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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, 1998 OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-20059
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ARDENT SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2818132
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 WASHINGTON STREET 01581-1021
WESTBORO, MASSACHUSETTS (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (508) 366-3888
----------------------------
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 outstanding of each of the registrant's classes of
common stock as of:
DATE CLASS OUTSTANDING SHARES
March 31, 1998 Common stock, $.01 par value 14,494,478
The index to the Exhibits appears on page 15
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ARDENT SOFTWARE, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
PAGE NUMBERING IN
SEQUENTIAL NUMBERING SYSTEM
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations
for the three months ended March 31, 1998
and March 30, 1997 4
Condensed Consolidated Statement of Comprehensive Loss
for the three months ended March 31, 1998 and
March 30, 1997 5
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1998 and March 30, 1997 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 17
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PART I FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ARDENT SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, 1998 Dec. 31, 1997
-------------- -------------
ASSETS
Current assets:
Cash and equivalents $ 15,526 $ 24,155
Accounts receivable - net 20,711 21,161
Income tax receivable 376 322
Prepaid expenses, deferred income taxes and other current assets
8,224 7,224
-------- --------
Total current assets 44,837 52,862
-------- --------
Property and equipment - net 6,408 15,916
-------- --------
Long-term assets:
Intangible assets - net 9,798 10,616
Deferred income taxes and other long-term assets 10,125 8,020
-------- --------
Total long-term assets 19,923 18,636
-------- --------
Total assets $ 71,168 $ 87,414
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Line of credit $ -- $ 7,357
Accounts payable, accrued expenses and other current
liabilities 20,407 19,098
Accrued merger and restructuring costs 6,142 1,068
Deferred revenue 16,246 13,248
-------- --------
Total current liabilities 42,795 40,771
-------- --------
Long-term liabilities:
Non-current debt and other long-term liabilities 9,720 21,190
-------- --------
Stockholders' equity 21,609 28,409
Cost of treasury stock (2,956) (2,956)
-------- --------
Total stockholders' equity 18,653 25,453
-------- --------
Total liabilities and stockholders' equity $ 71,168 $ 87,414
======== ========
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ARDENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended
------------------------------
March 31, 1998 March 30, 1997
-------------- --------------
Revenue:
Software $ 14,792 $13,301
Services and other 10,918 10,493
-------- -------
Total revenue 25,710 23,794
-------- -------
Costs and expenses:
Cost of software 1,671 2,072
Cost of services and other 5,355 5,947
Selling and marketing 9,289 9,238
Product development 4,240 3,675
General and administrative 2,628 2,941
Merger costs 14,895 --
-------- -------
Total costs and expenses 38,078 23,873
-------- -------
Loss from operations (12,368)
(79)
Other income (expense)-net 154 (517)
-------- -------
Loss before income tax benefit (12,214) (596)
Income tax benefit (2,857) (61)
-------- -------
Net loss $ (9,357) $ (535)
======== =======
Basic and diluted loss per common share $ (.66) $ (.04)
======== =======
Basic and diluted shares used for computation 14,206 13,529
======== =======
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ARDENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
(IN THOUSANDS)
Three months ended Three months ended
March 31, 1998 March 30, 1997
Net loss $(9,357) $(535)
Change in translation adjustment (91) (48)
------- -----
Comprehensive net loss $(9,448) $(583)
======= =====
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ARDENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Three Months Ended
-------------------------------
March 31, 1998 March 30, 1997
-------------- --------------
Cash flows from operating activities:
Net income $ (9,357) $ (535)
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 1,733 2,381
Stock compensation 7 7
Loss on disposal of assets 889 88
Change in deferred income taxes (3,961) (238)
Increase (decrease) in cash from:
Current assets 2,334 4,440
Current liabilities 9,877 (3,497)
-------- -------
Cash provided by operations 1,522 2,646
-------- -------
Cash flows from investing activities:
Expenditures for property and equipment (345) (723)
Expenditures for intangible assets (604) (716)
Decrease (increase) in cash surrender value of officers' life
insurance and deposits and other (273) (188)
Other assets (1,500) (639)
-------- -------
Cash used in investing activities (2,722) (2,266)
-------- -------
Cash flows from financing activities:
Sale of common stock 2,641 184
Borrowings under line of credit 7,330 -
Repayments of line of credit (7,357) (371)
Repayments under long-term debt (10,000) (130)
-------- -------
Cash provided by (used in) financing activities (7,386) 62
-------- -------
Effect of exchange rate changes on cash (43) (111)
-------- -------
Decrease in cash and equivalents (8,629) (48)
Cash and equivalents, beginning of period 24,155 15,545
-------- -------
Cash and equivalents, end of period $ 15,526 $15,497
======== =======
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission regarding interim financial reporting.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements and should be read in conjunction with the audited financial
statements included in the Company's Annual Report to Stockholders for the
year ended December 31, 1997 and the Company's Registration Statement on
Form S-4, filed on December 31, 1997, related to the merger with Unidata,
Inc. ("Unidata").
