<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-26772
VISIO CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1448389
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
520 Pike Street, Suite 1800, Seattle, Washington 98101-4001
(Address of principal executive offices) (Zip code)
(206) 521-4500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Shares outstanding as of April 30, 1996
--------------------------------- -----------------------------------------
Common Stock ($.01 par value) 13,412,541
===============================================================================
<PAGE> 2
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
10.15(a) Agreement for the Amendment of Distribution
Agreement dated January 15, 1996, between
Visio and ASCII Corporation.
11.1 Computation of Earnings Per Share.
27.1 Financial Data Schedule, which is submitted
electronically to the Securities and
Exchange Commission for information only
and not filed.
(b) Reports on Form 8-K:
None.
14
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: January 9, 1997 VISIO CORPORATION
By: /s/ MARTY CHILBERG
------------------------------------
Marty Chilberg
Vice President, Finance and Operations;
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
15
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<S> <C> <C>
10.15(a)+ Agreement for the Amendment of Distribution
Agreement dated January 15, 1996, between
Visio Corporation and ASCII Corporation.
11.1 Computation of Earnings Per Share. *
27.1 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed. **
</TABLE>
* Previously filed.
** Previously submitted.
+ Confidential treatment.
16
<PAGE> 1
Dated day of January 199
VISIO CORPORATION AND VISIO INTERNATIONAL LIMITED
FIRST PART
ASCII CORPORATION
SECOND PART
AGREEMENT FOR THE AMENDMENT OF
DISTRIBUTION AGREEMENT
[*] Confidential Treatment Requested
<PAGE> 2
THIS AGREEMENT is made as of the 19th day of January 1996 between:
1. VISIO CORPORATION, having its principal place of business at 520 Pike
Street, Suite 1800, Seattle, Washington 98101-4001, U.S.A., and its
affiliates, including but not limited to VISIO INTERNATIONAL LIMITED
(collectively referred to as "Visio"), and
2. ASCII CORPORATION, a Corporation organised under the laws of Japan,
having its principal place of business at 4-33-10 Yoyogi, Shibuya,
151-24 Tokyo, Japan and its affiliates ("Distributor").
RECITALS:
A. Visio and Distributor have entered into a Distribution Agreement as of
1st January, 1995 ("the Distribution Agreement").
B. Visio and Distributor have agreed to amend the Distribution Agreement
pursuant to section 21(g) thereof in accordance with the provisions of
this Agreement.
IT IS HEREBY AGREED as follows:-
CLAUSE 1 - PRELIMINARY
1.1 Definitions:
Words and expressions used in this Agreement, save where the context
otherwise requires, bear the same meanings as in the Distribution
Agreement.
CLAUSE 2 - AMENDMENTS TO THE DISTRIBUTION AGREEMENT
2.1 The Distribution Agreement is hereby amended as follows:-
2.1.1 All references in the Distribution Agreement to "Shapeware"
shall be amended to "Visio".
2.1.2 All references in the Distribution Agreement to "F.O.B." shall
be amended to "C.I.F. port of destination Narito Airport".
2.1.3 Section 1 of the Distribution Agreement is hereby amended to
add the following:
(l) "Promo Campaign Product" shall mean the full retail
unit of Visio 4.0 (J) which Distributor shall
purchase from Visio for [*]."
(n) "Sell-Through" shall mean the number of Units of the
Product sold by the Distributor to end users of the
Product and sold by sub-
[*] Confidential Treatment Requested
<PAGE> 3
distributors of the Product to resellers or
end users of the Product, net of all returns
of the Product."
2.1.4 The sentence:-
"Pursuant to Section 5(a) of this Agreement,
Shapeware grants Distributor the right to manufacture
the first version of the initial Product."
shall be deleted from Section 2(a) of the
Distribution Agreement.
2.1.5 Section 5(a) of the Distribution Agreement is
replaced in its entirety with the following:-
"(a) Visio and Distributor agree that all versions of
any Product will be manufactured in Ireland by Visio
with Distributor's co-operation to ensure that
Products meet Distributor's quality requirements and
delivery schedules. Visio shall invoice Distributor
in US Dollars each time Products are shipped. Prices
shall be as set out in the Price Schedule Distributor
agrees to pay Visio on a Net 30 days basis from the
date of invoice.
2.1.6 Section 5(b) of the Distribution Agreement is
replaced in its entirety with the following:
Prices shall be in accordance with Visio's Product
prices as determined solely by Visio, less
compensation allowances ("Allowances") all as set
forth in the Price Schedule. Allowances are
deductions from Visio's Product prices, which Visio
offers to Distributor for Distributor's performance
of the Valued Added Functions."
2.1.7 Section 5(c) of the Distribution Agreement is
replaced in its entirety with the following:
"(c) The US$ prices in the Price Schedule are based
on Yen to the $ rate of 102 Yen to $ and only in the
event that such rate deviates more than plus or minus
(5%) will Visio change the $ price in the Price
Schedule. All prices are C.I.F. port of destination
Narita Airport which, for the avoidance of doubt,
means that Visio will cover freight costs to Narita
Airport. All prices are exclusive of applicable
sales, use or value added taxes or other taxes,
import or export fees, duties including import
clearance charges or tariffs, and any other taxes,
duties or fees of any kind which may be levied in
connection with the transactions covered hereby. Such
charges shall be paid by Distributor. Visio, however,
shall be responsible for all taxes based upon its net
income."
