<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                   FORM 10-K
 
(MARK ONE)
 
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934
 
  For the fiscal year ended December 31, 1998.
 
                                      OR
 
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934
 
  For the transition period from       to
 
                        Commission file number 0-20364
 
                          BANYAN SYSTEMS INCORPORATED
            (Exact Name of Registrant as Specified in Its Charter)
 
<TABLE>
<S>  <C>
             MASSACHUSETTS                           04-2798394
    (State or Other Jurisdiction of     (I.R.S. Employer Identification No.)
    Incorporation or Organization)
</TABLE>
 
                               120 FLANDERS ROAD
                         WESTBORO, MASSACHUSETTS 01581
             (Address and Zip Code of Principal Executive Offices)
 
Registrant's telephone number, including area code: 508-898-1000
 
Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act:
 
                         Common Stock, $.01 par value
                               (Title of Class)
 
  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 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. [_]
 
  The aggregate market value of the voting stock held by non-affiliates of the
registrant, based on a per share fair market value of $12.688, was
approximately $220,143,106 as of March 22, 1999. For this purpose, any
officer, director or 5% stockholder of the Company is deemed to be an
affiliate. The registrant has no shares of non-voting Common Stock authorized
or outstanding.
 
  On March 22, 1999, there were 19,348,027 shares of Common Stock outstanding.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
(1)  Specifically identified portions of the Annual Report to Shareholders for
     the fiscal year ended December 31, 1998 (the "Annual Report to
     Shareholders") are incorporated by reference into Parts I and II of this
     Annual Report on Form 10-K.
 
(2)  Specifically identified portions of the Company's Definitive Proxy
     Statement, to be filed with the Securities and Exchange Commission within
     120 days after December 31, 1998 in connection with the Company's 1999
     annual meeting of stockholders, are incorporated by reference into Part
     III of this Annual Report on Form 10-K.
<PAGE>
 
  This Annual Report on Form 10-K contains forward-looking statements,
including without limitation information with respect to the potential
benefits to end users through the use of the Company's (as defined below)
products, the development of future products, the Company's plans and strategy
for its business, statements relating to the sufficiency of cash and cash
equivalent balances, available sources of financing, anticipated expenditures
and the intended effects of the Company's restructuring, sales and marketing,
and product development efforts. For this purpose, any statements contained
herein that are not statements of historical fact may be deemed to be forward-
looking statements. Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects" and similar expressions are intended to
identify forward-looking statements. There are a number of important factors
that could cause actual events or the Company's actual results to differ
materially from those indicated by such forward-looking statements. These
factors include, without limitation, the ability of the Company to continue to
sell products to existing customers and attract new customers, the ability of
the Company to enhance existing products and introduce new products on a
timely basis, market acceptance of the Company's products, the success of
Switchboard and other factors set forth under the caption into "Management's
Discussion and Analysis of Financial Condition and Results of Operations
Future Operating Results" which is incorporated by reference in Part II of
this Annual Report on Form 10-K.
 
                                    PART I
 
ITEM 1. BUSINESS
 
General
 
  Banyan Systems Incorporated ("Banyan" or the "Company") designs, develops
and markets networking, directory and messaging products and services that
help people to communicate across enterprise networks, intranets and the
Internet. Since 1985, the Company has been a pioneer in the computer
networking field, and currently offers a wide range of software products and
professional services. The Company's three lines of business are Networking
Software, Network Services and Switchboard. The Company's primary Networking
Software products include StreetTalk for Windows NT(R), VINES(R), Intelligent
Messaging(TM), BeyondMail(TM), Banyan Intranet Connect(R), and several
intranet solutions. In addition, the Company provides co-existence and
migration services, secure and remote access for business applications and
tools to deploy and manage intranets, directories and messaging. The Company's
primary Network Services offerings include network consulting, management and
integration services; directory planning, design and integration, network
monitoring and support; and technical support and education. The Company's
majority-owned subsidiary, Switchboard Incorporated, hosts an Internet people-
to-people and business directory services aimed at generating advertising
revenues from major domestic corporations and local merchants.
 
  The Company's network operating system product is based on a global
directory service called StreetTalk(TM). This service allows users to find one
another and access network resources, such as printers, files, mail and
applications, regardless of physical location. Banyan's other enterprise
directory services include messaging, management and security. Together, these
services make up the foundation for Banyan's Network Software products. These
products integrate mainframes, minicomputers, workgroup networks and personal
computers into a unified computing environment that is easy for users to
navigate and administrators to manage. The Company delivers its network
operating system products in several versions, including StreetTalk for
Windows NT(R) and VINES(R). Introduced in September 1996 and enhanced
throughout 1997 and 1998 Banyan's StreetTalk for Windows NT provides Banyan's
premier enterprise directory capabilities running natively on Microsoft(R)
Windows NT, an emerging standard for corporate networks. VINES is Banyan's
well proven, UNIX(R) based
 
--------
Banyan, the Banyan logo, StreetTalk, VINES and BeyondMail are registered
trademarks, and Intelligent Messaging, Switchboard, Banyan Enterprise Network
Solutions and EBR are trademarks of Banyan Systems Incorporated. StreetTalk is
a product of Banyan Systems Incorporated and not a product of McCarthy,
Crisanti & Maffei, Inc. UNIX is a registered trademark of Novell, Inc. in the
United States and in other countries licensed exclusively through X/Open
Company Ltd. IBM and OS/2 are registered trademarks of International Business
Machines Corporation. Microsoft, Windows NT and Windows are registered
trademarks of Microsoft Corporation. Macintosh is a registered trademark of
Apple Computer, Inc. Other product, company or organization names cited in
this Form 10-K are trademarks or registered trademarks of their respective
companies or organizations.
 