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements have been prepared on the same basis as
the audited consolidated financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the interim periods presented. The operating results for
the interim periods presented are not necessarily indicative of the results
which could be expected for the full year.
On February 10, 1998 the Company merged with Unidata. The merger was
accounted for as a pooling-of-interests and, accordingly, the consolidated
financial statements have been restated to include the accounts of Unidata
for all fiscal periods presented.
2. Income (Loss) Per Common Share
Basic income (loss) per common share is computed using the weighted average
number of common shares outstanding during each year. Diluted income (loss)
per common share reflects the effect of the Company's outstanding options
(using the treasury stock method), except where such items would be
anti-dilutive.
3. Income Taxes
The Company provides for income taxes at the end of each interim period
based on the estimated effective tax rate for the full fiscal year,
adjusted for significant non-deductible costs. Cumulative adjustments to
the tax provision are recorded in the interim period in which a change in
the estimated annual effective rate is determined.
4. Litigation
The Company is a defendant, together with certain of its officers, in two
actions initially filed in October 1995 in the U.S. District Court in the
District of Massachusetts. Those actions have been consolidated through the
filing of a Consolidated Amended Complaint (the "Complaint"). The
plaintiffs allege in the Complaint that the Company and certain of its
officers, during July through October 1995, made certain untrue statements
and failed to disclose certain information regarding the Company's
prospective financial performance in violation of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder and that such
statements and omissions artificially inflated the market prices of the
Company's stock. The plaintiffs purport to bring the actions on behalf of
certain classes of stockholders and seek damages in unspecified amounts.
The Company has denied the allegations in its answer to the Complaint. The
discovery stage of the proceeding is now substantially complete. Although
the Company's motion for summary judgement has been denied, management of
the Company believes that the actions are without merit and plans to
continue to oppose them
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vigorously.
The Company is a defendant in two actions filed against Unidata prior to
its merger into the Company, one in May 1996 in the U.S. District Court for
the Western District of Washington and one in September 1996 in the U.S.
District Court for the District of Colorado. The plaintiff, a company
controlled by a former stockholder of Unidata and a distributor of its
products in certain parts of Asia, alleges in both suits that Unidata
improperly authorized distribution of certain Unidata products in the
plaintiff's exclusive territory and asserts damages of approximately
$30,000,000 under claims for fraud, breach of contract, unfair competition,
RICO violations, and trademark and copyright infringement, among other
relief. Unidata denied the allegations in its answers to the complaints and
the proceedings are currently in their early stages. Management of the
Company believes that the actions are without merit and plans to continue
to oppose them vigorously.
5. Acquisition Costs
In connection with the merger with Unidata, the Company recorded a
one-time charge for merger costs of $14,895,000. Included in these costs
were $3,910,000 for financial advisor, legal, and accounting fees related
to the merger and $10,985,000 for costs associated with the combining
operations of the two companies including expenditures of $6,209,000 for
severance, benefits and other, $2,170,000 for closure of facilities and
$2,606,000 for the write-off of redundant assets. As of March 31, 1998,
$5,225,000 remains unpaid, comprised principally of severance and facility
costs.