[*] Confidential Treatment Requested
<PAGE> 4
2.1.8 Sections 5(f) and 5(g) are hereby added to the
Distribution Agreement as follows:
(f) Visio and Distributor shall mutually agree
upon a promotional campaign for sales
related to Visio 4.0 (J). Distributor agrees
to purchase the Promo Campaign Product
during a period of time, not to exceed
ninety (90) days, as mutually agreed upon by
Visio and Distributor ("Promotional
Period"). Distributor agrees that
Distributor may not return to Visio any of
the Promo Campaign Product.
(g) Distributor will receive a credit of [*] per
unit of a Product sold as a performance
incentive in the event that either or both
of the following events occur:
(i) Sell-Through of [*] units of the
shrink-wrap Visio 4.0(J) Product
for each calendar quarter in which
such Sell-Through occurs;
(ii) Sell-Through of [*] units of the
shrink-wrap Promo Campaign Product
during the Promotional Period.
Distributor shall receive the credit as set
forth in this Section 5(g) within thirty
(30) days of the end of the calendar quarter
for credits received pursuant to Section
5(g)(i) and within thirty (30) days of the
end of the Promotional Campaign Period for
credits received pursuant to Section
5(g)(ii)."
2.1.9 Section 6(b) of the Distribution Agreement is
replaced in its entirety with the following:-
"(b) achieve the key performance measures set forth
in paragraph 13 of the Business Plan and in the Sales
forecast set forth in the Price Schedule;".
2.1.10 Sections 6(k), (l), (m) and (n) shall be inserted
into the Distribution Agreement as follows:-
(k) work towards maintaining a minimum of four
(4) weeks inventory with Distributor and its
sub-distributors in Japan, based on average
weekly Sell-Through for the previous five
weeks;
(l) submit to Visio a monthly 90 day rolling
forecast of stock keeping units ("SKUs") of
products which Visio will ship to
Distributor on a monthly basis, based on a
firm monthly purchase order;
[*] Confidential Treatment Requested
<PAGE> 5
(m) provide Visio within two (2) business day
from the end of each week with weekly
report, in the form requested by Visio,
including but not limited to the following:
(i) inventory held by Distributor and
sub-distributors of the Product;
(ii) inventory held by major retailers
(such as [*] and [*]), in the
instance where this information is
unavailable from major retailers,
Distributor will provide best
estimates;
(iii) Sell-Through;
(iv) purchases of the Product by
Distributor;
(v) purchases of the Product by
sub-distributors from Distributor;
and
(vi) purchases of the Product by
resellers from sub-distributors."
(n) provide Visio with monthly reports, in the
form requested by Visio, to be delivered
within five (5) business days from the end
of each month as to royalties, customer
service and technical support calls,
marketing activities (such as advertising,
channel marketing, product and price
promotions), corporate account licensing
activities and customer registrations,
Distributor will provide best estimates of
corporate account licensing activities where
this information is unavailable from major
retailers."
2.1.11 Section 7(j) is hereby added to the Distribution
Agreement as follows:
(j) provide Japanese Visio 4.0 (J) to end users
of the Product who have purchased Japanese
Visio 3.0(J) between November 8, 1995 and
January 31, 1996 at a cost to Distributor of
fifteen US Dollars ($15) per unit subject to
a maximum quantity of five thousand (5,000)
units, this Section 7(j) reflects Visio's
sole responsibility regarding Japanese Visio
3.0(J)"
2.1.12 The expression "ten (10)" in Section 8 of the
Distribution Agreement shall be replaced by the
expression "seven (7)", and the sentence:-
"All claims for goods damaged during shipment shall
be made directly to Distributor's carrier."
shall be deleted in that Section, except for internal
freight in Japan.
[*] Confidential Treatment Requested
<PAGE> 6
2.1.13 The last sentence of Section 9 shall be replaced by the
following:
"Distributor shall place one main monthly order for all
Products in line with the forecast as per the Business Plan
and to support Sell-Through. Distributor shall also be
entitled to make one further order in any given calender
month. Visio may at its sole discretion accept further orders
from Distributor in the same calender month.
2.1.14 Section 10 of the Distribution Agreement is replaced in its
entirety with the following:
"(a) For Products manufactured pursuant to this Agreement,
the parties will use best efforts to establish a mutually
agreed upon verification and credit process for return of
Products.
(b) Subject to Section 10(c) herein, Distributor may only
return Products to Visio as follows:-
(i) if the Product has not been accepted
pursuant to Section 8;
(ii) if the Product is being returned pursuant to
any end-user warranty claim pursuant to
Section 11; or
(iii) Products as listed in Exhibit C, for which
Product updates have been issued ("Obsolete
Product") may be exchanged but only if:
Distributor returns the Obsolete Products to
Visio within forty five (45) days after
notification from Visio of the
discontinuance of a Product or the release
of a Product update and such Obsolete
Product is exchanged for new products on an
equivalent value basis. In returning
Obsolete Product, Distributor shall return
Product disks to Visio and destroy all
Product documentation. However, if Visio
authorises Distributor not to return the
Obsolete Product, Distributor must destroy
all copies of the Obsolete Product disks and
all Obsolete Product documentation. Visio
shall provide notice in writing of each
Product update to Distributor at least 90
days prior to the shipping date of that
Product update.
