<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 July 31, 1998
- -------------------------------- ---------------------------------------------
Common Stock ($.01 par value) 29,916,896
===============================================================================
<PAGE>
VISIO CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of June 30, 1998 and September 30, 1997......................... 2
Statements of Income for the three and nine months ended June 30, 1998 and 1997... 3
Statements of Cash Flows for the nine months ended June 30, 1998 and 1997......... 4
Notes to Financial Statements..................................................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................................... 10
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION................................................................. 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................. 20
SIGNATURES................................................................................. 21
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISIO CORPORATION
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1998 1997
----------- -------------
(UNAUDITED)
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments...................................... $105,930 $ 79,594
Accounts receivable.................................................. 12,970 6,360
Inventories.......................................................... 1,085 1,079
Prepaid expenses..................................................... 6,683 3,991
Deferred income taxes................................................ 8,295 7,291
-------- --------
Total current assets................................................ 134,963 98,315
Equipment and leasehold improvements.................................. 9,501 8,039
Capitalized technology................................................ 4,976 2,861
-------- --------
Total assets...................................................... $149,440 $109,215
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 5,938 $ 5,954
Accrued compensation and benefits.................................... 5,278 2,706
Other accrued liabilities............................................ 14,694 10,717
Deferred revenue..................................................... 7,487 8,998
Income taxes payable................................................. 2,777 2,988
Current portion of notes payable..................................... 763 1,024
-------- --------
Total current liabilities........................................... 36,937 32,387
-------- --------
Shareholders' equity:
Common stock......................................................... 67,816 52,258
Retained earnings.................................................... 44,687 24,570
-------- --------
Total shareholders' equity.......................................... 112,503 76,828
-------- --------
Total liabilities and shareholders' equity........................ $149,440 $109,215
======== ========
</TABLE>
See accompanying notes.
2
<PAGE>
VISIO CORPORATION
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
----------------- -----------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues............................................... $43,748 $25,805 $120,442 $68,351
Cost of revenues....................................... 4,080 2,731 11,037 7,099
------- ------- -------- -------
Gross profit........................................... 39,668 23,074 109,405 61,252
------- ------- -------- -------
Operating expenses:
Research and development.............................. 6,708 4,175 19,050 10,339
Sales and marketing................................... 18,072 9,988 49,616 26,791
General and administrative............................ 2,999 1,899 8,601 5,081
Acquired technology................................... 976 3,558 8,066 10,255
------- ------- -------- -------
Total operating expenses............................ 28,755 19,620 85,333 52,466
------- ------- -------- -------
Operating income....................................... 10,913 3,454 24,072 8,786
Interest and other income, net......................... 1,235 987 3,739 2,229
------- ------- -------- -------
Income before income taxes............................. 12,148 4,441 27,811 11,015
Provision for income taxes............................. 3,158 1,155 7,232 2,864
------- ------- -------- -------
Net income............................................. $ 8,990 $ 3,286 $ 20,579 $ 8,151
======= ======= ======== =======
Basic earnings per share............................... $0.31 $0.12 $0.72 $0.30
======= ======= ======== =======
Shares used in computation of basic earnings per share. 29,318 27,719 28,780 27,374
======= ======= ======== =======
Diluted earnings per share............................. $0.28 $0.11 $0.66 $0.27
======= ======= ======== =======
Shares used in computation of diluted earnings per
share................................................. 31,552 30,540 31,222 30,267
======= ======= ======== =======
</TABLE>
See accompanying notes.
3
<PAGE>
VISIO CORPORATION
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
-----------------------
1998 1997
--------- ---------
CASH FLOWS FROM OPERATIONS:
<S> <C> <C>
Net income....................................................... $ 20,579 $ 8,151
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization................................... 3,697 1,727
Deferred income taxes........................................... (11) (3,556)
Issuance of common stock for acquired technology................ 6,964 -
Changes:
Accounts receivable........................................... (6,632) (3,050)
Inventories................................................... (14) 156
Prepaid expenses.............................................. (3,022) (2,611)
Accounts payable.............................................. 29 404
Accrued compensation and benefits............................. 2,552 1,114
Deferred revenue.............................................. (1,495) 2,087
Other accrued liabilities..................................... 4,273 3,576
Income taxes payable.......................................... 2,443 661
-------- --------
Net cash from operations......................................... 29,363 8,659
-------- --------
CASH FLOWS USED FOR INVESTMENTS:
Purchases of short-term investments.............................. (34,502) (21,012)
Proceeds from maturities of short-term investments............... 25,500 10,815
Purchases of equipment and leasehold improvements................ (5,311) (3,795)
Capitalized technology........................................... (2,532) (2,135)
-------- --------
Net cash used for investments.................................... (16,845) (16,127)
-------- --------
CASH FLOWS FROM FINANCING:
Issuance of common stock......................................... 4,893 4,245
Payments on long-term obligations................................ (300) (465)
-------- --------
Net cash from financing.......................................... 4,593 3,780
-------- --------
Net increase (decrease) in cash and cash equivalents............... 17,111 (3,688)
Effect of exchange rate changes on cash............................ (463) (310)
Cash and cash equivalents, beginning............................... 58,222 42,506
-------- --------
Cash and cash equivalents, ending.................................. 74,870 38,508
Short-term investments............................................. 31,060 28,861
-------- --------
Cash and short-term investments.................................... $105,930 $ 67,369
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
VISIO CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of Visio Corporation ("Visio" or the "Company") at
June 30, 1998 and for the three and nine month periods ended June 30, 1998 and
1997 are unaudited and reflect all adjustments, consisting of only normal
recurring items which are, in the opinion of management, necessary for a fair
presentation of the financial position and results of operations for the interim
periods. The financial statements should be read in conjunction with the
financial statements and notes thereto for the fiscal year ended September 30,
1997 included in Visio's Annual Report on Form 10-K. The results of operations
for the three and nine months ended June 30, 1998 are not necessarily indicative
of the results to be expected for the full fiscal year. Certain
reclassifications were made to prior interim periods to conform to current
period presentation.
