<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[MARK ONE]
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------------ ------------
COMMISSION FILE NUMBER 0-26298
HARBINGER CORPORATION
(Exact name of registrant as specified in Its charter)
GEORGIA 58-1817306
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1055 LENOX PARK BOULEVARD
ATLANTA, GEORGIA 30319
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 841-4334
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
The number of shares of the issuer's class of capital stock outstanding as of
July 31, 1996, the latest practicable date, is as follows: 10,772,125 shares
of Common Stock, $.0001 par value.
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FORM 10-Q
PAGE 1 OF 17
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HARBINGER CORPORATION
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
---------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - (unaudited) June 30, 1996
and December 31, 1995. 3
Statements of Operations (unaudited) -
Three months and six months ended June 30, 1996 and 1995 4
Statements of Cash Flows (unaudited) -
Six months ended June 30, 1996 and 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
PART III. SIGNATURES 14
</TABLE>
FORM 10-Q
PAGE 2 OF 17
<PAGE> 3
Item 1. Financial Statements
HARBINGER CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
------------- ------------
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,305,000 $ 11,918,000
Accounts receivable, less allowances for returns and
doubtful accounts of $894,000 at June 30, 1996 and
$537,000 at December 31, 1995 8,457,000 5,624,000
Royalty receivable 2,515,000 1,382,000
Deferred income taxes 999,000 999,000
Due from joint ventures 566,000 566,000
Other current assets 814,000 283,000
------------ ------------
Total current assets 18,656,000 20,772,000
------------ ------------
Property and equipment, less accumulated depreciation and amortization 5,204,000 3,772,000
Investments in joint ventures 4,650,000 7,480,000
Intangible assets, less accumulated amortization 11,776,000 6,298,000
Deferred income taxes 1,843,000 1,938,000
------------ ------------
$ 42,129,000 $ 40,260,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,587,000 $ 1,335,000
Accrued expenses 5,456,000 2,759,000
Deferred revenues 3,526,000 2,358,000
Line of Credit 589,000 -
Note payable 557,000 -
------------ ------------
Total current liabilities 11,715,000 6,452,000
------------ ------------
Redeemable preferred stock:
Zero Coupon, $1.00 redemption value; 4,000,000 shares issued
and outstanding at June 30, 1996 and December 31, 1995 - -
------------ ------------
Total redeemable preferred stock - -
------------ ------------
Puttable common stock $0.0001 par value; 550,000 shares
issued and outstanding 4,675,000 4,675,000
Shareholders' equity:
Preferred stock, including redeemable preferred stock;
20,000,000 shares authorized --
Series C, $10.00 par value; 250,000 shares issued and
outstanding at December 31, 1995 - 2,485,000
Common stock, $0.0001 par value; 100,000,000 shares
authorized, 10,218,162 at June 30, 1996 and
9,690,684 shares issued and outstanding at December 31, 1995 1,000 1,000
Additional paid-in capital 39,801,000 32,201,000
Accumulated deficit (14,063,000) (5,554,000)
------------ ------------
Total shareholders' equity 25,739,000 29,133,000
------------ ------------
$ 42,129,000 $40,260,000
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements
FORM 10-Q
PAGE 3 OF 17
<PAGE> 4
HARBINGER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------------- -------------------------------
June 30, June 30,
--------------------------------- -------------------------------
1996 1995 1996 1995
--------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Services $ 7,122,000 $ 3,842,000 $ 12,200,000 $ 7,260,000
Software 2,959,000 1,446,000 5,044,000 2,570,000
-------------- --------------- -------------- --------------
Total revenues 10,081,000 5,288,000 17,244,000 9,830,000
-------------- --------------- -------------- --------------
Direct costs:
Services 2,094,000 973,000 3,391,000 1,882,000
Software 521,000 260,000 1,006,000 475,000
-------------- --------------- -------------- --------------
Total direct costs 2,615,000 1,233,000 4,397,000 2,357,000
-------------- --------------- -------------- --------------
Gross margin 7,466,000 4,055,000 12,847,000 7,473,000
