<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
March 31, 1997
[_] 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: 0-27468
ULTRADATA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2746681
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5000 Franklin Drive, Pleasanton, CA 94588-3031
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code:
510/463-8356
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 [_]
As of May 13, 1997, Registrant had outstanding 7,575,291 shares of Common Stock,
$.01 par value.
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1
<PAGE>
ULTRADATA CORPORATION
TABLE OF CONTENTS
PAGE
----
PART 1 FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Balance Sheets as of March 31, 1997 and
December 31, 1996 1
Statements of Operations for the Three Months
Ended March 31, 1997 and 1996 2
Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 3
Notes to Financial Statements 4
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II OTHER INFORMATION
ITEM 6 - Exhibits, Financial Statements Schedules,
and Report on Form 8-K 11
SIGNATURES 12
2
<PAGE>
ULTRADATA CORPORATION
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DEC. 31,
ASSETS 1997 1996
------ ----------- ---------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 837 $ 1,583
Short term investments 1,156 1,420
Trade accounts receivable 3,569 6,586
Unbilled revenues 3,168 3,870
Inventories 1,249 1,173
Prepaid expenses and other current assets 928 1,027
Income taxes receivable 838 958
------- -------
Total current assets 11,745 16,617
Property and equipment, net 4,179 3,532
Other assets 270 254
------- -------
$16,194 $20,403
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of debt $ 701 $ 96
Accounts payable 2,355 3,659
Accrued expenses 2,347 2,008
Deferred revenue and customer advances 2,914 3,508
------- -------
Total current liabilities 8,317 9,271
Deferred revenue and customer advances 1,183 1,313
Debt, excluding current portion --- 323
------- -------
Total liabilities 9,500 10,907
Stockholders' equity:
Preferred stock; par value $.001;2,000,000 shares authorized; none
outstanding ---- ----
Common stock; par value $.001; 23,000,000 shares authorized; 7,525,864
shares issued and outstanding; 7,525,864 shares outstanding in 1996 7 7
Additional paid in capital 15,115 14,941
Accumulated deficit (8,428) (5,452)
------- -------
Total stockholders' equity 6,694 9,496
------- -------
$16,194 $20,403
======= =======
</TABLE>
3
<PAGE>
ULTRADATA CORPORATION
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1997 1996
-------- -------
<S> <C> <C>
Revenues:
Software $ 1,039 $ 3,155
Maintenance 2,536 1,948
Services and other 1,306 1,875
Hardware 1,630 5,123
------- -------
Total revenues 6,511 12,101
------- -------
Cost of revenues:
Software 252 820
Maintenance 1,617 1,007
Services and other 1,192 1,723
Hardware 1,231 3,380
------- -------
Total cost of revenues 4,292 6,930
------- -------
Gross margin 2,219 5,171
------- -------
Operating expenses:
Product development 1,392 1,418
Selling,general and administrative 3,823 3,220
------- -------
Total operating expenses 5,215 4,638
------- -------
Operating income (loss) (2,996) 533
Interest income, net 4 82
Other income 16 ----
------- -------
Income (loss) before income taxes (2,976) 615
Income tax expense 0 228
------- -------
Net income (loss) $(2,976) $ 387
======= =======
Net income (loss) per common and common
equivalent share $ (0.39) $ .06
======= =======
Shares used in per share computations 7,559 6,823
======= =======
</TABLE>
4
<PAGE>
ULTRADATA CORPORATION
STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(2,976) $ 387
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization 309 246
Deferred income taxes -- 181
Equity in earnings of unconsolidated subsidiary (16) (27)
Changes in operating assets and liabilities:
Trade accounts receivable 3,017 995
Unbilled revenues 702 (3,092)
Inventories (76) (337)
Prepaid expenses and other assets 99 (114)
Income taxes receivables 120 --
Accounts payable (1,304) (1,328)
Accrued expenses 339 1,474
Income taxes payable -- 47
Deferred revenue and customer advances (724) (1,929)
------- -------
Net cash (used for) provided by operating activities (510) (3,497)
------- -------
Cash flows from investing activities:
Capital expenditures (956) (378)
Decrease of stockholders notes receivable -- 1,453
Purchase of short-term investments (105) --
Sale of short-term investments 369 --
------- -------
Net cash provided by (used for) investing activities (692) 1,075
------- -------
Cash flows from financing activities:
Bank borrowings, net 294 (1,000)
Repayment of debt (12) (116)
Net proceeds from issuance of common stock 174 --
Net proceeds from initial public offering -- 14,458
------- -------
Net cash provided by (used for) financing activities 456 13,342
------- -------
Net increase (decrease) in cash (746) 10,920
Cash and cash equivalents at beginning of period 1,583 1,124
------- -------
Cash and cash equivalents at end of period $ 837 $12,044
======= =======
</TABLE>
5
<PAGE>
ULTRADATA CORPORATION
Notes to Financial Statements
March 31, 1997 and 1996
1. BASIS OF PRESENTATION
These unaudited financial statements have been prepared in accordance with the
instructions for Form 10-Q and therefore certain information and footnote
disclosures normally contained in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
The accompanying unaudited financial statements of the Company reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary to present a fair statement of the financial position as
of March 31, 1997and the results of operations and cash flows for the interim
periods presented.
