A N N U A L R E P O R T 2 0 0 6 - MapInfo
A N N U A L R E P O R T 2 0 0 6 - MapInfo
A N N U A L R E P O R T 2 0 0 6 - MapInfo
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ANNUAL REPORT 2006
$$$$$$$Note: Fiscal Year 2006 excludes the impact of stock compensation expense under FAS 123Rand EMEA severance expense. See “Non-GAAP Financial Measures” on page 11.MAPINFO :: 2006
CONTENTSLetter to Shareholders 2Board of Directors 6Global Leadership Team 8Corporate Profile 9Selected Financial Data 10Note: Fiscal Year 2006 excludes the impact of stock compensation expense under FAS 123Rand EMEA severance expense. See “Non-GAAP Financial Measures” on page 11.2002200320042005200620022003200420052006200220032004200520062002200320042005200620022003200420052006$(4.2)$(2.1)$( 0 .1 6)$( 0.07)$92.6$106.3$124.7$149.4$165.5$10.7$15.7$17.8$0.28$0.48$0.59$36.1$34.8$72.8$73.8$90.4$77.1$79.3$133.5$147.7$169.9Net Revenue (in millions) Operating Income (in millions) Earnings Per Share Cash & short-term investments(in millions)Stockholders’ Equity(in millions)1
TO OUR VALUED SHAREHOLDERSAt <strong>MapInfo</strong>, we have adopted a vision for the company thatfocuses on establishing a discipline around customer intimacy.This vision influences how we expect our associates to interactand serve our customers as well as how we design our businessapproach and processes to ensure we meet our customersÕOur customers increasingly view <strong>MapInfo</strong> as a strategic partnerthat adds significant value to their organizations. We arepleased that the recurring nature of many of our relationshipsis creating a solid long-term market position for <strong>MapInfo</strong> andhelping solidify us as a customer-intimate organization.needs. As we achieve this vision, our customers are recognizingus as trusted advisors and dependable long-term partners.In fiscal year 2006, we made great strides towards realizing thiscorporate vision, supported first and foremost by our strategyfocused on vertical market solutions. We deepened many ofour customer relationships this year, including several with themost prestigious companies in the world. Additionally, withthe advancing of our location intelligence positioning, we areexposing many potential and existing customers to the benefitsof location intelligence through our Envinsa platform.THE GROWING IMPORTANCE OFLOCATION INTELLIGENCEThrough an engagement with BusinessWeek ResearchServices, we have determined that location intelligence is aSTRENGTHENINGTHE MAPINFOBRAND IN 2006.new business categorythat represents a growingmarket opportunity full ofpromise. This is evident inthe results of our research, which indicate that 30 percent ofsenior executives surveyed already recognize the category andMark P. CattiniPresident andChief Executive OfficerJohn C. CavalierChairman,Board of Directorsthat 28 percent are expecting to evaluate a location solutionin the next year. Our solid performance reflects the growingmarket awareness of the benefits of location intelligence.MAPINFO :: 2006
In fiscal year 2006, we significantly increased our marketing spendingfor programs to create greater awareness of location intelligence inthe marketplace. This investment is also helping us further penetrateour vertical markets and strengthen our leadership position.Additionally, we increased sales resources by ten percent over fiscalyear 2005 to expand our sales coverage and create and capture moreopportunities in our target markets.Furthermore, consumer mapping applications such as Google ® Earthand Yahoo! ® Maps have helped our target decision makers becomemore familiar with mapping technologies. This awareness has directlytranslated into more interest from prospects as to how location intelligencecan help them address and solve business problems. Based onour vertical market expertise, expanded offerings, Envinsa platformand growing customer base, we are well-positioned to further capitalizeon this increased awareness of the value of location intelligence.The quality of our solutions, combined with our ongoingmarketing efforts, has helped many organizations recognize <strong>MapInfo</strong>as the clear market leader and innovator.For example, a global reinsurance broker selected <strong>MapInfo</strong> for a multiyear,multi-million dollar contract based on the strength of our Envinsaplatform, global data offerings, services and our integration componentfor MicroStrategy ® . This example of a milestone customer agreementis clear evidence of the value we deliver across an organization.GLOBAL EXECUTIONIn the Americas and Asia Pacific regions, we have very successfullyimplemented our vertical market strategy by better coordinating oursales, marketing and product development efforts. In 2006, we turnedSOLVING CRITICALBUSINESS PROBLEMSIN TARGETEDVERTICAL MARKETS.our focus towardbringing the rest of theorganization up to thestandard set in these tworegions. For instance, inour Europe, Middle East and Africa (EMEA) operations, we streamlinedour reporting structure and increased our management focus to realignour resources globally and synchronize our efforts more effectively.3