Visio's fiscal year is a 52/53-week period. Accordingly, all references as
of and for the periods ended June 30, 1998, September 30, 1997 and June 30, 1997
reflect amounts as of and for the periods ended July 3, 1998, October 3, 1997
and June 27, 1997, respectively.
2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No.128, Earnings Per Share, which the company has adopted effective
for periods ending on or after December 31, 1997. Pursuant to the requirements
of Statement No. 128, the Company has changed the method previously used to
compute earnings per share and has restated all prior periods whereby the
calculation of primary and fully diluted earnings per share have been replaced
by basic and diluted earnings per share. Under the new requirements for
calculating basic earnings per share, the dilutive effect of stock options and
stock warrants are excluded.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
------------------------------------------------
BASIC DILUTED
------------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C>
Weighted average common shares outstanding................ 29,342 27,966 29,342 27,966
Restricted stock subject to repurchase.................... (24) (247) n/a n/a
Net effect of dilutive stock options and warrants
calculated using the treasury stock method and the
average stock price...................................... n/a n/a 2,210 2,574
------- ------- ------- -------
Total..................................................... 29,318 27,719 31,552 30,540
======= ======= ======= =======
Net income................................................ $ 8,990 $ 3,286 $ 8,990 $ 3,286
======= ======= ======= =======
Earnings per share........................................ $ 0.31 $ 0.12 $ 0.28 $ 0.11
======= ======= ======= =======
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
-------------------------------------------------
BASIC DILUTED
------------------- -------------------
1998 1997 1998 1997
---- ---- ---- ----
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C>
Weighted average common shares outstanding................ 28,829 27,718 28,829 27,718
Restricted stock subject to repurchase.................... (49) (344) n/a n/a
Net effect of dilutive stock options and warrants
calculated using the treasury stock method and the
average stock price...................................... n/a n/a 2,393 2,549
------ ------ ------ ------
Total..................................................... 28,780 27,374 31,222 30,267
======= ======= ======= =======
Net income................................................ $20,579 $ 8,151 $20,579 $ 8,151
======= ======= ======= =======
Earnings per share........................................ $ 0.72 $ 0.30 $ 0.66 $ 0.27
======= ======= ======= =======
</TABLE>
3. INVENTORIES
Inventories are stated at the lower of cost or market and consist of the
following:
JUNE 30, SEPTEMBER 30,
1998 1997
------- ------------
(IN THOUSANDS)
Raw Materials............... $ 503 $ 299
Finished Goods.............. 582 780
------ ------
$1,085 $1,079
====== ======
4. ACQUISITIONS
For all acquisitions accounted for under the purchase method, assets are
recorded at fair market value plus a pro rata portion of related acquisition
costs. The allocation of the purchase price to Acquired Technology or
Capitalized Technology is based on known valuation techniques in the software
industry. For some transactions, the Company obtains an independent appraisal
of the technology. Amounts allocated to Acquired Technology relate to in-
process research and development that were immediately expensed in the period of
acquisition because technological feasibility was not established and no
alternative commercial use was identified. Amounts allocated to Capitalized
Technology relate to technology that had achieved technological feasibility at
the time of acquisition. Capitalized Technology is amortized on a straight-line
basis over the estimated useful life of the technology.
On January 22, 1998, the Company acquired MarComp Inc. ("MarComp"), a
privately held provider of programming toolkits for access to Autodesk's AutoCAD
.dwg and .dxf file formats, located in Parkton, Maryland. Under the terms of the
merger agreement, Visio exchanged 50,014 shares of its unregistered common stock
for all of the outstanding shares of MarComp. The transaction was accounted for
as a pooling of interests and due to the immateriality of the amounts involved,
prior period financial statements have not been restated. The transaction
resulted in an increase in equity of $100,000 primarily due to the acquisition
of cash and accounts receivable from MarComp and resulted in approximately
$100,000 in acquisition related costs in the quarter ended March 31, 1998.
6
<PAGE>
On February 10, 1998, the Company acquired certain technology and assets of
InfoModelers, Inc. ("InfoModelers"), a privately held, leading supplier of
database and data warehouse visual design, access and query tools, located in
Bellevue, Washington. Under the terms of the agreement, Visio issued 200,000
shares of its unregistered common stock for accounts receivable, fixed assets,
tax assets and certain technology assets. The transaction was accounted for
using the purchase method and was valued at approximately $7.8 million for
InfoModeler shareholders. This transaction resulted in a total charge to
Acquired Technology of $7.0 million that included $6.8 million for in-process
research and development and $236,000 of acquisition related costs in the
quarter ended March 31, 1998. In addition, the Company recorded approximately
$1.0 million in other balance sheet assets.
On May 5, 1998, the Company acquired certain technology and assets from
Decision Graphics UK Ltd. ("Decision Graphics"), a privately held provider of
computer-aided facilities management (CAFM) software, located in the U.K., for
$688,000. The transaction was accounted for using the purchase method and
resulted in a total charge to Acquired Technology of $729,000 that included
$688,000 for in-process research and development and $41,000 of acquisition
related costs in the quarter ended June 30, 1998.
