<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 MARCH 31, 1999
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)
<TABLE>
<CAPTION>
<S> <C>
GEORGIA 58-1817306
(State or other Jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
1277 LENOX PARK BOULEVARD 30319
ATLANTA, GEORGIA (Zip Code)
(Address of principal executive offices)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 467-3000
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
May 3, 1999, the latest practicable date, is as follows: 38,383,412 shares of
Common Stock, $.0001 par value.
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<PAGE> 2
HARBINGER CORPORATION
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - (Unaudited) March 31, 1999
and December 31, 1998.................................................
Consolidated Statements of Operations (Unaudited) - Three
Months Ended March 31, 1999 and 1998....................................
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) -
Three Months Ended March 31, 1999 and 1998...........................
Consolidated Statements of Cash Flows (Unaudited) -
Three Months Ended March 31, 1999 and 1998...........................
Notes to Consolidated Financial Statements (Unaudited)......................
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................................
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders..............................
Item 6. Exhibits and Reports on Form 8-K.................................................
PART III. SIGNATURES.....................................................................
</TABLE>
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
HARBINGER CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................................ $ 14,109 $ 33,059
Short-term investments ................................................... 59,901 59,248
Accounts receivable, less allowances for returns and
doubtful accounts of $5,458 at March 31, 1999
and $5,464 at December 31, 1998 ........................................ 32,469 35,891
Royalties receivable, less allowance for doubtful accounts
of $2,864 at March 31, 1999 and $3,614
at December 31, 1998 ................................................... 681 1,730
Deferred income taxes .................................................... 2,103 2,103
Other current assets ..................................................... 4,975 5,622
---------- ------------
Total current assets ................................................. 114,238 137,653
---------- ------------
Property and equipment, less accumulated depreciation
and amortization ....................................................... 23,707 23,150
Intangible assets, less accumulated amortization ......................... 16,884 16,803
Deferred income taxes .................................................... 698 698
Other assets ............................................................. 637 65
---------- ------------
$ 156,164 $ 178,369
========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................................................... $ 3,538 $ 5,566
Accrued expenses ......................................................... 26,726 31,571
Deferred revenues ........................................................ 19,467 21,213
---------- ------------
Total current liabilities ............................................ 49,731 58,350
---------- ------------
Commitments and contingencies
Redeemable preferred stock:
Zero coupon redeemable preferred stock, no par value; 2,000,000
shares authorized, issued and outstanding .............................. _ _
Shareholders' equity:
Preferred stock, no par value; 18,000,000 shares authorized;
none issued or outstanding.............................................. _ _
Common stock, $0.0001 par value; 100,000,000 shares
authorized, 42,439,760 shares and 42,313,031 shares issued
as of March 31, 1999 and December 31, 1998 ............................ 4 4
Additional paid-in capital ............................................... 202,101 201,615
Accumulated deficit ...................................................... (71,187) (73,528)
Accumulated other comprehensive loss .................................... (1,257) (622)
Treasury stock, 4,056,050 shares as of March 31, 1999 and
1,562,100 shares as of December 31, 1998 ........................... (23,228) (7,450)
---------- ------------
Total shareholders' equity .................................... 106,433 120,019
---------- ------------
$ 156,164 $ 178,369
========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
HARBINGER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1999 1998
------- --------
<S> <C> <C>
Revenues:
Services ........................................................... $25,372 $ 19,849
Software ........................................................... 8,131 10,203
------- --------
Total revenues ................................................... 33,503 30,052
------- --------
Direct costs:
Services ........................................................... 10,626 7,033
Software ........................................................... 1,131 771
------- --------
Total direct costs ............................................... 11,757 7,804
------- --------
Gross margin ................................................. 21,746 22,248
------- --------
Operating costs:
Selling and marketing .............................................. 8,183 6,612
General and administrative ......................................... 6,560 5,499
Depreciation and amortization ...................................... 2,233 1,875
Product development ................................................ 3,214 2,519
Charge for purchased in-process product development,
write-off of software development costs, restructuring,
acquisition related and other charges ............................ -- 8,039
------- --------
Total operating costs .......................................... 20,190 24,544
------- --------
Operating income (loss) ...................................... 1,556 (2,296)
Interest income, net .................................................. 898 1,311
------- --------
Income (loss) from continuing operations before income taxes 2,454 (985)
Income tax expense .................................................... 113 136
------- --------
Income (loss) from continuing operations ..................... 2,341 (1,121)
Loss from discontinued operations ..................................... -- (217)
------- --------
Net income (loss) applicable to common shareholders .......... $ 2,341 $ (1,338)
======= ========
Basic earnings per common share:
Income (loss) from continuing operations ........................... $ 0.06 $ (0.03)
Income (loss) from discontinued operations ......................... -- --
------- --------
Net income (loss) per common share ............................. $ 0.06 $ (0.03)
======= ========
Weighted average number of common shares outstanding
39,879 41,046
======= ========
Earnings per common share assuming dilution:
Income (loss) from continuing operations ........................... $ 0.06 $ (0.03)
Income (loss) from discontinued operations ......................... -- --
------- --------
Net income (loss) per common share ............................. $ 0.06 $ (0.03)
======= ========
Weighted average number of common shares outstanding assuming
dilution ........................................................... 40,451 41,046
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
HARBINGER CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1999 1998
------- -------
<S> <C> <C>
Net income (loss) applicable to common shareholders $ 2,341 $(1,338)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments ........ (635) (205)
------- -------
Comprehensive income (loss) ................... $ 1,706 $(1,543)
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
HARBINGER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows provided by operating activities ................ $ 454 $ 1,150
Cash flows from investing activities:
Net (purchases) redemption of short-term investments ... (653) 1,066
Purchases of property and equipment ..................... (2,378) (2,545)
Additions to software development costs ................. (887) (869)
-------- --------
Net cash used in investing activities ............. (3,918) (2,348)
-------- --------
Cash flows from financing activities:
Exercise of stock options and warrants and issuance of
stock under employee stock purchase plan .............. 486 6,746
Purchases of common stock ............................... (15,778) --
Principal payments under notes payable and long-term debt -- (169)
-------- --------
Net cash provided by (used in) financing activities (15,292) 6,577
-------- --------
Net increase (decrease) in cash and cash equivalents ....... (18,756) 5,379
Cash and cash equivalents at beginning of period ........... 33,059 69,811
Effect of exchange rates on cash held in foreign currencies (194) 12
Cash received from acquisitions ............................ -- 52
-------- --------
Cash and cash equivalents at end of period ................. $ 14,109 $ 75,254
======== ========
Supplemental disclosures:
Cash paid for interest .................................. $ -- $ 25
======== ========
Cash paid for income taxes .............................. $ 45 $ 347
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 7
HARBINGER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited 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 months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1999. For further information, refer to the financial statements and footnotes
thereto included in Harbinger Corporation's ("Harbinger" or the "Company") Form
10-K for the year ended December 31, 1998 and the Company's current report on
Form 8-K dated April 2, 1999.
