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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A-1
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-26000
DATALOGIX INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
New York 13-3132256
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
100 Summit Lake Drive, Valhalla, NY 10595
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (914) 747-2900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant on September 19, 1996, was approximately
$53,070,000, based upon the closing price of such stock on that date. Shares of
Common Stock held by each officer, director, and holder of 5% or more of the
outstanding Common Stock on that date have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
As of September 19, 1996, there were 11,711,777 shares of Common Stock of
the registrant outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
The Registrant hereby amends and restates in their entirety Items 10, 11,
12 ,13 and 14 of its 1996 Annual Report on Form 10-K.
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PART III
Item 10. EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT
The names and certain information about the current directors of the
Company, and the executive officers of the Company are set forth below,
including information furnished by them as to their principal occupation for the
last five years, certain other directorships held by them and their ages as of
the date of this filing.
<TABLE>
<CAPTION>
Director or
Name Age Position with the Company Officer Since
- ---- --- ------------------------- -------------
<S> <C> <C> <C>
David R. Hathaway (1)(2) 52 Director 1986
George B. Beitzel (1)(2) 68 Director 1991
Peter J. Barris (1)(2) 44 Director 1992
Robert K. Weiler (2) 45 Director 1995
Raymond V. Sozzi 53 President, Chief Operating Officer and
Acting Chief Executive Officer 1996
Richard J. Willemin 45 Chief Financial Officer 1996
Peter B. Sobiloff 40 President, Worldwide Field Operations 1992
Joseph J. Grispo 51 General Manager, CIMPRO Business Systems 1993
John F. Cingari 40 Vice President, Product Marketing 1993
Ronald D. Nall 49 Senior Vice President, Product Research,
Marketing and Development and MIS 1995
Rick A. Marquardt 43 Vice President, Corporate Marketing and
Strategic Partners 1995
</TABLE>
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
David R. Hathaway has served as a director of the Company since 1986 and as
Chairman of the Audit Committee since 1993. Mr. Hathaway is a general partner of
Venrock Associates, a venture capital firm with which he has been associated
since 1980. From February to July 1992, Mr. Hathaway served as acting Chief
Executive Officer of the Company. He is also a director of Sequent Computer
Systems, Inc.
George B. Beitzel has served as a director of the Company since 1991 and as
Chairman of the Compensation Committee since 1993. In 1987, he retired from
International Business Machines Corporation where he had been employed since
1955 in various positions, most recently as a Senior Vice President, and was a
member of the Board of Directors. He is also a director of Bankers Trust
Company, Computer Task Group, Flight Safety International Inc., Phillips Gas
Company, Phillips Petroleum Company, Roadway Services, Inc., Rohm and Haas
Company, TIG Holdings, Inc. and Xillix Technologies Corp.
Peter J. Barris has served as a director of the Company since October 1992.
He has been associated with the New Enterprise Associates partnerships, venture
capital funds, since October 1990 and is a general partner of New Enterprise
Associates VI. From 1989 to August 1990, he was President and Chief Executive
Officer at LEGENT Corporation, a utilities and systems software company. He is
also a director of Amisys Managed Care Systems.
Robert K. Weiler has served as a director of the Company since March 1995.
He has served as President of Software Business of Wang Laboratories since
December 1995. From 1991 to 1995, he served as Senior Vice President of
Worldwide Sales and Marketing at Lotus Development Corporation. From 1989 to
1991, he was President and Chief Operating Officer of Interleaf, Inc.
Raymond V. Sozzi has been President and Chief Operating Officer and acting
Chief Executive Officer since July 1996. Prior to joining the Company, Mr. Sozzi
served as Chief Executive Officer, President and director of DataImage, Inc., a
software company providing integration of imaging systems, from November 1993 to
April 1996. From November 1992 to November 1993, he served as Chief Executive
Officer, President and Director of Insci Corp., a software company that
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provides electronic management information systems. From November 1991 to
November 1992, he served as Chief Executive Officer and President of Northstar
Technologies, Inc., a supplier of Loran and satellite navigation systems.
Richard J. Willemin has been Chief Financial Officer since September 1996
and was a consultant to the Company in that capacity from August 1996 to
September 1996. Prior to joining the Company, Mr. Willemin served as Vice
President and Chief Financial Officer of NEIC, a transaction processing company
in the health care industry, from June 1994 to August 1996. From March 1992 to
June 1994, he served as interim Chief Financial Officer during periods of
transition for several companies, including Saratoga Spring Water Company, a
beverage manufacturer and distributor; Canyon Ranch Spa Cuisine, a mail order
health food company; and Cosmetics Plus, a health and beauty aid retailer. From
October 1985 to March 1992, he held various financial positions at CitiCorp,
including Director, Financial Planning and Analysis, at CitiCorp POS, a database
marketing division.
Peter B. Sobiloff has served as President, Worldwide Field Operations
since February 1996. He served as Vice President of Worldwide Field
Operations from August 1992 to February 1996. Prior to joining the Company,
from 1981 to 1992, he served in various positions at Ross Systems, Inc., a
provider of software, including Executive Vice President, Field Operations in
1992.
Joseph J. Grispo has served as General Manager, CIMPRO Business Systems
since February 1996. He served as Vice President, Client Services and CIMPRO
Business Unit from February 1993 to February 1996. Prior to joining the
Company, he served as Executive Vice President, Client Services, of Ross
Systems, Inc. from 1990 to February 1993.
John F. Cingari has served as Vice President, Product Marketing since
March 1995. He served as Vice President, Marketing and Development from March
1994 to March 1995 and as Vice President, Marketing from June 1993 to March
1994. Prior to joining the Company, he served as Director of Marketing of
Marcam Corporation, a provider of software, from 1989 to June 1993.
Ronald D. Nall has been Senior Vice President, Product Research,
Marketing and Development and MIS since February 1996. He served as Vice
President, GEMMS Research and Development from July 1995 to February 1996.
Prior to joining the Company, he served as Vice President, Research &
Development, of Computer Associates, a provider of software, from 1986 to
July 1995.
Rick A. Marquardt has served as Vice President of Corporate Marketing and
Strategic Partners since July 1995 and as Vice President Oracle Business
Development from June 1994, when he joined the Company, until July 1995. From
1990 through 1994, Mr. Marquardt was employed by Ross Systems, Inc. as Vice
President - Manufacturing Systems.
Compensation of Directors
Directors are reimbursed for their expenses incurred in attending Board
meetings and each non-employee director is paid an annual retainer of $3,000 to
serve on the Board and $500 for each meeting of the Board or a Committee they
attend. Non-employee directors ("Outside Director") participate in the Company's
1995 Director Option Plan (the "Director Plan"). Under the Director Plan, each
new Outside Director will be granted an option to purchase 12,500 shares of
Common Stock upon the date on which such person first becomes an Outside
Director. These options have an exercise price equal to the fair market value of
the Company's Common Stock as of the date of grant and vest at a rate of 25% per
year on each anniversary of the date of grant so long as the optionee remains a
director of the Company. Each Outside Director who has served on the Board for
at least six months is also automatically granted an option to purchase 6,000
shares of Common Stock on the date of each annual meeting of shareholders at
which such person is re-elected to the Board of Directors. These options vest at
a rate of 12.5% per month following the date of grant so long as the optionee
remains a director of the Company and have an exercise price equal to the fair
market value of the Company's Common Stock on the date of grant.
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Item 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation paid to (i) the Company's
Chief Executive Officer during fiscal 1996, (ii) the four other most highly paid
executive officers at the end of fiscal 1996 and (iii) another highly paid
executive officer of the Company who is no longer serving as executive officer
of the Company at the end of fiscal 1996 (collectively, the "Named Officers")
during the three fiscal years ended June 30, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Long-Term
Compensation
Securities
Annual Compensation Underlying All
Fiscal Options Other
Name and Position Year Salary($) (1) Bonus($) (# of shares) Compensation($)
- ------------------------------------- ------------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Richard C. Giordanella, (2) 1996 260,000 65,000 -- 6,360 (3)
President and Chief 1995 250,000 80,000 100,000 4,647 (4)
Executive Officer 1994 225,000 112,500 190,064 (5) 4,647 (6)
Rick L. Smith, (7) 1996 132,942 12,335 6,000 2,051 (3)
Vice President, 1995 152,500 25,000 20,000 2,181 (4)
Finance and Administration, 1994 147,500 45,000 47,640 (5) 2,181 (6)
Chief Financial Officer
Peter B. Sobiloff, 1996 155,000 16,126 6,000 2,170 (3)
President, Worldwide Field 1995 150,000 34,094 20,000 2,073 (4)
Operations 1994 130,000 60,000 47,640 (5) 2,073 (6)
Joseph J. Grispo, 1996 155,000 15,000 6,000 2,929 (3)
General Manager, CIMPRO 1995 155,000 22,500 10,000 30,033 (4)
Business Systems 1994 152,500 27,500 15,694 43,476 (6)
John F. Cingari, 1996 135,000 17,094 -- 2,181 (3)
Vice President, 1995 135,000 15,710 -- 2,073 (4)
Product Marketing 1994 125,000 45,000 95,841 86,216 (6)
Ronald D. Nall 1996 170,000 12,500 6,000 52,662 (3)
Sr. Vice President, Product 1995 643 -- 50,000 --
Research, Marketing and 1994 -- -- -- --
Development and MIS
</TABLE>
(1) Salary includes amounts, if any, contributed by the executive to the
Company's 401(k) Plan for his own account.
(2) In July 1996, the employment of Mr. Giordanella, the Company's then Chief
Executive Officer, was terminated.
(3) Consists of group term excess life insurance premiums of $522, $522, $306,
$864, $306 and $864 for Messrs. Giordanella, Smith, Sobiloff, Grispo,
Cingari and Nall, respectively; life insurance premiums of $2,367 for Mr.
Giordanella; 401(k) Plan matching contributions of the Company of
$3,471, $1,529, $1,864, $2,065, $1,875 and $2,171 for Messrs. Giordanella,
Smith, Sobiloff, Grispo, Cingari and Nall and relocation costs of
$49,627 reimbursed to Mr. Nall.
(4) Consists of group term excess life insurance premiums of $522, $306, $198,
$864 and $114 for Messrs. Giordanella, Smith, Sobiloff, Grispo and Cingari,
respectively; disability insurance premiums of $2,250 for Mr. Giordanella;
401(k) Plan matching contributions of the Company of $1,875 per person for
Messrs. Giordanella, Smith, Sobiloff, Cingari and Grispo and $27,294 tax
gross-up on relocation costs paid to Mr. Grispo.
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(5) Includes options granted in November 1992, the performance and vesting
provisions of which were modified in September 1993 as follows: Mr.
Giordanella 53,418 shares; Mr. Smith 26,716 shares; and Mr. Sobiloff 26,716
shares.
(6) Consists of group term excess life insurance premiums of $522, $306, $198,
$465, and $114 for Messrs. Giordanella, Smith, Sobiloff, Grispo and
Cingari, respectively; disability insurance premiums of $2,250 for Mr.