-------------- --------------- -------------- --------------
Operating costs:
Selling and marketing 2,195,000 1,217,000 3,683,000 2,180,000
General and administrative 1,884,000 1,171,000 3,400,000 2,202,000
Depreciation and amortization 511,000 172,000 765,000 322,000
Product development 1,332,000 879,000 2,251,000 1,681,000
Charge for purchased in-process
product development - - 8,350,000 -
-------------- --------------- -------------- --------------
Total operating costs 5,922,000 3,439,000 18,449,000 6,385,000
-------------- --------------- -------------- --------------
Operating income (loss) 1,544,000 616,000 (5,602,000) 1,088,000
Interest expense (income), net (82,000) 12,000 (184,000) (4,000)
Equity in losses of joint ventures 1,650,000 185,000 2,829,000 326,000
-------------- --------------- -------------- --------------
Income (loss) before income tax expense (24,000) 419,000 (8,247,000) 766,000
Income tax expense 83,000 159,000 132,000 291,000
-------------- --------------- -------------- --------------
Net income (loss) (107,000) 260,000 (8,379,000) 475,000
Preferred stock dividends - (50,000) (28,000) (99,000)
-------------- --------------- -------------- --------------
Net income (loss) applicable to common
shareholders $ (107,000) $ 210,000 $ (8,407,000) $ 376,000
============== =============== ============== ==============
Net income (loss) per share of common stock $ (0.01) $ 0.03 $ (0.80) $ 0.05
============== =============== ============== ==============
Weighted average common and
common equivalent shares outstanding 10,741,000 7,913,000 10,539,000 7,911,000
============== =============== ============== ==============
</TABLE>
See accompanying notes to consolidated financial statements
FORM 10-Q
PAGE 4 OF 17
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HARBINGER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
June 30,
-----------------------------
1996 1995
-------------- -------------
<S> <C> <C>
Cash flows from operating activities: $ 890,000 $ 1,080,000
------------- ------------
Cash flows from investing activities:
Purchases of property and equipment (1,573,000) (1,357,000)
Additions to software development costs (1,321,000) (93,000)
Investment in acquisitions (4,605,000) -
Investment in joint ventures - (2,363,000)
------------- ------------
Net cash used in investing activities (7,499,000) (3,813,000)
------------- ------------
Cash flows from financing activities
Proceeds from short-term borrowings - 1,983,000
Repayments under credit arrangements (763,000) -
Dividends paid on preferred stock (29,000) (99,000)
Exercise of stock options and warrants 532,000 31,000
Repayment of note payable - (3,325,000)
------------- ------------
Net cash used in financing activities (260,000) (1,410,000)
------------- ------------
Net increase (decrease) in cash and cash equivalents (6,869,000) (4,143,000)
Cash and cash equivalents at beginning of period 11,918,000 4,642,000
Effect of exchange rates on cash (100,000) -
Cash received from acquisitions 356,000 -
------------- ------------
Cash and cash equivalents at end of period $ 5,305,000 $ 499,000
============= ============
Supplemental disclosure of cash paid for interest $ 22,000 $ -
============= ============
Supplemental disclosure of noncash investing activities:
Acquisition of technology and distribution agreement in exchange
for common stock $ - $ 4,675,000
============= ============
Conversion of Series C preferred stock to common stock $ 2,488,000 $ -
============= ============
Acquisition of businesses in exchange for common stock, notes and
assumption of liabilities $ 10,795,000 $ -
============= ============
</TABLE>
See accompanying notes to consolidated financial statements
FORM 10-Q
PAGE 5 OF 17
<PAGE> 6
HARBINGER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The financial information included herein is unaudited; however, the
information reflects all adjustments (consisting solely of normal recurring
adjustments) that are, in the opinion of management, necessary to a fair
presentation of the financial position, results of operations, and cash flows
for the interim periods. Operating results for the three and six months ended
June 30, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further information, refer
to the financial statements and footnotes thereto included in Harbinger
Corporation's 10-K for the year ended December 31, 1995.