RECLASSIFICATIONS
Certain reclassifications have been made to the quarter ended March 31,
1998 unaudited consolidated financial statements to conform with the
presentation of quarter ended March 31, 1999.
SEGMENT REPORTING
On December 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information, issued by the FASB in June 1997, effective for fiscal years
beginning after December 15, 1997.
2. SHAREHOLDERS' EQUITY
On March 22, 1999 the Board of Directors approved the purchase of an
additional 10% of the Company's outstanding shares of common stock under its
existing stock repurchase program. The Company completed the 10% repurchase
authorized on October 2, 1998 on March 19, 1999.
3. CHARGE FOR PURCHASED IN-PROCESS PRODUCT DEVELOPMENT, WRITE-OFF OF
SOFTWARE DEVELOPMENT COSTS, RESTRUCTURING, ACQUISITION RELATED AND
OTHER CHARGES
For the quarter ended March 31, 1999, the Company did not incur charges
for purchased in-process product development, write-off of software development
costs, restructuring, acquisition related and other charges ("Charges"). A
summary of the Charges incurred in the quarter ended March 31, 1998 is as
follows:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1998
---------
<S> <C>
Integration costs ............................... $ 6,380
Transaction charges.............................. 388
Asset write downs................................ 151
Severance costs.................................. 1,120
---------
$ 8,039
=========
</TABLE>
<PAGE> 8
Approximately $2.0 million of the Charges incurred in the three months
ended March 31, 1998 resulted from the redirection of internal resources and
their associated costs ("Integration Activity Costs") to manage integration
activities. In 1999 the management of these activities has been completed and
these internal resources and their associated costs are therefore recorded to
their original operation expense categories.
At March 31, 1999 the accrued liabilities related to Charges were
approximately $5.8 million, compared to approximately $7.5 million at December
31, 1998, primarily as a result of charges to the reserve for leases, severance
costs, professional fees and payments to customers of phased-out products in
lieu of continued service obligations on those contracts. Certain Charges
involve management estimates, as follows: lease termination costs and other
costs to exit activities, which include anticipated liabilities and obligations
associated with phasing out products. Actual results could vary from these
estimates.
4. INCOME TAXES
The Company reduced its valuation allowance in the quarter ended March
31, 1999 by $844,000. This relates to the reduction in the gross deferred income
tax assets that are realized through reversals of existing deductible temporary
differences. The Company continually reviews the adequacy of the valuation
allowance and recognizes these benefits as reassessment indicates it is more
likely than not that the benefits will be realized.
5. DISCONTINUED OPERATIONS
In the third quarter of 1998 the Board of Directors approved the
discontinuance of the TrustedLink Procurement business ("TLP"), expected to be
sold or liquidated within 12 months. The results of operations for the TLP
business for all periods prior to the discontinuation date of September 30, 1998
are reported in the accompanying consolidated statements of operation under
"loss from discontinued operations". Revenues from TLP were $29,000 and $1.0
million for the three-month periods ended March 31, 1999 and 1998, respectively.
The Company provided for an estimated anticipated loss on the future disposal of
TLP, including an estimate for operating losses during the phase-out period, of
$6.4 million at September 30, 1998. The balance of the loss reserve at March 31,
1999 was $4.7 million after $455,000 in operating losses in the first quarter of
1999. The anticipated loss on the disposal of TLP contains certain management
estimates, included but not limited to sales proceeds, lease exist costs and
length of operations beyond the measurement date. Actual results could vary from
such estimates. No income tax benefit was recognized in any period due to the
Company's net operating loss carry forwards. The operating loss incurred for TLP
from the measurement date to March 31, 1999 was $1.1 million.
The assets and liabilities of TLP are included in the Company's consolidated
balance sheets as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
Accounts receivable $ 380 $ 454
Other current assets 102 106
Property and equipment, net 766 766
Intangible assets, net 2,454 2,454
Deferred revenue (26) (45)
Current liabilities (345) (281)
--------- ------------
Net Assets $ 3,331 $ 3,454
========= ============
</TABLE>
<PAGE> 9
6. RELATED PARTY TRANSACTIONS
The Company received notes receivable during the first quarter of 1999
of $605,000 from five former shareholders of EDI Works! LLC., an immaterial
pooling of interests acquisition completed in 1998. The terms of the notes are
for 18 months with an annual interest rate of 8.75%. Interest accrues on a
monthly basis with principal and interest due at the end of the notes.
7. SEGMENT INFORMATION
The Company operates in a single industry segment: the development,
marketing and supporting of software products and the providing of network and
consulting services to enable businesses to engage in E-Commerce. The Company
manages its business along geographical lines, thus resulting in three
reportable segments: North America, Europe, and Asia Pacific and Latin America.
The accounting policies of each segment are the same as those described in the
summary of significant accounting policies. Revenues are attributed to a
reportable segment based on the location of the customer. Management evaluates
the performance of each segment on the basis of operating income, excluding
integration and restructuring charges and certain general and administrative
credits. Intersegment royalties are calculated based upon revenues, as defined,
derived from the sales of certain software products and services at agreed upon
percentages between the segments.