Giordanella; and 401(k) Plan matching contribution of the Company of $1,875
per person for Messrs. Giordanella, Smith, Sobiloff, and Cingari and $938
for Mr. Grispo; relocation costs of $42,073 reimbursed to Mr. Grispo; and
relocation costs of $47,492 reimbursed to Mr. Cingari plus tax gross-up on
relocation costs paid to Mr. Cingari of $36,735.
(7) In April 1996, Mr. Smith resigned from the Company.
Option Grants in the Last Fiscal Year
The following table provides information with respect to options granted in
fiscal 1996 ("Last Fiscal Year") to the Named Officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Annual Rates of
Securities % of Total Per Stock Price
Underlying Options Share Appreciation for
Options Granted to Exercise Expiration Option Term
Name Granted Employees (1) Price Date 5%(2) 10%(2)
- ---------------------- ------- ------------- ----- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Giordanella -- --% $ -- -- $ -- $ --
Rick L. Smith 6,000 4.1% $ 11.75 10/24/01 $23,977 $54,395
Peter B. Sobiloff 6,000 4.1% $ 11.75 10/24/01 $23,977 $54,395
Joseph J. Grispo 6,000 4.1% $ 11.75 10/24/01 $23,977 $54,395
John F. Cingari -- --% $ -- -- $ -- $ --
Ronald D. Nall 6,000 4.1% $ 11.75 10/24/01 $23,977 $54,395
</TABLE>
(1) Based on 147,500 options granted under all option plans to employees during
the Last Fiscal Year.
(2) Potential realizable value is based on an assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the
date of grant until the end of the 6-year term of the option. These values
are calculated based on requirements promulgated by the Securities and
Exchange Commission (the "SEC") and do not reflect the Company's estimate
or projection of future stock price. Actual gains, if any, on stock option
exercises will be dependent on the future performance of the Common Stock.
The Company has granted a total of 30,000 stock options since the beginning
of the Last Fiscal Year with exercise prices ranging from $11.75 to $12.25 per
share to directors and executive officers other than the Named Officers.
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Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
The following table provides-information with respect to option exercises
in the Last Fiscal Year by the Named Officers and the value of their unexercised
options at June 30, 1996.
<TABLE>
<CAPTION>
Total Number of Total Value of Unexercised,
Unexercised Options In-the-Money-Options at
Shares at Fiscal Year End Fiscal Year End(2)
Acquired or Value
Name Exercised Realized(l) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard C. Giordanella 100 $ 1,970 504,041 98,500 $3,159,265 $ 457,125
Rick L. Smith 92,875 $ 659,016 -- -- $ -- $ --
Peter B. Sobiloff 10,000 $ 145,750 93,061 32,726 $ 581,883 $ 136,743
Joseph J. Grispo 16,000 $ 197,325 47,876 33,965 $ 290,725 $ 162,554
John F. Cingari 14,250 $ 146,050 40,814 27,777 $ 263,251 $ 179,171
Ronald D. Nall -- $ -- 12,000 44,000 $ -- $ --
</TABLE>
(1) Market value of the shares on date of exercise, less the exercise price.
(2) Value is based on fair market value of the Company's Common Stock of $7.25
per share on June 28, 1996, the last trading day of the Last Fiscal Year.
Employee Stock Options
Stock Option Plan. In November 1992, the Board of Directors and
shareholders established the 1992 Stock Option Plan ("1992 Plan") which provides
for the issuance of 2,071,439 shares of the Company's common stock. The 1992
Plan provides for the grant of "incentive" stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonqualified stock options to employees, directors and consultants of the
Company. Incentive stock options may be granted only to employees. The 1992 Plan
is administered by the Compensation Committee (the "Administrator"), which
determines the terms of options granted, including the exercise price, the
vesting schedule and the number of shares subject to the option. Customarily
options granted under the 1992 Plan vest 24% on the anniversary of the date of
grant and 2% per month thereafter and expire after six years. The exercise price
of incentive stock options granted under the Plan must be at least equal to the
fair market value of the Company's Common Stock on the date of grant. The
maximum term of options granted under the 1992 Plan is ten years.
In the event of a merger of the Company with or into another corporation or
a sale of substantially all of the Company's assets, all outstanding options
shall be assumed or an equivalent option substituted by the successor
corporation, unless the Administrator in its discretion makes provision for
accelerating the exercisability of shares subject to options under the Plan. In
such event, the Company shall notify the holders of outstanding options that
such options are fully exercisable, and all options not exercised will terminate
15 days after the date of such notice.
The 1992 Plan further provides that the Administrator may grant to the
Company's employees stock purchase rights in addition to or in tandem with other
awards granted under the 1992 Plan. Such stock purchase rights may remain
outstanding for a maximum period of six months and are to be subject to a
repurchase option by the Company.
1995 Employee Stock Purchase Plan. The Company's 1995 Employee Stock
Purchase Plan (the "Purchase Plan") was adopted by the Company's Board of
Directors in April 1995 and approved by the Company's stockholders in April
1995.
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The Purchase Plan is intended to qualify under Section 423 of the Code. The
Company has reserved 250,000 shares of Common Stock for issuance under the
Purchase Plan. Under the Purchase Plan, an eligible employee may purchase
shares of Common Stock from the Company through payroll deductions of up to
10% of his or her base compensation plus commissions (excluding bonuses and
overtime), at a price per share equal 85% of the lower of (i) the fair market
value of the Company's Common Stock as of the first of each six-month
offering period under the Purchase Plan or (ii) the fair market value of the
Common Stock at the end of each respective offering period. Any employee who is
customarily employed for at least 20 hours per week and more than five months
per calendar year, who has been so employed for at least three consecutive
months on or before the commencement date of an offering period is eligible
to participate in the Purchase Plan.
1995 Director Option Plan. The Company's 1995 Director Option Plan (the
"Director Option Plan") was adopted by Board of Directors and approved by the
Company's stockholders in April 1995. Under the Director Option Plan, the
Company reserved 100,000 shares of Common Stock for issuance to Outside
Directors of the Company pursuant to nonstatutory stock options. The Director
Option Plan shall be in effect for a term of ten years unless sooner
terminated. See "Compensation of Directors" in Item 10.
Employment Agreements
Raymond V. Sozzi Employment Agreement. On June 28, 1996, the Company
entered into an Employment Agreement with Raymond V. Sozzi. Mr. Sozzi
commenced employment on July 10, 1996. Pursuant to the Agreement, as amended
on July 30, 1996 and September 13, 1996, Mr. Sozzi agreed to serve as the
Company's President, Chief Operating Officer and Acting Chief Executive
Officer. The Agreement, as amended, provides for an annual base salary of
$320,000; a signing bonus totaling $150,000, including $25,000 upon initial
employment and $125,000 upon accepting the Chief Executive Officer position;
a bonus of $40,000 for fiscal 1997, as well as certain fringe benefits,
including monthly car and medical insurance allowances. The Agreement also
provides Mr. Sozzi with options to purchase 200,000 shares of the Company's
Common Stock, of which 20% conditionally vested on the commencement of his
employment and 25% will vest each year on the anniversary thereof (subject to
acceleration upon a "change of control"). In the event of Mr. Sozzi's
resignation or other termination of employment with the Company (other than
by the Company for "cause" as defined), the Company agreed to pay Mr. Sozzi
severance of $250,000 (less the $125,000, paid upon accepting the Chief
Executive Officer position). The Agreement also contains various non-compete,
non-solicitation and confidentiality provisions.
In the event that a third party acquires more than 50% of the stock or
assets of the Company during the term of Mr. Sozzi's employment with the
Company, all such stock options granted to Mr. Sozzi will be canceled, Mr.
Sozzi will receive from the Company a cash bonus equal to 1% of the aggregate
value of the consideration paid to the holders of the shares of the Company's
Common Stock, less $125,000, and the Company will be relieved of any
obligation to pay severance to Mr. Sozzi upon termination of his employment
for any reason. In the event that Mr. Sozzi has exercised any of his stock
options prior to consummation of such a transaction, the amount of his cash
bonus will be reduced by any gain realized by Mr. Sozzi upon such exercise.
Richard J. Willemin Employment Agreement. On September 26, 1996, the
Company entered into an Employment Agreement with Richard J. Willemin, pursuant
to which Mr. Willemin agreed to serve as the Company's Chief Financial Officer.
The Agreement provides for an annual salary of $175,000 and a signing bonus of
$50,000, as well as certain fringe benefits. The Agreement also provides Mr.
Willemin with a bonus of $100,000 upon the consummation of the merger with
Oracle. In the event that the Merger Agreement is terminated, Mr. Willemin will
receive options to purchase 150,000 shares of the Company's Common Stock, which
vest at an annual rate of 25% commencing on the first anniversary of the
Agreement, subject to acceleration upon a "change of control." If Mr. Willemin
is terminated without "cause," the Company agreed to pay Mr. Willemin severance
of up to nine months of his base salary. In the event the merger with Oracle is
consummated and Mr. Willemin is terminated without "cause," or resigns after 90
days following the merger, the Company has agreed to pay Mr. Willemin severance
of six months. The Agreement also contains various non-compete, non-solicitation
and confidentiality provisions.
Richard C. Giordanella Employment Agreement. On July 8, 1992, the Company
entered into an Employment Agreement with Richard C. Giordanella, the Company's
President and Chief Executive Officer. The Agreement set certain minimum
payments for fiscal 1993 and 1994 and provides for certain benefits to Mr.
Giordanella including a car allowance, club dues and life insurance. In the
event Mr. Giordanella is terminated other than for cause, as defined in the
Agreement, the Company is obligated to pay his base salary on a monthly basis
for nine months from termination, subject to certain
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reductions, and to continue his health coverage for the earlier of nine months
or the commencement of full time employment for pay. The term of the Agreement
continues from year to year unless terminated upon 90 days' notice by the
Company or without notice for cause or by Mr. Giordanella on 30 days' notice. In
July 1996, the employment of Mr. Giordanella, the Company's then Chief Executive
Officer, was terminated.
The Company has severance agreements with certain of its executive
officers providing that if they are terminated without cause they will be
compensated for a specified period of time. They include John F. Cingari and
Ronald D. Nall, six months severance; Joseph J. Grispo, six months severance
and Peter B. Sobiloff, six months severance plus one month for each year of
employment beyond three years up to a total of nine months; and Rick L.
Smith, six months severance and relocation expenses up to $50,000 in certain
circumstances. Mr. Smith resigned from the Company in April 1996. In October
1996, the Company agreed to pay Mr. Smith $100,000 in connection with his
leaving the Company.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company. The Compensation Committee also administers various
incentive compensation and benefit plans. See "Employee Stock Plans." The
Compensation Committee consists of Messrs. Beitzel, who is Chairman,
Hathaway, Barris and Weiler.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 3, 1996 by (i) each
shareholder known to the Company to be a beneficial owner of more than 5% of the
Company's Common Stock, (ii) each director, (iii) each of the Named Officers,
and (iv) all executive officers and directors of the Company as a group.