6. Line of Credit
In March, 1998, the Company entered into a working capital line of credit
with a bank under which the Company may borrow up to the lesser of
$12,500,000 or 80% of eligible domestic accounts receivable and 70-80% of
eligible foreign accounts receivable, conditioned upon meeting certain
financial covenants, including maintaining specified levels of quarterly
earnings, tangible net worth, working capital and liquidity. The line of
credit also limits the Company's ability to pay dividends. At March 31,
1998, there was $7,330,000 outstanding under the Company's line of credit
which has been classified under long-term liabilities as the line of
credit expires in March 2000. No additional amounts were available for
borrowing.
7. Commitments
In March, 1998, the Company renegotiated the lease of its principal
operating facility. This lease had been classified as a capital lease. As
a result of this renegotiation, the term of the lease was modified and
reduced from 20 years to 13 years. As a result of this modification, the
lease no longer qualifies as a capital lease and has been reclassified as
operating. In connection with this reclassification, the Company removed
the asset and liability from the balance sheet and recorded a net gain of
approximately $600,000 in the quarter ended March 31, 1998.
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8. Comprehensive Loss
Effective January 1, 1998, the Company adopted the Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income,"
which requires the presentation of an additional primary financial
statement providing a prominent display of the components of items of
other comprehensive loss. The only item that the Company currently records
as other comprehensive loss is the change in cumulative translation
adjustment resulting from the changes in exchange rates and the effect of
those changes upon translation of the financial statements of the
Company's foreign operations. As of March 31, 1998 and December 31, 1997,
the cumulative translation adjustment was ($246,000) and ($155,000),
respectively.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
VMARK SOFTWARE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
INTRODUCTION
On February 10, 1998, the Company completed the merger with Unidata, Inc. The
merger was accounted for as a pooling-of-interests, and the accompanying
financial statements have been restated to include the accounts of Unidata, Inc.
with those of the Company for all fiscal periods presented.
The discussion which follows analyzes the combined results of operations for the
three months ended March 31, 1998 and the comparable fiscal period in 1997.
RESULTS OF OPERATIONS
The following table sets forth certain data as a percentage of total revenue for
the three months ended March 31, 1998 and March 30, 1997.
Three Months Ended
-------------------------
March 31, March 30,
1998 1997
--------- -------
Revenue:
Software 57.5% 55.9%
Services and other 42.5 44.1
----- -----
Total revenue 100.0 100.0
----- -----
Costs and expenses:
Cost of software 6.5 8.7
Cost of services and other 20.8 25.0
Selling and marketing 36.1 38.8
Product development 16.5 15.4
General and administrative 10.2 12.4
Merger costs 57.9 --
----- -----
Total costs and expenses 148.1 100.3
----- -----
Income from operations (48.1)% (--)%
===== =====
REVENUE
The Company's total revenue increased 8% to $25,710,000 in the first quarter of
1998 from $23,794,000 in the first quarter of 1997. The increase in the first
quarter revenue was due primarily to the increase in sales of the data warehouse
and object database product lines.
Software license revenue for the first quarter of 1998 increased 11% from the
first quarter of 1997. This increase is due principally to the increase in
DataStage revenue which represented approximately 14% of license revenue in the
quarter ended March 31, 1998 compared to 4% of license revenue in the same
period of the prior year. The DataStage product was introduced in first quarter
of 1997. In addition, license revenue increased due to revenue associated with
the object database product, O2 System, acquired through the acquisition of O2
Technology in December 1997. Software license revenue increased to 58% of total
revenue from 56% in the quarter ended March 30, 1997.
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Services and other revenue, consisting of consulting, training, and software
maintenance, increased 4% to $10,918,000 in the first quarter of 1998 from
$10,493,000 in the first quarter of 1997. This increase is due primarily to the
increase in service revenue associated with DataStage which represented 3% of
services and other revenue compared to less than 1% in the prior year comparable
quarter. In addition, the increase is also due to an increase in revenue
associated with other maintenance support contracts which increased 10% over the
prior year comparable quarter. Services and other revenue decreased to 42% of
total revenue from 44% in the first quarter of 1997.