                                       2
<PAGE>
 
networking software, which combines file and print sharing with the StreetTalk
directory, messaging, network management and security services. The Company's
Intelligent Messaging(R) option, available for both VINES and Windows NT
environments, provides an enterprise solution for reliably storing and
transporting electronic messages. Banyan's intranet products enable its
customers to utilize Internet standards to allow people to contact other
people and information in a reliable and secure manner over the Internet. The
Intranet Access product brings all the capabilities of the network operating
system to a user of a browser on the Internet.
 
  The Company's Network Services organization includes network and messaging
consulting, network management, help desk, technical support and education. A
critical element of the Company's strategy is to assure that customers are
provided with technical support, training and consulting services required to
build, manage and optimize the network environment using multi-vendor
products. Consulting services are generally offered on a customized basis and
in certain cases are packaged with other services. When combined with other
third party products and services, they are positioned as solution offerings.
The Company provides services through regional offices located in the
Americas, Europe, Asia Pacific and Australia.
 
  The Company's majority-owned subsidiary, Switchboard Incorporated, hosts one
of the Internet's leading people-to-people and business directory services
which is aimed at generating revenues from major domestic corporations and
local merchants. Switchboard has been consistently among the 40 most active
Web destinations according to Media Metrix, the foremost Internet traffic
monitoring service. Switchboard is the on-line directory selected by
AltaVista, Bell Atlantic and GeoCities.
 
Network Software Development Initiatives
 
  The Company's Networking Software business is in the process of
transitioning from a sole focus on the development of proprietary networking
and messaging products to development of middleware and application software
that makes use of Internet standards and technologies. In order to facilitate
this transition, the Company has organized its development group into three
focus areas: Networking Software, Integration Products and Internet Products.
 
  The Networking Software group is charged with maintaining and improving the
Company's network operating system products (VINES(TM) and StreetTalk(TM) for
Windows NT(R)) and its messaging products (BeyondMail(TM) mail client,
Intelligent Messaging(TM) and Internet Messaging Suite mail servers). The
focus of this development effort is to improve interoperability with industry
standard networking platforms such as Microsoft Windows NT/2000 and industry
leading mail systems such as Microsoft Outlook(TM) and Exchange(TM) through
the careful support of standards such as TCP/IP networking, and LDAP directory
access.
 
  The Integration Products group is focused on building tools, technologies,
and products that directly support the growth and requirements of the Banyan
Network Services business. As a result of the Company's recently announced
alliance with Microsoft Corporation(R) ("Microsoft"), this group is focused on
delivering interoperability and migration tools that support network
expansions and migrations from VINES and StreetTalk for Windows NT to Windows
NT 4.0 and Windows 2000(TM)/Active Directory as well as from BeyondMail/IM to
Microsoft Exchange. In addition, the Integration Products development group is
tasked with developing directory synchronization and management tools that
increase the value of an installed Banyan directory (StreetTalk) to users and
developers of Internet-based applications. The product development model is
principally a value-added OEM strategy and has resulted in new product
offerings such as Banyan SiteMinder and directory/migration tools from third
party vendors such as Lightspeed and Fastlane.
 
  The Internet Products group is focused on building a family of products that
are positioned in the emerging Enterprise Information Portal (EIP) market
space. These products would provide end users and web administrators with a
rapid application deployment framework that uses directory and personalization
technology to increase productivity while providing fast, customized access to
existing web-accessible corporate data. These products would further improve
end user productivity by remembering the user's preferences and favorites for
their repetitive use of their desktop web browser. In addition, these products
will provide e-mail alerting and consolidation of multiple e-mail boxes,
requiring only a web browser to provide secure access.
 
                                       3
<PAGE>
 
Banyan Architecture and Technology
 
  The Company bases its networking and messaging software products on a
modular architecture, specifically designed to serve computing environments
with multiple servers in multiple locations. This architecture enables the
delivery of a set of sophisticated network services that integrate workgroup
LANs (Local Area Networks), the Internet and other proprietary computer
environments into a single enterprise network.
 
  Banyan's enterprise directory services consist of software modules, each
providing a different service that may be shared by users across the network.
At the core of these services is Banyan's StreetTalk directory. StreetTalk
enables network administrators to assign location-independent "StreetTalk" IDs
or names to each user, computer, printer, server or other resource in the
network. These names remain consistent throughout the network, allowing a user
to access any network resource without regard to the physical location of the
user or the resource. The name, network location and characteristics of each
resource are stored in the StreetTalk database. StreetTalk's database is used
by all of the other services and integrated applications to locate and
transparently access resources throughout the network.
 
  Banyan has expanded this architecture to include the capability to easily
access these services through the Internet. From a browser, anywhere on the
Internet, a user can gain access to their printer, file and mail services. In
addition, for web servers in a corporate intranet, this architecture provides
the means to authenticate users and protect web pages.
 
  Banyan has released versions of all of its current networking and messaging
products that it believes are Year 2000 compliant. All new products developed
during 1998 were inherently designed and tested for Year 2000 compliance.
 
                                       4
<PAGE>
 
WINDOWS NT Integration
 
  In anticipation of the emergence of Microsoft Corporation's Windows NT
operating system and the Windows 2000 server product line that is currently in
beta testing, the Company has released products that allow corporations to
integrate Windows NT/2000 into their existing corporate networks.
 
  Running natively in Windows NT environments, StreetTalk for Windows NT is
designed to integrate Microsoft's Windows NT operating system into their
existing corporate networks. In July 1998, the Company announced the
availability of StreetTalk for Windows NT version 8.5, which offers improved
support for TCP/IP standards, new management tools, including additional
support for remote management, speedier disaster recovery, and a new version
of Banyan's integrated messaging services. Additionally, the Company
introduced the Internet Messaging Suite for Windows NT during 1998, which
delivers support for the IMAP Internet messaging standard for users of
StreetTalk for Windows NT that wish to deploy standards-based mail clients
such as Microsoft Outlook or Netscape Messenger.
 