Beneficial Owner (1)
--------------------
Beneficial Ownership Shares Percent
-------------------- ------ -------
Oracle Corporation (2) 1,566,287 13.4%
500 Oracle Parkway
Redwood Shores, CA 94065
J.P. Morgan Investment Corporation 1,100,587 9.4%
60 Wall Street
New York, NY 10260-0060
Entities affiliated with 658,000 5.6%
Putnam Investments. Inc. (3)
One Post Office Square
Boston, MA 02109
Richard C. Giordanella (4) 475,709 4.1%
Peter B. Sobiloff (5) 105,125 *
Joseph J. Grispo (6) 66,019 *
George B. Beitzel (7) 65,294 *
John F. Cingari (8) 50,397 *
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Beneficial Owner (1)
--------------------
Beneficial Ownership Shares Percent
-------------------- ------ -------
David R. Hathaway (9) 44,863 *
Ronald D. Nall (10) 18,560 *
Robert K. Weiler (11) 11,000 *
Peter J. Barris (12) 8,580 *
Rick L. Smith (13) 0 *
All directors and executive
officers as a group 863,467 7.4%
(11 persons) (14)
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting and investment power with respect to shares.
(2) The Company has entered into a Merger Agreement with Oracle. See "Business
- Recent Developments" in Item 1 on Form 10-K dated June 30, 1996.
(3) Consists of shares owned by Putnam Investment, Inc. ("PI"), and Putnam
Investment Management, Inc. ("PIM") and The Putman Advisory Company, Inc.
("PAC"). PIM and PAC are registered investments advisors and wholly owned
subsidiaries of PI. Pursuant to reports filed with the SEC, PI disclaims
beneficial ownership of shares owned by PIM and PAC and reports that it has
no power to vote or dispose of these shares.
(4) Mr. Giordanella was the Chief Executive Officer of the Company until July
29, 1996, when his employment was terminated. Shares beneficially owned by
Mr. Giordanella are based on the most recent publicly available
information.
(5) Consists of 105,125 shares issuable upon the exercise of options
exercisable within sixty days.
(6) Consists of 60,019 shares issuable upon the exercise of options exercisable
within sixty days.
(7) Includes 10,986 shares held by family trusts of which Mr. Beitzel is the
voting trustee; 24,661 shares issuable upon the exercise of options
exercisable within sixty days and 18,661 shares issuable upon the exercise
of options held by family trusts of which Mr. Beitzel is the voting trustee
exercisable within sixty days.
(8) Consists of 50,397 shares issuable upon the exercise of options exercisable
within sixty days.
(9) Includes 8,400 shares issuable upon the exercise of options exercisable
within sixty days.
(10) Consists of 18,560 shares issuable upon the exercise of options exercisable
within sixty days.
(11) Consists of 11,000 shares issuable upon the exercise of options exercisable
within sixty days.
(12) Includes 8,400 shares issuable upon exercise of options exercisable within
sixty days. Mr. Barris disclaims beneficial ownership of 412,025 shares
held by New Enterprise Associates V, except for his pecuniary interest
therein. Mr. Barris is a limited partner of New Enterprise Associates V.
(13) Mr. Smith was an executive officer of the Company until April 29, 1996,
when he resigned from the Company.
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(14) Includes the 475,709 shares of Common Stock owned by Mr. Giordanella. Does
not include 40,000 shares issuable to Raymond V. Sozzi upon the exercise
of options exercisable within sixty days. Mr. Sozzi was hired by the
Company as President and Chief Operating Officer in July 1996 and currently
serves as the Company's President, Chief Operating Officer and Acting Chief
Executive Officer. In the event the Company is acquired by Oracle
Corporation, Mr. Sozzi forfeits all outstanding stock options, vested and
unvested, and receives a percentage of the proceeds of the sale in
accordance with his Employment Agreement. If the aforementioned 40,000
shares were included in the percentage of beneficial ownership, the shares
of Common Stock held by directors and officers would be approximately 7.7%.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a Merger Agreement with Oracle. See "Business
- - Recent Developments" in Item 1 on Form 10-K dated June 30, 1996.
9
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are included herein as part of this Form
10-K/A-1.
(1) Consolidated Financial Statements. The consolidated financial
statements of Datalogix International Inc., together with the Report of
Independent Accountants thereon, is filed as a part of this Form 10-K/A-1 as
listed below.
Page No.
--------
Report of Independent Accountants on
Consolidated Financial Statements...................... F-1
Consolidated Balance Sheet -
At June 30, 1996 and 1995.............................. F-2
Consolidated Statement of Operations -
Years ended June 30, 1996, 1995, 1994.................. F-3
Consolidated Statement of Cash Flows -
Years ended June 30, 1996, 1995, 1994.................. F-4
Consolidated Statement of Shareholders Equity -
Years ended June 30, 1996, 1995, 1994.................. F-5
Notes to Consolidated Financial Statements.................. F-6
(2) Financial Statement Schedules. The financial statement schedule of
Datalogix International Inc. for the years ended June 30, 1996, 1995 and 1994,
together with Report of Independent Accountants thereon, is filed as a part of
this Form 10-K/A-1 as listed below and should be read in conjunction with the
consolidated financial statements of Datalogix International Inc.
Page No.
--------
Report of Independent Accountants on
Financial Statement Schedule........................... S-1
Schedule II. Valuation and Qualifying Accounts............. S-2
Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set forth
therein is included in the consolidated financial statements.
10
<PAGE>
(3) Exhibits:
Exhibit Description
-------- ------------------------------------------------------------
*****2.1 Agreement and Plan of Merger, dated as of September 24,
1996, between Oracle Corporation, a Delaware corporation
("Oracle"), Delphi Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Oracle, and
Datalogix International Inc., a New York corporation.
*3.1 Restated Certificate of Incorporation of Registrant as
amended to date.
****3.2 Amended and Restated By-Laws dated as of August 27, 1996.
*4.1 Specimen Common Stock Certificate of Registrant
4.2 See Exhibits 3.1 and 3.2 for provisions of the Certificate
of Incorporation and Bylaws of the Registrant defining
rights of holders of Common Stock of the Company.
****4.3 Rights Agreement, dated as of August 27, 1996, between the
Company and The First National Bank of Boston, as Agent.
*****4.4 Amendment No. 1 to Rights Agreement, dated as of September
24, 1996, between the Company and The First National Bank of
Boston.
*10.1 Form of Indemnification Agreement for Directors and Officers
of the Company.
**10.2 Amended and Restated 1992 Incentive Stock Plan.
**10.3 1995 Director Option Plan.
***10.4 1995 Employee Stock Purchase Plan.
**10.5 1986 Key Employees' Stock Option Plan adopted October 20,
1986, as amended.
*10.6 Employment Agreement between the Company and Richard
Giordanella, President and CEO dated July 8, 1992.
^^10.6(a) Employment Agreement between the Company and Raymond Sozzi,
President, COO and Acting Chief Executive Officer dated June
28, 1996.
^^10.6(b) Addendum dated July 30, 1996 to Employment Agreement for
Raymond Sozzi. See Exhibit 10.6(a) Employment Agreement
between the Company and Raymond Sozzi dated June 28, 1996.
*10.7(a) Lease dated April 14, 1988 between Capelli Associates II and
the Company relating to the premises described as 100 Summit
Lake Drive, Valhalla, NY.
*10.7(b) Amendment to Lease dated June 16, 1988 between Capelli
Associates II and the Company relating to the premises
described as 100 Summit Lake Drive, Valhalla, NY.
*10.7(c) Amendment to Lease dated May 1, 1989 between Capelli
Associates II and the Company relating to the premises
described as 100 Summit Lake Drive, Valhalla, NY.
*10.7(d) Third Amendment to Lease dated July 1, 1990 between Capelli
Associates II and the Company relating to the premises.
*10.7(e) Sublease Agreement entered into in July 1995, between Towers
Perrin Forester & Crosbey, Inc. and the Company relating to
the subletting of additional space at the premises described
as 100 Summit Lake Drive, Valhalla, NY
*10.8(a) Lease Agreement dated April 21, 1988 by and between Ravinia
II Associates and the Company relating to the premises
described as Two Ravinia Drive, Suite 1440, Atlanta, Georgia
30346.
*10.8(b) First Amendment to lease dated September 1, 1993 by and
between Ravinia II Associates and the Company relating to
the premises described as Two Ravinia Drive, Suite 1440,
Atlanta, Georgia 30346.
11
<PAGE>
Exhibit Description
-------- ------------------------------------------------------------
*10.9 Lease dated January 4,1993 by and between Airport Corporate
Center and Christopher E. Fountain doing business under the
name of the Company relating to the premises described as
533 Airport Blvd., Suite 390, Burlingame, California.
*10.10 Lease dated June 10, 1994 between Oakbrook Terrace
Associates, Ltd. and the Company relating to the premises
described as One Lincoln Centre, Suite 1660, Oakbrook
Terrace, Illinois 60181.
*10.11 Purchase Agreement dated October 29,1992 between the Company
and the purchasers of the Company's Series E Preferred
Stock.
*10.12 Purchase Agreement dated June 30,1993 between the Company
and the purchasers of the Company's Series E Preferred
Stock.
*10.13 Purchase Agreement dated September 6,1994 between the
Company and Oracle Corporation relating to the purchase of
the Company's Series F Preferred Stock.
*10.14 Master Lease Agreement dated January 3,1992 between
Comdisco, Inc. and the Company.
*10.15 Registration Rights Agreement dated October 29, 1992, as
amended and restated as of June 30,1993 and as of September
6,1994 between the Company and certain holders of the Series
A, B, C, D, E and F Preferred Stock and warrants of the
Company.
*10.16(a) Credit Agreement dated as of January 15,1994 between the
Company and Silicon Valley Bank.
*10.16(b) First Amendment dated as of December 5,1994 to Credit
Agreement dated as of January 15, 1994 between the Company
and Silicon Valley Bank.
*10.16(c) Amended and Restated Promissory Note dated December 5,1994
from the Company to Silicon Valley Bank in the amount of
$1.5 million.
*10.16(d) Promissory Note (Equipment Line of Credit Loans) dated as of
December 5,1994 from the Company to Silicon Valley Bank in
the amount of $1,000,000.
*10.16(e) Security Agreement dated January 15,1994 between the Company
and Silicon Valley Bank.
*10.16(f) First Amendment to Security Agreement dated as of December
5,1994 between the Company and Silicon Valley Bank.
*10.16(g) Copyright Mortgage dated as of January 15,1994 between the
Company and Silicon Valley Bank.
*10.16(h) Assignment of Trademarks dated January 15,1994 between the
Company and Silicon Valley Bank.
*10.16(i) Guarantee dated January 15,1994 made by Datalogix
Development Corp. in favor of Silicon Valley Bank.
*10.16(j) Security Agreement dated as of January 15, 1994 between
Datalogix Development Corp. and Silicon Valley Bank.