(c) Distributor shall pay all expenses, including without
limitation, freight, duties and insurance for
returned Products.
2.1.15 Exhibit A of the Distribution Agreement is replaced in its
entirety with the Business Plan contained in the First
Schedule hereto.
[*] Confidential Treatment Requested
<PAGE> 7
2.1.16 Exhibit B of the Distribution Agreement is replaced in its
entirety with the following:
EXHIBIT B - PRICE SCHEDULE
As compensation for these services performed by Distributor
for Visio, Visio provides Distributor with allowances as
mutually agreed upon by both parties ("Allowances"), deducted
from Visio's Product Prices as determined solely by Visio.
Visio's Product Prices and the Allowances shall be in US
Dollars. The [*] listed in the Schedule below are Visio's
present Product Prices from which Allowances have been
deducted.
<TABLE>
<CAPTION>
================================================================================
PRODUCT [*] [*] [*] [*]
================================================================================
<S> <C> <C> <C> <C>
Visio 4.0 [*] [*] [*] [*] per unit
Japanese Units
================================================================================
Visio 4.0 [*] [*] [*] [*] per unit
Promo Product (J) Units
================================================================================
Visio 4.0 [*] [*] [*] [*] per unit
Upgrade (J) Units
================================================================================
Visio 4.0
Licence Packs
================================================================================
1 User [*] [*] [*] per
Licence Pack Licences licence
================================================================================
10 User [*] [*] per
Licence Pack licence
================================================================================
50 User [*] [*] [*] per
Licence Pack Licences licence
================================================================================
100 User [*] [*] [*] per
Licence Pack Licences licence
================================================================================
Visio 4.0
Licence Pack
Upgrade
================================================================================
1 User [*] [*] per
Licence Pack licence
================================================================================
10 User [*] [*] per
Licence Pack licence
</TABLE>
[*] Confidential Treatment Requested
<PAGE> 8
<TABLE>
<CAPTION>
================================================================================
PRODUCT [*] [*] [*] [*]
================================================================================
<S> <C> <C> <C> <C>
50 User [*] [*] per
Licence Pack licence
================================================================================
100 User [*] [*] per
Licence Pack licence
================================================================================
Ascii Visio [*] [*] [*] [*] per unit
4.0 (J) End User Units
================================================================================
Visio 4.0 [*] [*] [*] [*] per unit
N.F.R.'s Units
================================================================================
(Free Up to a
Max of 500 Units)
</TABLE>
2.1.17 The Product "Japanese Visio 4.0(J)" is added to Exhibit C of
the Distribution Agreement.
2.2 All other provisions of the Distribution Agreement shall remain
unchanged.
IN WITNESS WHEREOF the parties hereto have on this day of 199 entered
into this Agreement which the parties agree shall be effective as of the day and
year first above written.
VISIO CORPORATION
by /s/ MARTY CHILBERG
----------------------------
Name Marty Chilberg
-------------------------
(print)
Title Vice President
------------------------
Date March 8, 1996
-------------------------
VISIO INTERNATIONAL LIMITED
by /s/ MARTY CHILBERG
----------------------------
Name Marty Chilberg
-------------------------
(print)
Title Director
------------------------
Date March 8, 1996
-------------------------
[*] Confidential Treatment Requested
<PAGE> 9
ASCII CORPORATION
by /s/ KAZUHIKO NISHI
-----------------------------
Name Kazuhiko Nishi
---------------------------
(print)
Title C.E.O. & President
-------------------------
Date January 15, 1996
---------------------------
[*] Confidential Treatment Requested
<PAGE> 10
FIRST SCHEDULE
[*] Confidential Treatment Requested
<PAGE> 11
VISIO/ASCII CORPORATION
1996 BUSINESS PLAN
1. GOALS AND OBJECTIVES
General
- To position Japanese Visio 4.0 (J) as the #1 drawing and
diagramming software in Japan.
- To strengthen the Visio brand in the channels of distribution
and in the end user market.
- To establish Visio as the standard drawing and diagramming
software in large enterprises.
- To leverage [*] to help develop the mass market for Japanese
Visio 4.0 (J).
- To sign an OEM Agreement with Microsoft that would bundle
Japanese Visio Express 4.0 (J) with Microsoft Office.
- To partner with [*] and [*] events, seminars and road shows.
- To establish a market for the [*] (see paragraph 6 below).
- To extend the market for Japanese Visio 4.0 (J) by developing
and marketing Visio Add-ons for target market segments.
- To develop a market for Third Party Japanese Visio 4.0 (J)
Add-on SmartShapes.