Primary Network Software Products
 
  The Company's key network operating system products include StreetTalk for
Windows NT, VINES, Intelligent Messaging, Internet Messaging Suite, and
BeyondMail. In addition, the Company markets a broad range of complementary
products and options for these base products.
 
  StreetTalk for Windows NT
 
  StreetTalk for Windows NT provides directory capabilities that extend beyond
individual server communities--encompassing every item and activity in the
enterprise. This simplifies access to all network resources, regardless of
location. The combination of Windows NT and StreetTalk for Windows NT supplies
an enterprise-wide application platform and networking solution that scales to
any size, including tens of thousands of users. StreetTalk also includes
numerous security features. In April 1998, the Company introduced StreetTalk
for Windows NT 8.5, a Year 2000-compliant release.
 
  VINES
 
  VINES integrates Banyan's StreetTalk directory and a full suite of
enterprise network services such as security and management into one package.
VINES installs on PC servers and clients and permits users of the leading PC
desktop systems--Windows 95(R) and 98, and Windows NT--to share information
and computing resources with each other and with host computing environments
through out the enterprise. In March 1998, the Company introduced VINES 8.5,
which offered improved performance and features and was Year 2000 compliant.
 
  BeyondMail
 
  A full-featured e-mail product, the Company believes BeyondMail is among the
most advanced software available for managing electronic mail. With its unique
rules-based agent technology, BeyondMail helps people manage information with
e-mail, classifying messages intuitively in folders for instant recall and
filtering out junk mail. When BeyondMail's intelligent agents are combined
with easy-to-customize forms, businesses are able to automate complex
procedures, such as producing database reports and routing purchase orders for
approval. BeyondMail supports Windows clients and takes full advantage of
StreetTalk and Intelligent Messaging capabilities. The Company offered
numerous maintenance releases of BeyondMail during 1998.
 
                                       5
<PAGE>
 
  Intelligent Messaging and the Internet Messaging Suite
 
  Intelligent Messaging is an enterprise-wide, client/server-based solution
for storing and transporting messages. Tightly integrated with StreetTalk
directory services, Intelligent Messaging eases use, reduces costs and
facilitates the deployment of large-scale messaging networks. New releases of
the Intelligent Messaging Server software were issued in conjunction with the
VINES and StreetTalk for Windows NT 8.5 releases during 1998.
 
  The Internet Messaging Suite was released in April 1998 and provided for
support of standards-compliant mail clients such as Microsoft Outlook and
Netscape Messenger when used in conjunction with StreetTalk for Windows NT and
the Intelligent Messaging server on Windows NT. IMS provided the Company's
large customers with a choice of mail clients from a wide variety of vendors.
When used in conjunction with the StreetTalk for Windows NT LDAP service, the
IMS IMAP service provides a great deal of flexibility in expanding mail
networks with additional client and server technology.
 
  Network Product Application Suite
 
  Banyan sells and supports several network applications programs that are
integrated with its enterprise network services. A GUI-based management tool
called StreetTalk Explorer is available for StreetTalk for Windows NT and
VINES products. MNET, which is sold with Banyan's network management services,
is a utility program that monitors the network in real-time and allows for
review of network-wide operational and performance characteristics from any
networked PC, workstation or server. The VINES assistant suite of utilities
automates routine tasks of network administration, such as renaming a user or
changing security privileges for a group of users or services.
 
  Banyan Intranet Connect
 
  In addition to its traditional, directory-based networking and messaging
solutions, the Company has developed a suite of intranet offerings that enable
organizations to create corporate intranets. In April and October of 1998, the
Company introduced two new versions of Banyan Intranet Connect. The Intranet
Connect product is intranet server software that provides a flexible and cost-
effective way to access network files, printers and e-mail using a standard
Web browser.
 
  Third Party Products
 
  During 1998, the Company developed relationships with independent software
vendors such as Netegrity, Oblix, Lightspeed, Fastlane, and Commvault. The
relationships were formed to supply value-added software products quickly to
both new and existing Banyan customers and support the expansion of the
Company's Network Services business.
 
  Banyan SiteMinder
 
  Banyan SiteMinder is a secure user management system that provides
centralized control, distributed management, and single sign-on capability for
all Web sites and applications that are a part of a customer's Internet
implementation. It is designed specifically for organizations doing business
on the Internet who need to provide secure, personalized content to customers,
partners, and employees and whose Web sites are built on multi-vendor open
systems.
 
  Oblix Products
 
  Following the signing of a value-added reseller agreement at the end of
1998, Banyan plans to offer the Oblix product line to enterprise customers
during 1999 as part of a solution that maximizes the value of their installed
and planned directory assets. As part of the Oblix CSA solution, the Oblix
Corporate Service Center(TM)
 
                                       6
<PAGE>
 
and Oblix Corporate Directory(TM) are two web-based applications that create,
publish and maintain a Digital Persona and automate the process of providing
corporate services. A Digital Persona(TM) is a complete digital profile of an
employee that can be used to provide and track valuable corporate resources
such as an address, physical resources such as laptop computers and the
individual's relationship to the organization.
 
Internet Products
 
  The Internet Products Group is focused on building a family of products that
are positioned in the emerging Enterprise Information Portal (EIP) market
space. These products will provide a personalized browser start page that
brings together corporate intranets, file servers, e-mail servers, directories
databases, line of business applications, and Internet resources. These
products will provide each user with a number of tools that can search the
enterprise-wide network for information and incorporates links to line-of-
business applications and can provide links to relevant industry
organizations, competitors and trading partners. Most importantly, these
products will provide a framework that organizes a user's common tasks into a
form that is accessible from a browser.
 
  A major part of this initiative is the ability to customize the intranet
portal on both a corporate and personal level. Customization at the corporate
level allows a customer to brand the software with both company name and logo
and to set a style using company color schemes, graphics and font treatments.
In this way the portal can maintain the same look and feel as other corporate
applications.
 