+*10.17 International Distribution Agreement dated as of September
6,1994 by and between the Company and Oracle Corporation.
+*10.18 Joint Marketing Agreement dated September 6,1994 between the
Company and Oracle Corporation.
*10.19 Authorized Distributor Agreement dated January 3, 1991
between the Company and JYACC, Inc.
*10.20 Restricted Source Code License Agreement dated December
17,1991 by and between JYACC, Inc. and the Company.
*10.21 Software Distribution License Agreement made as of May
29,1992 by and between IQ Software Corporation and the
Company.
*10.22 Development and Distribution Agreement dated February 2,
1993 by and between the Company and Intellection, Inc.
12
<PAGE>
Exhibit Description
-------- ------------------------------------------------------------
*10.23 Software License and Technology Escrow Agreements dated as
of March 30,1994 between UNISYS Corporation and the Company.
*10.24 International Distribution Agreement dated December 2,1994
between S.E.A. Group, Inc. and the Company.
*10.25 International Software Marketing Agreement dated as of
December 5, 1994 between the Company and IBM.
*10.26 International Distribution Agreement dated January 9,1995
between Vertical Systems, Inc. and the Company.
*10.27 Letter agreement with Rick L. Smith dated August 27,1992
containing severance provisions.
*10.28 Letter agreement with Peter B. Sobiloff dated July 21, 1992
containing severance provisions.
*10.29 Letter agreement with John Cingari dated May 7, 1993
containing severance provisions.
*10.30 Recapitalization Agreement dated June 30,1993 by and among
the Company, J.P. Morgan Investment Corporation and certain
security holders of the Company.
*10.31 License Agreement dated September 25, 1990 by and among the
Company and Concept Omega Corporation.
^++10.32 Master Software Reseller Agreement dated effective as of
July 18, 1995 by and among the Company and International
Business Machines Corporation.
^^^10.33 Amendment to Employment Agreement between the Company and
Raymond Sozzi, dated September 13, 1996.
10.34 Employment Agreement between the Company and Richard
Willemin, Chief Financial Officer, dated September 26, 1996.
^^11.1 Computation of Earnings Per Share.
^^21.1 Subsidiaries of Registrant.
23.1 Consent of Independent Accountants.
^^24.1 Power of Attorney. (included on signature page)
^^27.1 Financial Data Schedule.
- ---------------------
* Incorporated by reference to the Registration Statement on Form S-1
(File No. 33-91746) as declared effective by the Securities and
Exchange Commission on June 15, 1995.
** Incorporated by reference to the Registration Statement on Form S-8
(File No. 33-96868).
*** Incorporated by reference to the Registration Statement on Form S-8
(File No. 33-96866).
**** Incorporated by reference to Form 8-K dated August 27, 1996.
***** Incorporated by reference to Form 8-K dated September 24, 1996.
^ Incorporated by reference to Form 10-K dated June 30, 1995.
^^ Previously filed with Form 10-K dated June 30, 1996.
^^^ Incorporated by reference to the Company's Preliminary Proxy Statement
on Schedule 14A filed on October 10, 1996.
+ Confidential treatment has been granted with respect to certain
portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission.
13
<PAGE>
++ Confidential treatment has been requested with respect to certain
portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company during the fiscal quarter ended June 30, 1996. The Company subsequently
filed Form 8-K dated August 27, 1996. In addition, the Company filed two reports
on Form 8-K dated September 24, 1996, one disclosing the Agreement and Plan of
Merger with Oracle and the other announcing an anticipated loss for fiscal 1996
and certain restatements affecting first and second fiscal quarters of 1996.
Exhibits to the 8-K for the rights to announce adoption of a shareholder rights
plan and amendments to the Company's Bylaws were filed accordingly.
(c) Exhibits: See Item 14(a)(3) above.
(d) Financial Statement Schedules: See Item 14(a)(2) above.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this Form 10-K/A-1 to be
signed on its behalf by the undersigned, thereunto duly authorized.
Datalogix International Inc.
By: /s/ RAYMOND V. SOZZI
----------------------------------
Raymond V. Sozzi
President, Chief Operating Officer
and Acting Chief Executive Officer
(Principal Executive Officer)
October 29, 1996
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Datalogix International Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of cash flows and of shareholders' equity
present fairly, in all material respects, the financial position of Datalogix
International Inc. and its subsidiaries at June 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 13, on September 24, 1996 the Company executed an
agreement and plan of merger with Oracle in which Oracle will acquire all of the
Company's outstanding common stock.
Price Waterhouse LLP
Stamford, Connecticut
September 24, 1996
F-1
<PAGE>
DATALOGIX INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30,
--------------------
ASSETS 1996 1995
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents .............................................. $ 34,019 $ 43,762
Short-term investments ................................................. -- 165
Accounts receivable, less allowance for doubtful accounts
of $2,025, and $736, respectively ...................................... 13,930 13,484
Deferred income taxes .................................................. -- 2,017
Prepaid expenses and other current assets .............................. 747 576
-------- --------
Total current assets ................................................. 48,696 60,004
Fixed assets, net ......................................................... 3,356 2,207
Computer software development costs, less accumulated
amortization of $1,890 and $3,080, respectively ........................... 2,883 2,282
Deferred income taxes ..................................................... 2,732 499
Other assets .............................................................. 237 59
-------- --------
Total assets ......................................................... $ 57,904 $ 65,051
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ....................................................... $ 2,632 $ 5,157
Accrued liabilities .................................................... 5,162 3,516
Customer advances and unearned revenue ................................. 3,900 5,712
Notes payable and other obligations .................................... 4,666 824
-------- --------
Total current liabilities ............................................ 16,360 15,209
Unearned revenue .......................................................... 269 404
Notes payable and other obligations ....................................... -- 147
Commitments and contingencies (Note 6 and 12) ............................. -- --
Shareholders' equity (deficit):
Preferred stock, $.01 par value; authorized 5,000,000 shares;
none issued ......................................................... -- --
-------- --------
Common stock, $.01 par value; authorized - 40,000,000 shares; issued and
outstanding - 11,158,231 shares in 1996 and 10,864,130
shares in 1995 ...................................................... 112 109
Additional paid-in capital ............................................. 72,160 71,631
Accumulated deficit .................................................... (29,903) (21,871)
Treasury stock, at cost; 96,116 shares in 1996 and 11,116 shares in 1995 (704) (71)
Cumulative translation adjustment ...................................... (293) (267)
Deferred compensation .................................................. (97) (240)
-------- --------
Total shareholders' equity ........................................... 41,275 49,291
-------- --------
Total liabilities and shareholders' equity ........................... $ 57,904 $ 65,051
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
DATALOGIX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
Year Ended June 30,
----------------------------------
1996 1995 1994
-------- -------- --------
Revenues:
License fees ......................... $ 23,515 $ 26,852 $ 14,189
Services ............................. 25,668 16,326 10,559
-------- -------- --------
Total revenues ....................... 49,183 43,178 24,748
-------- -------- --------
Operating expenses:
Cost of license fees ................. 7,862 5,618 2,077
Cost of services ..................... 18,109 10,334 6,024
Sales and marketing .................. 16,418 13,670 8,589
Research and development ............. 9,386 6,271 4,554
General and administrative ........... 7,218 4,433 2,097
-------- -------- --------
Total operating expenses ............. 58,993 40,326 23,341
-------- -------- --------
Income (loss) from operations ........... (9,810) 2,852 1,407
Interest income ...................... 1,950 186 57
Interest expense ..................... (122) (113) (149)
-------- -------- --------
Income (loss) before taxes .............. (7,982) 2,925 1,315
Provision (benefit) for income taxes .... 50 (2,405) --
-------- -------- --------
Net income (loss) ....................... $ (8,032) $ 5,330 $ 1,315
======== ======== ========
Earnings (loss) per share ............... $ (0.70) $ 0.59 $ 0.16
======== ======== ========
Weighted average number of common
and common equivalent shares
outstanding........................... 11,426 9,048 8,313
======== ======== ========
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
DATALOGIX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ......................................... $ (8,032) $ 5,330 $ 1,315
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization ....................... 2,821 1,456 1,128
Provision for bad debt on accounts receivable ....... 2,812 307 590
Loss on disposal of fixed assets .................... 118 -- 6
Write-off of capitalized software costs ............. 131 -- 120
Deferred income taxes ............................... (216) (2,516) --
Changes in operating assets and liabilities:
Accounts receivable ............................... (3,258) (4,259) (3,483)
Prepaid expenses and other assets ................. (239) 347 (35)
Accounts payable and accrued liabilities .......... 4,576 2,160 410
Customer advances and unearned revenue ............ (1,947) (352) 286
-------- -------- --------
Net cash provided by (used in) operating activities (3,234) 2,473 337
-------- -------- --------
Cash flows from investing activities:
Short-term investments, net .............................. 55 (55) 272
Capital expenditures ..................................... (2,676) (1,884) (401)
Capitalized software costs ............................... (1,896) (1,122) (1,008)
-------- -------- --------
Net cash (used in) investing activities .......... (4,517) (3,061) (1,137)
-------- -------- --------
Cash flows from financing activities:
Net repayments on financing arrangements ................. (971) (2,780) (78)
Purchase of treasury ..................................... (633) -- --
shares
Proceeds from sale of redeemable convertible preferred
stock, net .......................................... -- 4,147 (38)
Payment of stock issuance costs .......................... (789) -- --
Proceeds from sale of common stock, net .................. -- 38,743 --
Proceeds from exercise of stock options and warrants and
employee stock purchase ............................ 427 216 --
-------- -------- --------
Net cash provided by (used in) financing activities (1,966) 40,326 (116)
-------- -------- --------
Effect of exchange rate changes on cash ..................... (26) (26) (15)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents (9,743) 39,712 (931)
Cash and cash equivalents at beginning of year .............. 43,762 4,050 4,981
-------- -------- --------
Cash and cash equivalents at end of year .................... $ 34,019 $ 43,762 $ 4,050
======== ======== ========
Supplemental disclosures of cash flow information:
Interest paid ............................................ $ 122 $ 113 $ 149
Interest received ........................................ $ 1,856 -- --
Noncash investing and financing activities:
Accrual of deferred stock option compensation ............ $ -- $ 257 $ --
Conversion of redeemable preferred stock to common stock . $ -- $ 32,977 $ --
Accrual of common stock issuance costs ................... $ -- $ 731 $ --
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
DATALOGIX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
Common Stock Additional Cumulative
--------------- paid-in Accumulated Treasury translation Deferred
Shares Amount capital (deficit) stock adjustment compensation
------ ------ ------- --------- ----- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993 213 $ 2 $ 275 $(28,125) $ (71) $ (226) $ --
Exercise of stock options 2 1
Preferred stock issuance costs (38)
Net income 1,315
Translation adjustments (15)
-------- -------- -------- -------- -------- -------- --------
Balance, June 30, 1994 215 2 276 (26,848) (71) (241) --
Preferred stock issuance costs (353)
Initial public offering of common
stock, net 2,495 25 37,987
Conversion of redeemable
preferred stock 7,259 73 32,904
Cashless exercise of Oracle
Warrant (Note 7):
Exercise 890 9 4,995
Reacquisition (890) (9) (15,128)
Sale 596 6 10,127
Exercise of stock options and
warrants 299 3 213
Deferred compensation on
stock options 257 (257)
Amortization of deferred
compensation 17
Net income 5,330
Translation adjustments (26)
-------- -------- -------- -------- -------- -------- --------
Balance, June 30, 1995 10,864 109 71,631 (21,871) (71) (267) (240)
Exercise of stock options and
warrants 282 3 296
Issuance under Stock Plans 12 -- 128
Purchase of treasury shares (633)
Amortization of deferred
compensation 105 143
Net loss (8,032)
Translation adjustments (26)
-------- -------- -------- -------- -------- -------- --------
Balance, June 30, 1996 11,158 $ 112 $ 72,160 $(29,903) $ (704) $ (293) $ (97)
======== ======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
NOTE 1 - THE COMPANY:
Datalogix International Inc. (the "Company") is a provider of open,
client/server software solutions for managing the manufacturing, logistics and
financial operations of process manufacturing companies worldwide. See Note 13
for the Oracle Merger.