Sales
- To achieve the 1996 calendar year retail unit forecast of [*]
units and a license unit forecast of [*] licenses. Unit sales
are divided into the following categories:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRODUCT DESCRIPTION 1996 UNITS
- --------------------------------------------------------------------------------
<S> <C>
Full Retail Product [*] [*]
- --------------------------------------------------------------------------------
Promotional Product [*] [*]
- --------------------------------------------------------------------------------
Full Retail Upgrade Product [*] [*]
- --------------------------------------------------------------------------------
ASCII User Campaign Product [*] [*]
- --------------------------------------------------------------------------------
License Pack [*] licenses [*]
- --------------------------------------------------------------------------------
License Pack [*] licenses [*]
- --------------------------------------------------------------------------------
License Pack [*] licenses [*]
- --------------------------------------------------------------------------------
</TABLE>
[*] Confidential Treatment Requested 1
<PAGE> 12
2. MARKETING
2.1. GENERAL POSITIONING
Visio's strategy is to establish Japanese Visio 4.0 (J) in the
category that we describe as "Business Drawing and
Diagramming". The objective is to differentiate Japanese Visio
from other "non-intelligent" drawing programs. Japanese Visio
is a "drag and drop" drawing tool for the non-graphics
specialist. The goal is to position Japanese Visio as a
component of every Windows desktop and office suite.
Additionally, the key differentiating factors of Japanese
Visio 4.0 (J) are:
Visio is leading-edge technology that has pioneered the
category of "business drawing and diagramming"
Visio Shapes are not clipart but intelligent shapes.
Visio is extensible technology that allows the user to create
their own "Smart Shapes"
Visio is leading-edge Windows technology with the best
implementation of OLE 2.0 technology in the market. The key
marketing message is, "When you buy Visio, you buying into
leading edge technology, a technology that will become more
and more useful as you add more and more "Smart Shapes".
In the early stages of introducing Visio to Japan, Visio
expects the product "positioning" and messaging to stay
focused on the business market. In the longer term, we would
expect ASCII to "expand" the market for Visio by launching the
technical version of the product. In the early stage, it is
important not to confuse the market by indicating that Visio
is for anything but the business user.
2.2. PUBLIC RELATIONS AND PRODUCT REVIEW
Visio has the view that customers make the primary purchase
decisions based on what the "independent" press recommend,
rather than on what the manufacturer claims through
advertising. Because Japanese Visio 4.0 (J) is new technology
it can capture a significant amount of press coverage.
Historically, the press has been intrigued by the concept of
an "intelligent drawing tool" with SmartShapes. So, you have a
chance to get a significant amount of press time. On the other
hand, the press can and will "position" the product
inappropriately if they are not properly managed. The concern
is that the press will include Japanese Visio 4.0 (J) with
other traditional drawing products like Corel Draw or Just
System's Hanako. In the early stages of the product
introduction - from January through May - Visio expects ASCII
to focus the majority of its time and resources on working
with the press on an individual basis.
[*] Confidential Treatment Requested 2
<PAGE> 13
2.2.1. POSITION JAPANESE VISIO AS THE "ESSENTIAL DRAWING AND
DIAGRAMMING SOFTWARE FOR WINDOWS, WINDOWS 95 AND
WINDOWS NT."
Distance Japanese Visio 4.0 (J) from "traditional
drawing tools". Focus on the unique SmartShape
technology and tight OLE 2.0 integration.
Spotlight the following capabilities:
SmartShape technology
OLE 2.0 and Windows 95 integration (drag and drop,
scrap feature, mail-enabled, viewer, etc.)
New Wizard Technology
[*] SmartShapes [*]
[*] with [*] and Microsoft Office (e.g. Microsoft
Office Binder)
2.2.2. ACTIVITIES
We will need to schedule a program of on-going press
interviews and product reviews. This should include
interesting story ideas on the Visio technology and
end user solutions.
Focus on [*]
Strategy is to focus critical sales and marketing
time working with the press during the critical
launch phase. To ensure that the product is
positioned correctly, it is ESSENTIAL that the ASCII
carefully and closely manage the introduction of
Japanese Visio 4.0 (J) to the local press - with one
on one meetings, carefully scripted demos and
carefully worded press kits. (Visio must review the
materials in the early stages in order to assist
ASCII so that it can maintain a consistent brand
identity worldwide. Visio will have approval
authorization on all materials).
2.3. CHANNEL MARKETING
We need to establish an effective channel marketing plan which
concentrates in the following areas:
2.3.1. CHANNEL COMMUNICATION AND EDUCATION
We will need to define a program of on-going channel
communication (marketing collateral, advertising,
etc.) to ensure Visio's awareness with distributors
and dealers. Also, we need to be certain that dealers
are educated about Visio and have the necessary tools
(e.g. video, demo files, NFRs, etc.) to demonstrate
the product.
[*] Confidential Treatment Requested 3
<PAGE> 14
2.3.2. PROMOTIONS
ASCII and Visio will define 2-3 product promotions in
1996. For example, we will [*] of [*] (e.g. [*] etc.)
to "upgrade" to Visio. Also, we will focus on
attaching Visio to Microsoft Office and Lotus
SmartSuite users via a promotional campaign.
Promotions will employ special pricing.
2.3.3. MERCHANDISING
We need to capitalize on an array of programs that
are possible in the retail channel. For example in
[*] [*], we must develop POP displays (e.g. end-caps
with product, signage, collateral, demos, etc.). We
should also develop "demonstration days" where we
assist retailers by encouraging sales via in-store
demos, product drawings and special give-aways.