COST OF SOFTWARE
Cost of software, which consists of amortization of technology licenses and
capitalized software, product royalties, product documentation, packaging, media
and production costs, decreased 19% to $1,671,000 for the first quarter of 1998
from $2,072,000 for the same period of the prior year. This decrease in cost of
software is due to a reduction in amortization costs related to software and
other capitalized costs, as well as the maturation of certain royalty agreements
late in 1997. Cost of software decreased to 11% of license revenue from 16% in
the first quarter of 1997.
COST OF SERVICES AND OTHER
Cost of services and other, which consist of consulting, training, and other
customer support service costs decreased 10% to $5,355,000 for the first quarter
of 1998 as compared to $5,947,000 in the same period of the prior year. This
decrease in costs is a result of the Company utilizing less sub-contracted
resources on consulting engagements. As a result, the profit margin associated
with services and other revenue has increased when compared to the first quarter
of 1997 to 51% from 43%. This increase in margins is also attributable to a
higher percentage of services and other revenue in 1998 being comprised of
customer maintenance support revenue which typically has a higher profit margin
than revenue derived from training and consulting services.
SELLING AND MARKETING
Selling and marketing expenses, which consist primarily of sales organization
costs and marketing programs, represented 36% of total revenue or $9,289,000 in
the first quarter of 1998 compared to 39% of total revenue or $9,238,000 in the
same period of the prior year. The relative flat levels of spending is partially
due to cost savings associated with the decrease in spending on promotions of
the relational database technology and tools products due to efficiencies gained
from the merger. This spending represented 55% of the spending in 1998 as
compared to 97% in 1997. These savings were offset by the additional investment
in the DataStage and O2 System products selling and marketing programs, which
represented 45% of total selling and marketing costs in 1998 as compared to 3%
in 1997.
PRODUCT DEVELOPMENT
Product development expenses, which consist primarily of salaries and related
benefits of development personnel and facility costs, increased 15% to
$4,240,000 in the first quarter of 1998 as compared to the same period of the
prior year. This increase in spending is due primarily to development efforts
dedicated to the DataStage and O2 System products. Product development expenses
as a percentage of revenue increased to 17% for the first quarter as compared to
15% for the comparable period of 1997. The Company is currently investing 53% of
its research and development funds into these new technologies in the first
quarter of 1998 compared to 4% in the same period of 1997. Relational database
technology and tools development represented 47% of research and development
costs in the first quarter of 1998 as compared to 97% in 1997.
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GENERAL AND ADMINISTRATIVE
General and administrative expenses decreased 11% to $2,628,000 for the first
quarter of 1998 as compared to the same period of the prior year. The first
quarter decrease was due to cost synergies realized through the elimination of
duplicate positions and facilities in conjunction with the merger of the Company
and Unidata.
MERGER COSTS
The Company recorded a one time charge of $14,895,000 associated with the merger
with Unidata. This amount includes $3,910,000 for financial advisor, legal, and
accounting fees related to the merger and $10,985,000 for costs associated with
the combining operations of the two companies including expenditures of
$6,209,000 for severance, benefits and other, $2,170,000 for closure of
facilities and $2,606,000 for the write-off of redundant assets. As of March 31,
1998, $5,225,000 remains unpaid comprised principally of severance and facility
costs.
INCOME TAXES
The Company recorded a benefit from income taxes of $2,857,000 for the first
quarter of 1998 compared to a benefit of $61,000 for the first quarter of 1997.
This represents an effective tax rate of 23% in 1998. This effective tax rate is
substantially less than the statutory rate due to certain non-deductible merger
charges incurred in the first quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations to date primarily through sales of equity
securities and positive cash flow from operations. At March 31, 1998 the Company
had $15,526,000 in cash and cash equivalents and $2,042,000 in working capital
($18,288,000 excluding deferred revenue, the satisfaction of which will have no
cash impact). The Company has a working capital line of credit with a bank under
which the Company may borrow, on an unsecured basis, up to the lesser of
$12,500,000 or 80% of domestic eligible accounts receivable and 70-80% of
eligible foreign accounts receivable, conditioned upon meeting certain financial
covenants, including maintaining specified levels of quarterly earnings,
tangible net worth and liquidity. The line of credit also limits the Company's
ability to pay dividends. At March 31, 1998, there was $7,330,000 outstanding
under the Company's line of credit which has been classified under long-term
liabilities as the line of credit expires in March 2000. No additional amounts
were available for borrowing.
