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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 5(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED MAY 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NO. 6-19538
IMRS INC.
(Exact name of registrant as specified in Charter)
DELAWARE 04-1326879
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
777 LONG RIDGE ROAD, STAMFORD, CONNECTICUT 06902
(Address of principal executive offices)(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 321-3500
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.01
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
As of September 15, 1994, there were 7,199,151 shares of the registrant's
Common Stock, $.01 par value, outstanding. The aggregate market value of the
registrant's voting stock held by non-affiliates as of
September 15, 1994 was approximately $251 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1994 Annual Report to Stockholders for the
fiscal year ended June 30, 1994 are incorporated by reference in Part II hereof.
Portions of the registrant's Proxy Statement for its 1994 Annual Meeting of
Stockholders, scheduled to be held on November 15, 1994, are incorporated by
reference in Part III hereof.
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Index to exhibits, page 16 Page 1 of 195
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PART I
ITEM 1. BUSINESS
GENERAL
IMRS Inc. (the "Company") develops, markets and supports enterprise level
financial applications for client/server environments. IMRS software addresses
the diverse accounting, financial consolidation, management reporting, and
information access needs of large corporations worldwide. The Company designs
products specifically for network implementation, providing fast, multi-user
access to centrally controlled and secure corporate data.
IMRS, Hyperion, IMRS OnTrack, Executive Forum, Micro Control, FASTAR,
FinalForm, Financial Intelligence, Retrieve-MC, Interactive/MC and TelePath are
registered trademarks of the Company. Hyperion Connect, Hyperion Financials,
Hyperion SQL, IMRS Forms, Visual Information Access, and OnRequest are
trademarks of the Company. All other trademarks or tradenames referred to herein
are the property of their respective owners.
INDUSTRY BACKGROUND
Large corporations generate significant amounts of accounting,
manufacturing, human resources, sales and marketing data. To be useful to senior
executives, managers and analysts, such transactional data must be retrieved
from a variety of financial and operational systems, then summarized and
organized into meaningful business information that is consistent and easily
accessible. The process of integrating the data is complicated because most
large corporations use multiple accounting systems and transactional databases,
conduct business in numerous locations and have diverse information requirements
across functions and throughout the management hierarchy.
Historically, corporations have attempted to collect, summarize, organize
and present information from fragmented computer systems and transactional data
sources in a number of ways. In many instances, business information reports are
assembled manually with the aid of spreadsheets and using data from general
ledgers and other operational systems. Additionally, many corporations have
sought to automate business information systems through the use of mainframe or
minicomputer software developed by their internal management information systems
("MIS") department. IMRS believes that these systems are becoming increasingly
obsolete because they are inherently rigid in structure, slow in response time,
expensive to maintain, and difficult to update when information requirements
change. In addition, growing corporate competition has increased the demand for
more comprehensive and timely business information that is accessible throughout
the corporation.
Recent advances in computer and networking technology have allowed business
information processing at large corporations to be moved to local area networks
("LANs") of personal computers. This trend in down-sizing corporate computing
has gained momentum as a result of improvements in PC processing speeds and
memory capacity and the widespread acceptance of LANs. Local area and
enterprise-wide networks have significantly increased the ability to share
information among users throughout an organization. While MIS departments were
initially slow to adopt LAN technology, they now view networked PCs as a
strategic element of information management. LAN-based solutions are becoming
accepted as an important means of decreasing computing costs while improving the
flow, accessibility and usefulness of corporate information. Additionally, the
flexibility of new client/server architectures has led to MIS adoption of new
technologies at a faster pace. Client/server computing takes advantage of the
power of desktop computers by appropriately segregating user interface and
application processing tasks between separate client and server machines.
The need for better business information, combined with the acceptance of
PCs and network computing, has created a significant market opportunity for a
new class of information software designed to operate on this platform. Most
financial analysts and accountants and many executives rely on personal
computers for analysis and forecasting through the use of spreadsheets. While
spreadsheets and other PC software tools have been used to perform some
corporate business information tasks, they have limited capability for
information sharing and lack the necessary controls to ensure corporate
consistency. Existing custom or packaged software
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for mainframes or minicomputers is impractical to modify for network computing
because it is based on operating systems and architectures which are
incompatible with PCs and lack the ease of use of PC software. The Company's
experience since 1981 in developing and marketing business information
management software for PCs and networks positions it well for this market.
STRATEGY
The Company's objective is to be the leading provider of enterprise level
financial management solutions to large, multi-divisional or multi-location
companies worldwide. Within a corporation, headquarters and remote feeder
systems, primarily mainframe and minicomputer-based, download data to IMRS
software, which manages the transfer of information to a network server
database. Senior executives, managers, analysts and other users may then access
business information through the appropriate IMRS software user interface.
IMRS focuses on designing network-based applications that are easy to
implement and operate. The Company's products are designed to be flexible, easy
to maintain, cost-efficient, fast, functionally complete and integrated with
popular general purpose spreadsheets. The Company will continue to enhance its
functionally rich DOS product line, and extend its suite of integrated Microsoft
Windows-based, client/server products. The Company believes that its financial
reporting and consolidation solutions are well established in the financial and
corporate offices of multinational enterprises. And, accordingly, with the
introduction of Hyperion Financials, a line of integrated transaction-based
accounting management products, IMRS believes it is well positioned to
participate in this emerging client/server, accounting applications market.