Year 2000 Compliance
 
  All the Company's current products have been upgraded to become Year 2000
compliant. In addition, the Company will offer customer services to assist in
the planning and implementing organizations' Year 2000 network upgrades.
 
Upgrades and Subscriptions
 
  Banyan offers upgrade and subscription programs that enable its customers to
migrate cost-effectively to enhanced versions of StreetTalk for Windows NT,
VINES, BeyondMail and other product offerings as they become available.
Customers are encouraged to purchase, for a fixed annual fee, a subscription
contract for their installed Banyan products.
 
Network Services Business
 
  The Network Services includes the consulting services function and the
support services business. Consulting is a growing segment of Banyan's
business that offers customers and partners services for network optimization,
transition and implementation. These services are generally offered as
customized consulting services and in certain cases as packaged services. When
combined with other third party product and services, they are positioned as
solution offerings.
 
  As part of the recent strategic initiative, the Company is increasingly
focused on its Network Services business. A key element of the Company's
strategy is to assure that customers are provided with the technical support,
training and consulting services required to build, manage and optimize the
network environment using Banyan products. The Company maintains technical
response centers in North America, Europe, Asia and Australia. These centers
provide technical telephone support, on-line access and, to a lesser extent,
on-site support. In addition, pre-sales and post-sales support for partners
and end users is provided through field systems consultants.
 
  The Company offers a wide range of training programs for partners and end
users. Training is offered at the Westboro headquarters, as well as various
regional sites. On-site training classes are also offered at partner's
 
                                       7
<PAGE>
 
sites as well as end user locations. In addition, there are 36 worldwide
Banyan Certified Education Centers, which conduct training classes for users
and administrators of Banyan products.
 
Customers
 
  In early 1999, Banyan established a global alliance with Microsoft
Corporation to deliver greater business value and increase competitive
advantage for enterprise customers. The two companies plan to develop new
services and software tools that increase the interoperability, connectivity
and integration among their products. As part of the alliance, Banyan plans to
expand its Microsoft certified network services organization over the next
three years, establish Customer Solutions Centers and work with Microsoft to
develop worldwide sales and marketing programs. Under the agreement, Microsoft
will provide $10 million to Banyan over a three-year period for training at
least 500 professionals, marketing and product development as well as the
purchase of 1,750,000 common stock warrants.
 
  In 1998, Banyan initiated a number of new consulting engagements at leading
organizations such as the Public Service Enterprise Group, GTE, EMC, Nike, the
United Nations and Dutch Rail. During the year the Company broadened the scope
of network consulting management and integration services. In addition to the
Company's new Year 2000 Readiness Program initiative, it introduced Directory
Advantage Services. These services address directory planning, design and
integration challenges in enterprise and Web-based environments. Going
forward, the Company believes Internet-related network services will be
particularly important to customers that desire to cost-effectively, securely
and reliably extend the reach of their key business applications via the Web.
 
  The Company estimates that it has approximately 7,000 software and services
customers with more than 8.0 million users worldwide. Banyan's customers,
which include nearly one-half of the Fortune 500 companies, typically are
medium to large-size businesses, financial institutions, professional
organizations, universities, government entities and not-for-profit
organizations with multiple sites dispersed over wide geographic areas.
 
  For the year ended December 31, 1998, no one customer accounted for more
than 10% of the Company's revenue. For the year ended 1997, Ingram Micro Inc.
accounted for approximately 11% of the Company's revenues. For the year ended
1996, Inacom Corporation accounted for approximately 11% of the Company's
revenues. In 1997 and 1996, no other customer or reseller accounted for more
than 10% of the Company's revenues. The loss of any significant customer could
have a material adverse effect on the Company.
 
Switchboard Incorporated
 
  The Company's majority-owned Switchboard subsidiary is an Internet-based
directory service that allows any individual with a Web browser to look up the
names and street addresses of more than 140 million individuals and businesses
in the United States. This product is available at no charge to the user.
Switchboard generates revenues through display advertisements that are
integrated with its business listings, categorized to match a user's search
criteria similar to traditional Yellow Pages telephone directories.
 
  During the year, Switchboard made investments to enhance its functionality.
In May 1998, Switchboard acquired the technology and Web site of MapsOnUs(R),
and Internet street mapping and directions service, from Lucent Technologies.
Switchboard integrated the mapping and direction service into its
www.switchboard.com Web site. In the second half of 1998, Switchboard
introduced its designed user interface and searching tool, "What's
Nearby(TM)", which integrates local content from its people and business
directories.
 
  In the second half of 1998, Switchboard announced that it was not renewing
its white and yellow pages agreement with America Online. Those arrangements
represented approximately 45% of the overall traffic and 30% of the total
advertising revenue for Switchboard in 1998.
 
  Today, leading businesses such as Ford Motor Company, Visa, Barnes & Noble,
and Microsoft market their products and services on Switchboard.
 
                                       8
<PAGE>
 
Marketing, Sales and Distribution
 
  The Company's marketing and distribution strategy focuses most of the
Company's field staff on direct consultative sales to key decision makers to
create product awareness and achieve design wins. Demand fulfillment is
primarily accomplished through Banyan's direct sales force. The Company's
remarketing partners include system integrators (organizations that integrate
third party products into complete systems for sale to customers) and systems
vendors (hardware manufacturers that integrate third party products into their
own systems for sale to customers) that are qualified to install and support
the Company's products as part of a complete network solution for the
customer, as well as aggregators (master value-added resellers that typically
resell to other resellers). Sales of products through remarketing partners
accounted for approximately 30%, 60% and 80% of the Company's revenues in
1998, 1997 and 1996, respectively, which when combined with certain services
and Switchboard sales has increased the share of the Company's direct business
over each of the last two years.
 