The Company believes that its available cash, anticipated cash generated from
operations based upon its operating plan, and amounts available under its credit
facility will be sufficient to finance the Company's operations and meet its
foreseeable cash requirements at least for the next twelve months.
During the quarter, the company transferred its rights to certain accounts
receivable to a finance company in exchange for cash payments from the finance
company. Total cash received by the Company in the first quarter of 1998 under
these arrangements was approximately $4,000,000.
In March, 1998, the Company renegotiated the lease of its principal operating
facility. This lease had been classified as a capital lease. As a result of this
renegotiation, the term of the lease was modified and reduced from 20 years to
13 years. As a result of this modification, the lease no longer qualifies as a
capital lease and has been reclassified as operating. In connection with this
reclassification, the Company removed the asset and liability from the balance
sheet and recorded a net gain of approximately $600,000 in the quarter ended
March 31, 1998
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RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) released Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosure About Segments of an Enterprise and
Related Information," both of which were adopted by the Company in the first
quarter of 1998. SFAS 130 requires that the Company to provide a prominent
display of the components of items of other comprehensive income. SFAS No. 131
requires the Company to provide information about the segments of its business
based upon discrete components of its businesses; such information will be
provided in the Company's Annual Report on Form 10-K.
CAUTIONARY STATEMENT
When used anywhere in this 10-Q and in future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases and in oral
statements made with the approval of an authorized executive officer of the
Company, the words or phrases "will likely result", "are expected to", "will
continue", "is anticipated", "estimated", "project", or "outlook" or similar
expressions (including confirmations by an authorized executive officer of the
Company of any such expressions made by a third party with respect to the
Company) are intended to identify "forward-looking statements", which speak only
as of the date made. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Certain of
such risks and uncertainties are set forth below and in Part II of the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. The Company
specifically declines any obligation to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
FACTORS AFFECTING FUTURE RESULTS
The Company operates in a rapidly changing environment that involves a number of
risks, many of which are beyond the Company's control. The following discussion
highlights some of these risks.
The Company's future operating results may vary substantially from period to
period. The timing and amount of the Company's license fee revenues are subject
to a number of factors that make estimation of revenues and operating results
prior to the end of the quarter extremely uncertain. Quarterly fluctuations may
be caused by several factors including but not limited to timing of customer
orders, adjustments of delivery schedules to accommodate customer or regulatory
requirements, timing and level of international sales, mix of products sold, and
timing of level of expenditures for sales, marketing and new product
development. The Company generally ships its products upon receipt of orders and
maintains no significant backlog. The company has experienced a pattern of
recording 60 percent to 80 percent of its quarterly revenues in the third month
of the quarter, with a concentration of such revenues in the last two weeks of
that third month. The Company's operating expenses are based on projected annual
and quarterly revenue levels and a substantial portion of the Company's costs
and expenses, including costs of personnel and facilities, cannot be easily
reduced. As a result, if projected revenues are not achieved in the expected
time frame, the Company's results of operations for that quarter would be
adversely affected. Accordingly, the results of any one period may not be
indicative of the operating results for future periods.
The market price of the Company's common stock is highly volatile. Failure to
achieve revenue, earnings, and other operating and financial results as
forecasted or anticipated by analysts could result in an immediate adverse
effect on the market price of the Company's stock.
The Company currently derives a substantial portion of its total revenue from
its core database products, UniVerse and Unidata. The Company's future results
will depend, to a significant extent, on continued
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market acceptance of these products as well as market acceptance of new
products, such as DataStage and O2 System. Any factor adversely affecting the
market for these products would have a material adverse effect of the Company's
business and financial results.
The market for the Company's products is characterized by ongoing technological
developments and changes in customer requirements and industry standards. If the
Company is unable to develop and introduce new products or enhancements in a
timely manner in response to changing market conditions or customer requirements
or if errors are found in products after commercial shipments, the Company's
business and results of operations will be adversely affected.