Hyperion Financials, which are scheduled for commercial release beginning in
calendar year 1995, will include Microsoft Windows-based: general ledger,
accounts payable, accounts receivable, fixed asset management and purchasing
modules plus toolkit, report writer and system administrator modules.
The Company believes that client/server and networked personal computing
have become a standard direction for the largest and best known companies in the
world. These technologies, when coupled with software that reflects applications
expertise, produce clear and immediate benefits to an organization.
The Company's strategy to achieve its objective includes the following
elements:
Increase Penetration of Financial Reporting Market. The Company believes
that approximately 15% of potential customers have purchased network-based
financial consolidation and reporting software. The Company intends to further
its penetration in this market and expand its leadership position by enhancing
its current products and dedicating significant resources to sales, marketing,
support and new product development.
Leverage Existing Market Leadership Position. The Company believes that
the core of a complete business information system is financial consolidation
and reporting because much of the data that executives use relates to a
company's internal financial information. The Company believes that its
established strength in providing financial reporting solutions places it in a
strong position to market its financial information management applications to
both new and existing customers.
Focus on Leading Network and Software Technologies. IMRS is committed to
the development of network-based software for business information applications.
The Company has products designed to run in the Microsoft Windows environment
and others designed to run on Microsoft's DOS operating system, all of which are
compatible with widely-used LANs. The Company intends to enhance its existing
products and develop new products linked to emerging software standards,
including Windows NT and Sybase SQL server.
Design Applications for Specific Business Information Needs. The Company's
product line is designed specifically for business information data collection,
consolidation and presentation. IMRS products have pre-programmed functionality,
reducing implementation time. This orientation to specific tasks results in
superior processing speed for fast consolidation and access to data. The use of
application specific, as opposed to general purpose, databases optimizes
performance on high volume networked applications. Hyperion SQL, which was
released in fiscal year 1994, offers an industry standard SQL database as an
option.
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Design for Ease of Implementation and Ease of Use. The Company's products
are designed for an end-user role in implementation and maintenance, with
minimal training. Application expertise is built into products and is also
provided by the Company through consulting services. Following implementation,
customers are able to operate self-sufficiently with trained administrators at
headquarters locations and independent end-users at headquarters and at remote
sites.
Maintain Direct Sales and Support Relationships. Unlike many other PC
software companies, the Company licenses its products throughout the world
primarily through a direct sales force. In certain territories outside of North
America, products are licensed through independent distributors, including major
accounting firms. IMRS often provides installation and post-sale consulting
support to build long-term customer relationships.
Generate Follow-on Revenues. The Company generates revenues from existing
customers through the licensing of additional sites, the introduction of new
products and license renewal fees. In addition, sales of services to existing
customers represents a significant portion of the Company's total service
revenues. Follow-on revenues leverage sales and marketing resources and
strengthen the Company's relationships with its customers.
PRODUCTS AND SERVICES
The Company's product line provides executives, managers, analysts and
accountants with the capability to collect, process, report and analyze business
information. The Company's Hyperion, Micro Control and FASTAR products
consolidate and report financial and other business data; IMRS OnTrack is a
complete Visual Information Access software product; and IMRS Forms and
FinalForm are used to design, implement and control forms for detailed and
consistent data collection. The Company also offers installation, training,
consulting and support services.
PRODUCTS
Hyperion. Hyperion, released in July 1991 and now in its third major
release, is an advanced business information consolidation and reporting product
designed to take advantage of the capabilities of the Microsoft Windows
graphical operating environment. The Company began development of Hyperion in
mid-1988 as a new product that combines powerful consolidation and reporting
capabilities with an open architecture and administrative ease of use made
possible through the graphical user interface of Windows. Hyperion reflects the
Company's twelve years of experience in financial and business information
software, and is targeted to corporations that have committed to a Windows
standard and direction. The Company has provided a migration path to Hyperion
for Micro Control or FASTAR users who may decide to adopt Windows, but intends
to continue to offer both character-based and Windows products to the reporting
and consolidation market. The Company derived approximately 56%, 22% and 4% of
its worldwide total revenues from Hyperion licenses and related services during
fiscal 1994, 1993 and 1992, respectively.
A Hyperion headquarters site license is priced at $125,000 (Hyperion SQL --
$150,000), with reporting site licenses priced at $4,500 or less, depending on
the number of sites.
Micro Control. Micro Control was introduced in 1982 and is now in its
seventh major release. Micro Control consolidates, reports and maintains, in one
integrated database, a company's financial and statistical reporting
information, including actual, budget, forecast, plan and prior years' data. The
Company derived approximately 27%, 56% and 75% of its worldwide total revenues
from Micro Control licenses and related services during fiscal 1994, 1993 and
1992, respectively.
Micro Control enables a financial staff to independently manage the
collection, consolidation, analysis and reporting of financial data without the
need for technical training. Information can be automatically loaded from
various sources, including mainframe or minicomputer-based general ledgers and
from spreadsheets. Reporting locations enter and validate information and
transmit it to headquarters through a wide area network, local area network or
direct PC-to-PC. Consolidation, currency conversions, intercompany eliminations
and expense allocations are performed automatically by Micro Control. Security
and audit trail features are also provided.