A summary of the Company's reportable segments as of March 31, 1999 and
March 31, 1998 is presented below (in thousands):
<TABLE>
<CAPTION>
North Latin
America Europe America Total
& Asia Pacific
---------- ------- --------------- ---------
<S> <C> <C> <C> <C>
Revenues:
1999 $ 28,413 $ 5,729 $ 511 $ 34,653
1998 $ 25,311 $ 5,096 $ 398 $ 30,805
Intersegment Royalties:
1999 $ 1,150 $ - $ - $ 1,150
1998 $ 753 $ - $ - $ 753
Operating Income (as defined):
1999 $ 54 $ 833 $ (81) $ 806
1998 $ 5,380 $ 231 $ 132 $ 5,743
</TABLE>
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Revenues:
- ---------
Total gross revenues for reportable segments $ 34,653 $ 30,805
Elimination of intersegment royalties (1,150) (753)
-------- --------
Total consolidated revenues $ 33,503 $ 30,052
======== ========
1999 1998
-------- --------
Operating Income (as defined):
- ------------------------------
Total operating income for reportable segments $ 806 $ 5,743
Charges for integration and restructuring -- (8,039)
Certain general and administrative credits 750 --
-------- --------
Total consolidated operating income (loss) $ 1,556 $ (2,296)
======== ========
</TABLE>
<PAGE> 10
8. CONTINGENCIES
The Company is involved in claims and other legal actions arising out
of the ordinary course of business. While the ultimate results and outcome
cannot be determined, management does not expect that they will have a material
adverse effect on the Company's results of operations or financial position.
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 consolidated financial statements and notes thereto included elsewhere
herein and the Company's Form 10-K for the year ended December 31, 1998 and the
Company's current report on Form 8-K dated April 2, 1999.
OVERVIEW
Harbinger Corporation (the "Company") generates revenues from various
sources, including revenues for services and license fees and royalties for
software. Revenues for services principally include subscription fees for
transactions on Harbinger.net, the Company's electronic commerce portal,
software maintenance and implementation charges and professional service fees
for consulting and training services. Subscription fees are based on a
combination of monthly access charges and transaction-based usage charges and
are recognized based on actual charges incurred each month. Software maintenance
and implementation revenues represent recurring charges to customers and are
deferred and recognized ratably over the service period. Revenues for
professional services are based on actual services rendered and are recognized
as services are performed. License fees for software are generally recognized
upon shipment, net of estimated returns. Software revenues also include royalty
revenues under distribution agreements with third parties which are recognized
either on shipment of software to a distributor or upon sales to end users by a
distributor depending on the terms of the distribution agreement.
RESULTS OF OPERATIONS
REVENUES
Total revenues increased 11% to $33.5 million in the three months ended
March 31, 1999 from $30.1 million in the same period in 1998. Revenues for
services increased 28% to $25.4 million in the three months ended March 31, 1999
from $19.8 million in the same period in 1998, reflecting increases in
professional services and maintenance revenues.
Revenues from software license fees decreased 20% to $8.1 million in
the three months ended March 31, 1999 from $10.2 million in the same period in
1998. The decrease in 1999 compared to 1998 was primarily attributable to the
phase-out of certain non-strategic software products ("Sunset Products") and a
reduction in the fees received from third party resellers of the Company's
software products.
<PAGE> 11
DIRECT COSTS
Direct costs for services increased to $10.6 million in the three
months ended March 31, 1999 from $7.0 million in the three months ended March
31, 1998. As a percentage of services revenues, these costs were 41.9% for the
three months ended March 31, 1999 and 35.4% for the three months ended March 31,
1998. The increase in direct costs as a percentage of services revenues for the
first quarter of 1999 compared to the first quarter of 1998 primarily reflects
the effects of a higher mix of professional services revenues in the first
quarter of 1999 and the effect of reallocating costs to Integration Activity
Costs in 1998.
Direct software costs increased to $1.1 million for the three months
ended March 31, 1999 from $771,000 for the three months ended March 31, 1998.
Direct software costs as a percentage of software revenues were 13.9% for the
three months ended March 31, 1999 and 7.6% for the three months ended March 31,
1998. The increase in direct software costs as a percentage of software revenues
for the first quarter of 1999 compared to the first quarter of 1998 primarily
reflects the effects of increased amortization of capitalized software for
certain newly released products, and to a lesser extent, write-off of outdated
collateral materials, accompanied by the decreased revenues from Sunset
Products.
SELLING AND MARKETING
Selling and marketing expenses increased 24% to $8.2 million, or 24.4%
of revenues in the three months ended March 31, 1999, from $6.6 million, or
22.0% of revenues in the three months ended March 31, 1998. The increase in
selling and marketing expenses as a percentage of revenues is primarily due to
increased marketing programs in 1999 and the effect of reallocating costs to
Integration Activity Costs in 1998.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased 19% to $6.6 million in
the three months ended March 31, 1999 from $5.5 million in the three months
ended March 31, 1998. As a percentage of revenues, these expenses increased to
19.6% of revenues in the three months ended March 31, 1999 from 18.3% of
revenues in the three months ended March 31, 1998. The 1999 period includes a
credit of $750,000 due to the receipt of an outstanding royalty receivable from
a specific customer that had been written off in 1998. If this receipt had not
occurred, general and administrative expenses would have been $7.3 million or
21.8% of revenues. The increase as a percentage of revenues is attributed to the
effect of reallocating costs to Integration Activity Costs in 1998, and an
increase in office space to accommodate expansion, an increase in infrastructure
investments, principally in the Information Technology area, and an increase in
compensation-related accruals in 1999.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased 19% to $2.2 million in the
three months ended March 31, 1999 from $1.9 million in the three months ended
March 31, 1998. As a percentage of revenues, these expenses were 6.7% for the
first quarter of 1999 and 6.2% for the first quarter of 1998. The increase in
depreciation and amortization for the three months ended March 31, 1999 compared
to 1998 is primarily associated with the purchase of computer hardware and
software associated with the Company's increased investments in its information
technology infrastructure.
PRODUCT DEVELOPMENT
Total expenditures for product development, including capitalized
software development costs, increased to $4.1 million for the three months ended
March 31, 1999 from $3.4 million for the three months ended March 31, 1998.
Total expenses for product development increased to $3.2 million, for the three
months ended March 31, 1999 from $2.5 million compared to the same period of
1998. As a percentage of revenues total product development expenses increased
to 9.6% in the three months ended March 31, 1999 from 8.4% in the same period of
1998. The increase in 1999 is due to increased development of internet based
products and the effect of reallocating costs to Integration Activity Costs in
1998. The Company capitalized software costs of $887,000 in 1999 and $869,000 in
1998.