On June 2, 1998, the Company acquired certain CAD technology, software
products and other assets from Ketiv Technologies Inc. ("Ketiv"), a privately
held provider of architecture, engineering and construction (AEC) software
located in Portland, Oregon, for approximately $2.6 million. The transaction was
accounted for using the purchase method and resulted in Capitalized Technology
of $2.5 million including acquisition related costs and a total charge to
Acquired Technology of $247,000 that included $235,000 for in-process research
and development and $12,000 of acquisition related costs. The Capitalized
Technology is being amortized on a straight-line basis over five years.
On February 21, 1997, the Company acquired certain technology and assets of
Boomerang Technology Inc. ("Boomerang"), a privately held developer of Autodesk
AutoCAD-compatible software, located in San Diego, California, for $6.7 million.
This transaction resulted in a charge to Acquired Technology of $6.7 million for
in-process research and development.
On May 1, 1997, the Company acquired certain assets of Freedom Solutions
Group, Inc. d.b.a. SysDraw Software Company ("SysDraw Software Company"), a
privately held network design and documentation solutions provider, located in
Lombard, Illinois. Under the terms of the agreement, the acquisition price
included $5.5 million in cash plus the issuance of a $1.0 million note payable
due August 1998. Visio is required to pay up to $1.5 million of additional
consideration if revenues of the acquired products meet certain performance
goals within three years of the acquisition. The transaction was accounted for
using the purchase method and resulted in Capitalized Technology of $3.1
million, other balance sheet assets of $100,000 and a charge to Acquired
Technology of $3.6 million that included $3.3 million for in-process research
and development and $300,000 of acquisition related costs. The Capitalized
Technology is being amortized on a straight-line basis over five years.
The technologies acquired in the MarComp, Boomerang, Decision Graphics and
Ketiv transactions are intended for use in the Company's products in the
Technical Drawing product group. The technologies acquired in the Sysdraw and
InfoModelers transactions are intended for use in the Company's IT Design and
Documentation product group.
The operating results of MarComp, Boomerang, SysDraw, InfoModelers,
Decision Graphics, and Ketiv were not considered material to the consolidated
financial statements of Visio, and accordingly, pro forma financial information
has not been presented for these acquisitions.
7
<PAGE>
5. SUBSEQUENT EVENTS
On July 10, 1998, the Company acquired Kaspia Systems Inc. ("Kaspia"), a
privately held developer of fully automated enterprise-network audit
functionality, including discovery, monitoring and reporting software, located
in Beaverton, Oregon. Under the terms of the merger agreement, Visio acquired
all of Kaspia's outstanding stock for 482,994 shares of Visio common stock,
valued at approximately $23.3 million for Kaspia shareholders. This transaction
will be accounted for as a pooling of interests. Accordingly, the consolidated
financial statements will include the combined results of operations beginning
in the quarter ended September 30, 1998 and all prior financial statements will
be restated. The transaction resulted in approximately $1.2 million in
acquisition related costs in the quarter ended September 30, 1998.
The following tables reflect restated summarized unaudited financial data of
Visio including the historical results of Kaspia:
SELECTED UNAUDITED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
FISCAL YEAR 1998 NINE MONTHS
THREE MONTHS ENDED ENDED
---------------------------------------- -----------
DECEMBER 31, MARCH 31, JUNE 30, JUNE 30,
(in thousands, except per share data) 1997 1998 1998 1998
------------ --------- -------- -----------
<S> <C> <C> <C> <C>
Revenues............................. $37,497 $40,089 $44,186 $121,772
Net income........................... $ 7,378 $ 3,326 $ 8,449 $ 19,153
Diluted earnings per share........... $ 0.24 $ 0.11 $ 0.26 $ 0.60
Shares used in computation of
diluted earnings per share.......... 31,395 31,659 32,018 31,691
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR 1997
FISCAL YEAR
THREE MONTHS ENDED ENDED
------------------------------------------------ -------------
(in thousands, except per share data) DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1997 1997 1997
------------ --------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues............................. $19,207 $23,812 $26,367 $31,389 $100,775
Net income........................... $ 4,157 $ 216 $ 2,942 $ 6,385 $ 13,700
Diluted earnings per share........... $ 0.14 $ 0.01 $ 0.10 $ 0.20 $ 0.44
Shares used in computation of
diluted earnings per share.......... 30,405 30,518 30,943 31,300 30,792
</TABLE>
SELECTED UNAUDITED BALANCE SHEET DATA:
(in thousands) SEPTEMBER 30, JUNE 30,
1997 1998
------------- --------
Cash and short-term investments...... $ 81,212 $106,107
Current assets....................... 101,586 138,251
Total assets......................... 112,701 153,048
Current liabilities.................. 33,544 39,269
Shareholders' equity................. 78,767 113,063
Total liabilities and
shareholders' equity................ 112,701 153,048
8
<PAGE>
6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Accounting Standards Executive Committee has issued Statement of
Position 97-2, "Software Revenue Recognition" ("SOP 97-2"), which supersedes SOP
91-1, the former literature on software revenue recognition. This Statement will
be effective beginning in fiscal year 1999. The Company believes it is
substantially in compliance with the provisions of SOP 97-2, and its adoption is
not expected to have a material impact on the financial position or results of
operations of the Company.
In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income." Statement No. 130 establishes standards for reporting and displaying
comprehensive income and its components in the financial statements which
requires the Company to display an amount representing total comprehensive
income for the period in its financial statements. The Company will be required
to implement Statement No. 130 for its fiscal year 1999.
In June 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Statement No. 131
establishes standards for the manner in which public companies report
information about operating segments in annual and interim financial statements.
The Company will be required to implement Statement No. 131 for its fiscal year
1999.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which is required to be adopted in years
beginning after June 15, 1999. Statement No. 133 provides a comprehensive and
consistent standard for the recognition and measurement of derivatives and
hedging activities. The Company currentely hedges foreign exchange transaction
exposures. Management has not yet determined what the effect of Statement No.