2. REVENUE RECOGNITION
The Company recognizes revenues from licenses of computer software provided that
a noncancelable license agreement has been signed, the software and related
documentation have been shipped, there are no material uncertainties regarding
customer acceptance, collection of the resulting receivable is deemed probable,
and no other significant vendor obligations exist. Maintenance revenues are
deferred and recognized over the related contract period, generally six months
to five years. Services and other revenues generated from professional
consulting and training services and software customization services are
recognized as the services are performed. Hardware revenues are recognized upon
shipment.
3. ACCRUED EXPENSES
A summary of accrued expenses follows (in thousands):
MAR. 31, DEC. 31,
1997 1996
-------- --------
Accrued payables $1,169 $ 868
Accrued vacation 616 631
Accrued 401(k) contribution 321 213
Other 241 296
------ ------
$2,347 $2,008
====== ======
4. RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." SFAS No. 128
requires the presentation of basic earnings per share ("EPS") and, for companies
with complex capital structures or potentially dilutive securities, such as
convertible debt, options and warrants, diluted EPS, SFAS No. 128 is effective
for annual and interim periods ending after December 31, 1997. Had SFAS No. 128
been effective for the quarter ended March 31, 1997, basic EPS and diluted EPS
would not have been significantly different from the reported net loss per
share.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS INCLUDES A NUMBER OF FORWARD-LOOKING STATEMENTS WHICH REFLECT THE
COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE.
THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES,
INCLUDING THOSE DISCUSSED BELOW, AND IN THE OTHER REPORTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION THAT COULD CAUSE RESULTS TO DIFFER MATERIALLY
FROM HISTORICAL RESULTS OR THOSE ANTICIPATED. IN THIS REPORT THE WORDS
"EXPECTS", "ANTICIPATES", "BELIEVES" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-
LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.
OVERVIEW
The Company provides open architecture, fully-integrated on-line information
management solutions that enable relationship-oriented financial institutions to
efficiently manage their businesses and offer real-time customized financial
services 24 hours per day, seven days per week. These solutions allow the
Company's customers to provide among other things financial services such as
checking, savings and investment accounts, credit and debit cards, ATM access
and consumer lending. The Company's products are today primarily targeted at
large and mid-sized credit unions.
A significant portion of the Company's revenues to date have been from software
licenses and hardware sales related to the Company's ULTRAFIS system and the
Company expects revenues related to the ULTRAFIS system to represent a
significant portion of its total revenues for the next several years.
The Company derives its revenues from software license fees, maintenance fees,
service bureau operation fees and disaster recovery services, custom
development, training and installation services and sales of third party
software and hardware products. A significant portion of the Company's revenues
are derived from substantial contracts with organizations that have long
decision-making cycles, typically from six to twelve months. The decision to
purchase the Company's products is followed by an installation and training
cycle, which is labor-intensive and generally requires from three to twelve
months to complete.