  The Company's remarketing partners in the Americas as of December 31, 1998
include three aggregators and 720 channel partner sales sites. Banyan has
established authorization levels (Premier Network Integrator and Authorized
Network Integrator, as well as authorization levels for messaging resellers)
to distinguish each reseller organization's expertise in working with the
Company's products, as well as their overall network design, certified support
centers, training, and global support. The Company's aggregators are Inacom
Corporation, Ingram Micro and Information Access Inc.
 
  The Company's international sales currently are made primarily through
distributors in 75 countries. These distributors provide products, technical
support and follow-on service to local resellers, which in turn serve end-user
customers. The Company estimates that its resellers had approximately 300
international sales sites as of December 31, 1998. International sales
accounted for 31%, 29% and 24% of the Company's revenues in 1998, 1997 and
1996, respectively. See Note O to the Company's Consolidated Financial
Statements, which are incorporated herein by reference to the Company's Annual
Report to Shareholders, for information as to the Company's revenues
attributable to each of the Company's geographic areas during the past three
fiscal years.
 
  During 1998, the Company's international distribution activities continued
to be augmented by a joint venture in Japan as well as two OEM agreements.
During 1995, the Company had entered into a joint venture with Marubeni
Corporation and Nippon Telegraph and Telephone. At December 31, 1998, these
Japanese companies held a 30% equity interest in Nippon Banyan Systems
Kabushiki Kaisha (NBSKK), a majority-owned subsidiary of the Company. See Note
P to the Company's Consolidated Financial Statements, which are incorporated
herein by reference to the Company's Annual Report to Shareholders. In
addition, the Company has OEM relationship with Hitachi, which includes
development and support.
 
  The Company actively supports its resellers and other partners with its own
experienced sales and marketing organization. The Company's sales staff
solicits prospective customers, provides technical advice with respect to
Banyan's products and works closely with the particular Banyan reseller
through which the customer desires to purchase its networking products. The
Company believes that the active participation of its sales staff in the
selling process, in conjunction with the efforts of its resellers, is
necessary in order to provide customers with the level of support required for
the implementation of enterprise networks. Banyan conducts its sales and
marketing activities from its principal offices in Westboro, Massachusetts as
well as 26 other North American sales offices and 9 international offices
located in Australia, Belgium, France, Germany, Japan, Malaysia, The
Netherlands and the United Kingdom. As of December 31, 1998, the Company's
sales and marketing organization consisted of 146 employees, of which 87 were
in the North American group and 59 were in the international group.
 
  The Company also has entered into sales and support alliances with various
system vendors, including Hewlett Packard, Microsoft Corporation, Commvault
Systems, FastLane Technologies, Tally Systems and Checkpoint Systems Inc.
These vendors resell and support Banyan's products within their customer base.
Companies with which Banyan has established support arrangements include
Cabletron, Dell, Hewlett Packard,
 
                                       9
<PAGE>
 
IBM, Oracle, Compaq, Cisco and Microsoft. Under these alliances, Banyan and
its partners exchange regularly updated technical information and offer mutual
access to technical support centers, training and advanced technical engineers
in order to facilitate problem resolution for customers with multi-vendor
networks.
 
  Delivery lead times for the Company's products are typically short and,
consequently, substantially all of the Company's revenues in each quarter
result from orders received in that quarter. Accordingly, the Company does not
maintain any significant backlog and believes that its backlog at any given
point in time is not a reliable indicator of future sales or earnings. The
absence of significant backlog may contribute to unpredictability in the
Company's results of operations. The Company's backlog of product orders at
December 31, 1998 and December 31, 1997 was immaterial.
 
Product Development
 
  The Company believes that its future success will depend in large part on
its ability to deliver solutions that are based on professional service
offerings and differentiating product offerings that meet the evolving needs
of the enterprise computing market. The Company plans to resell, OEM, and
develop and deliver new open standards-based product offerings, including
Internet-related products.
 
  As of December 31, 1998, Banyan had approximately 78 employees engaged in
research and development, test and quality assurance and technical
documentation. In 1998, 1997 and 1996, Banyan's product development
expenditures totaled $10.9 million, $15.9 million and $21.9 million,
respectively. During 1999, the Company anticipates a similar level of
investment in product development, as compared to 1998.
 
Manufacturing
 
  The Company's software products are distributed as object code on CD-ROM and
standard magnetic diskettes. Included with the software products are security
codes and documentation, which is available on CD-ROM as well as in print. In
general, the Company duplicates all software diskettes in house. Most of the
CD-ROM replication is done by outside vendors, with the ability to produce
smaller volume production runs in-house. From its Manufacturing & Distribution
facility in Westboro, Massachusetts, Banyan ships products worldwide through
authorized network integrators, resellers and international distributors.
 
Competition
 
  The networking software industry is highly competitive and is characterized
by rapidly changing technology and evolving industry standards. The Company
competes with a number of companies, including Novell, which have
substantially greater development, marketing, sales and financial resources,
distribution infrastructure, customer support organizations and name
recognition than those of the Company. The services business is highly
fragmented and increasingly competitive with no dominant set of networking
integration or consulting competitors worldwide that the Company directly
competes against.
 
  The Company has invested significant resources to develop products to bring
the Company's directory capabilities to Internet users. In 1996, the Company,
through a majority-owned subsidiary, introduced Switchboard, a directory
service for Internet users. In the second half of 1998, Switchboard announced
that it was not renewing its white and yellow pages agreement with America
Online(R). Those arrangements represented approximately 45% of the overall
traffic and 30% of the total advertising revenue for Switchboard in 1998. The
Company success will depend in part on its ability to enter into strategic
alliances with other Internet providers and its ability to enhance its
offering to attract local merchant customers.
 
  The Company believes principal competitive factors affecting the market for
its products include product functionality, performance, quality, reliability
and ease of use; quality of customer training and support; vendor reputation;
and price. The Company believes that competition in the industry is likely to
intensify as current competitors expand their product lines and new companies
enter the market. The Company's future success will
 
                                      10
<PAGE>
 
depend in part on its ability to respond promptly and effectively to the
challenges of technological change, evolving standards and its competitors'
innovations by continually enhancing its own product and services offerings,
as well as its marketing programs.
 