<PAGE> 12
CHARGE FOR PURCHASED IN-PROCESS PRODUCT DEVELOPMENT, WRITE-OFF OF SOFTWARE
DEVELOPMENT COSTS, RESTRUCTURING, ACQUISITION RELATED AND OTHER CHARGES
("CHARGES")
The Company incurred Charges of $27.0 million during the year ended
December 31, 1998 relating to the costs of integrating its acquisition in 1998
and 1997 and restructuring in 1998. Approximately $4.1 million of the Charges
consisted of an allocation of internal costs associated with personnel who
performed integration-related activities associated with these acquisitions
("Integration Activity Costs"). The integration activities were completed by the
end of 1998 and the internal resources and their associated costs may recur in
their original expense categories in 1999.
For the quarters ended March 31, 1999 and 1998, the Company incurred $0
and $8.0 million, respectively, in Charges, of which $2.0 million in 1998 was
costs reclassified internally as Integration Activity Costs. (See Note 3 to the
accompanying unaudited consolidated financial statements.)
INTEREST INCOME, NET
Interest income, net, decreased 31% to $898,000 for the three months
ended March 31, 1999 from $1.3 million for the three months ended March 31, 1998
as a result of spending approximately $15.8 million to acquire common stock of
the Company authorized in its on-going repurchase program.
INCOME TAXES
The Company recorded lower income tax expense of $113,000 for the three
months ended March 31, 1999 as compared to $136,000 for the three months ended
March 31, 1998, primarily as a result of the reduction of the valuation
allowance.
DISCONTINUED OPERATIONS
In the third quarter of 1998, the Board of Director's approved the
discontinuance of Trusted Link Procurement ("TLP") business. The $217,000 loss
from discontinued operations is the result of reclassifying the net operating
results of TLP for the three months ended March 31, 1998. (See Note 5 to the
accompanying unaudited consolidated financial statements.)
NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE
Net income applicable to common shareholders increased to $2.3 million
or $0.06 per share for the quarter ended March 31, 1999 from a loss of $1.3
million or ($0.03) per share for the quarter ended March 31, 1998. Net income,
adjusted to exclude a specific $750,000 credit to general and administrative
expense in the first quarter of 1999 and $8.0 million in Charges in the first
quarter of 1998, net of the effect of income taxes at 39%, would have been $1.0
million or $0.3 per share for the first quarter of 1999, compared to $4.4
million or $0.10 per share in the same period in 1998, representing a 76%
decrease in net income from 1998 to 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased $14.8 million to $64.5 million
as of March 31, 1999 from $79.3 million as of December 31, 1998. In the three
months ended March 31, 1999, cash provided by operating activities was $454,000
compared to $1.1 million for the three months ended March 31, 1998. The Company
used net cash in investing activities of $3.9 million for the three months ended
March 31, 1999 compared to $2.4 million for the three months ended March 31,
1998. The change in cash used in investing activities for the period ended March
31, 1999 compared to 1998 was primarily from increased net purchases of
short-term investments. Cash used in financing activities of $15.3 million for
the period ended March 31, 1999 was primarily for the repurchase of common
stock. Cash provided by financing activities for the period ended March 31, 1998
was from the exercise of stock options and warrants and issuance of stock under
the employee stock purchase plan.
2
<PAGE> 13
Management expects the Company will continue to be able to fund its
operations, investment needs and capital expenditures through cash flows
generated from operations, cash on hand, borrowings under the Company's
uncommitted credit facility and additional equity and debt capital. Several
factors could have an impact on the Company's ongoing cash flows in the future,
including the effects of the Company's ongoing common stock repurchase program,
liquidation of liabilities incurred due to Charges and discontinued operations
and anticipated outlays for the Company's ongoing effort to enhance and
consolidate its information technology infrastructure. The Company does not
believe that inflation has had a material impact on its business. However, there
can be no assurance that Harbinger's business will not be affected by inflation
in the future.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products will
not properly process date information in the time period leading up to,
including and following the year 2000. These systems and products often store
and process the year field of date information as two digit numbers, and
misinterpret dates in the year 2000 and beyond as being dates in the year 1900
or subsequent years. This "Year 2000" issue impacts Harbinger both with respect
to its customers as a developer and vendor of computer software products and
services and internally for its information technology ("IT") and non-IT
systems.
The Company formed a Year 2000 Steering Committee in July 1998 to
formally address the Company's Year 2000 issues, which formalized the Company's
Year 2000 assessment program begun in March 1997. The Year 2000 Steering
Committee has overseen the Company's Year 2000 Readiness Assessment Program,
which includes establishing the Company's standard for Year 2000 Readiness,
designing test parameters for its products, IT and non-IT systems, overseeing
the Company's remediation program, including establishing priorities for
remediation and allocating available resources, overseeing the communication of
the status of the Company's efforts to its customers, and establishing
contingency plans in the event the Company experiences Year 2000 disruptions.
The Company describes its products and services as "Year 2000 Ready"
when they have been successfully tested using the procedure proscribed in its
Readiness Assessment Program. This procedure defines the criteria used to design
tests that seek to determine the Year 2000 readiness of a product. Under the
Company's criteria, a software product is Year 2000 Ready if it:
1. Correctly handles date information before, during, and after January 1,
2000, accepting date input, providing date output and performing
calculation on dates or portions of dates.
2. Functions accurately and without interruption before, during and after
January 1, 2000 without changes in operation associated with the advent
of the new century assuming correct configuration.
3. Where appropriate, responds to two-digit date input in a way that
resolves the ambiguity as to century in a disclosed, defined and
pre-determined manner.
4. Stores and provides output of date information in ways that are
unambiguous as to century.
5. Manages the leap year occurring in the year 2000, following the
quad-centennial rule.