Each new customer system consists of the Company's ULTRAFIS product which may be
combined with selected client server applications, hardware and services. With
the increase in 1996 system sales and the introduction and demand for the
Company's new client server applications across its customer base, the Company
found itself poorly prepared to manage the increased requirements placed on its
training and installation and customer support organizations. The Company
believes that the number of large customer system sales in 1995 and the
Company's difficulties in some of the installations of these large systems
impacted the number of these types of sales by the Company in 1996 and in the
first quarter of 1997.
Software products as complex as those offered by the Company often contain
undetected errors or failures, or contain new functionality that may not meet
customer expectations. Nevertheless, through 1995 the Company had no history of
product returns or significant customer credits or other customer economic
accommodations. However, during 1996 the Company experienced customer
difficulties in two areas; the introduction of certain new client server
products and installation delays on several new customer installations.
The Company's customers expressed strong demand for the new client server
applications causing the Company to release certain products before
implementation of an effective product field testing process. Customer
difficulties occurred as certain product errors and failures arose and as
customers became aware of certain perceived functionality issues. As a result,
broad market acceptance did not occur, and the Company made some economic
accommodations as the Company worked to resolve the product issues.
7
<PAGE>
These 1996 customer difficulties caused, among other things, increases in the
Company's unbilled revenues, a significant increase in the Company's reserve for
doubtful accounts and sales returns and contributed to significant decreases in
new customers and software sales during the last two quarters of 1996 and the
first quarter of 1997.
The Company effected a reduction in force on March 31, 1997 of approximately 50
employees to reduce the employee base to approximately 225 employees. The
reduction was primarily in administrative and management positions across the
Company and was combined with a reallocation of resources to focus the Company
resources on client-server product lines, product standardization and customer
support.
RESULTS OF OPERATIONS
REVENUES
The Company's revenues are comprised of software, customer maintenance, services
and other revenues and hardware revenues. Revenues for the three months ended
March 31, 1997 decreased 86% over the same period last year from $12.1 million
to $6.5 million.
The following table sets forth the Company's revenue and gross margin and gross
margin as a percentage of revenues for the three month periods ended March 31,
1997 and 1996, respectively:
<TABLE>
<CAPTION>
REVENUE (IN THOUSANDS) GROSS MARGIN (IN THOUSANDS) GROSS MARGIN %
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED INCREASE
MARCH 31, MARCH 31, MARCH 31, (DECREASE)
-----------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Software 1,039 3,155 787 2,335 76% 74% 2%
Maintenance 2,536 1,948 919 941 36% 48% (12%)
Services & Other 1,306 1,875 114 152 9% 8% 1%
Hardware 1,630 5,123 399 1,743 24% 34% (12%)
------ ------- ------ ------ --- --- ---
$6,511 $12,101 $2,219 $5,171 34% 43% (9%)
====== ======= ====== ====== === === ===
</TABLE>
Software revenues decreased by 67% from $3.2 million in the first quarter of
1996 to $1.0 million in the first quarter of 1997. The decrease in software
revenues during the first quarter of 1997 as compared to first quarter 1996
was due primarily to a reduction in the number of new customer sales and a
reduction in sales volume of the Company's client-server applications.
The Company's maintenance revenues are derived from annual support agreements
with its customers. Maintenance revenues increased by 30% from $1.9 million in
the first quarter of 1996 to $2.5 million in the first quarter of 1997. The
increase was primarily a result of growth in new ULTRAFIS system customers
converted and add-on module sales during the last twelve months. The Company's
installed customer base grew from approximately 171 systems on March 31, 1996 to
approximately 185 systems on March 31, 1997.
Services and other revenues decreased by 44% from $1.9 million in the first
quarter of 1996 to $1.3 million in the first quarter of 1997. The revenue
decline was mainly attributable to decreases in training and installation
activities due to lower sales volumes during the last nine months. Services and
other revenues also includes custom development, service bureau operation fees
and disaster recovery contracts.
8
<PAGE>
Hardware revenues decreased from $5.1 million in the first quarter 1996 to $1.6
million in the first quarter of 1997. This 69% decrease was primarily
attributable to the decrease in the number of new customer hardware purchases
and customer product installations during the second half of 1996. The Company's
high volume of shipments during the first quarter of 1996 were due to the number
of new order activities which occurred during the second half of 1995 requiring
delivery during the first quarter of 1996. The percentage of hardware revenues
depends on the mix of customer orders and the timing of particular customer
installations and can be expected to fluctuate substantially from quarter to
quarter.