2. ACQUISITIONS
Effective March 31, 1996, the Company acquired all of the common stock of
NTEX Holding, B.V. ("NTEX"), a Dutch corporation based in Rotterdam, The
Netherlands for $3,195,000 in cash, the issuance of 71,852 shares of the
Company's common stock and warrants to purchase up to 12,500 shares of the
Company's stock at $17.25 per share. The Company recorded the acquisition,
which was completed on April 4, 1996, using the purchase method of accounting
with $4,449,000 of the purchase price allocated to in-process product
development and charged to the consolidated statement of operations on March
31, 1996 and $2,960,000 allocated to goodwill and other intangibles.
Effective March 31, 1996, the Company acquired all of the common stock of
INOVIS GmbH & Co. ("INOVIS"), a German corporation based in Karlsruhe for
$1,409,000 in cash, the issuance of 140,184 shares of the Company's common
stock and warrants to purchase up to 20,000 shares of the Company's stock at
$15.25 per share. The Company recorded the acquisition, which was completed on
April 19, 1996, using the purchase method of accounting with $3,300,000 of
the purchase price allocated to in-process product development and charged to
the consolidated statement of operations on March 31, 1996 and $1,723,000
allocated to goodwill and other intangibles.
FORM 10-Q
PAGE 6 OF 17
<PAGE> 7
Effective March 31, 1996, the Company acquired the remaining outstanding
common stock of Harbinger N.V., a Dutch corporation based in Hoofddorp, the
Netherlands for the issuance of 38,710 shares of the Company's common stock
through a B type reorganization. The Company recorded the acquisition, which
was completed on April 20, 1996, using the purchase method of accounting with
$300,000 of the purchase price allocated to in-process product development and
charged to the consolidated statement of operations on March 31, 1996 and
$492,000 allocated to goodwill and other intangibles.
The balance sheets of the above companies have been included in the
Company's consolidated balance sheet as of June 30, 1996 and the results of
operations of the acquired companies have been included in the Company's
consolidated statements of operations as of April 1, 1996.
The pro-forma amounts presented below represent the results of operations
for the three and six months ended June 30, 1996 and 1995 adjusted to give
effect to the acquisitions described above as if each of the acquisitions had
been completed as of January 1, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------- --------------------------------
June 30, June 30,
-------------------------------- --------------------------------
1996 1995 1996 1995
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $10,081,000 $6,678,000 $18,634,000 $12,611,000
Net income applicable to
common shareholders (107,000) (523,000) (9,140,000) (1,090,000)
Net income per share of
common stock $ (0.01) $ (0.07) $ (0.86) $ (0.15)
Weighted average outstanding
common shares and
common share equivalents 10,741,000 7,657,000 10,664,000 7,655,000
</TABLE>
The unaudited proforma consolidated results of operations included above
do not necessarily represent results which would have occurred if the
acquisitions had taken place on the dates indicated nor are they necessarily
indicative of the results of future operations.
FORM 10-Q
PAGE 7 OF 17
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3. SIGNIFICANT SUBSIDIARY
In December 1994, the Company founded Harbinger NET Services, LLC ("HNS")
to develop products and services to facilitate electronic commerce using the
Internet. This investment is being accounted for using the equity method.
Presented below is summarized income statement information relating to
HNS:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30,
------------------------ ------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(in $000's) (in $000's) (in $000's) (in $000's)
<S> <C> <C> <C> <C>
Revenues 4 -0- 4 -0-
Net Loss 1,779 201 2,975 299
Harbinger's Share of Net Loss 1,650 112 2,760 163
</TABLE>
4. SHAREHOLDERS' EQUITY
On March 1, 1996 the Company exchanged 140,692 shares of common stock for
all outstanding shares of the Company's Series C preferred stock.
In April 1996 the Company issued 250,746 shares of the Company's common
stock as partial consideration related to the Company's (i) acquisition of
NTEX, (ii) the acquisition of INOVIS and (iii) the acquisition and plan of
reorganization of HNV. (See Note 2.)
FORM 10-Q
PAGE 8 OF 17
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto included elsewhere herein and the
Company's Form 10-K for the year ending December 31, 1995.
RESULTS OF OPERATIONS
REVENUES
Total revenues increased 75% from $9.8 million in the six months ended
June 30, 1995 to $17.2 million in the same period in 1996. Revenues for
services increased 68% from $7.3 million in the six months ended June 30, 1995
to $12.2 million in the same period in 1996, reflecting the revenues from the
acquisitions completed at the end of the first quarter 1996, an increase in the
number of subscribers utilizing the Company's Value Added Network ("VAN"), as
well as increases in the average volume of transmissions by subscribers.