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The Company offers several complementary Micro Control modules. Through
Retrieve-MC and Retrieve MC/XL, Micro Control users can link directly to Lotus
1-2-3 and Microsoft Excel, respectively, for further data manipulation and
analysis. TelePath allows menu-driven on-screen report building. Chartbuilder
provides a method for quick and easy creation and maintenance of a Micro Control
system.
A Micro Control headquarters site license is priced at $95,000, and it
allows for an unlimited number of computers at the site to run the software.
Reporting site licenses are $3,500 per site or less, depending on the number of
sites.
FASTAR. FASTAR, acquired in 1989 in connection with the Company's
acquisition of Corporate Class Software, Inc., is a spreadsheet-based financial
consolidation and reporting system. FASTAR incorporates many of the same
consolidation and reporting features as Micro Control, but is targeted to
organizations oriented to a spreadsheet-based solution. It provides significant
ease of use and learning advantages for companies with a large investment in
Lotus 1-2-3. While financial reporting in Micro Control is based on a chart of
accounts, FASTAR uses financial schedules as the primary data interface and uses
cell/range-based logic consistent with Lotus 1-2-3 conventions. FASTAR uses
Lotus 1-2-3 as both an input and output reporting mechanism, and a corporation's
existing Lotus 1-2-3 spreadsheets may be used as templates for FASTAR schedules.
FASTAR is designed to allow consolidation of financial results from diverse
locations, with reporting and query capabilities at all levels. Control is
realized through password protection and on-line data and validity checks.
FASTAR allows communication of information between remote sites and
headquarters.
A FASTAR headquarters site license is priced at $75,000, and it allows for
up to thirty computers to use the software. Reporting site licenses are $3,000
per site or less, depending on the number of sites.
IMRS OnTrack. IMRS OnTrack, introduced in 1989 and now in its third major
release, is a Microsoft Windows-based, Visual Information Access product. IMRS
OnTrack provides senior executives, managers and analysts with access to
business information through an attractive, intuitive user interface.
Presentation of information from a variety of sources, which may include one of
the Company's financial reporting software products, is easily accomplished
through a set of Windows-based system administration facilities. Information
from mainframe or network-based systems, such as marketing, sales, human
resources or production data, and external information, such as stock price
quotations or economic data, may also be incorporated. Graphics and spreadsheets
are easily integrated. A key benefit to IMRS OnTrack is greatly reduced
development and maintenance effort in comparison to traditional mainframe-based
systems.
The Company's Executive Forum product, a module that works within IMRS
OnTrack, was released in October 1991. This product was developed in cooperation
with Lotus Development Corporation and integrates IMRS OnTrack with Lotus Notes,
a LAN-based group communications software product. Executive Forum permits users
to share analysis and comments related to the business information presented in
IMRS OnTrack through use of a Lotus Notes database.
OnRequest, another IMRS OnTrack module was released in June 1992. OnRequest
incorporates Trinzic Corp.'s Forest and Trees product into IMRS OnTrack,
providing access to a number of SQL databases.
An IMRS OnTrack license for system administration and including 10 end
users is priced at $65,000. An Executive Forum headquarters license is priced at
$15,000 and includes 10 users and 10 copies of Lotus Notes. An OnRequest license
for application development, including 10 end user versions of Forest and Trees,
is priced at $15,000.
FinalForm. FinalForm, a Microsoft DOS-based product introduced in 1987, is
used to design, implement and control forms for detailed and consistent data
collection. FinalForm permits headquarters staff to design forms for data entry
and to control submission and collection of forms. Major features of FinalForm
include validation procedures embedded within data entry forms, distribution of
forms to field locations and cross-validation of multiple forms. FinalForm can
be used to build such self-contained applications as tax reporting, product
tracking and financial reporting schedules and to cross-validate data between
applications. FinalForm is frequently integrated with one of the Company's
financial reporting software products, providing expanded data entry and control
capabilities.
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A headquarters site license for FinalForm is priced at $40,000, with remote
locations priced at $1,000 per site.
IMRS Forms. IMRS Forms, commercially released in fiscal year 1994, is a
Microsoft Windows-based product used to control a full range of data collection
and forms management functions. IMRS Forms supports financial workflow by
accelerating and securing data collecting and transferring procedures. It
provides customers with the ability to design custom forms for detailed data
entry and transfer data into IMRS Forms from virtually any corporate database.
A headquarters site license for IMRS Forms is priced at $60,000, with
remote locations priced at $1,500 per site.
SERVICES
The Company provides design consulting and implementation support for its
products and their operation on LANs and offers a range of administrator and
end-user courses at its training facilities or at the customer's site.
Implementation, consulting and training services are not included in software
license fees but are provided on a time and materials basis. This allows the
customer to determine the level of support appropriate to its needs and permits
the Company to provide high quality services on a profitable basis.
Following product implementation, a customer receives support under its
standard license renewal and maintenance fee and may choose, through payment of
a retainer, to receive ongoing consulting services at a discount from standard
rates. Under the terms of the Company's standard license agreement, customers
pay a license renewal and maintenance fee 90 days after delivery of software and
annually thereafter. The annual fee charged to a customer is generally a fixed
percentage of the then-current list prices for the licensed software used by the
customer (subject to a 10% limit on the permitted increase in any one year).
This fee entitles customers to support, including a user hotline and electronic
bulletin board, and to any updates and enhancements provided for their software.