GROSS MARGIN
Gross margin as a percentage of total revenue declined 9% from 43% in the first
quarter of 1996 to 34% in first quarter of 1997 primarily due to declines in
margin for maintenance and hardware revenues.
Software gross margin as a percentage of software revenue improved 2% due to a
lower proportion of sales of software purchased and licensed from third parties.
This change in mix was due to the lower volume of orders for upgrades and new
customer sales requiring third party software.
Gross margin percentage from maintenance revenues declined by 12% for the first
quarter of 1997 compared to the same quarter prior year. The decrease was
primarily due to increases in the number of employees to address customer
support calls regarding the Company's products and increases in new customers in
1996.
Gross margin percentage from services and other revenues increased by 1% for the
first quarter of 1997 primarily due to the mix of low margin training and
installation service revenues compared to higher margin service bureau and
disaster recovery revenues.
Hardware gross margin as a percentage of hardware revenues decreased 12% for
the first quarter of 1997. This was due to the mix of hardware products from
the Company's various vendors that were shipped during the first quarter of
1997 having lower margins compared to the mix of hardware products shipped
during the same quarter prior year.
OPERATING EXPENSES
<TABLE>
<CAPTION>
THREE MONTHS ENDED INCREASE AS A PERCENT OF
MARCH 31, (DECREASE) REVENUE
------------------ ---------- --------------
1997 1996 $ % 1997 1996
<S> <C> <C> <C> <C> <C> <C>
OPERATING EXPENSES
Product development 1,392 1,418 (26) (2%) 21% 12%
Selling, general and administrative 3,823 3,220 603 19% 59% 27%
------- ------ ---- --- --- ---
$ 5,215 $4,638 $577 12% 80% 38%
</TABLE>
Product development expenses were consistent with the same quarter prior year at
$1.4 million. Product Development costs were primarily for staffing to support
new product development programs such as Ultra-Access Remote Banking modules,
Optical Disk Systems modules, product enhancements, regulatory compliance.
Product development expenses as a percentage of total revenues increased from
12% to 21% during the first quarter of 1997 compared to the same period during
1996 primarily as a result of the reduction in revenues over the same period
prior year.
Sales, marketing, support and general and administrative expenses increased from
$3.2 million in first quarter 1996 to $3.8 million in first quarter 1997. The
increase was primarily due to staff increases to address the sale of the
Company's increasing array of application modules to the existing customer base
and for enhancing the product marketing function for these and other new
products. Selling, general and administrative expenses as a percentage of total
revenues increased from 27% to 59%.
9
<PAGE>
FUTURE OPERATING RESULTS
The Company's operating performance each quarter is subject to various risks and
uncertainties as discussed in this report and in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission on May 7, 1997, as
amended. This report on Form 10-Q should be read in conjunction with such
reports, particularly "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" contained therein. The
Company's future operating results will depend upon conditions in its market
that may affect demand for its products and its ability to enhance its existing
products and introduce new products on a timely basis. The Company must also
manage growth and change effectively as failure to do so could materially and
adversely affect its business and operating results.
Installation of the Company's ULTRAFIS system is a complex process that must
typically be done without any disruption of the customer's service. Because a
portion of the Company's contracts may include development of custom software,
adaptation to customer needs and significant training and installation efforts,
a failure by the Company to anticipate the time and expenses associated with
such development and adaptation could result in increased costs, delays, or
reduced revenues and margin. In 1996 the Company experienced difficulty in the
installation and training process on several conversions, resulting in delays,
reductions in revenues and increases in expenses primarily as a result of the
increase in new customer activity in 1996 and the failure of the Company's
training and installation organization to be able to perform to contract
schedules. Failure by the Company to successfully install an ULTRAFIS system
could result in significant loss of revenue in a particular quarter and
fluctuation in the Company's results of operations. Although the Company
schedules the installations of its products several months in advance, its
ability to achieve its revenue plans, both in the near term and in the long
term, depends on the Company's continued ability to sign new customer contracts
and to complete such contracts on schedule. Failure to close new customer
contracts as a result of lost sales or deferrals of customer decisions could
have a material adverse impact on the future operating results. There can be no
assurance that sales or installations will continue to occur at historical rates
or in accordance with the Company's expectations. Because the Company's
operating expenses are based on anticipated revenue levels and a high percentage
of the Company's expenses are relatively fixed, a small variation in the timing
of the recognition of specific revenues could cause significant variations in
operating results from quarter to quarter.