Revenues from software maintenance and implementation also increased,
reflecting primarily an increase in the number of customers. Revenue from
software sales increased 96% from $2.6 million in the six months ended June 30,
1995 to $5.0 million in the same period in 1996. This increase primarily
reflects the effect of $2.4 million in royalties for software products licensed
through the System Software Associates, Inc. ("SSA") agreement as well as
increases in business to business software sales, offset by decreases in
Financial EDI software sales and certain other one-time license fees which
occurred in the prior year.
Total revenues increased 91% from $5.3 million in the three months ended
June 30, 1995 to $10.1 million in the same period in 1996. Revenues for
services increased 85% from $3.8 million in the three months ended June 30,
1995 to $7.1 million in the same period in 1996, reflecting the revenues from
the acquisitions completed at the end of the first quarter 1996, an increase in
the number of subscribers utilizing the Company's Value Added Network ("VAN"),
as well as increases in the average volume of transmissions by subscribers.
Revenues from software maintenance and implementation also increased,
reflecting primarily an increase in the number of customers. Revenue from
software sales increased 105% from $1.4 million in the three months ended June
30, 1995 to $3.0 million in the same period in 1996. This increase primarily
reflects the effect of $1.3 million in royalties for software products licensed
through the System Software Associates, Inc. ("SSA") agreement as well as
increases in business to business software sales, offset by decreases in
Financial EDI software sales and certain other one-time license fees which
occurred in the prior year.
FORM 10-Q
PAGE 9 OF 17
<PAGE> 10
DIRECT COSTS
Direct costs for services increased from $1.9 million, or 26% of services
revenues, in the six months ended June 30, 1995, to $3.4 million, or 28% of
services revenues, in the six months ended June 30, 1996. The increase in
direct costs for services, as a percentage of services revenues reflects a
higher mix of lower margin consulting revenue, increased direct costs for
services related costs associated with the Company's European operations and
increased customer service costs to provide a higher level of support to our
customers related to the introduction of a new version of the Company's Windows
product. Direct costs for software increased from $475,000, or 18% of software
revenues, in the six months ended June 30, 1995, to $1.0 million, or 20% of
software revenues, in the six months ended June 30, 1996. The increase in
direct costs for software, as a percentage of software revenues, is primarily
due to increased software amortization, resulting from the SSA agreement.
Direct costs for services increased from $973,000, or 25% of services
revenues, in the three months ended June 30, 1995, to $2.1 million, or 29% of
services revenues, in the three months ended June 30, 1996. The increase in
direct costs for services, as a percentage of services revenues reflects a
higher mix of lower margin consulting revenue, increased direct costs for
services related costs associated with the Company's European operations and
increased customer service costs to provide a higher level of support to our
customers related to the introduction of a new version of the Company's Windows
product. Direct costs for software increased from $260,000, or 18% of software
revenues, in the three months ended June 30, 1995, to $521,000, or 18% of
software revenues, in the three months ended June 30, 1996.
SELLING AND MARKETING
Selling and marketing expenses increased 69% from $2.2 million or 22% of
revenues in the six months ended June 30, 1995 to $3.7 million or 21% of
revenues in the six months ended June 30, 1996.
Selling and marketing expenses increased 80% from $1.2 million or 23% of
revenues in the three months ended June 30, 1995 to $2.2 million or 22% of
revenues in the three months ended June 30, 1996.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased 54% from $2.2 million in the
six months ended June 30, 1995 to $3.4 million in the six months ended June 30,
1996. As a percentage of revenues, these expenses decreased from 22% of
revenues in the six months ended June 30, 1995 to 20% of revenues in the six
months ended June 30, 1996. The decrease as a percentage of revenues reflects
efficiencies associated with expanding the Company's operations and the effect
of increases in software and services revenue.