The Company's product support function provides a hotline, collects and
evaluates requests for enhancement of products and together with the product
management and planning group, coordinates the design, development and releases
of new products and product enhancements.
An active user group, including a steering committee and product
enhancement sub-committees, works closely with the Company in helping to define
product enhancement priorities and directions. A U.S. user group meeting,
attended by over 1,200 users from 513 companies in April 1994, is held annually.
Regional user meetings and product-specific focus groups are also scheduled
periodically, including an annual European user group meeting.
CUSTOMERS AND APPLICATIONS
The Company markets its products worldwide to multi-divisional or
multi-locational organizations which have extensive operations and significant
information management requirements. Examples of the use of IMRS products by the
Company's clients include the following:
- A leading international home appliance manufacturer and marketer has
implemented Hyperion as part of its global financial information process
re-engineering initiative. Operating in more than 120 countries, sites
from around the world were previously faxing data to corporate
headquarters, where the data was manually entered into spreadsheets. The
entire process was "extremely tedious and prone to error," according to
the company. Now, Hyperion is addressing the company's expanding global
information requirements, providing easy access to data, direct links to
spreadsheets and easy system maintenance, all within a Microsoft
Windows-based computing environment.
- A healthcare company eliminated tedious re-keying of data and
dramatically reduced manual input by using Hyperion for its worldwide
financial information requirements. An expanding presence in Europe and
the addition of a new line of over-the-counter products required that the
company keep track of an extensive amount of product data on a global
basis. Essential business data of the company includes knowing where and
when sales are made, products are introduced, and whether budgets are
being
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achieved. Hyperion's flexible reporting, dynamic links to spreadsheet
products, speed, and access to both detail and top-level data for
more than 500 products is the cornerstone for this data.
- IMRS software solutions are critical components in the budgeting and
forecasting activities of a $2 billion services organization. Rapid
growth over the last several years made system flexibility and control
a paramount concern and, according to the company, IMRS products and
services meet these requirements. With Microsoft Windows adopted as the
company's standard operating environment, Hyperion currently downloads
financial data into several critical databases. Before the Hyperion
implementation, this process required 35 people; now, it is completed
in less than a day, resulting in more time for analysis of the information.
The Company has licensed its software to over 1,600 corporate headquarters
customers. In the past three fiscal years, no one customer accounted for more
than 10% of total revenues. The Company's customers include the following:
COMPUTERS & SOFTWARE FINANCIAL SERVICES & INSURANCE COMMUNICATIONS
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3COM Aetna AT&T
Amdahl American Express Bell Atlantic
AST Research Bank of America BellSouth
AT&T/GSI The Bank of New York Centel
Bull Chemical Bank GTE
Compaq Computer Dean Witter ITT
Digital Equipment Kemper Life ICL
Lotus Development Metropolitan Life NYNEX
Novell National Westminster Bancorp SNET
Wang Skandia Southwestern Bell
Shawmut Bank Sprint
Teacher's Insurance Turner Broadcasting
USF&G
CONSUMER GOODS FOOD & BEVERAGE UTILITIES & ENERGY
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American Brands Burger King AMOCO
Black & Decker CPC International Arco Oil & Gas
Bristol Myers Squibb Dannon BP Oil
Clairol Dole Canadian Occidental
Colgate-Palmolive Hiram Walker -- Allied Vintners Citizens Utilities
Eveready Battery H.J. Heinz Conoco
Gillette Kraft General Foods Mobil Oil
Goodyear Nabisco International Northwest Utilities
Levi Strauss & Co. Pepsi-Cola International Pennzoil
Nike Reckitt & Colman Santa Fe Energy
Sony USA Sara Lee Southern California
Timex Gas
Whirlpool Tenneco
SALES AND MARKETING
The Company has a direct sales force comprised of 77 sales personnel as of
June 30, 1994. The Company supports its sales force with lead generation and
marketing programs which include telemarketing, public relations, direct mail,
advertising, seminars, trade shows and ongoing customer communication programs.
The Company has sales offices at its headquarters in Stamford, Connecticut and
in: Atlanta, Boston, Brussels, Calgary, Chicago, Dallas, Denver, Detroit,
Frankfurt, Hong Kong, Houston, London, Los Angeles, Manchester, Milan, Newark,
Ottawa, Paris, Philadelphia, Rome, St. Louis, San Francisco, Seattle, Tampa, The
Netherlands, Toronto and Washington, DC. Product support and training are
available as well through many of these locations.
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The Company markets its products outside of North America through a
combination of subsidiaries and independent distributors. These distributors are
managed through the Company's facility in Milan, Italy, which is staffed by
fourteen Company employees. The Company has license and distribution agreements
with independent distributors in: Australia, Austria, Japan, Mexico, New
Zealand, Scandinavia, South Africa, Southeast Asia, Spain and Switzerland. The
Company's distributors include affiliates of Arthur Andersen & Co. in Japan,
Spain and Switzerland, and of KPMG Peat Marwick in Australia and New Zealand.
The distributors generally maintain sales and service personnel dedicated solely
to the Company's products. The distribution agreements between the Company and
its distributors generally provide for the exclusive right to offer the
Company's products within a territory, in return for royalties typically equal
to 50% of license and license renewal fees. In each of its 1994, 1993 and 1992
fiscal years, approximately 29.3%, 27.8% and 20.0%, respectively, of the
Company's total revenues were derived from sources outside of the United States.