133 will be on the earnings and financial position of the Company.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Visio(R), which commenced operations in September 1990, develops drawing
and diagramming software for the general business personal computer user. All of
the Company's products have been developed for the Microsoft Windows 3.1,
Windows 95, Windows 98 and Windows NT operating systems and are marketed under
the Visio brand. The Company's primary products are Visio Standard, Visio
Technical, Visio Professional and IntelliCAD(R) 98. The Company's first product,
Visio Standard, which shipped in November 1992, began creating a new market for
business diagramming. The Company shipped its second major product, Visio
Technical, for technical drawing, in November 1994. The Company introduced its
third significant product in January 1997, Visio Professional, for information
systems and network design and documentation. The company introduced its most
recent product in March 1998, IntelliCAD 98, for the computer aided drafting
market.
When used in this discussion, the words "expects," "believes,"
"anticipates" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Factors
which could affect the Company's financial results and cause such results to
differ materially from quarter to quarter include but are not limited to
fluctuations in quarterly performance, dependence on other products, including
Microsoft Windows, competition in the business drawing and diagramming software
market, timing and customer acceptance of new products, the Company's ability to
manage growth and integrate acquired technology, potential changes in licensing
and marketing methods and changes in general economic conditions. Additional
information concerning these and other risks is described in the "Certain Risk
Factors that may Impact Future Results of Operations" section of the Company's
Form 10-K for the fiscal year ended September 30, 1997, and, from time to time,
in other reports filed by the Company with the Securities and Exchange
Commission. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
- ------------------
VISIO and IntelliCAD are registered trademarks of Visio Corporation.
10
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth statement of income data as a percentage of
revenues for the fiscal periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues.......................................... 100.0% 100.0% 100.0% 100.0%
Cost of revenues.................................. 9.3 10.6 9.2 10.4
----- ----- ----- -----
Gross profit...................................... 90.7 89.4 90.8 89.6
----- ----- ----- -----
Operating expenses:
Research and development......................... 15.3 16.2 15.8 15.1
Sales and marketing.............................. 41.3 38.7 41.2 39.2
General and administrative....................... 6.9 7.3 7.1 7.4
Acquired technology.............................. 2.2 13.8 6.7 15.0
----- ----- ----- -----
Total operating expenses.......................... 65.7 76.0 70.8 76.7
----- ----- ----- -----
Operating income.................................. 25.0 13.4 20.0 12.9
Interest and other income, net.................... 2.8 3.8 3.1 3.2
----- ----- ----- -----
Income before income taxes........................ 27.8 17.2 23.1 16.1
Provision for income taxes........................ 7.2 4.5 6.0 4.2
----- ----- ----- -----
Net income........................................ 20.6% 12.7% 17.1% 11.9%
===== ===== ===== =====
</TABLE>
REVENUES
Revenues include the license of software products, maintenance and support
contracts, net of reserves for estimated future returns and allowances. License
revenues are derived from packaged software products, volume licenses,
international royalties and certain OEM arrangements. The Company periodically
upgrades its products. Revenues from upgrades are cyclical and are typically
highest in the periods of and immediately following an upgrade. The last
significant upgrade occurred in August 1997 where the Company's three primary
products Visio Standard, Visio Technical and Visio Professional were upgraded to
version 5.0.
Revenues for the third quarter of fiscal 1998 increased 70% over the same
quarter in the prior year. Revenues for the nine months ended June 30, 1998
increased 76% over the comparable prior year period. The increase in revenues
was due primarily to sales volume growth across product groups, distribution
channels and geographic regions.
11
<PAGE>
PRODUCT GROUPS:
The following table sets forth revenues by product group with the
corresponding percentage of total revenues and the year-to-year percentage
change for the fiscal periods indicated. Prior year's figures have been
restated for comparability.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------------------
1998 1997 CHANGE
-------------- -------------- --------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Revenues:
Business Diagramming................................. $11,561 26.4% $11,042 42.8% 4.7%
Technical Drawing.................................... 10,753 24.6 7,309 28.3 47.1%
IT Design and Documentation.......................... 21,434 49.0 7,454 28.9 187.6%
------- ----- ------- ----- -----
Total revenues................................... $43,748 100.0% $25,805 100.0% 69.5%
======= ===== ======= ===== =====
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
-----------------------------------------
1998 1997 CHANGE
-------------- -------------- --------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Revenues:
Business Diagramming................................. $ 35,220 29.2% $33,648 49.2% 4.7%
Technical Drawing.................................... 28,483 23.7 21,836 32.0 30.4%
IT Design and Documentation.......................... 56,739 47.1 12,867 18.8 341.0%
-------- ----- ------- ----- -----
Total revenues................................... $120,442 100.0% $68,351 100.0% 76.2%
======== ===== ======= ===== =====
</TABLE>
The Company classifies its products in the following product groups: Visio
Standard and Visio Maps in the Business Diagramming product group, Visio
Technical and IntelliCAD 98 in the Technical Drawing product group, and Visio
Professional, Visio Business Modeler and Visio Network Equipment in the IT
Design and Documentation product group.
The Company believes that the percentage growth in the Business Diagramming
product group has been impacted by cannibalization from Visio Professional. The
Company believes that customers who may otherwise have purchased Visio Standard
are choosing Visio Professional for its added features and content. Many Visio
Standard customers in the past were information technology professionals who can
now choose Visio Professional that provides them with more of the functionality
they need.