FORM 10-Q
PAGE 10 OF 17
<PAGE> 11
General and administrative expenses increased 61% from $1.2 million in the
three months ended June 30, 1995 to $1.9 million in the three months ended June
30, 1996. As a percentage of revenues, these expenses decreased from 22% of
revenues in the three months ended June 30, 1995 to 19% of revenues in the
three months ended June 30, 1996. The decrease as a percentage of revenues
reflects efficiencies associated with expanding the Company's operations and
the effect of increases in software and services revenue.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased 138% from $322,000 in the six
months ended June 30, 1995 to $765,000 in the six months ended June 30, 1996.
As a percentage of revenues, these expenses increased from 3.3% of revenues in
the six months ended June 30, 1995 to 4.4% of revenues in the six months ended
June 30, 1996. The increase as a percentage of revenues is primarily the
result of the amortization of the intangible assets related to the acquisitions
completed at the end of the first quarter 1996.
Depreciation and amortization increased 197% from $172,000 in the three
months ended June 30, 1995 to $511,000 in the three months ended June 30, 1996.
As a percentage of revenues, these expenses increased from 3.3% of revenues in
the three months ended June 30, 1995 to 5.1% of revenues in the three months
ended June 30, 1996. The increase as a percentage of revenues is primarily the
result of the amortization of the intangible assets related to the acquisitions
completed at the end of the first quarter 1996.
PRODUCT DEVELOPMENT
Total expenditures for product development, including capitalized software
development costs, increased from $1.8 million in the six months ended June 30,
1995 to $3.6 million in the same period in 1996. This increase reflects the
hiring of additional development personnel, increased product development
resources associated with the SSA Agreement and additional product development
personnel related costs associated with the acquisitions. The Company
capitalized product development costs of $93,000 and $1.3 million,
respectively, in the six months ended June 30, 1995 and the six months ended
June 30, 1996, which represented 5% and 37% of total expenditures for product
development in these respective periods. As a percentage of total revenues,
product development costs decreased from 17% of revenues in the six months
ended June 30, 1995 to 13% of revenues in the six months ended June 30, 1996.
The increase in capitalized development costs between the six months of 1995
and 1996 and the related decrease in software development costs as a percentage
of revenue reflects a higher level of capitalized product development expense
due to development activities on products which had reached technological
feasibility. Amortization of capitalized product development costs is charged
to direct costs of software revenues and totaled $245,000 and $755,000,
respectively, in the six months ended June 30, 1995 and the six months ended
June 30, 1996.
FORM 10-Q
PAGE 11 OF 17
<PAGE> 12
Total expenditures for product development, including capitalized software
development costs, increased from $955,000 in the three months ended June 30,
1995 to $1.8 million in the same period in 1996 reflecting the reasons
mentioned above. The Company capitalized product development costs of $75,000
and $494,000, respectively, in the three months ended June 30, 1995 and the
three months ended June 30, 1996, which represented 8% and 27% of total
expenditures for product development in these respective periods. As a
percentage of total revenues, product development costs decreased from 17% of
revenues in the three months ended June 30, 1995 to 13% of revenues in the
three months ended June 30, 1996. This increase in capitalized development
costs between second quarter 1995 and 1996 and the related decrease in software
development costs as a percentage of revenue reflects a higher level of
capitalized product development expense due to development activities on
products which had reached technological feasibility. Amortization of
capitalized product development cost is charged to direct cost of software
revenues and totaled $124,000 and $377,000, respectively, in the three months
ended June 30, 1995 and the three months ended June 30, 1996.
CHARGE FOR PURCHASED IN-PROCESS PRODUCT DEVELOPMENT
The Company incurred a $8,350,000 charge for acquired research and
development costs during the six months ended June 30, 1996. In connection
with the acquisitions described above, the Company acquired in-process product
development for several software products. Since the Company determined that
certain of the acquired technologies had not reached technological feasibility,
the Company expensed the portion of the purchase price allocable to such
in-process product development. (See Note 2.)
EQUITY IN LOSSES OF JOINT VENTURES
The Company recognized equity in losses of Harbinger NV of $163,000 in the
six months ended June 30, 1995, as compared to a corresponding loss of $69,000
from its investment in Harbinger NV in the six months ended June 30, 1996.