As of March 31, 1999 Company management estimates that approximately
95% of its product readiness testing has been completed. While most of the
Company's products are presently Year 2000 Ready, the Company currently
estimates that all of its continuing products will be available to customers in
a Year 2000 Ready version by the end of the first quarter of 1999. Certain of
the Company's customers are currently using legacy versions of the Company's
products for which a Year 2000 Ready version will not be developed. The Company
has developed migration plans to move such customers to functionally similar
Year 2000 Ready products. The Company is also in the process of implementing a
website on the Internet that will include a general overview of the Company's
Readiness Assessment Program, including a list of products and the applicable
Year 2000 Ready version numbers of such products.
The Company is presently engaged in a significant upgrade of
substantially all of its core IT systems, including those related to sales,
customer service, human resources, finance, accounting and other enterprise
resource planning functions, as a result of its growth in recent years. The
Company believes that the upgraded systems, which it expects to have
substantially implemented by mid-year 1999, are all Year 2000 Ready. The Company
is reviewing its remaining IT systems for Year 2000 Readiness, and expects to
modify, replace or discontinue the use of non-compliant systems before the end
of 1999. In addition, the Company is in the process of evaluating its Year 2000
readiness with respect to non-IT systems, including systems embedded in the
Company's communications and office facilities. In many cases these facilities
have been recently upgraded or are scheduled to be upgraded before year-end 1999
as a result of the Company's growth in recent years. The Company is in the
process of distributing surveys to its principal IT and non-IT systems and
services vendors soliciting information on their Year 2000 Readiness as part of
this review. The Company is also surveying its vendors' websites for additional
related information.
The majority of the work performed for the Company's Year 2000
Readiness Assessment Program has been completed by the Company's staff.
Additionally, the Company engaged outside advisors to evaluate the Readiness
Assessment Program and to participate in certain elements of product testing.
The total costs for completing the Year 2000 Readiness Assessment Program,
including modifications to the Company's software products, is estimated to be
between $1 million and $2 million, funded through the Company's internal
operating cash flows. This cost does not include the cost for new software, or
for modifications to existing software, for the Company's core IT and non-IT
systems, as these projects were not accelerated due to the Year 2000 issue.
Approximately $100,000 to $200,000 in cost remains to be incurred to complete
the Company's Readiness Assessment Program.
The Company believes that the purchasing patterns of customers and
potential customers may be affected by Year 2000 issues in a variety of ways.
Many companies are expending significant resources to correct or patch their
current software systems for Year 2000 compliance. These expenditures may result
in reduced funds available to purchase software products such as those offered
by the Company. Potential customers may also choose to defer purchasing Year
2000 compliant products until they believe it is absolutely necessary, thus
resulting in potentially stalled market sales within the industry. Conversely,
Year 2000 issues may cause other companies to accelerate purchases, thereby
causing an increase in short-term demand and a consequent decrease in long-term
demand for software products. In addition, Year 2000 issues could cause a
significant number of companies, including current Company customers, to
reevaluate their current software needs, and as a result switch to other systems
or suppliers. Any of the foregoing could result in a material adverse effect on
the Company's business, operating results and financial condition.
At present the Company has only preliminarily discussed contingency
plans in the event that Year 2000 non-compliance issues materialize. The Company
expects to formalize its contingency plans prior to year-end 1999. In the case
of certain of the Company's value-added network operations, it will be difficult
for the Company to seamlessly implement alternative service arrangements due to
the nature and complexity of the customer interface. While the Company believes
that its Readiness Assessment Program is addressing the risks specific to the
Company for the Year 2000 issue, including its operations in markets outside of
the United States, it cannot be assured that events will not occur that could
have a material adverse impact on its business, operating results and financial
condition. Such events include the risk of lawsuits from customers and the
inability to process data internally on its IT systems. Further, the Company is
aware of the risk that domestic and international third parties, including
vendors and customers of the Company, will not adequately address the Year 2000
problem and the resultant potential adverse impact on the Company. Regardless of
whether the Company's products are Year 2000 compliant, there can be no
assurance that customers will not assert Year 2000 related claims against the
Company.
FORWARD LOOKING STATEMENTS
Other than historical information contained herein, certain statements
included in this report may constitute "forward looking" statements within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934
related to the Company that involve risks and uncertainties including, but not
limited to, fluctuation of operating results, the ability to compete
successfully, the ability to integrate acquired companies, the impact of Year
2000 compliance and other risks. For further information about these and other
factors that could affect the Company's future results, please see Exhibit 99.1
to the Company's most recent Form 10-K for the year ended December 31, 1998
filed with the Securities and Exchange Commission. Investors are cautioned that
any forward looking statements are not guarantees of future performance and
involve risks and uncertainties and that actual results may differ materially
from those contemplated by such forward looking statements. The Company
undertakes no obligation to update or revise forward looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
to future operating results.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) The Annual Meeting of Shareholders (the "Annual Meeting") of Harbinger
Corporation (the "Company") was held on April 30, 1999. There were present
at said meeting in person or by proxy, shareholders of the Corporation who
were the holders of 33,123,733 shares or 82.0% of the Common Stock entitled
to vote.
b) The following directors were elected to hold office for a term as
designated below or until their successors are elected and qualified, with
the vote for each director being reflected below:
<PAGE> 14
<TABLE>
<CAPTION>
VOTES FOR VOTES WITHHELD
Elected to hold office until the 2002 Annual Meeting:
<S> <C> <C>
C. Tycho Howle 33,029,801 93,932
William D. Savoy 33,026,554 97,179
John D. Lowenberg 33,024,819 98,914
Benn R. Konsynski 33,024,819 98,914
</TABLE>
The affirmative vote of the holders of a plurality of the outstanding
shares of Common Stock represented at the Annual Meeting was required to
elect each director.
The Directors of the Company continuing in office until the 2001 Annual
Meeting are as follows: David T. Leach, Ad Nederlof, and David Hildes.
The directors of the Company continuing in office until the 2000 Annual
Meeting are as follows: Klaus Neugebauer, Stuart L. Bell, William B.