The financial statements reflect the consolidated activities of the Company
and its subsidiaries. All intercompany balances and transactions have been
eliminated.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Company.
Accounting estimates:
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 amounts of revenues and expenses during the reported
period. Actual results could differ from these estimates.
Revenue recognition:
Revenues under the Company's noncancellable license agreements are
recognized upon delivery of the software and once all significant contractual
obligations have been satisfied. Royalty revenues are recognized as they are
reported to the Company by the third party licensing the Company's software.
Revenues from the Company's customer support services (i.e., telephone
support and product updates) are recognized on a pro rata basis over the life of
the service contract, generally one year. Revenues from consulting, programming,
training and software installation services are recognized as these services are
performed and delivered. Customer advances and unearned revenues include amounts
received or billed for customer support services to be rendered in the future.
Estimated warranty costs of the Company's noncancellable license agreements
are recognized upon the recognition of revenue related to these agreements. See
Note 12 for fourth quarter increase to the warranty reserve.
Computer software development costs:
The Company's software development costs, which are primarily comprised of
salaries and related costs, are expensed until technological feasibility is
established and then capitalized until a marketable product is completed.
Capitalized software development costs are amortized over their estimated
economic life, principally three to five years. Amortization expense included in
cost of license fees for the years ended June 30 were $1,161 in 1996, $690 in
1995 and $596 in 1994. Included in research and development expenses were
previously capitalized software in the amounts of $131 and $120 in fiscal 1996
and 1994, respectively, which the Company determined would provide no future
benefit.
The Company periodically reviews its capitalized software development costs
to determine their net realizability based upon anticipated net future cash
flows of the applicable products.
F-6
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
Fixed assets:
Fixed assets are stated at cost less accumulated depreciation or
amortization. Depreciation of computer and office equipment is calculated using
the straight-line method over the estimated useful lives of the assets.
Amortization of leasehold improvements is calculated using the straight-line
method over the shorter of the life of the improvement or the related lease.
Depreciation and amortization expenses were $1,406, $749, and $532 in fiscal
1996, 1995 and 1994, respectively.
Short-term investments:
Short-term investments consist of bank deposits with maturities greater
than three months.
Income taxes:
The Company accounts for income taxes using the asset and liability
approach. See Note 10 for further information.
Statement of cash flows:
For purposes of reporting cash flows, the Company considers all
interest-bearing securities having original maturities of three months or less
to be cash equivalents.
Concentrations of credit risks:
The Company operates in one segment and its customers are concentrated
primarily in the consumer packaged goods (food, beverage, health and beauty
aids) and the industrial products (chemical, pharmaceutical and petroleum)
industries. The Company generally requires a cash deposit upon contract signing.
The Company establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific customers, historical trends and other
information.
In fiscal 1996, approximately 10% and 16% of total revenues were derived
from Oracle and another customer, respectively. The GEMMS license fees and
services comprised the principal component of the revenues from these customers.
No customer accounted for revenues in excess of 10% in fiscal 1995 or 1994.
The Company invests its excess cash principally in money market
instruments, short-term corporate obligations and certificates of deposit.
Generally, the investments mature within 90 days.
Foreign currency translation:
Assets and liabilities denominated in foreign currencies are translated at
exchange rates on the balance sheet date, and revenues and expenses are
translated at average rates during the period. Translation adjustments are shown
separately as a component of shareholders' equity. The majority of international
revenues are denominated in U.S. dollars and pound sterling.
Earnings (loss) per share:
Earnings (loss) per share is determined by dividing net income (loss) by
the weighted average number of shares of common stock and common stock
equivalents outstanding during the period. Common stock equivalents include
stock options, warrants and redeemable convertible preferred stock prior to its
conversion into common stock in June 1995, upon the closing of the initial
public offering of the Company's common stock.
F-7
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
Recently issued accounting standards:
In October 1995, the Financial Accounting Standards Board issued SFAS 123,
" Accounting for Stock Based Compensation," which is effective in fiscal 1997
for the Company. Under SFAS 123, companies can elect, but are not required, to
recognize compensation expense for all stock-based awards, using a fair value
methodology. The Company expects to implement in fiscal 1997 the disclosure only
provision, as permitted by SFAS 123.
Reclassifications:
Certain reclassifications have been made to prior period amounts to conform
with the current year presentation.
NOTE 3 - ORACLE (A RELATED PARTY) AGREEMENTS:
In September 1994, the Company entered into a Joint Marketing Agreement and
an International Distribution Agreement with Oracle Corporation (the "Oracle
Agreements") to market and distribute the GEMMS product (under the name "Oracle
GEMMS") on a worldwide basis. Datalogix pays royalties of 30% to Oracle for
certain GEMMS sales in the United States. The Company reports the royalties paid
to Oracle as a cost of license fees. In exchange for its international
distribution rights, Oracle pays the Company a royalty equal to 40% or more of
the license fees and maintenance fees received by Oracle for certain sales
outside the United States. Oracle also pays the Company license fees for certain
sales in the United States where Oracle sells directly to the customer. The
Company includes these royalties and license fees in revenues. There is no
offsetting entry to cost of license fees that is attributable to the royalty and
license fees revenues earned by the Company from Oracle. The Oracle Agreements
are for a four-year term and renew annually unless terminated by either party.
Royalties and license fees paid by Oracle to Datalogix were approximately
$4,342 and $411 and royalties paid by Datalogix to Oracle were approximately
$3,923 and $2,670 for fiscal 1996 and 1995, respectively. Services revenue paid
by Oracle to Datalogix were approximately $740 and $130 in fiscal 1996 and 1995,
respectively. At June 30, 1996 and 1995, the Company had receivables due from
Oracle in the amount of $1,576 and $164, respectively, which are included in
accounts receivable in the consolidated balance sheet. Also, at June 30, 1996
and 1995, the Company had payables due Oracle in the amount of $1,905 and
$2,877, respectively, which are included in accounts payable in the consolidated
balance sheet. See Note 7, 11 and 13 for other transactions with Oracle.
NOTE 4 - BALANCE SHEET COMPONENTS:
Fixed assets consisted of the following at:
June 30,
--------
1996 1995
------ ------
Computer equipment ................................. $4,003 $3,608
Assets under capital lease ......................... -- 270
Office furniture, fixtures and other ............... 2,169 1,297
------ ------
Total ........................................... 6,172 5,175
Less - Accumulated depreciation and amortization ... 2,816 2,968
------ ------
$3,356 $2,207
====== ======
F-8
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
Accrued liabilities consisted of the following at:
June 30,
--------
1996 1995
------ ------
Commissions ................................ $1,076 $1,136
Payroll and other compensation ............. 1,957 352
Other ...................................... 2,129 2,028
------ ------
$5,162 $3,516
====== ======
NOTE 5 - NOTES PAYABLE AND OTHER OBLIGATIONS:
In January 1994, the Company secured a commitment for a short term credit
facility of $1,500. The facility was amended in December 1994 to include an
equipment line of credit of $1,000. These facilities bear interest at a rate of
0.75% to 1.25% above the lender's prime rate and are secured by the Company's
assets. The short term credit facility expired in April 1996. The equipment line
of credit facility expired in June 1995. No amounts were outstanding under
either the short term credit facility or the equipment line credit at June 30,
1996 or 1995.
The Company has other obligations relating to product claims and warranty
costs. In the fourth quarter of fiscal 1996, the Company increased its reserve
for such costs and obligations to approximately $4,700 as discussed in Note 12.
The Company has noncancelable operating leases for furniture, equipment,
office space and automobiles. Annual rental expense under operating leases was
$1,957, $1,920 and $1,758 in fiscal 1996, 1995, 1994, respectively.
At June 30, 1996, scheduled minimum future lease payments due under
noncancelable operating leases having initial or remaining terms of one year or
more are as follows:
Fiscal Year
-----------
1997 ............................................. $2,112
1998 ............................................. 2,296
1999 ............................................. 1,187
2000 and thereafter .............................. 102
------
Total minimum lease payments ........................ $5,697
======
NOTE 6 - COMMITMENTS AND CONTINGENCIES:
The Company has made commitments to its customers for the annual support
and maintenance of its products as well as other customer obligations. See Note
5 for the accrued liability for product claims and warranty costs.
The Company is a party to claims arising during the normal course of
business, the outcome of which, in the opinion of management, will not have a
material adverse effect on the Company's financial position or results of
operations. See Note 12 for discussion of quarterly restatements.
F-9
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
NOTE 7 - CAPITAL STOCK:
Authorization
In April 1995, the Board of Directors and shareholders approved a 1-for-2
reverse stock split of the common stock, authorized the issuance of 5,000,000
shares of preferred stock at $.01 par value and approved an increase in the
number of authorized common shares from 30,000,000 to 40,000,000 shares. The
reverse stock split has been reflected in all prior periods presented.
Accordingly, all previously reported common stock share, per share and stock
option data have been restated.
Common Stock
On June 15, 1995, the Company completed an underwritten initial public
offering ("IPO") of 3,795,000 shares of its common stock, at an initial price to
the public of $17.00 per share. The offering was comprised of 2,495,000 newly
issued shares by the Company and 1,300,000 shares offered by selling
shareholders. The Company retained net proceeds of $37,954 after deducting
underwriting commissions and discounts of $2,969 and other costs of $1,492.
In connection with the Oracle Agreements in September 1994 (see Note 3),
2,401,280 shares of preferred stock were issued to Oracle for $1.874 per share.