Because the Company generally ships its products shortly after license
agreements are signed, the Company's software licensing backlog is typically
small.
PRODUCT DEVELOPMENT
To date, all of the Company's products have been developed by its internal
staff except for FASTAR, which was acquired in connection with the Company's
acquisition of Corporate Class Software, Inc., and portions of IMRS OnTrack and
IMRS Forms. When developing a new product or enhancement, the Company works
closely with current and prospective customers to determine their requirements.
A user product enhancement committee, comprised of representatives of certain of
the Company's customers, meets quarterly and advises the Company of their
priorities for product development and enhancement, as well as product support
service.
The Company's current product development efforts are primarily focused on
Hyperion Financials, and on maintaining the competitiveness of its current
product line, including development of the next releases of Hyperion, Micro
Control, IMRS OnTrack and IMRS Forms. The Company generally releases
enhancements to its products every 12 to 18 months. As of June 30, 1994, the
Company's product development was performed by 116 employees primarily located
at its Stamford, Connecticut headquarters.
During fiscal 1994, 1993 and 1992, the Company's product development
expense, which is net of capitalized development costs, was $10,538,000,
$7,029,000 and $5,398,000, or 12.5%, 11.5% and 11.7% of total revenues,
respectively. In accordance with Statement of Financial Accounting Standards No.
86, the Company capitalizes certain development costs. During fiscal 1994, 1993
and 1992, the Company capitalized $4,009,000, $2,050,000 and $1,490,000,
respectively, or 27.6%, 22.6% and 21.6% of total product development
expenditures.
In February 1993, the Company acquired, from MAI Systems Corporation,
client/server accounting and related applications technology for $2,600,000. The
substance of the transaction represented the purchase of research and
development and, as such, is included as a one-time charge in the Company's 1993
operating results. The Company is using this technology to develop accounting
software, including general ledger, accounts payable, accounts receivable, fixed
assets and purchasing systems. Complementing Hyperion, the Company's existing
Microsoft Windows-based financial information solution, these products will
constitute Hyperion Financials, a fully integrated line of financial
applications software designed for large company client/server environments. The
accounting products are scheduled for commercial release beginning in calendar
year 1995.
COMPETITION
The principal competitive factors in the markets served by the Company
include product quality and functionality, speed, reliability, ease of use,
customer satisfaction, service, price, and vendor reputation and financial
stability. The Company believes that its products currently compete favorably
with respect to such factors, although it may be at a competitive disadvantage
against companies with greater financial, marketing, service and support and
technological resources.
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The Company experiences competition from applications software vendors and
from software developed by the MIS departments of its potential customers. Many
of the Company's potential customers utilize software developed internally for
mainframes or minicomputers. The market for network-based business information
software is still an emerging market and is not well established. As the market
for the Company's products develops, additional competitors may enter the market
and competition may intensify. Some of the Company's current and potential
competitors have significantly greater development, marketing and capital
resources than the Company. While IMRS is anticipating formidable competition
with respect to Hyperion Financials, the Company believes the presence and
acceptance of its existing financial management solutions in the marketplace
will serve to establish the position of Hyperion Financials in the emerging
client/server, transaction-based accounting applications market.
PROPRIETARY RIGHTS AND LICENSES
The Company depends upon a combination of trade secret, copyright and
trademark laws, license agreements, nondisclosure and other contractual
provisions and technical measures to protect its proprietary rights in its
products. In addition, the Company attempts to protect its trade secrets and
other proprietary information through agreements with employees and consultants.
Despite these precautions, it may be possible for unauthorized third parties to
copy aspects of the Company's products or to obtain information that the Company
regards as proprietary. The Company also seeks to protect the source code of its
products as a trade secret and as an unpublished copyright work.
The Company distributes its products under software license agreements
which grant customers a nonexclusive, nontransferable license to the Company
products and contain terms and conditions prohibiting the unauthorized
reproductions or transfer of the Company's products. The Company does not
provide licensees with the source code for its products.
Customers are billed an initial license fee for the software upon delivery
and, subsequently, are billed an annual license renewal fee entitling them to
routine support and product updates. The license renewal fee is typically
calculated at a fixed percentage of the then-current price of all licensed
software used by the customer, subject to a maximum year-to-year increase of
10%. After four years, the licensee may elect to cease paying annual license
renewal fees and receive a perpetual fully paid license to use the licensed
software in its then current form, without receiving future updates or product
support. See "Services."
The Company believes that, due to the rapid pace of innovation within the
software industry, factors such as the technological and creative skills of its
personnel and ongoing reliable product maintenance and support are more
important in establishing and maintaining a leadership position within the
industry than are the various legal protections of its technology. In addition,
the Company believes that the nature of its customers, the importance of the
Company's products to them and their need for continuing product support reduce
the risk of unauthorized reproduction.
EMPLOYEES
As of July 31, 1994, the Company employed a total of 580 employees,
including 139 in marketing and sales, 389 in product development, support and
technical services, and 52 in management, administration and finance. None of
the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes that its employee relations are good.