King, and James M. Travers.
c) The proposal to amend the Company's 1996 Stock Option Plan was approved
with 30,530,592 affirmative votes, 2,422,284 negative votes cast and
170,857 abstentions. An affirmative vote of the holders of a majority of
the outstanding shares of Common Stock represented at the annual meeting
was required to approve the amendment.
d) The appointment of KPMG LLP as independent public accountants to audit the
accounts of the Company and its subsidiaries for the year ending December
31, 1999, was ratified with the votes as follows: 33,049,741 affirmative
votes, 45,059 negative votes cast and 28,933 abstentions. An affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
represented at the annual meeting was required to ratify the appointment of
KPMG LLP.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
<S> <C>
(a) Exhibits
Exhibit 10.1 Fourth Amendment to the Harbinger Corporation Stock Option Plan
Exhibit 10.2 Employment Agreement with Douglas L. Roberts
Exhibit 11.1 Computation of Earnings per Share
Exhibit 27.1 Financial Data Schedule
Exhibit 27.2 Restated Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K dated April 2, 1999 reporting under Item 5 and Item 7 (c) the text of a press release dated
March 22, 1999 concerning the Board of Directors approving the purchase of an additional (10%) of
the Company's outstanding common shares under its existing stock repurchase program.
</TABLE>
<PAGE> 15
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.
<TABLE>
<CAPTION>
HARBINGER CORPORATION
<S> <C>
Date: May 17, 1999 /s/ C. Tycho Howle
----------------------------------------------- -----------------------------------
C. Tycho Howle
Chief Executive Officer
(Principal Executive Officer)
Date: May 17, 1999 /s/ James K. McCormick
----------------------------------------------- -----------------------------------
James K. McCormick
Chief Financial Officer
(Principal Financial Officer;
Principal Accounting Officer)
</TABLE>
<PAGE> 1
EXHIBIT 10.1
FOURTH AMENDMENT TO THE HARBINGER CORPORATION
1996 STOCK OPTION PLAN
THIS FOURTH AMENDMENT TO THE HARBINGER CORPORATION 1996 STOCK OPTION
PLAN (the "Amendment") is made effective as of the _____ day of May, 1999 (the
"Effective Date"), by HARBINGER CORPORATION, a corporation organized and doing
business under the laws of the State of Georgia (the "Company"). All capitalized
terms in this Amendment have the meaning ascribed to such term as in the
Harbinger Corporation 1996 Stock Option Plan (the "Plan"), unless otherwise
stated herein.
W I T N E S S E T H:
WHEREAS, the First Amendment to the Plan was approved by the
shareholders of the Company at the 1997 Annual Meeting
of Shareholders;
WHEREAS, the Second Amendment to the Plan was approved by the
shareholders of the Company at the Special Meeting of Shareholders held on
December 18, 1997;
WHEREAS, the Third Amendment to the Plan was approved by the
shareholders of the Company at the 1998 Annual Meeting of Shareholders; and
WHEREAS, the Board of Directors of the Company desires to amend the
Plan to add certain provisions to insure compliance with the safe harbor
provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained herein, the Plan is hereby amended as follows:
SECTION 1. Section 3.1 of the Plan is hereby amended by deleting the
first sentence of Section 3.1 of the Plan in its entirety and substituting in
lieu thereof the following:
"3.1 Shares Reserved for Issuance. Subject to any
antidilution adjustment pursuant to Section 3.2, the maximum
number of Shares that may be subject to Options granted
hereunder shall not exceed 8,737,500, plus the number of Prior
Plan Shares; provided, however, the maximum number of Shares
with respect to which Options may be granted to any individual
grantee in any calendar year shall be 1,000,000."
SECTION 2. Section 5 of the Plan is hereby amended by deleting the
first sentence of Section 2 in its entirety and substituting in lieu thereof the
following:
"This Plan shall be administered by the Committee,
which shall consist of three (3) or more directors appointed
by the Board, each of whom is an "outside director" within the
meaning of Section 162(m) of the Code and is not while a
member of the Committee, or was not during the one (1) year
prior to serving as a member of the Committee, eligible to
receive equity securities of the Company, or any affiliate of
the Company, pursuant to this Plan, the Prior Plan, or any
other plan of the Company or any affiliate of the Company,
except as may be permitted under Section 16(b)(3) of the
Exchange Act."
SECTION 3. Except as specifically amended by this Fourth Amendment, the
Plan shall remain in full force and effect as prior to this Fourth Amendment.
<PAGE> 2
IN WITNESS WHEREOF, the Company has caused this FOURTH AMENDMENT TO THE
HARBINGER CORPORATION 1996 STOCK OPTION PLAN to be executed on the Effective
Date.
HARBINGER CORPORATION
By:
-----------------------------
ATTEST:
By:
----------------------------
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AND CONFIDENTIALITY AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of the day
of April 1999, by and between HARBINGER CORPORATION ("HC"), including its wholly
owned affiliates and Douglas Roberts ("Employee"), an individual. For and in
consideration of the mutual covenants described below, the parties hereto agree
as follows:
1. EMPLOYMENT. HC agrees to employ or continue to employ Employee, and
Employee agrees to accept and continue such employment, upon the following terms
and conditions.
2. DUTIES. (a) Employee shall assume the responsibilities and perform the
Duties specified in Exhibit A ("Duties"). Such Duties may be revised from time
to time at the sole discretion of HC. Employee agrees to devote his or her full
time and energy to the furtherance of the business of HC and shall not during
the term hereof work or perform services in any advisory or other capacity for
any individual, firm, company, or corporation other than for HC without HC's
prior written consent. This Agreement may be supplemented from time to time by
rules and regulations of employment issued by HC, including, without limitation,
such rules and regulations described in the HC employee handbook, and Employee
agrees to adhere to these rules and regulations.
(b) If Employee desires to perform any services during the term hereof for
anyone other than HC, whether or not Employee is compensated, then Employee
agrees to contact an officer of HC to discuss this matter. HC will review the
request and advise Employee of HC's approval or disapproval of the proposed
outside work, in HC's sole discretion. In making its decision, HC may consider
such factors as whether the outside work may be harmful to the business of HC or
interfere with Employee's ability to satisfactorily discharge his or her Duties,
whether the outside work is based directly or indirectly on a business practice
of HC or idea that was conceived by Employee while on HC's payroll, or whether
such outside work could result in a violation of any covenants of Employee in
this Agreement. In this case, HC will notify Employee of HC's approval or
disapproval of such request to perform outside work within a reasonable period
of time after HC is notified by Employee of the request to perform such
services. Unless HC grants such approval in writing, Employee agrees to refrain
from such outside work.