2.4. EVENTS [*]
2.4.1. EVENTS
We need to identify all significant events and trade
shows where we can showcase Visio.
2.4.2. [*]
We need to create a [*] in order to educate and build
interest in the large enterprise segment of the
market. This [*] would emphasize "business solutions"
using Visio and Microsoft Office, Lotus SmartSuite
Notes, etc. Ideally, we could receive [*] and [*]
directly from [*]
This [*] will the forerunner to [*] that will focus
on [*]. This will be very important [*] Visio into
[*] for future [*] [*] sales.
2.5. ADVERTISING
2.5.1. STAGE 1 - BRAND BUILDING
The initial advertising will target building of the
Visio brand. The style of the initial advertising
will be "Eye catching" in design. This stage will
begin in approximately February of 1996 and conclude
in May of 1996.
2.5.2. STAGE 2 - EDUCATIONAL - "HOW TO USE"
The second stage of advertising will focus on "How to
Use" Japanese Visio 4.0 (J). The type and use of
specific SmartShapes to solve users problems will be
the focus. Japanese Visio will be positioned as an
alternative to traditional drawing applications. The
message will position
[*] Confidential Treatment Requested 4
<PAGE> 15
Japanese Visio as a part of "every office suite".
This stage will begin in May and conclude in August
of 1996.
2.5.3 STAGE 3 - TARGET MARKETS -"SOLUTIONS"
The third stage of the advertising will focus on how
Japanese Visio can address specific problems that
users have. The type of applications will be the main
focus of the advertising. This stage will begin in
October and continue throughout the remainder of
1996.
2.6. DIRECT MARKETING
2.6.1. UPGRADES AND DIRECT SALES
The creations of significant marketing program to [*]
during January, February and March [*] sales. [*]
[*], etc. have to be defined in order to be
successful in this area. A direct sales and marketing
effort targeted at the existing customer base will
also be important to the overall business.
2.7. [*]
Visio's strategy is to [*] in the market. The first stage of
Visio's strategy is to bundle Visio Express 4.0 (J) with
Microsoft Office Professional. This would preferably be
accomplished through a direct OEM Agreement with Microsoft.
Ideally, Visio Express 4.0 (J) would be bundled inside the
actual Microsoft Office box. Other possibilities include [*]
at the distributor or dealer level or [*] at the channel or
using a coupon that would entitle the customer to [*] after
the purchase of Microsoft Office.
The strategy to [*] is based both on Visio technology and [*]
for drawing applications. Visio is one of the best
implementations of OLE 2.0 for Windows available. [*] can use
Visio as a technology [*] for Microsoft Office. The strategy
is to get [*] Japanese Visio 4.0 (J) OLE 2.0 capabilities [*].
This will allow Japanese Visio to gain credibility (by being
included as a part of [*]) as the high quality, leading
technology drawing and diagramming solution. Secondly, Visio
intends to [*] on the fact that [*] does [*] as part of [*].
With its "drag and drop" capability, Japanese Visio 4.0 (J) is
uniquely suited to be sold to the average business user.
Visio will communicate all relevant information regarding [*]
to ASCII,
2.7.1. [*]
The second stage of the strategy is to [*] the [*]
user to the full retail version of [*] would be used
to [*] and/or to purchase [*] packages of [*].
[*] Confidential Treatment Requested 5
<PAGE> 16
3. SALES
3.1. DISTRIBUTION AND PRICING
ASCII will continue to sell Visio through the major
channels of distribution in Japan. It is anticipated
that the majority of the revenue will be derived from
the following channels:
- [*] [*]
- [*] [*]
- [*] [*]
- [*] [*]
Note: The [*] [*] is anticipated to be [*].
The [*] is to offer a [*] to the [*]. The SRP
(suggested retail price) for the [*] [*] of Japanese
Visio 4.0(J) will be [*]. The [*] from ASCII for this
version will be [*] of the SRP. It is [*] that the
[*] for this [*] will be [*] to [*].
ASCII [*] [*] for Japanese Visio 4.0 (J). The SRP for
this [*] will be [*]. The [*] from ASCII for this [*]
will be [*] of the SRP. It is [*] that the [*] for
this [*] will be [*].
ASCII will conduct [*] in 1996 including a [*] and
[*] for [*] users.
<TABLE>
<CAPTION>
VISIO PRODUCTS RETAIL PRICE [*] [*]
<S> <C> <C> <C>
[*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*]
[*] [*] (per license) [*] [*]
[*] [*] (per license) [*] [*]
[*] (per license) [*] [*]
[*] Upgrade (per license) [*] [*]
[*] Upgrade (per license) [*] [*]
[*] Upgrade (per license) [*] [*]
[*] [*] [*]
</TABLE>
3.2. MICROSOFT
Because Visio has a [*], Visio will initiate the
negotiations for an OEM Agreement with Microsoft
Japan. ASCII will be asked to participate in the
final negotiations for this agreement and to manage
the on- going [*].
