
- --------------------------------------------------------------------------------
Page 4
<PAGE>
officers, shareholders, employees, or agents. The Company will not disparage,
defame, or besmirch the reputation, character, image, or services of Employee.
9. Claims Involving The Company. Employee will not recommend or suggest
to any potential claimants or plaintiffs or their attorneys or agents that they
initiate claims or lawsuits against the Company or any of its affiliates,
divisions, directors, officers, shareholders, employees, agents, successors, or
assigns, nor will Employee voluntarily aid, assist, or cooperate with any such
claims or lawsuits; provided, however, that this paragraph will not be construed
to prevent Employee from giving truthful testimony in response to direct
questions asked pursuant to a lawful subpoena during any future legal
proceedings.
10. Time To Consider Agreement. Employee understands that he may take
at least 21 (twenty-one) calendar days to decide whether to sign this Agreement,
provided, however, that Employee has requested and the Company has agreed that
Employee may execute this Agreement before the expiration of that period if he
so chooses. Employee further understands that the Company's offer as set forth
in this Agreement shall expire on February 21, 1996, at 5:00 p.m. unless
Employee executes the Agreement and the Company receives it prior to that time.
11. Right To Revoke. Employee understands that he has the right to
revoke this Agreement for any reason within 7 (seven) calendar days after he
signs it. Employee understands that this Agreement will not become effective or
enforceable unless and until he has not revoked it and the applicable revocation
period has expired.
12. Return Of Company Property. Employee agrees to promptly return to
the Company all property that belongs to the Company, including without
limitation all equipment, supplies, documents, files, computer disks, and
Employee agrees to remove from any personal computer all data files containing
Company information; provided, however, that Employee may retain on his personal
computer the Microsoft Office commercial office software that he used in the
performance of services for the Company and that does not contain any data
proprietary to the Company or any Company information.
13. Confidentiality Agreement. Employee acknowledges and reaffirms his
obligations under the Company's Employment Confidentiality and Proprietary
Information Agreement dated August 5, 1993.
14. Full Compensation. The payments made and other consideration
provided under this Agreement constitute full compensation for and extinguish
all Employee's Claims, including, but not limited to, all Claims for attorneys's
fees, costs, and disbursements, and all Claims for any type of legal or
equitable relief.
15. No Admission Of Wrongdoing. This Agreement does not constitute an
admission that any person or entity violated any local, state, or federal
ordinance, regulation, ruling, statute, rule of decision, or principle of common
law, or that any person or entity
- --------------------------------------------------------------------------------
Page 5
<PAGE>
engaged in any improper or unlawful conduct or wrongdoing. Employee will not
characterize this Agreement or the payment of any money or other consideration
in accord with this Agreement as an admission or indication that any person or
entity engaged in any improper or unlawful conduct or wrongdoing.
16. Legal Representation. Employee acknowledges that he has been
advised to consult with his own attorneys prior to executing this Agreement, and
that he has done so. Employee acknowledges that he has retained and consulted
with his own attorneys prior to executing this Agreement. Employee acknowledges
that he has had a full opportunity to consider this Agreement, that he has had a
full opportunity to ask any questions that he may have concerning this
Agreement, and that in deciding whether to sign this Agreement he has not relied
upon any statements made by the Company or its attorneys, other than the
statements made in this Agreement. Employee further acknowledges that he has
read and understands the contents of this Agreement and that he executes this
Agreement knowingly and voluntarily and based upon and with the opportunity to
obtain independent legal advice of his own choosing.
17. Authority. Employee represents and warrants that he has the
authority to enter into this Agreement, and that he has not assigned any Claims
to any person or entity.
18. Invalidity. In the event that a court of competent jurisdiction
determines that any provision of this Agreement is invalid, illegal, or
unenforceable in any respect, such a determination will not affect the validity,
legality, or enforceability of the remaining provisions of this Agreement, and
the remaining provisions of this Agreement will continue to be valid and
enforceable.
19. Successors And Assigns. This Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, representatives,
successors, and assigns.
20. Entire Agreement. This Agreement and the other agreements
referenced herein are intended to and do define the full extent of the legally
enforceable undertakings of the parties, and no promises or representations,
written or oral, that are not set forth explicitly in this Agreement are
intended by any party to be legally binding, and all other agreements and
understandings between Employee and the Company relating to Employee's
employment with the Company are hereby superseded. No provision of this
Agreement shall be amended, waived, or modified except by an instrument in
writing, signed by all parties hereto.
21. Headings. The descriptive headings of the paragraphs and
subparagraphs of this Agreement are intended for convenience only, and do not
constitute parts of this Agreement.
22. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
- --------------------------------------------------------------------------------
Page 6
<PAGE>
23. Governing Law. This Agreement will be construed in accord with, and
any dispute or controversy arising from any breach or asserted breach of this
Agreement will be governed by, the laws of the State of Arizona.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates indicated below.
DATED this 30th day of January, 1996.
/s/ Albert J. Boos, Jr.
-----------------------
Albert J. Boos, Jr.
DATED this 1st day of February, 1996.
VIASOFT, INC.
By:/s/ Steven D. Whiteman
----------------------
Steven D. Whiteman
President & CEO
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 30th
day of January, by Albert J. Boos, Jr.
/s/ Patty J. Kerl
-----------------
Notary Public
My Commission Expires:
December 6, 1998
- ----------------
- --------------------------------------------------------------------------------
Page 7
<PAGE>
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 1st
day of February, 1996, by Steven D. Whiteman.
/s/ Valada E. Bolster
---------------------
Notary Public
My Commission Expires:
December 3, 1998
- ----------------
- --------------------------------------------------------------------------------
Page 8
<PAGE>
EXHIBIT A
---------
1. Each of the following agreements is hereby amended to provide that the
option thereunder shall be exercisable on the Termination Date (as defined
in the foregoing Confidential Severance Agreement) with respect to the
aggregate respective number of additional shares set forth below:
o Incentive Stock Option Agreement dated February 28, 1995: 7,083 shares
o Stock Option Agreement dated April 19, 1994: 1,292 shares
o Stock Option Agreement dated January 18, 1994: 1,083 shares
2. The Company hereby waives its right under section 5 of that certain
Restricted Stock Purchase Agreement dated October 12, 1993, to repurchase
and agrees to release to Employee, notwithstanding the provisions of
section 6 of that same Agreement, an additional 5,000 shares, in addition
to the 10,000 shares that already have been delivered to Employee.
Notwithstanding any of the foregoing, none of the shares of stock so
released shall be delivered to Employee until Employee has made payment of
appropriate principal and accrued interest on that certain Promissory Note
dated October 12, 1993.
3. The Company hereby waives until July 31, 1996, its right under that certain
Promissory Note dated October 12, 1993, to accelerate payment upon
termination of Employee's employment with the Company.
4. Except as expressly amended herein, each of the foregoing agreements shall
remain in full force and effect, subject to all of the terms and conditions
set forth in each respective agreement.
<PAGE>
EXHIBIT B
---------
February 7, 1996
PERSONAL AND CONFIDENTIAL
- -------------------------
Steven D. Whiteman
VIASOFT, Inc.
3033 North 44th Street
Phoenix, Arizona 85018
Dear Steve:
This is to confirm that I have not revoked and will take no
action to revoke the Confidential Severance Agreement that I executed on
January 30, 1996, with VIASOFT.
Very truly yours,
/s/ Albert J. Boos, Jr.
-----------------------
Albert J. Boos, Jr.
<PAGE>
EXHIBIT C
---------
FOR IMMEDIATE RELEASE
CONTACT:
Kathy Schauer
Marketing Communications
VIASOFT, Inc.
(602) 952-0050 xl237
VIASOFT APPOINTS HOLLAND AS CHIEF FINANCIAL OFFICER
Phoenix, AZ (January 29, 1996) - - VIASOFT, Inc. (Nasdaq NM: VIAS) today
announced that Alvin E. Holland, Jr. has been appointed chief financial officer
and vice president of finance and administration, effective immediately. His
responsibilities will include worldwide financial, treasury and corporate
planning/development activities for the parent corporation and foreign
subsidiaries, as well as responsibility for all administrative matters of the
corporation. He will report to Steven D. Whiteman, CEO and president of VIASOFT.
Holland replaces Albert J. Boos, Jr., who has resigned to pursue other
interests. In his 2 1/2 years with VIASOFT, Mr. Boos made significant
contributions to the Company, including implementing a new professional service
management system, improving receivable and contractual management processes and
preparing the Company for, and helping to lead it through, a successful initial
public offering in March, 1995.
Holland joins VIASOFT with more than 20 years of experience in financial
and business planning management, primarily in the areas of corporate finance,
corporate development, mergers and acquisitions, venture formation and venture
management. He was actively involved, beginning in 1981, in the formation of
Sterling Software, Inc. and served as its executive vice president, chief
financial officer and treasurer from its inception through 1984 and also served
as a director from inception until 1985. At Sterling Software, he had
responsibility for global financial, treasury, acquisition and administrative
activities of the parent corporation, along with six U.S. and three foreign
subsidiaries. Prior to Sterling, he served as a partner of Arthur Young &
Company (now Ernst & Young), where he specialized in mergers, acquisitions,
business planning and international finance with a client base primarily in
computer software and services, banking and consumer products. Immediately prior
to joining VIASOFT, Holland served as president and managing director of Holland
Investments, Inc. (dba First Dallas Group), which he founded in 1981 as The
Holland Financial Group, Ltd., Inc.