To take advantage of the clear opportunity we have in EMEA, werecently added executive leadership to the management team withproven experience building and growing a geographic market andincreased our corporate focus on this region. As a result, we canmore effectively leverage best practices to ensure all regions areexecuting on our vertical market strategy to support our growth.FISCAL YEAR 2006: SOLID GROWTH,CASH FLOW AND PROFITABILITYIn fiscal year 2006, revenue grew 11 percent to a record $165.5million. Operating income and earnings per share, determined inaccordance with generally accepted accounting principles (GAAP),were $13.3 million and $0.44, respectively. During fiscal year 2006,we adopted FAS 123R, which required the expensing of stockcompensation, and we also incurred European severance expenses.Excluding these two items for comparability to prior-year results,we delivered non-GAAP operating income of $17.8 million andnon-GAAP earnings of $0.59 per share. These earnings represent anincrease of 14 percent and 23 percent, respectively, compared tofiscal year 2005. We achieved a record $90.4 million in cash andinvestments as of September 30, 2006, driven by $16.1 million incash from operations.MOMENTUMFUELED BYSTRATEGICEXECUTION.We believe we are well positioned tocontinue delivering solid operatingresults, largely due to our attractivebusiness model. Approximately twothirdsof our revenue is generated fromrecurring sources such as data renewals, software maintenanceand services, providing us with revenue stability and predictability.2007: CONTINUED MOMENTUM FUELEDBY STRATEGIC EXECUTIONIn summary, <strong>MapInfo</strong> made solid progress with our strategicinitiatives in fiscal year 2006, despite some execution issues inEurope. The fact that we were able to grow the business with thesechallenges is a testament to the diversification we have achievedMAPINFO :: 2006
from both geographic and vertical market perspectives. We aretherefore optimistic about our outlook heading into fiscal year2007. We believe that we have the right strategy to capitalize onthe growing location intelligence market opportunities, and willcontinue executing against the same set of key initiatives wefocused on in 2006 to ensure we significantly grow the businessWe thank our great associates for their hard work, passionand dedication over the past year. In a year that presented somechallenges, our associates demonstrated the highest degree ofcommitment to delivering on our strategic objectives. We thankour customers, partners and shareholders for their trust andongoing support of our vision and strategy.in 2007. As such, we will further investin sales and marketing to take fulladvantage of this market opportunity.We also plan to supplement ourorganic growth with vertical marketacquisitions that will add key capabilitiesand deepen our presence withinour targeted vertical markets.Mark P. CattiniPresident andChief Executive OfficerJohn C. CavalierChairman,Board of DirectorsOverall, we are confident that we will deliver on our strategy.Our differentiated value proposition, targeted focus and visionaryleadership position make us the leading global provider of locationintelligence solutions in the marketplace.5
BOARD OF DIRECTORSJohn C. CavalierChairman of theBoard of Directors<strong>MapInfo</strong> CorporationDirector since 1996Mark P. CattiniPresident andChief Executive Officer<strong>MapInfo</strong> CorporationDirector since 2001Dr. Simon J. Orebi GannStrategic Resources Director –Gas, Power & Renewables andIntegrated Supply and TradingBPDirector since 2004Committee Memberships:CompensationCorporate Governance/NominatingMAPINFO :: 2006
Joni KahnExecutive Vice PresidentBearingPoint, Inc.Director since 2000Committee Memberships:AuditCompensation (Chair)Corporate Governance/NominatingThomas L. MassiePresident andChief Executive OfficerBridgeline SoftwareDirector since 2003Committee Memberships:AuditCompensationCorporate Governance/Nominating (Chair)Robert P. SchechterChairman, President andChief Executive OfficerNMS CommunicationsDirector since 2002Committee Memberships:Audit (Chair)7
from leftMark P. Cattini Michael J. Hickey Daniel T. Gerron George C. Moon James D. Scott K. Wayne McDougallPresident and Chief Operating Officer Vice President, Chief Technology Officer Vice President, Vice President andChief Executive Officer Business Planning Engineering Chief Financial OfficerMAPINFO :: 2006
<strong>MapInfo</strong> is the leading global provider of location intelligence solutions,integrating software, data, expertise and services to providegreater value from location-based information and drive moreinsightful decisions for businesses and government organizationsaround the world. <strong>MapInfo</strong>’s innovative solutions help customersuse location intelligence to enhance their performance and decisionsin many ways – asset and risk management, network planning, siteselection, targeting markets and service delivery, to name a few.More than 7,000 customers in nearly every industry sector aroundthe world rely on <strong>MapInfo</strong> technology and expertise. <strong>MapInfo</strong> locationintelligence solutions are particularly advanced and powerful forthese vertical markets: retail, financial services (including insurance),telecommunications and public sector.With more than 900 employees worldwide, <strong>MapInfo</strong>’s globalfootprint includes offices in Australia, Canada, China, Germany andthe United Kingdom; distribution relationships throughout Europeand Asia; and a worldwide network of channel partners.9