The strategy is to twofold. First of all, Visio
intends to seed the market through a bundle deal with
Microsoft and then actively promote the upgrade to
the full retail version of Japanese Visio 4.0 (J).
Secondly, Visio intends to [*] marketing capability
by [*] to [*] Japanese Visio's OLE 2.0 features [*]
MS Office
[*] Confidential Treatment Requested 6
<PAGE> 17
applications. The goal is to make Japanese Visio 4.0 (J) the
[*] for [*] capabilities [*].
3.3. OTHER [*]
The strategy is to initially [*] on the [*]. Visio does [*] to
[*] any other [*] until the local [*] have been made. This
will allow the greatest [*] to participate [*]. ASCII will be
responsible for developing other [*] in the future.
4. KEY EVENTS FOR 1996
The following are the key events for the 1996 calendar year.
4.1. PRODUCT LAUNCH JANUARY
4.2. PROMOTION #1 PLANNING JANUARY (TO BEGIN
IN MARCH/APRIL)
4.3. MARKETING PLAN FOR 1ST HALF OF YEAR JANUARY
4.4. PROMOTION #2 PLANNING FEBRUARY (TO BEGIN
IN MAY/JUNE)
4.5. PROMOTION #3 PLANNING MAY/JUNE (TO BEGIN
IN SEPTEMBER/
OCTOBER)
5. ROLES AND RESPONSIBILITIES
The following section outlines the roles and responsibilities for ASCII
and Visio.
5.1. ASCII TEAM
The following list describes the functional areas for which
ASCII shall be responsible. After each area the responsible
individual (if designated) is mentioned.
5.1.1. GENERAL MANAGEMENT - MR. HIRANO
Mr. Hirano will be directly responsible for managing
the Visio business in Japan. He will oversee the
ASCII team and act as a management level liaison to
Visio in the US. He will be directly responsible for
the performance of the Japanese Visio products. Mr.
Hirano will also be responsible for creation of the
biannual business and marketing plan.
5.1.2. OEM SALES - MR. HIRANO
Mr. Hirano will be responsible for the negotiation of
all OEM agreements involving Visio products in Japan
except any [*] and except any [*] originated in the
[*] which shall be [*]. Mr. Hirano will wait until he
receives the written approval of Visio before
starting any OEM negotiations. Also, ASCII agrees to
obtain Visio's written approval before entering into
an OEM arrangement in which an OEM projects a
purchase of [*]
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of the Japanese Visio products. All pricing, terms
and conditions, etc. are subject to Visio's written
approval.
5.1.3. SALES AND MARKETING - MR. KITAMURA
Mr. Kitamura will develop [*] plan that will conform
to a mutually agreed upon [*] with Mr. Brown. Mr.
Kitamura will discuss [*] with Visio management
before implementing [*]. Mr. Kitamura will be
responsible for the creation and placement of Visio's
[*] Japan. Mr. Kitamura must receive Visio's written
approval on creative design of [*] before placing
them in publications [*]. He will also be responsible
for providing Visio with [*]. The [*] month [*] to be
delivered to Visio [*].
5.1.4. LOCALIZATION - MR. HAYASHI
Mr. Hayashi will oversee all development activities
for Japanese Visio 5.0 (J). This will include
management of the localization of the [*]. All
localization work for hire will comply to
specifications provided by Visio.
5.1.5. ENGINEERING [*] - MR. NISHIMOTO/MR. SAKAMOTO
Mr. Nishimoto/Mr. Sakamoto will be responsible for
the development of [*] that [*] to the [*]. He will
be responsible for creation of the product
specification for each [*]. The specifications must
be approved in writing by Visio management before
final product content is determined.
5.1.6. QUALITY ASSURANCE - MR. NAKAMURA
Mr. Nakamura will be responsible for running all
quality assurance tests on the [*]. He will be
responsible for interfacing with Visio Quality
Assurance staff in Seattle to address any testing
methodology issues. Mr. Nakamura will work with the
Visio automated testing tools as well as creating
Japanese specific tools.
5.1.7. PROJECT MANAGEMENT - MR. SATO
Mr. Sato will be responsible for project tracking and
reporting. He will be responsible for the overall
management of the development of the product. This
includes [*] development [*] and day-to-day
management of the schedule.
5.1.8. TRANSLATION - MR. YANAGIDA
Mr. Yanagida will be responsible for the translation
of the manual, Japanese Visio [*] Japanese Visio
program resources, and [*]. He will be the liaison
between ASCII translators and Visio staff.
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5.1.9. Key Contact with Visio - Mr. Yanagida
Mr. Yanagida will be the primary contact for day to
day to communications with Visio for issues regarding
the development of the Japanese versions of the
product. He will be responsible for managing day to
day communications between ASCII and Visio.
5.1.10. OPERATIONS - MR. KITAMURA
Mr. Kitamura will be responsible for placing all
orders for Japanese Visio products to Visio.
5.1.11. CUSTOMER SUPPORT - MR. NAGATOMO
Mr. Nagatomo, will be responsible for managing the
technical support of Japanese Visio 4.0 (J). He will
be responsible for the development of the technical
support team for Japanese Visio and interfacing with
the technical support team at Visio. Mr. Nagatomo
will be trained in Seattle by Visio technicians and
will receive additional training twice yearly.