-more-
<PAGE>
VIASOFT, Inc.
Appoints Holland as Chief Financial Officer
January 29, 1996
"We're pleased to have someone of Al~'s extensive background join us at
what is an extremely exciting time in VIASOFT's history," said Steven D.
Whiteman. "As part of the senior management team, he'll be instrumental in
helping us with our short-term objective of providing an experienced interface
to U.S. and foreign capital markets and financial communities. On a long-term
basis, Al will also be critical to helping VIASOFT consistently evolve and
broaden our focus, and establish a process by which to identify new market
niches, evaluate key corporate acquisitions, manage our joint ventures and
leverage the extraordinary base of solutions that has been our core foundation."
VIASOFT is a leading provider of business solutions, consisting of
integrated technology and specialized professional consulting services, designed
to enable customers worldwide to cost effectively manage the maintenance and
evolution of their existing applications. Headquartered in Phoenix, Arizona,
VIASOFT provides sales and services through regional offices in the U.S. and a
network of subsidiaries and distributors internationally.
For more information on VIASOFT's products and services, please visit
the company's World Wide Web site at http://www.viasoft.com.
<TABLE>
VIASOFT, INC. AND SUBSIDIARIES
Computation of Earnings Per Share
Exhibit 11
(in thousands, except per share data)
<CAPTION>
Three Months Ended Year to Date
March 31 March 31
------------------ ------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Common Shares Outstanding, beginning of period 8,096 1,781 7,975 1,719
Effect of Weighting of Shares:
Shares Issued-IPO -- 567 189
Shares Issued-Overallotment -- 3 1
Warrants and employee stock options outstanding 495 478 490 504
Shares purchased 2 -- 32 --
Employee stock options exercised 51 6 115 42
Treasury stock (3) -- (1) --
Assumed conversion of preferred stock -- 2,949 -- 3,932
Conversion of preferred stock -- 1,475 -- 492
------- ------- ------- -------
Weighted average number of common and common
share equivalents outstanding 8,639 7,259 8,610 6,879
======= ======= ======= =======
Net income $ 1,270 $ 1,047 $ 3,851 $ 2,947
======= ======= ======= =======
Earnings per common and common share equivalent $ 0.15 $ 0.14 $ 0.45 $ 0.43
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE
Common Shares Outstanding, beginning of period 8,096 1,781 7,975 1,719
Effect of Weighting of Shares:
Shares Issued-IPO -- 567 189
Shares Issued-Overallotment -- 3 1
Warrants and employee stock options outstanding 541 487 574 505
Shares purchased 2 -- 32 --
Employee stock options exercised 51 6 115 42
Treasury stock (3) -- (1) --
Assumed conversion of preferred stock -- 2,949 -- 3,932
Conversion of preferred stock -- 1,475 -- 492
------- ------- ------- -------
Weighted average number of common and common
share equivalents outstanding 8,685 7,268 8,694 6,880
======= ======= ======= =======
Net income $ 1,270 $ 1,047 $ 3,851 $ 2,947
======= ======= ======= =======
Earnings per common and common share equivalent $ 0.15 $ 0.14 $ 0.44 $ 0.43
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1995 JUN-30-1996
<PERIOD-START> JUL-01-1994 JUL-01-1995
<PERIOD-END> JUN-30-1995 MAR-31-1996
<EXCHANGE-RATE> 1 1
<CASH> 7,680 5,077
<SECURITIES> 12,875 21,404
<RECEIVABLES> 8,686 10,363
<ALLOWANCES> 391 294
<INVENTORY> 0 0
<CURRENT-ASSETS> 29,914 37,389
<PP&E> 3,990 4,531
<DEPRECIATION> 2,335 2,714
<TOTAL-ASSETS> 32,614 40,069
<CURRENT-LIABILITIES> 11,964 14,407
<BONDS> 0 0
0 0
0 0
<COMMON> 8 8
<OTHER-SE> 20,415 25,246
<TOTAL-LIABILITY-AND-EQUITY> 32,614 40,069
<SALES> 30,757 28,963
<TOTAL-REVENUES> 30,951 29,058
<CGS> 6,713 6,951
<TOTAL-COSTS> 26,066 24,861
<OTHER-EXPENSES> (9) 45
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (481) (996)
<INCOME-PRETAX> 5,375 5,148
<INCOME-TAX> 183 1,297
<INCOME-CONTINUING> 5,192 3,851
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,192 3,851
<EPS-PRIMARY> 0.71 0.45
<EPS-DILUTED> 0.71 0.45
</TABLE>