  The Company is evolving its strategic focus, seeking to decrease its
reliance on its traditional networking software products while devoting
additional resources to its network services business. As part of this
strategy, on January 11, 1999, the Company announced a strategic alliance with
Microsoft to deliver integrated messaging, networking and Internet solutions
and the collaboration on the design and implementation of packaged services,
solutions and support offerings based on Microsoft's enterprise platform. The
agreement contains various obligations and milestones that must be met by the
Company, including the certification of 500 Microsoft-trained professionals.
The failure of the Company to meet such obligations and milestones could
result in the termination of the agreement, which could have a material
adverse effect on the Company. In addition, the Company's future success will
depend in part upon its ability to continue to grow its Network Services
business, acquire additional network services customers and adapt to changing
technologies and customer requirements. Any failure to do so could have a
material adverse effect on the Company. There can be no assurance the Company
will be successful in its new strategic focus.
 
Proprietary Rights and Licenses
 
  The Company does not currently hold any patents and currently relies upon a
combination of copyright, trademark and trade secret laws and contractual
provisions to establish and maintain its proprietary rights to its products.
The Company believes that because of the rapid pace of technological change in
the networking and computer industries, the legal protections for its products
are less significant factors in the Company's success than the knowledge,
ability and experience of the Company's employees, the frequency of product
enhancements, and the timeliness and quality of support services provided by
the Company.
 
Employees
 
  At December 31, 1998, the Company employed 428 persons, including 146 in
sales, marketing and related activities, 78 in research and development, 126
in customer support and education, 14 in manufacturing, and 64 in finance,
administration, and human resources. The Company has no collective bargaining
agreement with its employees. The Company believes that its relations with its
employees are good.
 
ITEM 2. PROPERTIES
 
  The Company's principal administrative, sales and marketing, research and
development, manufacturing and support facilities are located in Westboro,
Massachusetts and consist of approximately 170,000 square feet under leases
that expire at various times from December 31, 2002 through July 31, 2005,
with an aggregate annual base rent of approximately $941,000. The Company
subleases approximately 49,000 square feet of its principal Westboro,
Massachusetts facilities under leases that expire on July 31, 2000 and
September 31, 2000, with an aggregate annual base rental income of
approximately $594,000. The Company leases and occupies sales offices in 30
additional locations throughout the United States, Canada, Europe, Asia, Japan
and Australia.
 
ITEM 3. LEGAL PROCEEDINGS
 
  There are no legal proceedings, other than ordinary routine litigation
incidental to its business, to which the Company or any of its subsidiaries is
a party or of which any of their property is the subject.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
  No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
 
 
                                      11
<PAGE>
 
                     EXECUTIVE OFFICERS OF THE REGISTRANT
 
  The Company's executive officers as of March 26, 1999 were as follows:
 
<TABLE>
<CAPTION>
 Name                     Age Position
 ----                     --- --------
 <C>                      <C> <S>
 William P. Ferry          46 President and Chief Executive Officer
 
                              Senior Vice President, Worldwide Sales and
 Robert D. Burke           44 Service
 
                              Vice President and Chief Financial Officer,
 Richard M. Spaulding      39 Treasurer and Clerk
 
 Anthony J. Bellantuoni    47 Vice President, Human Resources
                              Vice President of Development and Chief
 Alexander D. Crosett III  41 Technology Officer
</TABLE>
 
  Mr. Ferry, President and Chief Executive Officer, joined the Company in
February 1997. He is also a Director of the Company. Prior to joining Banyan,
Mr. Ferry was President of Wang Laboratories, Inc.'s Services Division. During
his six years at Wang, Mr. Ferry's other positions included Senior Vice
President and General Manager of Wang's North American Operations, Senior Vice
President and General Manager of Europe, Africa and Middle East Operations,
Senior Vice President and General Manager of the OFFICE 2000 Business Unit and
Senior Vice President of Applications and Professional Services. Mr. Ferry's
professional experience also includes executive positions at Digital Equipment
Corporation and Texas Instruments.
 
  Mr. Burke, Senior Vice President, Worldwide Sales and Service, joined the
Company in March 1997. Prior to joining Banyan, Mr. Burke served as Vice
President, Worldwide Systems Integration, of Digital Equipment Corporation's
System Integration Business. During his twenty-one years at Digital, Mr.
Burke's other positions included Vice President, Systems Integration Practice,
Vice President, Digital Consulting U.S. Group, Vice President, U.S.
Professional Services/Systems Integration and Vice President, Digital
Services.
 
  Mr. Spaulding, Vice President and Chief Financial Officer, Treasurer and
Clerk, joined the Company in September 1990. Prior to joining Banyan, he
served in a number of senior financial management positions with C. R. Bard,
Inc., a medical products provider, from June 1985 to September 1990. From June
1983 to June 1985, Mr. Spaulding was a Certified Public Accountant with Arthur
Andersen & Company.
 
  Mr. Bellantuoni joined the Company in July 1997 as vice president of Human
Resources. Prior to joining the Company, Mr. Bellantuoni was vice president of
Human Resources at Wang Laboratories, Inc. from 1993 to 1997. Mr. Bellantuoni
also held various senior management positions at Wang Laboratories, Inc. from
1979 to his appointment as vice president in 1993.
 
  Mr. Crosett, Vice President of Development and Chief Technology Officer,
joined the company in February 1998. Prior to joining Banyan, Mr. Crosett
served as chief technology officer at Planet Direct from 1996 - 1998 and vice
president of development at CompuServe from 1994 - 1996. Mr. Crosett has also
held several senior-level technical and marketing management positions at
Lotus Development Corporation and Interactive Data Corporation, and was
founder and president of two successful medical imaging and software
companies.
 