Effective March 31, 1996, the Company acquired the remaining outstanding stock
of Harbinger NV and no longer recognizes losses under the equity method. (See
Note 2.) The equity in losses of Harbinger NET Services, LLC ("HNS") for the
six months ended June 30, 1995 totaled $163,000 as compared to a corresponding
loss of $2.8 million in the six months ended June 30, 1996. This increase
primarily reflects increased activities by HNS related to additional personnel
to support product development and product marketing.
The Company recognized equity in losses of Harbinger NV of $73,000 in the
three months ended June 30, 1995. Effective March 31, 1996, the Company
acquired the remaining outstanding stock of Harbinger NV and no longer
recognizes losses under the equity method. (See Note 2.) The equity in losses
of HNS for the three months ended June 30, 1995 totaled $112,000 as compared to
a corresponding loss of $1.6 million in the three months ended June 30, 1996.
This increase primarily reflects increased activities by HNS related to
additional personnel to support product development and product marketing.
FORM 10-Q
PAGE 12 OF 17
<PAGE> 13
INTEREST INCOME
The Company recorded interest income, net of $184,000 for the six months
ended June 30, 1996 as compared to $4,000 for the six months ended June 30,
1995. This increase is primarily due to the interest earned on the funds
received from the Company's initial public offering in August 1995.
The Company recorded interest income, net of $82,000 for the three months
ended June 30, 1996 as compared to interest expense of $12,000 for the three
months ended June 30, 1995. This increase is primarily due to the interest
earned on the funds received from the Company's initial public offering in
August 1995.
INCOME TAXES
The Company recorded income tax expense of $132,000 for the six months
ended June 30, 1996 as compared to income tax expense of $291,000 for the six
months ended June 30, 1995. The Company has not reflected an income tax
benefit on the $8,350,000 charge for purchased in process product development
related to the acquisitions described above.
The Company recorded income tax expense of $83,000 for the three months
ended June 30, 1996 as compared to income tax expense of $159,000 for the three
months ended June 30, 1995.
NET INCOME (LOSS) AND EARNINGS PER SHARE
The Company realized a net loss of $8,407,000 for the six months ended
June 30, 1996 as compared to net income of $376,000 for the six months ended
June 30, 1995. The net loss in the period ended June 30, 1996 reflects the
effect of the charge for purchased in-process product development of $8,350,000
in connection with the acquisitions described above and the equity in losses of
joint ventures of $2,829,000. Without the $8,350,000 charge the Company's net
loss for the six months ended June 30, 1996 would have been $57,000. The
Company realized a loss per share of $0.80 for the six months ended June 30,
1996 as compared to earnings per share of $0.05 for the six months ended June
30, 1995. The charge for purchased in-process product development described
above had approximately an $0.80 loss impact on the Company's earnings for the
six months ended June 30, 1996.
The Company realized a net loss of $107,000 for the three months ended
June 30, 1996 as compared to net income of $210,000 for the three months ended
June 30, 1995. The net loss in the three months ended June 30, 1996 reflects
the equity in losses of joint ventures of $1,650,000. The Company realized a
loss per share of $0.01 for the three months ended June 30, 1996 as compared to
earnings per share of $0.03 for the three months ended June 30, 1995.
FORM 10-Q
PAGE 13 OF 17
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased $7.4 million from $14.3 million as
of December 31, 1995 to $6.9 million as of June 30, 1996. This decrease
principally reflects the liabilities assumed and the consideration given
related to the acquisitions described above. (See Note 2.) In the six months
ended June 30, 1996 the Company generated cash from operating activities of
$890,000 as compared to $1,080,000 for the six months ended June 30, 1995.
This decrease reflects, in large part, payment terms under the Company's
relationship with SSA discussed below. The Company used net cash in investing
activities of $7,499,000 for the six months ended June 30, 1996 as compared to
$3,813,000 for the six months ended June 30, 1995. Cash used in investing
activities for June 30, 1996 included primarily cash used to acquire the
European Operations (see Note 2), purchases of property and equipment and
additions to software development. The Company used net cash from financing
activities of $260,000 in the six months ended June 30, 1996 as compared to
$1,410,000 for the six months ended June 30, 1995, related primarily to
repayment of a note payable in 1995.