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The executive officers of the Company are as follows:
NAME AGE POSITION
---- --- --------
James A. Perakis......... 50 President and Chief Executive Officer and Director
Terence W. Rogers........ 52 Executive Vice President
David M. Sample.......... 46 Senior Vice President
John N. Adinolfi......... 44 Vice President -- Marketing
Thomas E. Bell........... 40 Vice President -- Product Development
Gordon O. Rapkin......... 39 Vice President -- Product Management and Planning
Lucy Rae Ricciardi....... 52 Vice President -- Finance and Chief Financial
Officer
Craig M. Schiff.......... 39 Vice President -- Products and Services and
Secretary
Mr. Perakis has served as Chief Executive Officer and as a director of the
Company since September 1985 and as President since December 1987. Mr. Perakis
is also Chairman of the Board of Directors. From 1983 to September 1985, Mr.
Perakis served as Senior Vice President and General Manager of Chase Decision
Systems, a division of Interactive Data Corporation, a developer and marketer of
mainframe software for planning and financial applications. From 1979 to 1983,
Mr. Perakis was Chief Financial Officer of Interactive Data Corporation, a
supplier of data and software to financial and corporate markets.
Mr. Rogers was appointed Executive Vice President of the Company in August
1993. From August 1991 to August 1993, Mr. Rogers served as Vice President --
Communications Products Division of Lotus Development Corporation, a developer
and marketer of applications software and information services. From April 1990
to August 1991, Mr. Rogers was Vice President -- Spreadsheet Development of
Lotus. Prior to April 1990, Mr. Rogers served in a variety of senior development
positions at IBM.
Mr. Sample was appointed Senior Vice President of the Company in July 1993.
From July 1986 to July 1993, Mr. Sample served as Vice President -- Sales of the
Company. From 1978 to July 1986, Mr. Sample was associated with the Business
Information Services Division of Control Data Corporation, most recently as a
District Sales Manager.
Mr. Adinolfi has served as Vice President -- Marketing of the Company since
March 1987. Prior to March 1987, Mr. Adinolfi served in a variety of software
and product management positions with Dun & Bradstreet.
Mr. Bell was appointed Vice President -- Product Development of the Company
in April 1994. From May 1991 to April 1994, Mr. Bell served first as Director of
Software Architecture and later as Director of Programming of the Company. Prior
to May 1991, Mr. Bell served as Director of Development with Must Software, a
spin-off from Dun & Bradstreet.
Mr. Rapkin was appointed Vice President -- Product Management and Planning
of the Company in November 1992. From October 1988 to November 1992, Mr. Rapkin
served as Vice President -- Product Development of the Company. From 1981 to
October 1988, Mr. Rapkin served as Senior Director, Product Development of
Comshare, Inc., an applications software company.
Ms. Ricciardi has served as Vice President -- Finance and Chief Financial
Officer of the Company since February 1990. From February 1988 to February 1990,
Ms. Ricciardi served as Director of Finance of the Company. Prior to 1988, Ms.
Ricciardi was associated with Dun & Bradstreet, most recently in its
Acquisitions Analysis Group.
Mr. Schiff has served as Vice President -- Products and Services of the
Company since July 1985. Mr. Schiff originally joined the Company in July 1983.
Prior to July 1983, Mr. Schiff served in a variety of customer service and
support positions with General Electric Information Services.
ITEM 2. PROPERTIES
The Company's principal administrative, marketing and product development
and support facilities are located in Stamford, Connecticut, where the Company
leases approximately 73,600 square feet under several agreements that expire in
fiscal 1996. The annual base rent (not including operating expenses, insurance,
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property taxes and assessments) is approximately $1,300,000 and is subject to an
annual adjustment in accordance with the Consumer Price Index.
The Company also leases regional office space for its local sales and
service needs.
On September 27, 1994, the Company agreed in principle to purchase an
office facility in Stamford, Connecticut for $11.4 million. The Company has
outgrown, particularly with respect to increases in research and development
activities, the offices it currently leases in Stamford. The new location has
approximately 140,000 square feet of existent office space and it offers the
possibility of expansion.
The purchase price is to be financed by the Connecticut Development
Authority ("CDA," an agency of the State of Connecticut) through a $9.5 million
mortgage loan, with Company funds to be used for the balance. In the interest of
Connecticut-based jobs, the CDA has agreed to such financing over a 15 year
period at LIBOR minus 2%, subject to, among other things: (i) the creation of a
specified number of new Connecticut-based jobs, (ii) a ten year residency in the
state, and (iii) the payment of the remaining unpaid principal at year ten.
Violations of certain such covenants, if any, would result in additional
interest charges and/or a penalty payment.
The purchase transaction is subject to a third party's right of first
refusal to acquire the property which right expires in October 1994, as well as
the outcome of customary due diligence procedures, including independent
appraisals of the property, and the execution of a definitive purchase and sale
agreement. In the meantime, the Company continues its evaluation of various
other expansion alternatives.
ITEM 3. LEGAL PROCEEDINGS
The Company has no material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders, through the solicitation of
proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
See the section entitled "Common Stock Data," which is incorporated herein
by reference, appearing on page 34 of the Company's 1994 Annual Report to
Stockholders.