The growth in the Technical Drawing product group was primarily due to
IntelliCAD 98 that was introduced in March 1998. Revenues from IntelliCAD 98
were approximately $3.0 million or 28% of Technical Drawing revenues in the
quarter ended June 30, 1998. The Company believes that the percentage growth in
the Technical Drawing product group has also been impacted by cannibalization
from Visio Professional. Prior to the release of Visio Professional, Visio
Technical had been marketed to the IT professional as the solution for network
diagramming.
Visio Professional, the Company's first significant product in the IT
Design and Documentation product group, significantly impacted the revenue mix
within the product groups for the quarter and nine months ended June 30, 1998.
Since being introduced in the second quarter of fiscal 1997, Visio Professional
has experienced significant growth as the product has been accepted as a viable
solution for IT professionals in the design and documentation of their networks,
databases, software applications and web sites. Also contributing to the growth
of Visio Professional is the growth of the IT design and documentation market as
a whole.
12
<PAGE>
SALES CHANNELS:
The following table sets forth revenues by sales channel with the
corresponding percentage of total revenues and the year-to-year percentage
change for the fiscal periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------------------
1998 1997 CHANGE
-------------- -------------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Distribution.............................. $29,901 68.3% $19,264 74.7% 55.2%
Direct.................................... 2,614 6.0 1,424 5.5 83.6%
Volume Licensing.......................... 11,218 25.6 4,775 18.5 134.9%
OEM....................................... 15 0.1 342 1.3 (95.6)%
------- ----- ------- ----- -----
Total revenues........................ $43,748 100.0% $25,805 100.0% 69.5%
======= ===== ======= ===== =====
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
-----------------------------------------
1998 1997 CHANGE
-------------- -------------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Distribution.............................. $ 84,179 69.9% $50,798 74.3% 65.7%
Direct.................................... 9,259 7.7 4,558 6.7 103.1%
Volume Licensing.......................... 26,892 22.3 12,167 17.8 121.0%
OEM....................................... 112 0.1 828 1.2 (86.5)%
-------- ----- ------- ----- -----
Total revenues........................ $120,442 100.0% $68,351 100.0% 76.2%
======== ===== ======= ===== =====
</TABLE>
Visio classifies its revenues in four sales channels: "Distribution,"
"Direct," "Volume Licensing," and "OEM." Distribution revenues represent sales
of packaged products through national distributors and corporate, retail and
mail order resellers. Direct revenues represent sales of packaged products
directly by the Company, including upgrades, generally to end users responding
to advertising or marketing promotions. Volume Licensing revenues are derived
from volume licenses, which are generally administered through corporate
resellers after the Company's sales staff has negotiated the sale. The sales
cycle for a volume license can extend up to eighteen months on significant
volume licenses as organizations can require extensive time to evaluate and
consider a large-scale implementation. Volume Licensing revenues usually do not
include any significant amount of packaged goods, but do include maintenance and
support revenues, which are priced separately and recognized over the lives of
the contracts. OEM revenues include licenses of Visio products to hardware and
software manufacturers for bundling arrangements. OEM revenues include packaged
product sales, as well as royalty payments with no associated product costs.
Growth in absolute terms in both the Distribution and Direct channel was
primarily driven by the strength of the IT Design and Documentation product
group as well as revenue from the version 5.0 upgrade. Volume Licensing channel
revenues grew 135% for the three month period ended June 30, 1998, over the
comparable period in fiscal 1997. This strong growth reflects continued
investment in the corporate sales force and the Volume Licensing programs. The
company has increased its staff in the corporate sales department from 31 at
June 30, 1997 to 62 at June 30, 1998.
13
<PAGE>
GEOGRAPHY:
The following table sets forth revenues by geography with the corresponding
percentage of total revenues and the year-to-year percentage change for the
fiscal periods indicated.
THREE MONTHS ENDED JUNE 30,
-----------------------------------------
1998 1997 CHANGE
-------------- -------------- ------
(DOLLARS IN THOUSANDS)
Revenues:
North America.................. $27,047 61.8% $17,039 66.0% 58.7%
Europe......................... 10,355 23.7 5,533 21.5 87.1%
Rest of World.................. 6,346 14.5 3,233 12.5 96.3%
------- ----- ------- ----- ----
Total international...... 16,701 38.2 8,766 34.0 90.5%
------- ----- ------- ----- ----
Total revenues............. $43,748 100.0% $25,805 100.0% 69.5%
======= ===== ======= ===== ====
NINE MONTHS ENDED JUNE 30,
-----------------------------------------
1998 1997 CHANGE
-------------- -------------- ------
(DOLLARS IN THOUSANDS)
Revenues:
North America.................. $ 70,396 58.4% $42,841 62.7% 64.3%
Europe......................... 30,600 25.4 15,756 23.0 94.2%
Rest of World.................. 19,446 16.2 9,754 14.3 99.4%
-------- ----- ------- ----- ----
Total international...... 50,046 41.6 25,510 37.3 96.2%
-------- ----- ------- ----- ----
Total revenues............. $120,442 100.0% $68,351 100.0% 76.2%
======== ===== ======= ===== ====
Revenues in the U.S. and Canada for the quarter ended June 30, 1998
increased in absolute terms over the comparable period of fiscal 1997 primarily
due to the growth of the IT Design and Documentation product group, the upgrade
to version 5.0 and the increase in Volume Licensing. International revenues for
the quarter ended June 30, 1998, increased in absolute terms and as a percentage
of total revenues over the comparable period of fiscal 1997, primarily due to
the growth of the IT Design and Documentation product group, the upgrade to
version 5.0, an increase in Volume Licensing and continued investment in
international markets. For the quarter and nine months ended June 30, 1998, the
growth in Rest of World was partially offset by general weakened economic
conditions and foreign currency fluctuations in Japan and Southeast Asia. These
economic and currency conditions may continue to negatively impact revenue and
operating results in the Rest of World region in upcoming periods.