The total amount of preferred shares issued to Oracle was converted into common
stock upon the closing of the Company's IPO on June 15, 1995. In addition,
Oracle was granted a warrant (the "Oracle Warrant") to purchase 890,426 shares
of the Company's common stock at $5.62 per share. The Oracle Warrant was also
exercised for the Company's common stock upon the closing of the Company's IPO
as part of a cashless exercise. As a result of these and other market
transactions, Oracle owns approximately 14% of the Company's outstanding common
stock at June 30, 1996.
NOTE 8 - STOCK OPTION PLANS:
The Company has reserved shares of common stock to be issued in connection
with its key employee stock option plan. The employees' options to purchase
shares vest over a fifty-month period. The options terminate six years from the
date granted.
All outstanding options under existing employee option plans and all
warrants outstanding both prior to and since the April 1995 1-for-2 reverse
stock split are now deemed to be exercisable into that number of common shares
determined using the stock split multiple.
In April 1995, the Board of Directors and shareholders established the 1995
Director Option Plan and the 1995 Employee Stock Purchase Plan which provides
for the issuance of 100,000 and 250,000 shares of common stock, respectively. As
of June 30, 1996, 24,000 options were granted and 76,000 shares remained
available for future granting of options under the 1995 Director Option Plan.
Under the Employee Stock Purchase Plan, eligible employees may purchase shares
of the Company's common stock through payroll deductions not to exceed 10% of
compensation per pay period. The purchase price under this plan is an amount
equal to 85% of the lower of the fair market value of the stock on enrollment
date or on the exercise date. The plan purchased approximately 11,960 shares of
the Company's common stock during fiscal 1996. At June 30, 1996, there were
238,040 shares available for future offerings. No options or shares had been
granted or issued under these plans at June 30, 1995.
In November 1992, the Board of Directors and shareholders established the
1992 Stock Option Plan which provides for the issuance of 2,071,439 shares of
common stock.
F-10
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
Transactions under the Company's stock option plans, as retroactively
adjusted for stock splits, are summarized below (price approximates market value
at date of grant):
Options Price per share
------- ---------------
Options outstanding at June 30, 1993 1,139,248
Options granted .................... 418,295 $ 0.80
Options exercised .................. (1,573) $ 0.80
Options canceled ................... (77,598) $ 0.80
---------
Options outstanding at June 30, 1994 1,478,372
Options granted .................... 644,163 $ 0.80 - $13.00
Options exercised .................. (268,848) $ 0.80
Options canceled ................... (183,777) $ 0.80 - $ 6.98
---------
Options outstanding at June 30, 1995 1,669,910
Options granted .................... 171,500 $11.75 - $12.25
Options exercised .................. (272,141) $ 0.80 - $ 3.50
Options canceled ................... (95,024) $ 0.80 - $13.00
---------
Options outstanding at June 30, 1996 1,474,245
=========
Stock options exercisable at June 30, 1996 were 906,199 with an exercise
price per share of $0.80 - $13.00. At June 30, 1996, 212,987 shares remained
available for future granting of options under the 1992 Plan. In fiscal 1996 and
1995, the Company recognized as compensation the excess of the deemed value for
accounting purposes of the common stock issuable upon exercise of certain
options over the exercise price of such options. The compensation expense is
amortized ratably over the period from the date of the grant through the vesting
date.
NOTE 9 - EMPLOYEE RETIREMENT PLAN:
The Company sponsors a defined contribution 401(k) plan which covers
substantially all of its employees. The Company matches an amount equal to 25%
of the first 5% contributed by the employee. Employees are fully vested in their
own contribution and vest in the Company's contributions over a four-year
period. Contribution expenses of $134, $139 and $72 were incurred during fiscal
1996, 1995 and 1994, respectively.
NOTE 10 - PROVISION FOR INCOME TAXES:
The deferred tax provision was determined under the asset and liability
approach. Deferred tax assets and liabilities were recognized on differences
between the book and tax bases of assets and liabilities using presently enacted
tax rates. The provision (benefit) for income taxes is the sum of the amount of
income tax paid or payable for the year as determined by applying the provisions
of enacted tax laws to the taxable income for that year and the net change
during the year in the Company's deferred tax assets and liabilities.
F-11
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
In the third quarter of fiscal 1995, the Company, based upon its recent
operating results and the market acceptance of its GEMMS product, reduced its
valuation allowance to $698. The effect of this change in judgment regarding the
realizability of certain net operating losses was to offset the 1995 provision
for income taxes by $3,497, resulting in a net benefit for income taxes of
$2,405 for fiscal 1995. The valuation allowance was increased to $3,412 at June
30, 1996 primarily reflecting an allowance against additional loss carryforwards
generated in the current fiscal year. The Company believes it is more likely
than not that the deferred income taxes of $2,732 at June 30, 1996 will be
realized. However, it is reasonably possible that such valuation allowance could
increase significantly in the near term, depending on the Company's ability to
generate sufficient taxable income.
The provision (benefit) for taxes for the fiscal years ended June 30, 1996,
1995 and 1994 are as follows:
Year Ended June 30,
-------------------
1996 1995 1994
------- ------- -------
Current provision
U.S. federal ................................ $ -- $ 15 $ --
State ....................................... 50 66 --
Foreign ..................................... 216 30 --
------- ------- -------
Total current provision ........................ 266 111 --
Deferred benefit ............................... (216) (2,516) --
------- ------- -------
Provision (benefit) for income taxes ........... $ 50 $(2,405) $ --
======= ======= =======
Deferred tax liabilities (assets) are comprised of the following at:
June 30,
--------
1996 1995
------- -------
Software development cost amortization .......... $ 1,009 $ 799
Depreciation and other .......................... 165 223
------- -------
Gross deferred tax liabilities ............... 1,174 1,022
------- -------
Loss carryforwards .............................. (4,892) (3,548)
Contract refunds and other obligations .......... (1,633) (243)
Commissions ..................................... (26) (65)
Bad debt expense ................................ (709) (235)
Other ........................................... (58) (145)
------- -------
Gross deferred tax assets .................... (7,318) (4,236)
------- -------
Deferred tax asset valuation allowance .......... 3,412 698
------- -------
Net deferred tax asset ....................... $(2,732) $(2,516)
======= =======
The provision (benefit) for income taxes differs from the amount of income
tax determined by applying the U.S. applicable income tax rate to (loss) income
before taxes is as follows:
Year Ended June 30,
-------------------
1996 1995 1994
------- ------- -------
Tax (benefit) provision at statutory rate... $(2,794) $ 1,024 $ 447
State income taxes, net of federal tax
benefit ................................. 33 43 --
Valuation allowance adjustment, net......... 2,714 (3,497) (447)
Other ...................................... 97 25 --
------- ------- -------
Provision (benefit) for income taxes ....... $ 50 $(2,405) $ --
======= ======= =======
F-12
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
The Company has significant operating loss carryforwards which expire in
2008, 2009 and 2011. For tax purposes, there is a limitation on the utilization
of net operating losses resulting from certain changes in ownership due to prior
common and preferred stock transactions. As a result, the amount of net
operating loss carryforwards available to offset future taxable income is
approximately $14,000 as of June 30, 1996. Accordingly, the Company has recorded
a gross deferred tax asset for the amount of net operating loss carryforwards
available to offset future taxable income.
NOTE 11 - GEOGRAPHIC INFORMATION:
Financial information, summarized by geographic area, is as follows:
Canada and
United Other
States Europe International Total
------ ------ ------------- -----
Year ended June 30, 1996:
Total revenues ............... $ 40,042 $ 4,867 $ 4,274 $ 49,183
Income (loss) from operations $(11,532) $ 55 $ 1,667 $ (9,810)
Identifiable assets .......... $ 55,783 $ 1,945 $ 176 $ 57,904
Year ended June 30, 1995:
Total revenues ............... $ 38,289 $ 2,527 $ 2,362 $ 43,178
Income (loss) from operations $ 2,591 $ (723) $ 984 $ 2,852
Identifiable assets .......... $ 63,998 $ 1,035 $ 18 $ 65,051
Year ended June 30, 1994:
Total revenues ............... $ 22,027 $ 1,481 $ 1,240 $ 24,748
Income (loss) from operations $ 1,222 $ (408) $ 593 $ 1,407
Identifiable assets .......... $ 16,438 $ 1,148 $ 10 $ 17,596
Revenues received directly from Oracle approximates $5,082, $541 and $0 for
the year ended June 30, 1996, 1995, and 1994 respectively.
NOTE 12 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
Summarized quarterly financial data for the year ending June 30, 1996 and
1995 are as follows:
Per the Quarter Ended
-------------------------------------------------
September 30, December 31, March 31, June 30,
Fiscal Year 1996 1995* 1995* 1996 1996
- --------------------------------------------------------------------------------
Total revenues $ 9,166 $ 14,870 $ 11,065 $ 14,082
Operating expenses 10,760 13,698 13,712 20,823
Income (loss) before taxes (1,109) 1,625 (2,179) (6,319)
Net income (loss) (698) 1,023 (1,373) (6,984)
Earnings (loss) per share (.06) .08 (.12) (.60)
- --------------------------------------------------------------------------------
* The first and second quarters of fiscal 1996 have been restated from
originally reported amounts as disclosed below.
During August 1996, new management conducted a comprehensive review of
major customer accounts for the purpose of determining the adequacy of reserves
and allowances related to customer warranty costs, legal costs and accounts
receivable. As a result of this review, management increased its sales returns
and allowance and bad debt provision by approximately $1,700, its customer
warranty costs by approximately $3,400 and made certain other
F-13
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
adjustments of approximately $800. Management has no basis on which to allocate
these costs to prior periods; as such, these adjustments totaling approximately
$5,900 have been accounted for as changes in estimates in the fourth quarter.
The first and second quarters of fiscal 1996 were restated due to
accounting irregularities which necessitated the elimination of a reseller
transaction that was subsequently determined not to be in accordance with
Company policies, the reversal of a credit taken against royalties to Oracle and
to record as compensation certain expenses related to a former employee. As a
result of these restatements, the Company's Board of Directors has retained
outside counsel to conduct a review of the facts and circumstances surrounding
these matters and in addition the Company's business practices and procedures.
The originally reported amounts were as follows:
Per the Quarter Ended
------------------------------
September 30, December 31,
Fiscal Year 1996 - As Previously Reported 1995 1995
- --------------------------------------------------------------------------------
Total revenues $10,126 $13,910
Operating expenses 10,072 13,410
Income before taxes 539 953
Net income 340 600
Earnings per share .03 .05
- --------------------------------------------------------------------------------
The Company is unable to predict whether litigation resulting from the
publication of the restatements will be initiated against the Company, its
officers or its directors nor is it able to predict the outcome or the range of
potential loss, if any, which might result if such litigation is initiated.
Accordingly, no provision for any liability or other adjustments which may
result has been made in the financial statements at June 30, 1996.