ITEM 6. SELECTED FINANCIAL DATA
See the section entitled "Selected Consolidated Financial Data," which is
incorporated herein by reference, appearing on page 12 of the Company's 1994
Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
See the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which is incorporated herein by reference,
appearing on pages 13 through 19 of the Company's 1994 Annual Report to
Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, which are incorporated herein by
reference to the Company's 1994 Annual Report to Stockholders, are indexed
herein under Item 14(a)(1) of Part IV. See also the financial statement
schedules appearing herein, as indexed under Item 14(a)(2) of Part IV.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See the sections entitled "Election of Directors" and "Reports About
Ownership of the Company's Common Stock," which are incorporated herein by
reference to the Company's Proxy Statement for its 1994 Annual Meeting of
Stockholders. See also the section entitled "Executive Officers of the Company"
appearing in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
See the section entitled "Compensation Information Concerning Directors and
Officers," which is incorporated herein by reference to the Company's Proxy
Statement for its 1994 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the section entitled "Principal Holders of Voting Securities," which is
incorporated herein by reference to the Company's Proxy Statement for its 1994
Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See the section entitled "Certain Transactions," which is incorporated
herein by reference to the Company's Proxy Statement for its 1994 Annual Meeting
of Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) FINANCIAL STATEMENTS WHICH ARE INCORPORATED HEREIN BY REFERENCE TO THE
COMPANY'S 1994 ANNUAL REPORT TO STOCKHOLDERS:
Consolidated Balance Sheet as of June 30, 1994 and 1993.
Consolidated Statement of Income for the years ended June 30, 1994,
1993 and 1992.
Consolidated Statement of Stockholders' Equity for the years ended June
30, 1994, 1993 and 1992.
Consolidated Statement of Cash Flows for the years ended June 30, 1994,
1993 and 1992.
Notes to Consolidated Financial Statements.
(2) FINANCIAL STATEMENT SCHEDULES, WHICH ARE INCLUDED AT THE END OF THIS
REPORT:
Schedule VIII -- Valuation and Qualifying Accounts
Schedule IX -- Short-Term Borrowings
All other schedules have been omitted since they are not required, not
applicable or the information has been included in the consolidated
financial statements or the notes thereto.
(3) EXHIBITS:
EXHIBIT NO. DESCRIPTION
- - - ----------- -----------------------------------------------------------------------------
**3.1 -- Restated Certificate of Incorporation of the Company.
**3.2 -- By-laws, as amended and restated, of the Company.
**10.1 -- 1985 Incentive Stock Option Plan.
**10.2 -- 1989 Stock Option Plan.
**10.3 -- 1991 Stock Plan.
**10.4 -- 1991 Employee Stock Purchase Plan.
**10.5 -- 1991 Non-Employee Director Stock Option Plan.
**10.6 -- Sub-Lease Agreement with Amstar Corporation for the lease of premises located
at 777 Long Ridge Road, Stamford, CT
**10.7 -- Sub-Lease Agreement with Citicorp North America, Inc. for the lease of
premises located at 777 Long Ridge Road, Stamford, CT.
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EXHIBIT NO. DESCRIPTION
- - - ----------- -----------------------------------------------------------------------------
**10.8 -- Sub-Lease Agreement with National Reinsurance Corporation for the lease of
premises located at 777 Long Ridge Road, Stamford, CT.
***10.9 -- Amended and Restated Credit Agreement with The Bank of New York and the
signatory banks thereto, dated as of May 1, 1992 (including forms of guaranty
and security agreement, and pledge agreement).
**10.10 -- Registration Rights Agreement among the Company and certain holders of Common
Stock of the Company, dated as of August 9, 1991
10.11 -- Employment Agreement with James A. Perakis, dated as of August 1, 1993
10.12 -- Employment Agreement with David M. Sample, dated as of July 1, 1994
10.13 -- Employment Agreement with Lucy Rae Ricciardi, dated as of July 1, 1994.
10.14 -- Employment Agreement with Craig M. Schiff, dated as of July 1, 1994.
10.15 -- Employment Agreement with John N. Adinolfi, dated as of July 1, 1994
10.16 -- Employment Agreement with Gordon O. Rapkin, dated as of July 1, 1994.
**10.17 -- Agreement with Marco Arese Lucini, dated as of October 1, 1990.
**10.18 -- Stock Option Agreement with Harry S. Gruner, dated as of December 22, 1989.
10.19 -- Employment Agreement with Thomas Bell, dated as of July 1, 1994.
**10.20 -- Form of Software License Agreement.
**10.21 -- Consulting Agreement with Natcom Consulting Services Ltd., dated as of
January 1, 1988.
**10.22 -- Consulting Agreement with Natcom Consulting Services Ltd., dated as of
January 1, 1991, and amendments thereto.
**10.23 -- Software Development License Agreement with Teknedata S.R.L.
**10.24 -- Lease with 1033 Washington Blvd. Associates, dated as of December 23, 1985
and amended thereto.
10.25 -- [Reserved]
10.26 -- [Reserved]
**10.27 -- License Agreement with KPMG Peat Marwick Hungerfords Managements Consultants
dated as of June 8, 1989.
**10.28 -- Trademark and Tradename License Agreement with KPMG of Hong Kong.
**10.29 -- License Agreement with IMRS Nordic dated as of January 1, 1989.
**10.30 -- License Agreement with Prologic Decision Support (PTY) Ltd. dated as of March
28, 1991.
**10.31 -- License Agreement with Arthur Andersen Japan dated as of December 17, 1990.
*10.32 -- Software Development and License Agreement with Channel Computing, Inc.,
dated February 27, 1992.
**10.33 -- License Agreement with Arthur Andersen AG dated as of November 2, 1989.
**10.34 -- License Agreement with Drs. A.J. Hordijk BV dated as of July 1, 1989.
10.35 -- [Reserved]
*10.36 -- Distributor Agreement with Arthur Andersen Auditors, S.A. dated March 1,
1992.