                                      12
<PAGE>
 
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS
 
  Information with respect to this item may be found in the section captioned
"Supplementary Data" appearing in the Annual Report to Shareholders. Such
information is incorporated herein by reference.
 
ITEM 6. SELECTED FINANCIAL DATA
 
  Information with respect to this item may be found in the section captioned
"Supplementary Data" appearing in the Annual Report to Shareholders. Such
information is incorporated herein by reference.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS
 
  Information with respect to this item may be found in the section captioned
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing in the Annual Report to Shareholders. Such information
is incorporated herein by reference.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
  Not applicable.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
  Information with respect to this item may be found in the section captioned
"Supplementary Data" appearing in the Annual Report to shareholders and in the
consolidated financial statements and schedules referred to in the Index to
Consolidated Financial Statements and Consolidated Financial Statement
Schedules filed as part of this 10-K. Such information is incorporated herein
by reference.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
 
  None.
 
                                      13
<PAGE>
 
                                   PART III
 
  The information required by Part III is omitted from this Annual Report on
Form 10-K, and incorporated herein by reference to the definitive proxy
statement, pursuant to Regulation 14A, with respect to the 1999 Annual Meeting
of Stockholders (the "1999 Proxy Statement") which the Company will file with
the Securities and Exchange Commission not later than 120 days after the end
of the fiscal year covered by this Annual Report on Form 10-K.
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
  Except as provided below, information with respect to this item will appear
in the sections captioned "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" appearing in the 1999 Proxy
Statement, and such information is incorporated herein by reference.
Information required by this item with respect to Executive Officers of the
Company may be found under the section captioned "Executive Officers of the
Registrant" in Part I of this Annual Report on Form 10-K.
 
ITEM 11. EXECUTIVE COMPENSATION
 
  Information with respect to this item will appear in the sections captioned
"Executive Compensation," "Director Compensation," "Compensation Committee
Interlocks and Insider Participation" and "Certain Relationships and Related
Transactions" appearing in the 1999 Proxy Statement. Such information is
incorporated herein by reference.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  Information with respect to this item will appear in the section captioned
"Beneficial Ownership of Common Stock" appearing in the 1999 Proxy Statement.
Such information is incorporated herein by reference.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
  Information with respect to this item will appear in the sections captioned
"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions" appearing in the 1999 Proxy Statement.
Such information is incorporated herein by reference.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
(a) The following documents are filed as part of or are included in this
    Annual Report on Form 10-K:
 
  1. Financial Statements:
 
    .  Consolidated Balance Sheets as of December 31, 1998 and 1997.
 
    .  Consolidated Statements of Operations for the years ended December
       31, 1998, 1997, and 1996.
 
    .  Consolidated Statements of Shareholders' Equity for the years ended
       December 31, 1998, 1997 and 1996.
 
    .  Consolidated Statements of Cash Flows for the years ended December
       31, 1998, 1997 and 1996.
 
    .  Notes to Consolidated Financial Statements.
 
    .  Report of Independent Accountants for the years ended December 31,
       1998, 1997 and 1996.
 
    .  Selected Financial Data for the years ended December 31, 1998, 1997,
       1996, 1995, and 1994.
 
                                      14
<PAGE>
 
  2. Financial Statement Schedules:
 
    .  Report of Independent Accountants for the years ended December 31,
       1998, 1997 and 1996.
 
    .  Schedule II--Valuation and Qualifying Accounts.
 
    .  Schedules other than the one listed above have been omitted since
       they are either not required, not applicable or the information is
       otherwise included.
 
  3. Listing of Exhibits:
 
    .  The Exhibits filed as part of this Annual Report on Form 10-K are
       listed in the Exhibit Index immediately preceding such Exhibits and
       are incorporated herein by reference.
 
(b) No other reports on Form 8-K were filed by the Company during the last
    quarter of the year ended December 31, 1998.
 
                                      15
<PAGE>
 
                                  SCHEDULE II
 
                          BANYAN SYSTEMS INCORPORATED
                       VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                               Additions
                                    Balance at Charged to            Balance at
                                    Beginning  Costs and                End
            Description             of Period   Expenses  Deductions of Period
            -----------             ---------- ---------- ---------- ----------
<S>                                 <C>        <C>        <C>        <C>
Year ended December 31, 1998:
 
  Reserve for price, sales and
   doubtful account allowance......   $3,721     $1,177     $1,981     $2,917
 
Year ended December 31, 1997:
 
  Reserve for price, sales and
   doubtful account allowance......   $7,168     $2,448     $5,895     $3,721
 
Year ended December 31, 1996:
 
  Reserve for price, sales and
   doubtful account allowance......   $5,636     $8,712     $7,180     $7,168
</TABLE>
 
                                       16
<PAGE>
 
                     REPORT OF INDEPENDENT ACCOUNTANTS ON
                         FINANCIAL STATEMENTS SCHEDULE
 
To the Board of Directors
of Banyan Systems Incorporated:
 
  Our audits of the consolidated financial statements referred to in our
report dated January 26, 1999 appearing on page 37 of the 1998 Annual Report
to Shareholders of Banyan Systems Incorporated (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the financial statement schedule noted in
Item 14(a)(2) of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
 
                                          /s/ PricewaterhouseCoopers LLP
                                          -------------------------------------
                                          PricewaterhouseCoopers LLP
 
January 26, 1999
 
                                      17
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
   Exhibit
   Number    Title of Document
   -------   -----------------
 <C>         <S>
  3.1(2)     Second Amended and Restated Articles of Organization of the
             Company.
 
  3.2(1)     Amended and Restated By-Laws of the Company.
 
  3.3(10)    Certificate of Vote of Directors Establishing a Class or Series of
             Stock
 
 10.1+(11)   Second Amended and Restated 1984 Incentive Stock Option Plan.
 
