IONA Technologies PLC (Exact Name of Registrant As Speci®Ed in Its Charter and Translation of Registrant's Name Into English)
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 20-F ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended Commission File December 31, 1998 No. 0-29154 IONA Technologies PLC (Exact name of Registrant as speci®ed in its charter and translation of Registrant's Name into English) Ireland (Jurisdiction of incorporation or organization) The IONA Building Shelbourne Road, Ballsbridge Dublin 4, Ireland (Address of principal executive of®ces) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Ordinary Shares, IR£0.002 Par Value (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate number of shares outstanding of each of the registrant's classes of capital or common stock as of December 31, 1998: 19,451,723 Ordinary Shares, IR£0.002 Par Value Indicate by check mark whether the registrant (1) has ®led all reports required to be ®led by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such ®ling requirements for the past 90 days. Yes X No Indicate by check mark which ®nancial statement item the registrant has elected to follow: Item 17 Item 18 X This Annual Report on Form 20-F was not prepared for ®ling in Ireland in compliance with Irish law or the listing rules of the Irish Stock Exchange. Unless otherwise provided herein, references to ``IONA'' in this annual report shall mean IONA Technologies PLC and its world-wide subsidiaries, collectively. IONA has a secondary listing on the Irish Stock Exchange. For this reason, IONA is not subject to the same ongoing regulatory requirements as those which would apply to an Irish company with a primary listing on the Irish Stock Exchange, including the requirement that certain transactions require the approval of shareholders. For further information, shareholders should consult their own ®nancial advisor. IONA's ®nancial statements are presented in U.S. dollars and are prepared in accordance with generally accepted accounting principles in the United States. All references in this Annual Report to ``Dollars'' and ``$'' are to U.S. dollars, and all references to ``Pounds'' or ``IR£'' or ``£'' are to Irish pounds. Except as otherwise stated herein, all monetary amounts in this Annual Report have been presented in Dollars. Except for amounts contained in or derived from IONA's Consolidated Financial Statements and unless otherwise indicated, all conversions of amounts herein from Pounds to Dollars have been made at an exchange rate of 1.4779 Dollars to one Pound based upon the noon buying rate in New York City for cable transfers in foreign currencies for customs purposes by the Federal Reserve Bank of New York as of December 31, 1998. The terms Orbixt and IONAt used in this Annual Report are registered trademarks of IONA. The terms ``Making Software Work Togethere,'' ``OrbixOTMe,'' ``OrbixCOMete,'' ``OrbixWebe'' and ``MessageStoree'' are un-registered trademarks of IONA. CORBAt is a registered trademark of the Object Management Group, Inc. in the U.S. and other countries. All other trademarks appearing in this Annual Report are the property of IONA or their respective holders. -i- TABLE OF CONTENTS Page Part I ......................................................................... 1 Item 1. Description of Business ................................................. 1 Item 2. Description of Property ................................................. 11 Item 3. Legal Proceedings ..................................................... 11 Item 4. Control of Registrant ................................................... 12 Item 5. Nature of the Trading Market ............................................. 13 Item 6. Exchange Controls and Other Limitations Affecting Security Holders ............... 14 Item 7. Taxation ............................................................ 14 Item 8. Selected Financial Data ................................................. 18 Item 9. Management's Discussion and Analysis of Financial Condition and Results of Operations ......................................................... 19 Item 9A. Quantitative and Qualitative Disclosure About Market Risks ...................... 37 Item 10. Directors and Of®cers of Registrant ........................................ 37 Item 11. Compensation of Of®cers and Directors ..................................... 39 Item 12. Options to Purchase Securities from Registrant or Subsidiaries .................... 39 Item 13. Interest of Management in Certain Transactions ............................... 41 Part II ........................................................................ 41 Item 14. Description of Securities to be Registered .................................... 41 Part III ........................................................................ 41 Item 15. Defaults on Senior Securities ............................................. 41 Item 16. Changes in Securities, Changes in Security for Registered Securities and Use of Proceeds .......................................................... 41 Part IV ........................................................................ 42 Item 17. Financial Statements ................................................... 42 Item 18. Financial Statements ................................................... 42 Item 19. Financial Statements and Exhibits ......................................... 42 -ii- PART I Item 1. DESCRIPTION OF BUSINESS This Annual Report, and other reports, proxy statements and other communications to shareholders, as well as oral statements made by the of®cers or agents of IONA Technologies PLC, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, with respect to, among other things, IONA's future revenues, operating income, net income per ordinary share, products and services, markets and plans and objectives of management. All forward-looking statements included herein are made as of the date hereof, based on information available to IONA as of the date hereof, and IONA assumes no obligation to update any forward-looking statement. These forward-looking statements involve risks and uncertainties and actual results could differ materially from those discussed in the forward-looking statements. Factors that may cause such variation are discussed in ``Management's Discussion and Analysis of Financial Condition and Results of OperationsÐFactors Affecting Future Results'' and the Company's reports ®led with the Securities and Exchange Commission. General IONA is a world leader in the business of ``Making Software Work Together.'' IONA creates and delivers middleware products which enable the development, integration and management of network-based applications in multi-platform computing environments. IONA's Orbix family of products can be thought of as ``containers'' which hold the various different software components that make up modern applications. These products are therefore designed to provide the software communications infrastructure to connect applications running on multiple, heterogeneous platforms and to support the rapid development and deployment of network-centric and component-oriented applications. Orbix is the world's leading implementation of the Common Object Request Broker Architecture (``CORBA'') standard, which has been promulgated by the Object Management Group, an independent standards body, to address the problems of application integration by standardizing application-to-application communications. IONA also supports other standards in the middleware market, including Microsoft's Common Object Model and Sun Microsystems' Enterprise Java Beans. IONA believes that many corporate information technology (``IT'') departments are adopting a component-oriented approach to application development and procurement to x increase the ¯exibility, scalability, agility and feature set of network applications; x decrease development cost; x reduce time-to-market; and x extend the boundaries of their information systems beyond the enterprise to the Internet. This component-oriented approach has created a demand for an underlying infrastructure, such as Orbix, which can be used by corporate IT departments and complemented by independent software vendors to connect application components. IONA has pursued a business strategy of developing an extensive customer base by designing its Orbix family of products as a shrink-wrapped, easy-to-use, modular product set for application developers and marketing the Orbix family of products through ®eld sales, direct sales, telesales and indirect channel sales. These channels have been augmented with a growing enterprise sales team focused on delivering larger scale accounts. The Orbix family of products is available on over 15 leading computing platforms, such as OS/390, various UNIX versions and Windows, and supports a wide range of programming languages, including C++, Java, Visual Basic and COBOL. -1- IONA also provides enterprise class products and services. For example, OrbixOTM is an integrated suite of middleware products which provides support for enterprise development and represents a complete integrated solution