3. COMPENSATION. HC shall pay as compensation for all the services to be
rendered the salary and additional compensation, if any, described in Exhibit B
(the "Employee Compensation") and as the Employee Compensation may be determined
by HC in its sole discretion from time to time. HC's obligation to pay Employee
any Employee Compensation shall cease upon termination of Employee's employment
with HC. Employee's annual salary shall be prorated on a daily basis for the
years in which Employee commences and terminates his or her employment
relationship with HC.
3. TERM AND TERMINATION. This Agreement shall be effective upon execution
by the parties and shall remain in full force and effect for an indefinite
period of time. The parties agree that Employee's term of employment may be
terminated at any time, for any reason or for no reason, for cause or not for
cause, with or without notice, by HC or Employee. Upon termination of employment
for any reason, Employee shall return immediately to HC all documents, property,
and other records of HC, and all copies thereof, within Employee's possession,
custody or control, including but not limited to any materials containing any
Trade Secrets or Confidential Information (as defined below) or any portion
thereof.
4. OWNERSHIP.
(a) For purposes of this Agreement, "Work Product" shall mean the data,
materials, documentation, computer programs, inventions (whether or not
patentable), and all works of authorship, including all worldwide rights therein
under patent, copyright, trade secret, confidential information, or other
property right, created or developed in whole or in part by Employee, whether
prior to the date of this Agreement or in the future, either (i) while retained
by HC and that have been or will be paid for by HC, or (ii) while employed by HC
(whether developed during work hours or not). All Work Product shall be
considered work made for hire by the Employee and owned by HC. If any of the
Work Product may not, by operation of law, be considered work made for hire by
Employee for HC, or if ownership of all right, title, and interest of the
intellectual property rights therein shall not otherwise vest exclusively in HC,
Employee hereby assigns to HC, and upon the future creation thereof
automatically assigns to HC, without further consideration, the ownership of all
Work Product. HC shall have the right to obtain and hold in its own name
copyrights, patents, registrations, and any other protection available in the
Work Product. Employee agrees to perform, during or after Employee's employment,
such further acts as may be
<PAGE> 2
necessary or desirable to transfer, perfect, and defend HC's ownership of the
Work Product that are reasonably requested by HC.
(b) Employee agrees that during the term of employment, any money or other
remuneration received by Employee for services rendered to a customer or
potential customer of HC shall be the property of HC.
5. TRADE SECRETS AND CONFIDENTIAL INFORMATION.
(a) HC may disclose to Employee certain Trade Secrets and Confidential
Information (defined below). Employee acknowledges and agrees that the Trade
Secrets and Confidential Information are the sole and exclusive property of HC
(or a third party providing such information to HC) and that HC or such third
party owns all worldwide rights therein under patent, copyright, trade secret,
confidential information, or other property right. Employee acknowledges and
agrees that the disclosure of the Trade Secrets and Confidential Information to
Employee does not confer upon Employee any license, interest or rights of any
kind in or to the Trade Secrets or Confidential Information. Employee may use
the Trade Secrets and Confidential Information solely for the benefit of HC
while Employee is employed or retained by HC. Except in the performance of
services for HC, Employee will hold in confidence and not reproduce, distribute,
transmit, reverse engineer, decompile, disassemble, or transfer, directly or
indirectly, in any form, by any means, or for any purpose, the Trade Secrets or
the Confidential Information or any portion thereof. Employee agrees to return
to HC, upon request by HC, the Trade Secrets and Confidential Information and
all materials relating thereto.
(b) Employee's obligations under this Agreement with regard to the Trade
Secrets shall remain in effect for as long as such information shall remain a
trade secret under applicable law. Employee acknowledges that its obligations
with regard to the Confidential Information shall remain in effect while
Employee is employed or retained by HC and for three (3) years thereafter. As
used herein, "Trade Secrets" means information of HC, its licensors, suppliers,
customers, or prospective licensors or customers, including, but not limited to,
technical or nontechnical data, formulas, patterns, compilations, programs,
devices, methods, techniques, drawings, processes, financial data, financial
plans, product plans, or a list of actual or potential customers or suppliers,
which (a) derives economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use; and (b) is the subject
of efforts that are reasonable under the circumstances to maintain its secrecy.
As used herein, "Confidential Information" means information, other than Trade
Secrets, that is of value to its owner and is treated as confidential,
including, but not limited to, future business plans, licensing strategies,
advertising campaigns, information regarding executives and employees, and the
terms and conditions of this Agreement.
6. CUSTOMER NON-SOLICITATION.
Employee agrees that for a period of eighteen (18) months immediately
following termination of Employee's employment with HC for any reason,
including, without limitation, voluntary resignation from employment by Employee
("Non-Solicitation Period"), Employee shall not, on Employee's own behalf or on
behalf of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, solicit, contact, call upon, communicate
with or attempt to communicate with any customer or prospect of HC, or any
representative of any customer or prospect of HC, with a view to sale or
providing of any deliverable or service competitive or potentially competitive
with any deliverable or service sold or provided or under development by HC
during the time of two (2) years immediately preceding cessation of Employee's
employment with HC, provided that the restrictions set forth in this paragraph
shall apply only to customers or prospects of HC, or representatives of
customers or prospects of HC, with which Employee had contact during such two
(2) year period. The actions prohibited by this paragraph shall not be engaged
in by Employee directly or indirectly, whether as manager, salesperson, agent,
technical support, sales, or service representative, or otherwise.
7. EMPLOYEE NON-SOLICITATION.
Employee agrees that Employee shall not call upon, solicit, recruit, or assist
others in calling upon, recruiting or soliciting any person who is or was an
employee of HC within the Non-Solicitation Period, for the purpose of having
such person work in any other corporation, association, entity, or business
engaged in providing any of the following: (i) development and operation of
computer networks (the "Hosts") to facilitate electronic data interchange and
electronic commerce ("EDI") transactions and cash management services; (ii)
development, marketing, distribution, and licensing of personal computer,
workstation and networking software to facilitate EDI and transaction processing
and other communications with the Hosts; (iii) development, marketing,
distribution, and licensing of software products for operation on personal
computers and workstations relating to the performance of cash management
services, including balance and transaction reporting, transfers, stop payments,
account reconciliation, check writing, financial record keeping, messaging, and
information services; and (iv) consulting, training, and implementation of the
products and services described in (i), (ii) and (iii) above (collectively the
"Company Business").