COST OF REVENUES
The following table sets forth cost of revenues with the corresponding
percentage of revenues and year-to-year percentage change for the fiscal periods
indicated.
JUNE 30,
-------------------------------------------------
1998 1997 CHANGE
-------------- ----------------- ------
(DOLLARS IN THOUSANDS)
Three months ended......... $ 4,080 9.3% $2,731 10.6% 49.4%
Nine months ended.......... $11,037 9.2% $7,099 10.4% 55.5%
Cost of revenues varies with the mix of Distribution, Direct, Volume
Licensing and OEM revenues, due to relative variations in the standard product
costs associated with each revenue category, and with fluctuations in
14
<PAGE>
period costs. Standard product costs consist primarily of documentation,
packaging, media duplication, assembly and material management costs. Period
costs consist primarily of certain royalties, technical support, production
management, freight and fulfillment, amortization of capitalized technology,
standard material variances and inventory valuation adjustments.
Standard costs associated with each revenue category are primarily
determined by the amount of packaged product delivered in that revenue category.
Accordingly, most of the Company's standard costs are associated with
Distribution and Direct revenues, the majority of which are derived from sales
of packaged products. Volume Licensing revenues have the lowest standard cost
because they generally do not include any substantive amount of packaged goods.
The decrease in cost of revenues as a percentage of revenues for the three
and nine month periods of fiscal 1998 over the comparable periods of fiscal 1997
resulted from the increased use of lower cost CD-ROM media and other raw
material cost reductions, an increase in the percentage of revenue from Visio
Professional, Visio Technical, and IntelliCAD 98 which have lower standard
product costs as a percentage of revenues than Visio Standard and increased
Volume Licensing revenues which have little or no standard product costs. These
decreases were partially offset by increased royalty costs for licensed
technology including Visual Basic for Applications (VBA) from Microsoft
Corporation and increased amortization costs of capitalized technology. The
Company expects its cost of revenues as a percentage of revenues to increase due
to expected increases in technical support costs associated with the Company's
new computer-aided drafting product, IntelliCAD 98 as well as support for other
future products of more complexity, and increased amortization of Capitalized
Technology from recent acquisitions.
RESEARCH AND DEVELOPMENT
The following table sets forth research and development expenses with the
corresponding percentage of revenues and year-to-year percentage change for the
fiscal periods indicated.
<TABLE>
<CAPTION>
JUNE 30,
-------------------------------------------------
1998 1997 CHANGE
-------------- ----------------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Three months ended......... $ 6,708 15.3% $ 4,175 16.2% 60.7%
Nine months ended.......... $19,050 15.8% $10,339 15.1% 84.3%
</TABLE>
Research and development expenses consist primarily of personnel, contract
services, occupancy and equipment costs required to conduct the Company's
product development efforts. Product development includes product engineering,
documentation development, localization, usability testing, quality assurance
and advanced research and development costs. Product localization costs and lump
sum payments for technology such as file converters are capitalized and
amortized to development over the lesser of the useful life or 18 months.
Research and development expenses are charged to operations as incurred. The
Company has not capitalized certain software development costs subsequent to the
establishment of technological feasibility, as these costs have been immaterial.
Increases in research and development expenses in absolute terms for the
three and nine month periods ended June 30, 1998 over the corresponding periods
of fiscal 1997 resulted primarily from planned additions to the Company's
development organization and the addition of engineering personnel that joined
the Company as part of the acquisitions completed during these time periods.
The Company believes it will be necessary to continue to increase research and
development spending on an absolute basis in order to continue to maintain a
competitive technological position as well as continue to expand its product
line and the number of localized language versions.
15
<PAGE>
SALES AND MARKETING
The following table sets forth sales and marketing expenses with the
corresponding percentage of revenues and year-to-year percentage change for the
fiscal periods indicated.
<TABLE>
<CAPTION>
JUNE 30,
-------------------------------------------------------------------------
1998 1997 CHANGE
------------------------ -------------------------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Three months ended......... $18,072 41.3% $ 9,988 38.7% 80.9%
Nine months ended.......... $49,616 41.2% $26,791 39.2% 85.2%
</TABLE>
Sales and marketing expenses have increased in absolute terms as the
Company continues building its worldwide sales, marketing and customer service
infrastructure. The increase in sales and marketing expenses in absolute terms
and as a percentage of revenue for the three and nine month periods ended June
30, 1998 over the comparable periods in fiscal 1997 was primarily due to
expansion in international markets, increased product marketing costs to support
new products and upgrades to existing products and investment in the corporate
sales force and the Volume Licensing programs.
The Company believes substantial spending on marketing awareness and
corporate sales staffing is essential to achieve revenue growth and to maintain
and enhance the Company's competitive position. Accordingly, Visio expects sales
and marketing expenses will continue to increase in absolute terms over time.
GENERAL AND ADMINISTRATIVE
The following table sets forth general and administrative expenses with the
corresponding percentage of revenues and year-to-year percentage change for the
fiscal periods indicated.
<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------------------------------------
1998 1997 CHANGE
------------------------ -------------------------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Three months ended......... $2,999 6.9% $1,899 7.3% 57.9%
Nine months ended.......... $8,601 7.1% $5,081 7.4% 69.3%
</TABLE>
General and administrative expenses increased in absolute terms in both the
third quarter and nine months of fiscal 1998 over the corresponding periods of
fiscal 1997 primarily due to increased staffing to support the Company's growth
as well as growth in Visio's operational headquarters in the Asia Pacific
region. The Company expects to show increased general and administrative
expenses in absolute terms in future periods for infrastructure to support the
Company's revenue growth.