REPORTS and TOOLS?
5.2. VISIO TEAM
The following list describes the functional areas for which
Visio shall be responsible. After each area the responsible
individual (if designated) is mentioned.
5.2.1. BUSINESS MANAGEMENT AND SALES AND MARKETING
MANAGEMENT - KEVIN BROWN
Mr. Brown will manage the business relationship and
the sales and marketing relationship between ASCII
and Visio. He will be the primary contact at Visio
for ASCII and he will be responsible for all business
planning and required approvals. He is to receive and
review the monthly sell-in, sell-through reports and
monthly forecast reports from ASCII. He will also
will be responsible for working with ASCII staff to
create all sales and marketing plans for Japanese
Visio 4.0 (J). He will ensure that the Visio
executive staff is involved during the planning
process and approve all plans. Mr. Brown will also
assist in the negotiation of OEM agreements, approve
special pricing requests, and provide ongoing sales
and marketing support.
5.2.2. ENGINEERING TRAINING - STEVE FUJIKI AND MATT TOWERS
Mr. Fujiki and Mr. Towers will be responsible for
organizing the training of the [*] developers in
Seattle. This training program will also involve
question and answer support from the applications
engineers as the [*] are developed by Mr. Nishimoto.
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5.2.3. PRODUCT MANAGEMENT - STEVE FUJIKI
Mr. Fujiki will manage the creation of a detailed
product plan for Japanese Visio 4.0 (J) pursuant to
the Product Schedule (Exhibit B) and Specifications
(Exhibit C) of the Visio Corporation Localization
Agreement between Visio and ASCII ("Localization
Agreement"). He will determine the exact product
content with input from ASCII staff. Mr. Fujiki will
also develop a process for creation of these
documents.
5.2.4. JAPANESE VISIO EXE/DOUBLE BYTE ENABLING - MITCH
BOSS/TERRY RUSSELL
Mr. Boss and Mr. Russell will be responsible for the
design and implementation of the engineering
necessary to create the Japanese version of Visio.
All modifications to the Visio source code to create
the Japanese Visio 4.0 (J) will be handled by Mr.
Boss and Mr. Russell.
5.2.5. QUALITY ASSURANCE - JASPER CHIN
Mr. Chin will be responsible for providing all the
[*] tools and procedures to the ASCII Quality
Assurance lead. He will provide basic training on the
tools as well as answering questions from ASCII
staff. Mr. Chin will also be responsible for the
final QA and verification of the gold diskettes.
5.2.6. PRODUCT ACCEPTANCE - STEVE FUJIKI/ JASPER CHIN
Mr. Fujiki and Mr. Chin will be responsible for
providing ASCII with key criteria for acceptance of
the final product. They will be responsible for
performing the final acceptance testing and creating
the gold master diskettes for duplication.
5.2.7 PRODUCT SUPPORT - ANNE MARIANI
Ms. Mariani will provide "secondary" technical
support to ASCII. She will assign a contact person
for Mr. Nishimoto. The Japanese Visio 4.0 (J)
products support liaison will be responsible for
providing [*] [*] and delivering [*] to the ASCII
contact. The Product Support liaison will also be
responsible for collecting and managing the technical
support statistics gathered by ASCII.
5.2.8. OPERATIONS - MARY COFFEY
Ms. Coffey will be responsible for the management of
the manufacturing and product delivery for the
Japanese market. She will work with ASCII to create
detailed specifications for manufacturing quality as
well as shipping parameters.
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5.2.9. Additional Marketing Support - TBD
TBD will be responsible for reviewing and approving
all ASCII advertising and marketing materials in
order to ensure consistent world-wide branding for
Visio products. TBD will also provide marketing
support to ASCII.
6. KEY DECISIONS REQUIRING WRITTEN APPROVAL FROM VISIO
6.1. PLANNING DOCUMENTS
The annual business plan and contract amendment will be
submitted to Mr. Jeremy Jaech of Visio. If there is any
deviation from these plans or contract terms, written approval
will be required from Visio.
6.2. SALES AND PRICING
If any of the following Sales and Marketing related situations
occur, ASCII must receive prior written authorization from
Visio.
- OEM agreements involving volumes greater than [*] units.
- OEM agreements for any other Visio product other than
Japanese Visio Express.
- [*] the [*] of any Visio product [*] than [*] the existing
[*].
6.3. PRODUCT
If any of the following modifications are to be made to any
Visio product ASCII must receive prior written authorization
from Visio.
- Packaging modifications Any changes from the [*] ([*] and
[*] - the [*] of the [*])
- [*] Any [*][*] to the product (This includes [*] of [*] or
modification to the [*] in the [*] document.)
6.4. MARKETING
The following items will require Visio's prior written
approval before they are implemented.
- All [*] - e.g. [*] and [*]
- Product [*] - (e.g. [*], the [*] on a [*] emphasizing a [*]
of [*])
The following will require Visio's prior written approval
before changes are made.
- [*] If the frequency or [*] is modified from the [*]
section 6.3 of this business plan.
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6.5 DISCLOSURE TO ASCII
ASCII would like to be notified of any new products, pricing
policies or strategic plans by Visio that will involve ASCII
in Japan.