8. NONCOMPETITION.
Employee agrees that, without the prior written consent of HC, Employee shall
not, so long as Employee is employed hereunder and for a period of one (1) year
<PAGE> 3
thereafter within the area described in Exhibit C (the "Territory"), directly or
indirectly perform the Duties on behalf of any person, firm, corporation, or
other entity in the Company Business, if the Company is also then still engaged
in the Company Business.
9. WARRANTIES OF EMPLOYEE.
(a) Employee warrants to HC that (i) Employee is not presently under any
contract or agreement with any party that will prevent Employee from performing
the Duties assigned by HC, and (ii) Employee is not in breach of any agreement
with respect to any trade secrets or confidential information owned by any other
party.
(b) Employee agrees to indemnify and hold harmless HC, any affiliated
corporation, and their respective shareholders, directors, officers,
agents, and employees, from and against any and all liability,
including payment of attorneys' fees, arising directly or indirectly
from a violation of Section 10(a).
10. EQUITABLE RELIEF. The parties to this Agreement acknowledge that a
breach by Employee of any of the terms or conditions of this Agreement will
result in irrevocable harm to HC and that the remedies at law for such breach
may not adequately compensate HC for damages suffered. Accordingly, Employee
agrees that in the event of such breach, HC shall be entitled to injunctive
relief or such other equitable remedy as a court of competent jurisdiction may
provide. Nothing contained herein will be construed to limit HC's right to any
remedies at law, including the recovery of damages for breach of this Agreement.
11. SEVERABILITY. If any provision or part of any provision of this
Agreement is held invalid or unenforceable by a court of competent jurisdiction,
such holding shall not affect the enforceability of any other provisions or
parts thereof, and all other provisions and parts thereof shall continue in full
force and effect.
12. MISCELLANEOUS. This Agreement shall not be amended or modified except
by a writing executed by both parties. This Agreement shall be binding upon and
inure to the benefit of HC and its successors and assigns. Due to the personal
nature of this Agreement, Employee shall not have the right to assign Employee's
rights or obligations under this Agreement without the prior written consent of
HC. This Agreement shall be governed by the laws of the States of Georgia,
Michigan, Texas, and California without regard to its rules governing conflicts
of law. This Agreement and the attached Exhibits represent the entire
understanding of the parties concerning the subject matter hereof and supersede
all prior communications, agreements and understandings, whether oral or
written, relating to the subject matter hereof. All communications required or
otherwise provided under this Agreement shall be in writing and shall be deemed
given when delivered to the address provided below such party's signature (as
may be amended by notice from time to time), by hand, by courier or express
mail, or by registered or certified United States mail, return receipt
requested, postage prepaid. The exhibits attached hereto are incorporated herein
by this reference.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed their hands and seals effective as of the date first above written.
HARBINGER CORPORATION
By:
-----------------------------------------------
Title: Michael Lieb, Director of Human Resources
Date:
---------------------------------------------
1277 Lenox Park Boulevard
Atlanta, Georgia 30319
EMPLOYEE: Douglas Roberts
- --------------------------------------------------
Signature
Date:
---------------------------------------------
Address:
------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
<PAGE> 1
EXHIBIT 11.1
HARBINGER CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------
1999 1998
------- --------
<S> <C> <C>
Basic:
Net income (loss) available to common
shareholders.................................... $ 2,341 $ (1,338)
======= ========
Weighted average number of common
shares outstanding.............................. 39,879 41,046
======= ========
Basic earnings (loss) per share................... $ 0.06 $ (0.03)
======= ========
Diluted:
Net income (loss) available to common
shareholders................................... $ 2,341 $ (1,338)
======= ========
Weighted average number of common
shares outstanding.............................. 39,879 41,046
Effect of potentially dilutive stock options...... 567 --
Effect of potentially dilutive warrants........... 5 --
------- --------
Weighted average number of common
shares outstanding assuming dilution............ 40,451 41,046
======= ========
Diluted earnings (loss) per share................. $ 0.06 $ (0.03)
======= ========
</TABLE>
Computational Note:
In connection with the computation of diluted earnings per share for
the quarter ended March 31, 1998 all common share equivalents have been
excluded because their impact on the Company's net loss per share is
antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF HARBINGER CORPORATION FOR THE QUARTER
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 14,109
<SECURITIES> 59,901
<RECEIVABLES> 37,926
<ALLOWANCES> 5,464
<INVENTORY> 0
<CURRENT-ASSETS> 114,238
<PP&E> 47,651
<DEPRECIATION> 23,944
<TOTAL-ASSETS> 156,164
<CURRENT-LIABILITIES> 49,731
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 106,429
<TOTAL-LIABILITY-AND-EQUITY> 156,164
<SALES> 8,131
<TOTAL-REVENUES> 33,503
<CGS> 1,131
<TOTAL-COSTS> 11,757
<OTHER-EXPENSES> 20,190
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,454
<INCOME-TAX> 113
<INCOME-CONTINUING> 2,341
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,341
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RESTATED
CONSOLIDATED FINANCIAL STATEMENTS OF HARBINGER CORPORATION FOR THE QUARTER ENDED
MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 75,254
<SECURITIES> 31,050
<RECEIVABLES> 32,988
<ALLOWANCES> 2,773
<INVENTORY> 0
<CURRENT-ASSETS> 149,862
<PP&E> 34,944
<DEPRECIATION> 16,164
<TOTAL-ASSETS> 186,421
<CURRENT-LIABILITIES> 51,070
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 135,347
<TOTAL-LIABILITY-AND-EQUITY> 186,421
<SALES> 10,203
<TOTAL-REVENUES> 30,052
<CGS> 771
<TOTAL-COSTS> 7,804
<OTHER-EXPENSES> 24,544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27
<INCOME-PRETAX> (985)
<INCOME-TAX> 136
<INCOME-CONTINUING> (1,121)
<DISCONTINUED> (217)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,338)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