16
<PAGE>
ACQUIRED TECHNOLOGY
The following table sets forth acquired technology expenses related to
recent acquisitions with the corresponding percentage of revenues and year-to-
year percentage change for the fiscal periods indicated.
<TABLE>
<CAPTION>
JUNE 30,
-------------------------------------------------------------------------
1998 1997 CHANGE
------------------------ -------------------------- ------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Three months ended......... $ 976 2.2% $ 3,558 13.8% (72.6)%
Nine months ended.......... $8,066 6.7% $10,255 15.0% (21.3)%
</TABLE>
On January 22, 1998, the Company acquired MarComp Inc. ("MarComp"), a
privately held provider of programming toolkits for access to Autodesk's AutoCAD
.dwg and .dxf file formats, located in Parkton, Maryland. Under the terms of the
merger agreement, Visio exchanged 50,014 shares of its unregistered common stock
for all of the outstanding shares of MarComp. The transaction was accounted for
as a pooling of interests and due to the immateriality of the amounts involved,
prior period financial statements have not been restated. The transaction
resulted in an increase in equity of $100,000 primarily due to the acquisition
of cash and accounts receivable from MarComp and resulted in approximately
$100,000 in acquisition related costs in the quarter ended March 31, 1998.
On February 10, 1998, the Company acquired certain technology and assets of
InfoModelers, Inc. ("InfoModelers"), a privately held, leading supplier of
database and data warehouse visual design, access and query tools, located in
Bellevue, Washington. Under the terms of the agreement, Visio issued 200,000
shares of its unregistered common stock for accounts receivable, fixed assets,
tax assets and certain technology assets. The transaction was accounted for
using the purchase method and was valued at approximately $7.8 million for
InfoModeler shareholders. This transaction resulted in a total charge to
Acquired Technology of $7.0 million that included $6.8 million for in-process
research and development and $236,000 of acquisition related costs in the
quarter ended March 31, 1998. In addition, the Company recorded approximately
$1.0 million in other balance sheet assets.
On May 5, 1998, the Company acquired certain technology and assets from
Decision Graphics UK Ltd. ("Decision Graphics"), a privately held provider of
computer-aided facilities management (CAFM) software, located in the U.K., for
$688,000. The transaction was accounted for using the purchase method and
resulted in a total charge to Acquired Technology of $729,000 that included
$688,000 for in-process research and development and $41,000 of acquisition
related costs in the quarter ended June 30, 1998.
On June 2, 1998, the Company acquired certain CAD technology, software
products and other assets from Ketiv Technologies Inc. ("Ketiv"), a privately
held provider of architecture, engineering and construction (AEC) software
located in Portland, Oregon, for approximately $2.6 million. The transaction was
accounted for using the purchase method and resulted in Capitalized Technology
of $2.5 million including acquisition related costs and a total charge to
Acquired Technology of $247,000 that included $235,000 for in-process research
and development and $12,000 of acquisition related costs. The Capitalized
Technology is being amortized on a straight-line basis over five years.
On February 21, 1997, the Company acquired certain technology and assets of
Boomerang Technology Inc. ("Boomerang"), a privately held developer of Autodesk
AutoCAD-compatible software, located in San Diego, California, for $6.7 million.
This transaction resulted in a charge to Acquired Technology of $6.7 million for
in-process research and development.
17
<PAGE>
On May 1, 1997, the Company acquired certain assets of Freedom Solutions
Group, Inc. d.b.a. SysDraw Software Company ("SysDraw Software Company"), a
privately held network design and documentation solutions provider, located in
Lombard, Illinois. Under the terms of the agreement, the acquisition price
included $5.5 million in cash plus the issuance of a $1.0 million note payable
due August 1998. Visio is required to pay up to $1.5 million of additional
consideration if revenues of the acquired products meet certain performance
goals within three years of the acquisition. The transaction was accounted for
using the purchase method and resulted in Capitalized Technology of $3.1
million, other balance sheet assets of $100,000 and a charge to Acquired
Technology of $3.6 million that included $3.3 million for in-process research
and development and $300,000 of acquisition related costs. The Capitalized
Technology is being amortized on a straight-line basis over five years.
INTEREST AND OTHER INCOME, NET
Interest income for the third quarter of fiscal 1998 of $1.2 million
increased 25% over the third quarter of fiscal 1997. Interest income for the
nine months ended June 30, 1998 of $3.7 million increased 68% over the
comparable period of fiscal 1997. The increase in fiscal 1998 was primarily due
to a larger cash and short-term investment balance. Other income includes grant
income from the Industrial Development Agency of Ireland and foreign currency
transaction gains and losses. Visio currently hedges certain foreign exchange
transaction exposures. To the extent the Company has assets and liabilities
denominated in foreign currencies that are not hedged, the Company is subject to
foreign currency gains and losses.
INCOME TAXES
The Company's effective income tax rate was 26% for both the fiscal 1998
and fiscal 1997 periods.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had cash and short-term investments totaling
$105.9 million, an increase of $26.3 million from September 30, 1997. The
increase in cash and short-term investments was due primarily to cash generated
from operations and cash proceeds from the issuance of shares through the
employee stock option program.
At June 30, 1998, the Company's principal commitments consisted primarily
of leases on its facilities. The Company's capital expenditures totaled $5.3
million in the first nine months of fiscal 1998. At June 30,1998, the Company
had commitments for approximately $8.0 million to be paid over the next nine
months related to tenant improvements associated with the Company's new
headquarters building. The Company believes that its current cash balances and
cash flows from operations will be sufficient to meet its working capital and
capital expenditure requirements for at least the next 12 months.