7. LOCALIZATION
Goal is to ship full retail version of Japanese Visio 4.0 (J) by
JANUARY 31, 1997. The Localization Agreement sets forth in detail the
localization process.
7.1. PACKAGING
The packaging will be modified to better adhere to the
Japanese market requirements. The basic design and coloring
will be retained as much as possible to maintain Visio's
worldwide corporate identity.
7.2. MANUALS
The manuals will be maintain the basic "look and feel" of the
US manuals. Modifications in design will be made if necessary
to adapt to the Japanese market.
7.3. [*]
The [*] [*] will be outlined in detail in the product
specifications. The [*] content will be determined by Visio
and ASCII to meet the needs of the Japanese customers.
7.4. [*]
The [*] will be maintained as a [*] to help [*] become [*].
The product will be [*] and will [*].
8. LEGAL
8.1. LICENSE AGREEMENTS
All end user license agreements will be provided by Visio. The
licenses will be developed by Visio attorneys and reviewed by
ASCII and Japanese counsel.
8.2. COPYRIGHTS AND TRADEMARKS
All copyright and trademarks will be registered by Visio in
Japan.
9. [*]
9.1. [*] PROGRAM
[*] some [*] to get started. Evaluate the possibility of [*]
to include in Japanese Visio 4.0 (J), and offer to [*] with
coupon in the box.
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9.2. MARKETING
Promote with Japanese Visio 4.0 (J) - [*] during Public
Relations campaign, etc.
10. CUSTOMER SUPPORT
10.1. USER REGISTRATION - DIRECT SALES
The plan is to have [*] of the total number of Japanese Visio
4.0 (J) units registered by the end of 110106. Registration is
considered the receipt of a customers name address and other
information. The long [*] will be to [*] to the registered
users of Japanese Visio 4.0 (J) and Express products.
10.2. CUSTOMER SERVICE
The plan is to have customer service handle the following
types of service requests:
- Replacement product diskettes
- Product literature
- Dealer location information
- Fulfillment of special offers and promotions
- Tracking customer information requests.
10.3. TECHNICAL SUPPORT
ASCII will provide Japanese Visio 4.0 (J) customers with high
quality customer support via phone, fax and BBS to the
registered user base.
The Visio Dublin Support Group or the USA Technical Support
Group will expect the following:
- [*]
- [*]
- [*]
- [*]
11. OPERATIONS
11.1. MANUFACTURING
12. SCHEDULES AND CHECKPOINTS
12.1. PRODUCT DEVELOPMENT
See Exhibit B of the Localization Agreement for a detailed
project schedule.
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12.2. ADVERTISING
See Appendix A for a detailed advertising insertion schedule.
13. KEY PERFORMANCE MEASURES
This section outlines the key performance measures to be performed by
ASCII.
- Sell-through unit sales shall be at least [*] units ([*]
of the estimated sales of [*] units for 1996 mentioned in
paragraph 1 of this business plan.)
- Distribution market share (units) shall not fall below
[*] of the [*] software category. The [*] in the [*]
category includes [*] and Visio.
- User registration of the Japanese Visio 4.0 (J) product
shall not fall below [*] of shipments of the full retail
version of Visio 4.0 (J)for Business.
- The Japanese Visio 4.0 (J) product shall meet the
specifications as outlined in Exhibit C of the
Localization Agreement.
- The Japanese Visio 4.0 (J) product shall not deviate from
the Product Schedule (Exhibit B) of the Localization
Agreement by more than 60 days.
- Distributor will not compete with Visio pursuant to the
terms in Section 6 of the Visio Corporation Distribution
Agreement between Visio and ASCII ("Distribution
Agreement").
- Distributor is obligated to make payments to Visio
pursuant to Section 5 of the Distribution Agreement.
14. [*] - 1996 TARGETS
14.1. [*]
14.1.1. [*]
- To achieve the 1996 calendar year [*] units and a [*] of [*].
Unit sales are divided into the following categories:
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION 1996 [*]
<S> <C>
[*] [*]
[*] [*]
[*] [*]
[*] [*]
TOTAL [*]
[*] [*]
[*] [*]
[*] [*]
TOTAL [*]
</TABLE>
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15. CONTROLLING LANGUAGE
Terms used in this Business Plan shall have the same meaning as such
terms in the Localization Agreement and the Distribution Agreement. In
the event of any discrepancy in usage of the terms or obligations by
the parties among the Business Plan, Localization Agreement, and
Distribution Agreement, the usage of such terms and the obligations by
the parties in the Localization Agreement and the Distribution
Agreement shall control.
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APPENDIX A - ADVERTISING MAGAZINE PAGE PLACEMENT
1996 Magazine Page Placement [*]
<TABLE>
<CAPTION>
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
</TABLE>
All bold magazines are [*].
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APPENDIX B - DEALER DEVELOPMENT PLAN
TO BE DEVELOPED JOINTLY
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APPENDIX C - REVENUE FORECASTS
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION 1996 [*] [*] [*]
<S> <C> <C> <C>
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
TOTAL [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
TOTAL [*] [*]
GRAND TOTAL [*]
</TABLE>
[*]
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