 10.2+(11)   Second Amended and Restated 1984 Non-Qualified Stock Option Plan.
 
 10.3(12)+   1992 Stock Incentive Plan, as amended.
 
 10.4(1)(8)+ 1992 Director Stock Option Plan, as amended.
 
 10.5(7)+    Consulting Services Agreement dated as of November 11, 1996
             between the Company and Burton Technology Partners, Ltd.
 
 10.6(7)(8)+ Employment Agreement dated February 4, 1997 between the Company
             and William P. Ferry, as amended.
 
 10.6A+      Amendment No. 2 dated as of October 16, 1998 to Employment
             Agreement between the Company and William P. Ferry.
 
 10.7(1)     Real Estate Sublease dated June 19, 1991, as amended to date,
             between the Company and Sytron Corporation.
 
 10.8(1)     Lease Agreement dated April 21, 1989, as amended to date, between
             the Company and CB Westboro C Limited Partnership, a Texas Limited
             Partnership.
 
 10.8A       Amendment to Lease Agreement dated April 21, 1993 between the
             Company and CB Westboro C Limited Partnership, a Texas Limited
             Partnership.
 
 10.8B(5)    Amendment to Lease Agreement dated April 21, 1993 between the
             Company and Commonwealth Westboro Limited Partnership, a
             Massachusetts Limited Partnership (as successor in interest to CB
             Westboro C Limited Partnership, a Texas Limited Partnership).
 
 10.9(1)     Lease Agreement dated November 14, 1986, as amended to date,
             between the Company and Aetna Real Estate Associated, L.P. (as
             assignee of Flanders Realty Trust).
 
 10.9A       Amendment to Lease Agreement dated April 1, 1993 between the
             Company and Aetna Real Estate, L.P. (as assignee of Flanders
             Realty Trust).
 
 10.9B(11)   Fifth Lease Extension and Modification Agreement made as of
             October 15, 1997 between Aetna Real Estate Associates and the
             Company.
 
 10.10(9)    Loan and Security Agreement dated as of September 4, 1997 by and
             between Foothill Capital Corporation and the Company.
 
 10.10A(11)  Consent and Amendment to Loan and Security Agreement dated as of
             March 5, 1998 by and between Foothill Capital Corporation and the
             Company.
 
 10.11(9)    Securities Issuance Agreement dated as of September 4, 1997 by and
             between Foothill Capital Corporation and the Company.
 
 10.12(9)    Form of Warrant issued by and to be issued by the Company to
             Foothill Capital Corporation.
 
 10.13(10)   Preferred Stock and Warrant Purchase Agreement dated as of March
             5, 1998 between the Company and HarbourVest Partners V--Direct
             Fund L.P. ("HarbourVest").
 
</TABLE>
 
 
                                       1
<PAGE>
 
<TABLE>
<CAPTION>
     Exhibit
     Number      Title of Document
     -------     -----------------
 <C>             <S>
 10.14(10)       Warrant to purchase shares of Series B Convertible Preferred
                 Stock issued by the Company to HarbourVest as of March 5,
                 1998.
 
 10.15(10)       Warrant to purchase shares of Series C Convertible Preferred
                 Stock issued by the Company to HarbourVest as of March 5,
                 1998.
 
 10.16 +(11)(13) Separation Agreement and Release and Waiver of Claims dated as
                 of May 31, 1997 between the Company and David C. Mahoney, as
                 amended.
 
 10.17+          Executive Retention Agreement dated as of October 16, 1998
                 between The Company and Robert D. Burke.
 
 10.18+          Executive Retention Agreement dated as of October 16, 1998
                 between the Company and Richard M. Spaulding.
 
 10.19+          Executive Retention Agreement dated as of October 16, 1998
                 between the Company and Anthony J. Bellantuoni.
 
 10.20+          Executive Officer Restricted Stock Agreement dated October 16,
                 1998 between the Company and William P. Ferry.
 
 10.21+          Executive Officer restricted Stock Agreement dated October 16,
                 1998 between the Company and Robert D. Burke.
 
 10.22+          Executive Officer Restricted Stock Agreement dated October 16,
                 1998 between the Company and Richard M. Spaulding.
 
 10.23+          Executive Officer Restricted Stock Agreement dated October 16,
                 1998 between the Company and Anthony J. Bellantuoni.
 
 13              Selected portions of Annual Report to Shareholders for the
                 year ended December 31, 1997 (which is not deemed to be
                 "filed" except to the extent that portions thereof are
                 expressly incorporated by reference in this Annual Report on
                 Form 10-K).
 
 21(11)          Subsidiaries of the Company.
 
 23              Consent of PricewaterhouseCoopers LLP.
 
 27              Financial Data Schedule.
</TABLE>
--------
+  Management contract or compensation plan or arrangement required to be
   filed as an exhibit pursuant to Item 14(c) of Form 10-K.
 
(1)  Incorporated herein by reference to the exhibits to the Company's
     Registration statement on Form S-1 (File No. 33-49194).
 
(2)  Incorporated herein by reference to the exhibits to the Company's
     Registration statement on Form S-8 (File No. 33-54140).
 
(3)  Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993.
 
(4)  Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
     1995.
 
(5)  Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
     1995.
 
                                       2
<PAGE>
 
(6)  Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the fiscal year ended December 31, 1995.
 
(7)  Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the fiscal year ended December 31, 1996.
 
(8)  Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997.
 
(9)  Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
     1997.
 
(10)  Incorporated herein by reference to the exhibits to the Company's
      Current Report on Form 8-K dated March 5, 1998.
 
(11)  Incorporated herein by reference to the exhibits to the Company's Annual
      Report on Form 10-K for the fiscal year ended December 31, 1997.
 
(12)  Incorporated herein by reference to the exhibits to the Company's
      Registration Statement on Form S-8 (File No. 333-53705).
 
(13)  Incorporated herein by reference to the exhibits to the Company's
      Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
      1998.
 
                                       3