The Company is investing in a new telephone system which commits the
Company to a capital expenditure of approximately $1.0 million during the next
six months. The Company currently has no other material commitments for
capital expenditures.
The accompanying balance sheet reflects a $2.5 million royalty receivable
from SSA relating to certain minimum royalties under a distribution
arrangement. Under the royalty arrangement, royalties are not payable to
Harbinger until 30 days after SSA has received payment from its customers.
Accordingly, it is conceivable that the Company will not receive any payments
on the royalties accrued during 1996, until January 1997 when all royalty
amounts are due.
Management expects that Harbinger will continue to be able to fund its
operations, investment needs and capital expenditures through cash flows
generated from operations, cash on hand, debt borrowings and additional equity
capital. Management believes that outside sources for debt and additional
equity capital, if needed, will be available to finance expansion projects and
any possible acquisitions. The form of any financing will vary depending upon
prevailing market and other conditions and may include short- or long-term
borrowings from financial institutions, or the issuance of additional equity
securities. However, there can be no assurances that funds will be available on
terms acceptable to Harbinger.
FORM 10-Q
PAGE 14 OF 17
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11. Computation of earnings per share
27. Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
For the period covered by this report through the date hereof, the
Company filed Reports on Form 8-K as follows:
1. Form 8-K/A Report dated June 17, 1996 reporting
under Item 7 the financial statements and exhibits of NTEX
Holding B.V.
2. Form 8-K/A Report dated July 1, 1996 reporting under Item
7 the financial statements and exhibits of INOVIS
GmbH & Co.
3. Form 8-K/A Report dated July 2, 1996 reporting under Item 7
the financial statements and exhibits of Harbinger N.V.
FORM 10-Q
PAGE 15 OF 17
<PAGE> 16
S I G N A T U R E S
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.
HARBINGER CORPORATION
Date: 8/13/96 /s/ C. Tycho Howle
------------------------------ --------------------------------
C. Tycho Howle
Chairman & CEO
(Principal Executive Officer)
Date: 8/13/96 /s/ Joel G. Katz
------------------------------ --------------------------------
Joel G. Katz
Vice President, Finance
(Principal Financial Officer;
Principal Accounting Officer)
FORM 10-Q
PAGE 16 OF 17
<PAGE> 1
EXHIBIT 11
HARBINGER CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------- ----------------------------------
March 31, June 30,
-------------------------------- ----------------------------------
PRIMARY 1996 1995 1996 1995
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Weighted average common
stock outstanding 10,741,000 7,407,000 10,539,000 7,405,000
Net effect of dilutive stock options
and warrants
- based on the treasury method - 506,000 - 506,000
----------- ---------- ------------ -----------
Total 10,741,000 7,913,000 10,539,000 7,911,000
=========== ========== ============ ===========
Net income applicable to common
stockholders $ (107,000) $ 210,000 $ (8,407,000) $ 376,000
=========== ========== ============ ===========
Net income per share applicable to
common stockholders $ (0.01) $ 0.03 $ (0.80) $ 0.05
=========== ========== ============ ===========
</TABLE>
Computational note:
In connection with the computations for 1996, all common share
equivalents have been excluded because their impact on the Company's net
loss per share is antidilutive. In connection with the computations for
1995, the Company has included the effect of dilutive stock options and
warrants pursuant to the rules of Securities and Exchange Commission.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HARBINGER CORPORATION FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,305
<SECURITIES> 0
<RECEIVABLES> 9,351
<ALLOWANCES> 894
<INVENTORY> 0
<CURRENT-ASSETS> 18,656
<PP&E> 8,336
<DEPRECIATION> 3,132
<TOTAL-ASSETS> 42,129
<CURRENT-LIABILITIES> 11,715
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 25,738
<TOTAL-LIABILITY-AND-EQUITY> 42,129
<SALES> 5,044
<TOTAL-REVENUES> 17,244
<CGS> 1,006
<TOTAL-COSTS> 4,397
<OTHER-EXPENSES> 18,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (184)
<INCOME-PRETAX> (8,247)
<INCOME-TAX> 132
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,407)
<EPS-PRIMARY> (0.80)
<EPS-DILUTED> 0
</TABLE>