*10.37 -- Distributor Agreement with Austrian Industries Informatics Ges.m.b.H dated
July 1, 1992.
***10.38 -- Amendment to the Termination of the License Agreement with Sema Group Systems
Limited, Government and Commerce Division, dated March 31, 1992.
***10.39 -- Exclusive Sales Agency Agreement with Sema Group Systems Limited, Government
and Commerce Division, dated April 1, 1992
***10.40 -- Business Purchase and Sale Agreement with Sema Group Systems Limited,
Government and Commerce Division, dated March 31, 1992, effective July 1,
1992.
****10.41 -- Asset Purchase and Sale Agreement between Columbia Software, Inc. and IMRS
Inc., dated January 21, 1993.
****10.42 -- Asset Purchase and Sale Agreement between MAI Systems Corporation and IMRS
Inc., dated February 12, 1993.
*****10.43 -- Letter Agreement with Arthur Andersen AG, dated as of May 19, 1993, regarding
distribution of Company products in Switzerland and Liechtenstein.
*****10.44 -- Waiver and Amendment to Amended and Restated Credit Agreement with The Bank
of New York and signatory banks thereto, dated as of June 30, 1993.
*****10.45 -- Employment Agreement with Terence W. Rogers, dated as of July 16, 1993.
10.46 -- Distributor Agreement with Consultores de Integracion de Sistemas S.A. de
C.V.
10.47 -- Distributor Agreement with Delteq Systems Pte Ltd. 13.1
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EXHIBIT NO. DESCRIPTION
- - - ----------- -----------------------------------------------------------------------------
13.1 -- Registrant's Annual Report to Stockholders for fiscal year ended June 30,
1994 (filed herewith to the extent expressly incorporated by reference
herein).
22.1 -- Subsidiaries of the Company.
23.1 -- Consent of Ernst & Young LLP, independent auditors (filed herewith).
- - - ---------------
* Incorporated by reference to the exhibits to the registrant's
Registration Statement on Form S-1 (File No. 33-50694)
** Incorporated by reference to the exhibits to the registrant's Registration
Statement on Form S-1 (File No. 33-42855).
*** Incorporated by reference to the exhibits to the registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1992.
**** Incorporated by reference to the exhibits to the registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1992.
***** Incorporated by reference to the exhibits to the registrant's Annual
Report on Form 10-K for the year ended June 30, 1993.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed or were required to be filed by the
registrant during the fourth quarter of the fiscal year ended June 30, 1994.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
IMRS INC.
(Registrant)
/s/ JAMES A. PERAKIS
Date: September 27, 1994 By:.................................
JAMES A. PERAKIS
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- - - ------------------------------ ----------------------------------------- -------------------
/S/ JAMES A. PERAKIS President, Chief Executive Officer and September 27, 1994
............................ Director
JAMES A. PERAKIS (principal executive officer)
/S/ LUCY RAE RICCIARDI Chief Financial Officer September 27, 1994
............................ (principal financial and accounting
LUCY RAE RICCIARDI officer)
/S/ GARY G. GREENFIELD Director September 22, 1994
............................
GARY G. GREENFIELD
Director September , 1994
............................
HARRY S. GRUNER
/S/ WILLIAM W. HELMAN IV Director September 21, 1994
............................
WILLIAM W. HELMAN IV
/S/ MARCO ARESE LUCINI Director September 27, 1994
............................
MARCO ARESE LUCINI
/S/ ALDO PAPONE Director September 27, 1994
............................
ALDO PAPONE
Director September , 1994
............................
ROBERT W. THOMSON
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SCHEDULE VIII
IMRS INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
ADDITIONS
----------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER ACCOUNTS DEDUCTIONS END
DEDUCTIONS OF PERIOD EXPENSES -- DESCRIBE -- DESCRIBE OF PERIOD
- - - ------------------------------- ---------- ----------- --------------- ----------- -----------
For the year ended June 30,
1992
Allowance for doubtful
accounts, returns and
discounts............... $ 601 $ 706 $ 257(a) $ 1,050
For the year ended June 30,
1993
Allowance for doubtful
accounts, returns and
discounts............... 1,050 1,194 1,044(a) 1,200
For the year ended June 30,
1994
Allowance for doubtful
accounts, returns and
discounts............... 1,200 1,904 1,604(a) 1,500
- - - ---------------
(a) Write-offs, returns and discounts, net of recoveries.
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SCHEDULE IX
IMRS INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
(DOLLARS IN THOUSANDS)
(B)
(A) WEIGHTED
MAXIMUM AVERAGE AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
BALANCE AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE AT END INTEREST DURING DURING DURING
SHORT-TERM BORROWINGS OF PERIOD RATE THE PERIOD THE PERIOD THE PERIOD
- - - ----------------------------------------- --------- -------- ----------- ----------- ----------
Year ended June 30, 1992
14% notes payable................... $68 14% $ 73 $ 67 14%
Revolving line of credit............ -- 9.5% 731 244 9.5%
- - - ---------------
(a) The average amount outstanding during the period was computed by dividing
the total of month-end outstanding principal balances by 12.
(b) The weighted average interest rate during the period was computed by
dividing the actual interest expense by the average amount of short-term
debt outstanding during the period.
17