Per the Quarter Ended
---------------------------------------------------
September 30, December 31, March 31, June 30,
Fiscal Year 1995 1994 1994 1995 1995
- --------------------------------------------------------------------------------
Total revenues $ 7,115 $ 9,988 $12,004 $14,071
Operating expenses 7,095 9,602 11,258 12,371
Income before taxes 22 398 758 1,747
Net income 22 398 3,809 1,101
- --------------------------------------------------------------------------------
NOTE 13 - SUBSEQUENT EVENTS:
The Company filed an 8-K dated August 27, 1996 and announced that its Board
of Directors adopted a shareholder rights plan in which preferred stock purchase
rights will be distributed as a dividend at a rate of one right for each share
of the Company's common stock. The Company adopted the plan to protect
shareholders against unsolicited attempts to acquire control of the Company that
would not offer what the Company believes is intended to enable all of the
Company's shareholders to realize the long-term value of their investment in the
Company. The rights do not preclude a takeover, but put on notice anyone seeking
to acquire the Company to negotiate with the Board prior to attempting a
takeover. The rights will be issued to shareholders of record on September 9,
1996 and will expire on August 27, 2006.
The plan provides for the issuance of one right for each one one-thousandth
of a newly issued share of Series A preferred stock of the Company at an
exercise price of $30. The rights will be exerciseable and transferable apart
from the Company's common stock only if a person or group acquires beneficial
ownership of 20% or more of common stock or commences a tender or exchange offer
upon consummation of which such person or group would
F-14
<PAGE>
DATALOGIX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share data)
beneficially own 20% or more of the common stock. If a person or group becomes
the beneficial owner of 20% or more of the Company's common stock, then each
right not owned by a 20% or more shareholder or certain related parties will
entitle its holder to purchase, at the right's then-current exercise price,
shares of common stock (or, in certain circumstances as determined by the Board,
cash , other property, or other securities) having a value twice the right's
exercise price. The Company will generally be entitled to redeem the rights at $
.01 per right at any time until a person or group has become the beneficial
owner of 20% or more of the Company's common stock.
If, after any person has become a 20% or more shareholder, the Company is
involved in a merger or other business combination with another person in which
its common stock is changed or converted, or sells 50% or more of its assets or
earning power to another person, each right will entitle its holder to purchase,
at the right's then-current exercise price, shares of common stock of such other
person having value of twice the right's exercise price.
The Company also announced that the Board of Directors had adopted
amendments to the Company's Bylaw's implementing notice procedures for
shareholder proposals and for nominations for the election of directors,
increasing the percentage of outstanding shares of stock required to call
special meetings of shareholders, and eliminating the ability of shareholders to
remove directors without cause.
On September 24, 1996 the Company executed an Agreement and Plan of Merger
with Oracle in which Oracle will acquire all of the Company's outstanding common
stock, excluding treasury, for a price of $8.00 per share or an aggregate of
approximately $81 million. Each share of the Company's common stock (and
associated preferred stock purchase rights) will be converted into the right to
receive $8.00 per share payable to the holder thereof, without interest.
Consummation of the merger is subject to certain closing conditions, including
shareholder consent and regulatory approval. In connection with the execution of
the Merger Agreement on September 24, 1996, the Company amended the plan to
exclude the Merger from triggering the exerciseability of such rights.
F-15
<PAGE>
DATALOGIX INTERNATIONAL INC.
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of
Datalogix International Inc.
Our audits of the consolidated financial statements referred to in our
report dated September 24, 1996 appearing on page F-1 of the 1996 Annual Report
of Datalogix International Inc. also included an audit of the Financial
Statement Schedule listed in Item 14(a) of this Form 10-K/A-1. In our opinion,
this Financial Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
Price Waterhouse LLP
Stamford, CT
September 24, 1996
S-1
<PAGE>
DATALOGIX INTERNATIONAL INC.
Schedule II - Valuation and Qualifying Accounts
Years ended June 30, 1996, 1995, 1994
(in thousands)
<TABLE>
<CAPTION>
Additions
Balance at charged to
beginning of costs and Balance at
period expenses Deductions end of period
------ -------- ---------- -------------
<S> <C> <C> <C> <C>
Year ended June 30, 1996:
Allowance for doubtful accounts $ 736 $2,812 $1,523 $2,025
Deferred taxes $ 698 $2,714 $ -- $3,412
Year ended June 30, 1995:
Allowance for doubtful accounts $ 600 $ 307 $ 171 $ 736
Deferred taxes $4,942 $ -- $4,244 $ 698
Year ended June 30, 1994:
Allowance for doubtful accounts $ 535 $ 590 $ 525 $ 600
Deferred taxes $4,904 $ 38 $ -- $4,942
</TABLE>
S-2
<PAGE>
Exhibit 10.34
EMPLOYMENT AGREEMENT
AGREEMENT made this 26th day of September, 1996 (the "Agreement") by and
between Datalogix International Inc., a New York corporation, with offices at
100 Summit Lake Drive, Valhalla, New York 10595 (the "Company"), and Richard
Willemin, an individual residing at 76 Cross Ridge Road, Chappaqua, NY 10514
(the "Executive").
1. Employment and Duties.
(a) Employment. The Company agrees to employ Executive, and Executive
agrees to accept employment with the Company.
(b) Scope of Duties. Executive's title will be Chief Financial
Officer ("CFO") of the Company. Executive will render services solely for the
benefit of the Company and its subsidiaries as directed by the President and
Chief Executive Officer ("CEO"). The CEO and the Board of Directors of the
Company (the "Board") will determine the general and specific duties to be
performed by Executive (commensurate with the position of CFO).
(c) Exclusive Service. Executive will perform his duties in a
diligent manner; will not engage in activities which are or could reasonably be
foreseeable to be detrimental to the existing or future business of the Company;
and will observe and conform to all laws, customs and standards of business
ethics and honest business practices. Executive will be required, and does
hereby agree, to devote his full working time and attention to the duties
imposed upon him under this Agreement. In no event, however, will Executive's
pursuit of publications, charitable endeavors, or personal investment
opportunities (that are not related to the Company's business) be deemed a
breach of this Agreement, provided that such pursuits does not interfere with
the services required to be rendered to the Company hereunder, is consistent
with the Company's policies regarding conflicts of interest, and does not in any
way violate or infringe any of Executive's covenants set forth herein.
(d) Professional Standards. Recognizing and acknowledging that it is
essential for the protection and enhancement of the name and business of the
Company and the good will pertaining thereto, Executive will perform his duties
under this Agreement professionally and in accordance with the standards
established by the Company from time to time; and Executive will not act, and
will refrain from acting, in any manner that could reasonably be foreseen to
harm or tarnish the name, business or income of the Company or the good will
pertaining thereto.
<PAGE>
2. Compensation.
(a) Base Salary. For all services rendered by Executive during the
term of this Agreement, the Company will pay Executive an annual base salary
(the "Base Salary") of $175,000, payable in accordance with the Company's
customary payment policies. The Base Salary may be increased (but not decreased)
at the end of each year of employment at the discretion of the Compensation
Committee of the Board.
(b) Bonuses. (i) Upon execution of this Agreement, the Company shall
pay Executive a signing bonus of $50,000.
(ii) In the event that the Oracle Acquisition (as defined below) does
not occur, Executive will be eligible for a performance bonus ("Performance
Bonus") for each fiscal year of the Company during his term of employment. The
Performance Bonus target will be $50,000, and will be based on achievement of
the performance criteria set by the Compensation Committee. The Performance
Bonus for each fiscal year, if earned, will be paid to the Executive within
fifteen (15) days after the Company's independent accounting firm has concluded
its audit and issued its report with respect to such fiscal year.
(c) Fringe Benefits. Executive will be entitled to participate in
such pension, expense reimbursement, auto allowance, benefit plans, fringe
benefits, life insurance, medical and dental plans, retirement plans and other
programs as are offered from time to time by the Company to its executive
employees.
(d) Vacation. Executive will be entitled to an annual vacation of
fifteen (15) working days for each full calendar year of employment hereunder.
(e) Business Expenses. The Company agrees to pay or to reimburse the
Executive for all reasonable, ordinary and necessary business or entertainment
expenses incurred in the performance of his services hereunder in accordance
with the policy of the Company as from time to time in effect.
(f) Oracle Acquisition Bonus.
(i) In the event that the Company is acquired by the Oracle
Corporation ("Oracle") during the term of Executive's employment pursuant to the
Agreement and Plan of Merger (the "Merger Agreement") dated as of September 24,
1996 By and Among Oracle, Delphi Acquisition Corporation and the Company (the
"Oracle Acquisition"), the Company shall pay Executive a cash bonus of $100,000.
The bonus shall be paid upon consummation of the Oracle Acquisition.
-2-
<PAGE>
(ii) If requested by Oracle, Executive shall continue to perform
services for the Company or its successor for a transition period of up to three
months from the date of the Oracle Acquisition.
(g) Stock Options.
(i) In the event that the Merger Agreement is terminated and the
Oracle Acquisition does not occur, the Company will grant to Executive an option
(the "Option") under its Amended and Restated 1992 Incentive Stock Plan (the
"Plan") to purchase 150,000 shares of the Common Stock; provided, however, that
such grant will be subject to approval by the Company's shareholders of the
amendment previously adopted by the Board increasing the number of shares
available for issuance under the Plan by 600,000 (the "Plan Amendment"). The
Option, if granted, shall be subject to the terms and conditions described in
paragraphs (g)(ii)-(v) below.
(ii) Subject to shareholder approval of the Plan Amendment, the Option
will vest in installments of 37,500 shares on each the first, second, third and
fourth anniversaries of the date hereof, provided that Executive is employed by
the Company on such date(s).
(iii) If a Change of Control (as defined in Section 8(e)) occurs on or
prior to the first anniversary of the date hereof, the Option will vest with
respect to 75,000 shares on the date of such Change of Control, and the
remaining 75,000 shares will vest in installments of 18,750 shares on each of
the first, second, third and fourth anniversaries of the date hereof, provided
that Executive is employed by the Company on such date(s). If a Change in
Control occurs after the first anniversary of the date hereof and on or prior to
the second anniversary of the date hereof, the Option will vest with respect to
an additional 75,000 shares on the date of such Change in Control (i.e., in
addition to the 37,500 shares with respect to which the Option would have vested
on the first anniversary of the date hereof), and the remaining 37,500 shares
will vest in installments of 12,500 shares on each of the second, third and
fourth anniversaries of the date hereof, provided that Executive is employed by
the Company on such dates. If a Change in Control occurs after the second
anniversary of the date hereof, the Option will vest with respect to all
unvested shares subject thereto as of the date of such Change in Control,
provided that Executive is employed by the Company on such date.
(iv) If a Change of Control occurs and, at the time of such Change of
Control, the aggregate in-the-money value of the Option with respect to vested
Option shares (based on the price paid for the Common Stock in connection with
the Change of Control, and taking into account shares with respect to which the
Option vests as a result of the Change of Control) is less than $30,000,
Executive will receive an additional cash payment,
-3-
<PAGE>
at the time of such Change of Control, equal to the amount by which the
in-the-money value of such vested Option is less than $30,000.
(v) The Option shall be evidenced by a stock option agreement setting
forth terms and conditions customarily applicable to options granted under the
Plan.