Approximately 36% of the Company's total revenue in the quarter ending March
31, 1998 was attributable to international sales made through international
subsidiaries. Because a substantial portion of the Company's total revenue is
derived from such international operations, which are conducted in foreign
currencies, changes in the value of those currencies relative to the United
States dollar may affect the Company's results of operations and financial
position. The Company engages in certain currency-hedging transactions intended
to reduce the effect of fluctuations of foreign currency exchange rates on the
Company's results of operations. However, there can be no assurance that such
hedging transactions will materially reduce the effect of fluctuations on such
results. If, for any reason, exchange or price controls or other restrictions on
the conversion of foreign currencies were imposed, the Company's business could
be adversely affected. Other potential risks inherent in the Company's
international business generally include longer payment cycles, greater
difficulties in accounts receivable collection and the burdens of complying with
a wide variety of foreign laws and regulations.
The market for application development software is intensely competitive. The
Company competes with many companies offering alternative solutions to the needs
addressed by the Company's products. Many of these competitors may have greater
financial, marketing, or technical resources than the Company and may be able to
adapt more quickly to new or emerging technologies and standards or changes in
customer requirements or to devote greater resources to the promotion and sale
of their products than the Company.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant, together with certain of its officers, in two
actions filed in October 1995 in the U.S. District Court for the District
of Massachusetts. Those actions have been consolidated through the filing
of a Consolidated Amended Complaint (the "Complaint"). The plaintiffs
allege in the Complaint that the Company and certain of its officers,
during July through October 1995, made certain untrue statements and failed
to disclose certain information regarding the Company's prospective
financial performance in violation of Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder and that such statements and
omissions artificially inflated the market prices of the Company's stock.
The plaintiffs purport to bring the actions on behalf of certain classes of
stockholders and seek damages in unspecified amounts. The Company has
denied the allegations in its answer to the Complaint. The discovery stage
of the proceeding is now substantially complete. Although the Company's
motion for summary judgement has been denied, management of the Company
believes that the actions are without merit and plans to continue to oppose
them vigorously.
The Company is a defendant in two actions filed against Unidata prior to
its merger into the Company, one in May 1996 in the U.S. District Court for
the Western District of Washington and one in September 1996 in the U.S.
District Court for the District of Colorado. The plaintiff, a company
controlled by a former stockholder of Unidata and a distributor of its
products in certain parts of Asia, alleges in both suits that Unidata
improperly authorized distribution of certain Unidata products in the
plaintiff's exclusive territory and asserts damages of approximately
$30,000,000 under claims for fraud, breach of contract, unfair competition,
RICO violations, and trademark and copyright infringement, among other
relief. Unidata denied the allegations in its answers to the complaints and
the proceedings are currently in their early stages. Management of the
Company believes that the actions are without merit and plans to continue
to oppose them vigorously.
ITEM 2 AND 3. NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 10, 1998, the stockholders of the Company approved the
merger of Unidata, Inc. ("Unidata") and the Company. Unidata was
merged into the Company on such date on substantially the terms that
were disclosed in the Company's registration statement, Form S-4 (No.
333-43533), that became effective on December 31, 1997. This
information was disclosed in the Form 8-K (No. 001-13631) that was
filed on February 12, 1998.
Of the 8,291,358 shares eligible to vote, 6,410,577 were represented
at this meeting. This matter received favorable votes of 6,293,788
shares and negative votes of 47,184 shares. 69,605 shares, including
broker non-votes, abstained from voting.
ITEM 5. NONE
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) The Company filed a report on Form 8-K on February 12, 1998,
disclosing the approval of the merger between the Company and
Unidata, Inc. effective February 10, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Ardent Software, Inc.
(Registrant)
Dated: May 14, 1998 /s/Peter Gyenes
------------------------------------------
Peter Gyenes
Chairman and Chief Executive Officer
(principal executive officer)
Dated: May 14, 1998 /s/Charles F. Kane
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Charles F. Kane
Vice President, Finance, and
Chief Financial Officer
(principal finance and accounting officer)
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