SELECTED FINANCIAL DATAYEARS ENDED SEPTEMBER 30 2006 2005 2004 2003 2002(in thousands, except per share data)Income Statement data:Net revenues $ 165,495 $ 149,424 $ 124,673 $ 106,255 $ 92,598Cost of revenues 49,525 44,206 35,326 31,611 25,101Gross Profit 115,970 105,218 89,347 74,644 67,497Operating Expenses:Research and development 25,398 23,742 21,351 20,387 19,657Selling and marketing 53,423 48,494 42,284 41,011 38,901General and administrative 19,313 17,280 15,013 15,329 13,183Total operating expenses 98,134 89,516 78,648 76,727 71,741Operating income (loss) 17,836 15,702 10,699 (2,083) (4,244)Other income (expenses), net 1,386 (815) (2,160) 333 178Income (loss) before provisionfor income taxes 19,222 14,887 8,539 (1,750) (4,066)Provision for (benefit from) income taxes 6,285 4,652 3,416 (665) (1,711)Net income (loss) $ 12,937 $ 10,235 $ 5,123 $ (1,085) $ (2,355)Earnings (loss) per share:Basic $ 0.61 $ 0.50 $ 0.29 $ (0.07) $ (0.16)Diluted $ 0.59 $ 0.48 $ 0.28 $ (0.07) $ (0.16)Weighted average shares outstanding:Basic 21,121 20,553 17,959 15,307 15,041Diluted 21,785 21,148 18,514 15,307 15,041Consolidated Balance Sheet data:Total assets $ 233,989 $ 213,340 $ 202,845 $ 132,972 $ 116,678Long–term obligations, less current portion $ 13,674 $ 14,634 $ 15,589 $ 17,427 $ 10,816Note: Fiscal Year 2006 excludes the impact of stock compensation expense under FAS 123R and EMEA severance expense. See “Non-GAAP Financial Measures” on page 11.MAPINFO :: 2006
FY 2006 NON-GAAP ADD-BACKS Total FAS EMEA123R SeveranceIncome Statement data:Net revenues $ - $ - $ -Cost of revenues 388 370 18Gross Profit (388) (370) (18)Operating Expenses:Research and development 704 551 153Selling and marketing 1,664 866 798General and administrative 1,808 1,691 117Total operating expenses 4,176 3,108 1,068Operating income (loss) (4,564) (3,478) (1,086)Other income (expenses), net - - -Income (loss) before provisionfor income taxes (4,564) (3,478) (1,086)Provision for (benefit from) income taxes 1,288 933 355Net income (loss) impact $ (3,276) $ (2,545) $ (731)Net income, Non-GAAP $ 12,937Net income, GAAP $ 9,661Non-GAAP Financial MeasuresTo supplement its financial statements, which are prepared on a GAAP basis,<strong>MapInfo</strong> presents for fiscal year 2006 non-GAAP net income and earnings pershare. These measures are determined by excluding stock-based compensationexpense determined under FAS 123R associated with the adoption of FAS 123R andnon-recurring severance expenses associated with management changes in ourEuropean operations, in addition to the results presented in accordance withgenerally accepted accounting principles (GAAP) in this annual report. TheCompany believes that the non-GAAP measures provided assist investors in understandingthe results of operations on a comparative basis, since the prior comparableperiod did not include stock compensation expense or severance expense.The presentation of this additional information should be used in addition to GAAPresults, and not in lieu of the GAAP results.Cautionary Note Regarding Forward-Looking StatementsThis annual report contains forward-looking statements involving risks and uncertainties.Any statement not a statement of historical fact is a forward-looking statement,including without limitation statements concerning demand for and benefitsof <strong>MapInfo</strong> products and integration of <strong>MapInfo</strong> products with existing solutions.Actual results could differ materially from those stated or implied in forwardlookingstatements due to a number of factors, including those factors contained inthe Company’s most recent annual report on form 10K for the year endedSeptember 30, 2006 filed with the Securities and Exchange Commission under theheading “Risk Factors.” <strong>MapInfo</strong> takes no responsibility to update any forwardlookingstatements.Note: See “Non-GAAP Financial Measures”on right.Annual MeetingAnnual Meeting of Stockholders will beheld at <strong>MapInfo</strong> Corporation Headquarters,located at One Global View, Troy, New Yorkon Tuesday, February 13, 2007at 9:30 a.m., eastern.Independent AccountantsPricewaterhouseCoopers LLPAlbany, New YorkLegal CounselWilmer Cutler Pickering Hale and Dorr LLPBoston, MassachusettsTransfer Agent and RegistrarComputershare Trust Company. N.A.P. O. Box 43078Providence, RI 02940-3023Shareholder Inquiries: 781-575-2879http://www.computershare.com11
www.mapinfo.com/investorsCorporate HeadquartersOne Global ViewTroy, New York12180–8399 USAmain 1.518.285.60001.800.327.8627fax 1.518.285.6070investor@mapinfo.comAsia Pacific / Australiamain +61.2.9437.6255fax +61.2.9439.1773australia@mapinfo.comCanadamain 1.416.594.52001.800.268.3282fax 1.416.594.5201canada@mapinfo.comEurope / United Kingdommain +44.1753.848.200fax +44.1753.621.140europe@mapinfo.com©2006 <strong>MapInfo</strong> Corporation. All rights reserved. <strong>MapInfo</strong>, the <strong>MapInfo</strong> Meridian Symbol, Be Location Intelligent and Envinsa are trademarks of <strong>MapInfo</strong> Corporation and/or its affiliates. All other marks are the property of their respective holders. MPI-AR-07 91972
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