3. Indemnification. The Company will indemnify Executive to the fullest
extent permitted by the New York Business Corporation Law from claims against
him in his capacity as an officer and employee of the Company and to the extent
he is serving as such a Director of the Company. Such indemnification will
include, among other things, the advancement as incurred of costs and legal fees
of defending against any such claims. Additionally, for so long as the Company
maintains such insurance, it will maintain the Executive as a named covered
person under its directors and officers liability insurance, provided, however,
the provisions of this Section 2(h) will not create an independent obligation on
the part of the Company to maintain such insurance.
4. Confidential Information. All confidential information which Executive
may now possess, may obtain during or after the Employment Period, or may create
prior to the end of the Employment Period relating to the business of the
Company or of any of its respective customers, licensees or suppliers will not,
without the prior written consent of the Company, be published, disclosed, or
made accessible by him to any other person, firm or corporation either during or
after the Employment Period or used by him except during the Employment Period
in the business and for the benefit of the Company. Executive will return to the
Company all tangible evidence of such confidential information, whether in
written form, disc form, computer file or otherwise, and will delete or destroy
all intangible evidence of such confidential information, in each case, prior to
or at the end of the Employment Period. For this purpose confidential
information will refer to and include all of the particulars hereinafter
described in this paragraph: (i) systems which the Company now or hereinafter
owns, plans or develops, whether for its own use or for use by its clients; (ii)
information and document which clients of the Company may furnish to the Company
concerning their business affairs, property, methods of operation or other data;
(iii) the list of the Company's customers, as it may exist from time to time;
(iv) all specific proprietary software, algorithms, computer processing systems,
computer programs, course codes and techniques, formulas and technologies, with
which Executive becomes familiar as an employee of the Company; and (v) all
records, files, memoranda, reports, price lists, customer lists, drawings,
plans, sketches, documents, equipment, and the like relating to the business of
the Company which Executive will use or prepare or with which Executive may come
into contact either directly or indirectly in writing, orally or by drawings or
observation of parts or equipment. For
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purposes of this Agreement, "confidential information" will not include any
information: (a) that is or becomes generally or publicly available other than
through disclosure by Executive; (b) that is approved for release by written
authorization of the Company; (c) that is received from a third party outside
the Company following the termination of employment of Executive if such
disclosure was without breach of any confidentiality obligation to the Company
or (d) that may be required by law, regulation or an order of any court, agency
or governmental body to be disclosed.
5. Rights of the Company.
(a) Any interest in copyrights, copyrightable works, developments,
discoveries, designs and processes, patents, patent applications, inventions and
technological innovations (collectively, "Inventions") which Executive (i) owns,
conceives of or develops, alone or with others, (A) relating to the business of
the Company or its subsidiaries or any business in which the Company (or its
subsidiaries) contemplates being engaged or (B) which anticipate research or
development of the Company or its subsidiaries, or (ii) conceives of or develops
utilizing the time, material, facilities or information of the Company or its
subsidiaries, in either case during the Employment Period and for six months
thereafter, will belong to the Company.
(b) As soon as Executive owns, conceives of or develops any
Invention, Executive will immediately communicate such fact in writing to the
Board of the Company. Upon the request of the Company, Executive will, without
further compensation but at the Company's expense (subject to clause (i) below)
execute all such assignments and other documents (including applications for
trademarks, copyrights and patents and assignments thereof) and take all such
other action as the Company may reasonably request, including obtaining spousal
consents or waivers, (ii) to vest in the Company all right, title and interest
of Executive in and to such Inventions, free and clear of all liens, mortgages,
security interests, pledges, charges and encumbrances (Executive to take such
action, at his expense, as is necessary to remove all such liens) and (iii) if
patentable or copyrightable, to obtain patents or copyrights (including
extensions and renewals) therefore in any and all jurisdictions in and outside
the United States in the name of the Company or in such other name(s) as the
Company will determine.
6. Insurance. Executive agrees to submit to such medical examinations as
may be reasonably required by the Company to enable the Company to obtain, at
its option, key man life insurance on the life of Executive in such amount and
with such insurer as the Company may determine in its sole discretion.
7. Employment Period. The Term of the Executive's employment hereunder
(the "Employment Period") will commence on
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the date hereof and will continue until the occurrence of any of the following
events (the "Termination Date"):
(a) the death of Executive;
(b) the voluntary resignation of Executive;
(c) the termination by the Board of the Executive's employment for
Disability (as hereinafter defined);
(d) the termination by the Board of the Executive's employment for
Cause (as hereinafter defined); or
(e) the termination by the Board of the Executive's employment
Without Cause (as hereinafter defined).
8. Definitions Relating to Termination.
(a) Disability
The term "Disability" will mean any physical or mental condition
of Executive which, in the reasonable discretion of the Board, after
consultation with Executive's physician, materially impairs Executive's ability
to render the services to be performed by him hereunder for a period of 90
consecutive days or for at least 120 days in any consecutive 180 day period.
(b) Cause
The term "Cause" will mean the good faith finding by the Board of
the Company upon resolution adopted by it of the existence of any one of the
following:
(i) Executive's failure or refusal to perform specific written
directives of the Board consistent with his duties and responsibilities as set
forth in Section 1 hereof, which lack of performance is not cured within 15 days
after written notice thereof or 30 days if at the 15th day and thereafter
Executive is diligently attempting to cure;
(ii) Excessive use of alcohol or illegal drugs, interfering with
performance of Executive's obligations under this Agreement, which interference
is not cured within 15 days after written notice thereof or 30 days if at the
15th day and thereafter Executive is diligently attempting to cure;
(iii) Conviction of a felony or of any crime involving moral turpitude
or fraud;
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(iv) The commission by Executive of any willful or intentional act
which Executive reasonably should have contemplated would have the effect of
injuring the reputation, financial condition, business or business relationships
of the Company and/or Executive; or
(v) Any material breach of the provisions of Sections 4 or 5 of this
Agreement, if such breach is not cured within 30 days after written notice
thereof to the Executive by the Board.
(c) Without Cause
The term "Without Cause" will mean a determination of the Board
to terminate Executive for any reason other than death, Disability or Cause.
(d) Change of Control
A "Change of Control" will be deemed to have occurred if:
(i) any "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1994, as amended (the "Exchange Act"), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company's then outstanding
securities;
(ii) there will cease to be a majority of the Board comprised as
follows: individuals who on the date of this Agreement constitute the Board and
any new director(s) whose election by the Board or nomination for election by
the Company's shareholders was approved by a vote of a majority of the directors
then still in office who either were directors or whose election or nomination
for election was previously so approved;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent at least fifty
percent (50%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets; or
(iv) the business of the Company for which Executive's services are
principally performed is disposed of by the Company pursuant to an partial or
complete liquidation of the
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Company, a sale of assets (including stock of a subsidiary of the Company) or
otherwise; provided, however, that consummation of the Oracle Acquisition and
the transactions contemplated by the Merger Agreement shall not constitute a
Change in Control.
9. Effect of Termination on Compensation.
(a) If Executive's employment is terminated for Disability, or upon
his death, Executive or his estate will be paid his Base Salary, Performance
Bonus, and other benefits hereunder through the Termination Date. If Executive's
employment is terminated for Cause or if he resigns, then except as provided in
Section 9(b), Executive will be paid his Base Salary and other benefits through
the Termination Date. When under this Agreement a Performance Bonus is payable
through the Termination Date, such amount is calculated as the amount of the
Performance Bonus as if the Executive were employed through the entire fiscal
year multiplied by the quotient obtained by dividing the number of elapsed days
through the Termination Date by 365.
(b) In the event that the Oracle Acquisition is consummated, and
Executive's employment is terminated without Cause at any time after such
consummation, or if Executive resigns more than ninety days after such
consummation, then in consideration of Executive's agreement under Sections 4
and 5 hereof and in lieu of the payment of any other severance pay or benefits,
the Company will continue to pay Executive his Base Salary for six months after
the Termination Date (irrespective of the re-employment of Executive).
(c) In the event that the Oracle Acquisition has not occurred and
Executive's employment is terminated Without Cause, then in consideration of
Executive's agreement, under Sections 4 and 5 hereof and in lieu of the payment
of any other severance pay or benefits, the Company will continue to pay to
Executive his Base Salary for six (6) months after the Termination Date
(irrespective of the re-employment of the Executive) and Salary Continuance (as
hereinafter defined) for up to three (3) months, and (ii) his Performance Bonus
through the Termination Date. Salary Continuance means payment of the Base
Salary to the Executive for the period commencing six (6) months after the
Termination Date and ending on the earlier of nine (9) months after the
Termination Date or the day that the Executive has obtained other suitable
employment for which he will search in good faith; suitable employment being
employment whereby the Executive is utilizing substantially the same type of
skills at a level of authority similar to that obtained by the Executive under
this Agreement.
(d) Irrespective of the basis for the termination of Executive's
employment, all benefits, if any, other than Base Salary and pro rata
Performance Bonus, if applicable, will cease
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as of the Termination Date, other than COBRA rights which will continue to the
extent provided thereunder.
10. Modification. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
11. Notices. Any notice or communication to be given hereunder by any
party to the other will be in writing and will be deemed to have been given when
personally delivered or transmitted by facsimile, or three (3) days after the
date sent by registered or certified mail, postage prepaid, as follows:
(a) If to the Company, addressed to it at:
Datalogix International Inc.
100 Summit Lake Drive
Valhalla, New York 10595
(b) if to Executive, addressed to him at:
Richard Willemin
76 Cross Ridge Road
Chappaqua, NY 10514
or to such other person or addresses as may be designated in writing by the
party to receive such notice.
12. Waiver. Any waiver by either party of a breach of any provision of
this Agreement will not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
13. Successors and Assigns. The provisions of this Agreement will be
binding upon and inure to the benefit of Executive and his heirs and personal
representatives, and will be binding upon and inure to the benefit of the
Company and its successors and assigns.
14. Injunctive Relief. Since a breach of the provisions of Sections 4 and
5 may not adequately be compensated by money damages, the Company will be
entitled, in addition to any other right and remedy available to it, to an
injunction restraining such breach or a threatened breach, and in either case no
bond or other security will be required in connection
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therewith, and Executive hereby consents to the issuance of such injunction.
15. Jurisdiction. The validity and interpretation of this Agreement will
be construed in accordance with and be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
on the day and year first above written.
DATALOGIX INTERNATIONAL INC.
By: /s/ Raymond V. Sozzi
------------------------------
Name: Raymond V. Sozzi
Title: Chief Executive Officer
/s/ Richard Wilemin
------------------------------
Richard Willemin
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Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-96866 and 33-96868) of Datalogix International
Inc., of our report dated September 24, 1996 appearing on page F-1 of this
Annual Report on Form 10-K/A-1. We also consent to the incorporation by
reference of our report on the Financial Statement Schedule, which appears on
page S-1 of this Form 10-K/A-1.
Price Waterhouse LLP
Stamford, CT
October 24, 1996