From time to time, the Company evaluates potential acquisitions of
businesses, products or technologies that complement the Company's business. At
June 30, 1998, except for the acquisition of Kaspia Systems, Inc. ("Kaspia")
described in "Subsequest Events", the Company had no material agreements or
commitments with respect to any such transactions.
18
<PAGE>
SUBSEQUENT EVENTS
On July 10, 1998, the Company acquired Kaspia, a privately held developer
of fully automated enterprise-network audit functionality, including discovery,
monitoring and reporting software, located in Beaverton, Oregon. Under the terms
of the merger agreement, Visio acquired all of Kaspia's outstanding stock for
482,994 shares of Visio common stock, valued at approximately $23.3 million for
Kaspia shareholders. This transaction will be accounted for as a pooling of
interests. The transaction resulted in acquisition related charges of
approximately $1.2 million that will be expensed in the quarter ended September
30, 1998. See "Notes to Financial Statements -- 5. Subsequent Events."
RECENTLY ISSUED ACCOUNTING STANDARDS
The Accounting Standards Executive Committee has issued Statement of
Position 97-2, "Software Revenue Recognition" ("SOP 97-2"), which supersedes SOP
91-1, the former literature on software revenue recognition. This Statement will
be effective beginning in fiscal year 1999. The Company believes it is
substantially in compliance with the provisions of SOP 97-2, and its adoption is
not expected to have a material impact on the financial position or results of
operations of the Company.
In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income." Statement No. 130 establishes standards for reporting and displaying
comprehensive income and its components in the financial statements which
requires the Company to display an amount representing total comprehensive
income for the period in its financial statements. The Company will be required
to implement Statement No. 130 for its fiscal year 1999.
In June 1997, the FASB issued Statement No. 131, "Disclosures About
Segments of an Enterprise and Related Information." Statement No. 131
establishes standards for the manner in which public companies report
information about operating segments in annual and interim financial statements.
The Company will be required to implement Statement No. 131 for its fiscal year
1999.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which is required to be adopted in years
beginning after June 15, 1999. Statement No. 133 provides a comprehensive and
consistent standard for the recognition and measurement of derivatives and
hedging activities. The Company currently hedges certain foreign exchange
transaction exposures. Management has not yet determined what the effect of
Statement No. 133 will be on the earnings and financial position of the Company.
19
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
In accordance with the Company's Bylaws, a shareholder proposing to
transact business at the Company's 1999 annual meeting must provide written
notice of such proposal, in the manner provided by the Company's Bylaws, not
fewer than 60 or more than 90 days prior to the date of such annual meeting (or,
if the Company provides less than 60 days notice of such meeting, no later than
10 days after the date of the Company's notice). In addition, if the Company
receives notice of a shareholder proposal after November 25, 1998 the persons
named as proxies in such proxy statement and proxy will have discretionary
authority to vote on such shareholder proposal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
2.1 Agreement and Plan of Merger by and among Visio
Corporation, Kaspia Systems, Inc., VMS-1, Inc. and the
stockholders of Kaspia named therein, dated July 10, 1998
(filed as Exhibit 2.1 to the registrant's Current Report on
Form 8-K dated July 10, 1998 and incorporated herein by
reference).
4.2 Investor Rights Agreement between Visio Corporation and the
investors named therein, dated July 10, 1998 (filed as
Exhibit 4.1 to the registrant's Current Report on Form 8-K
dated July 10, 1998 and incorporated herein by reference).
27.1 Financial Data Schedule which is submitted electronically
to the Securities and Exchange Commission for information
purposes only and not filed.
(b) Reports on Form 8-K:
The Company filed Form 8-K dated July 10, 1988, disclosing the
Agreement and Plan of Merger by and among Visio Corporation,
Kaspia Systems, Inc., VMS-1, Inc. and the stockholders of
Kaspia, dated July 10, 1998.
ITEMS 1, 2, 3, AND 4 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
20
<PAGE>
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: August 17, 1998 VISIO CORPORATION
By: /s/ STEVE M. GORDON
-------------------------------------------------
Steve M. Gordon
Senior Vice President, Finance and Administration;
Chief Financial Officer
(Principal Financial and Accounting Officer and Duly
Authorized Officer)
21
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
2.1 Agreement and Plan of Merger by and among Visio
Corporation, Kaspia Systems, Inc., VMS-1, Inc. and
the stockholders of Kaspia named therein, dated July 10,
1998 (filed as Exhibit 2.1 to the registrant's Current
Report on Form 8-K dated July 10, 1998 and incorporated
herein by reference). N/A
4.2 Investor Rights Agreement between Visio Corporation and
the investors named therein, dated July 10, 1998
(filed as Exhibit 4.1 to the registrant's Current Report
on Form 8-K dated July 10, 1998 and incorporated herein
by reference). N/A
27.1 Financial Data Schedule which is submitted
electronically to the Securities and Exchange Commission
for information purposes only and not filed. N/A
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 105,930
<SECURITIES> 0
<RECEIVABLES> 20,593
<ALLOWANCES> 7,623
<INVENTORY> 1,085
<CURRENT-ASSETS> 134,963
<PP&E> 18,727
<DEPRECIATION> 9,226
<TOTAL-ASSETS> 149,440
<CURRENT-LIABILITIES> 36,937
<BONDS> 0
0
0
<COMMON> 67,816
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 149,440
<SALES> 120,442
<TOTAL-REVENUES> 120,442
<CGS> 11,037
<TOTAL-COSTS> 11,037
<OTHER-EXPENSES> 85,333
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 27,811
<INCOME-TAX> 7,232
<INCOME-CONTINUING> 20,579
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,579
<EPS-PRIMARY> .72
<EPS-DILUTED> .66
</TABLE>