The Company has previously experienced delays in the development and
introduction of new products and product enhancements, including certain of its
client server products. The length of these delays has varied depending upon the
size and scope of the project and the nature of the problems encountered. Any
significant delay in the development of new products, or the failure of these
new products, if and when installed, to achieve a significant degree of market
acceptance, could have a material adverse effect upon the Company's business,
financial condition and results of operations.
The Company's quarterly and annual revenues and operating results have varied
significantly in the past, and may do so in the future. Operating results may
fluctuate due to factors such as the demand for the Company's products, the
introduction and acceptance of new products and product enhancements by the
Company or its competitors, changes in the levels of operating expenses,
customer order deferrals in anticipation of new products, competitive conditions
in the credit union and financial services markets and economic conditions
generally or in various industry segments. In addition, a significant portion of
the Company's business has been derived from substantial contracts with large
organizations with long decision-making cycles, and the timing of such orders
has caused material fluctuations in the Company's operating results. The
Company's expense levels are based in part on its expectations regarding future
revenues and in the short term are fixed to a large extent. Therefore, the
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall. As a result, if anticipated revenues do not
occur or are delayed, the Company's operating results would be
disproportionately affected. The Company expects quarterly and annual
fluctuations to continue for the foreseeable future. Accordingly, the Company
believes that period-to-period comparisons of its financial results should not
be relied upon as an indication of future performance.
10
<PAGE>
In addition, software products as complex as those offered by the Company often
contain undetected errors or failures when first introduced or as new versions
are released. There can be no assurance that, despite testing by the Company and
by current and potential customers, errors will not be found in new products
after commencement of commercial shipments. The occurrence of such errors could
result in loss of, or delay in, market acceptance of the Company's products,
which could have a material adverse effect on the Company's business, financial
condition and results of operations.
Substantially all of the Company's revenues historically have been related to
the Company's ULTRAFIS system, and the Company expects that for several years a
substantial portion of its revenues will continue to be related to the ULTRAFIS
system. The Company is also dependent upon the success of its new client server
products. The Company's success will depend in large part on its ability to
sell, install, maintain and enhance the ULTRAFIS system and client server
products and to develop, on a timely and cost-effective basis utilizing new
technologies, application modules that meet evolving customer needs. Any
failure by the Company to anticipate or to respond adequately to new and
changing market conditions, enhance the ULTRAFIS system and develop application
modules, compete with new product offerings by third parties, complete new
standalone product offerings, respond to emerging industry standards, adapt to
changing technologies, maintain sales of the Company's products, or continue to
sign and complete new customer contracts would have a material adverse effect on
the Company's results of operations.
On October 25, 1996 the U.S. District Court ruled that federal credit unions may
not extend membership benefits to individuals who are not part of the credit
union's original charter group. This ruling imposes limits on new customers
that a federal credit union may attract. As a result, some federal credit
unions have expressed a reluctance to pursue extensive capital purchases until
the impact of the ruling is further assessed. Accordingly, if this ruling
results in deferred customer purchase decisions for the Company's products, it
could have a material adverse effect on the Company's business, financial
condition, and results of operations. While federal credit unions represent
approximately 60% of all credit unions, less than half of these credit unions
are affected by this ruling.
LIQUIDITY AND CAPITAL RESOURCES
The Company's management believes current cash, cash equivalents and short-term
investments, expected cash generated from operations and the available factoring
agreement of credit will satisfy its expected working capital and capital
expenditure requirements through the immediate future.
In September 1996, the Company entered into an agreement with a bank to obtain a
$5.0 million revolving line of credit, bearing interest at the bank's prime
rate, 8.25% at December 31, 1996 and a $1.5 million capital equipment facility
bearing interest at prime plus 0.25%. The Company was in violation of certain
financial covenants under this agreement as of December 31, 1996 and March 31,
1997. In May 1997, the bank waived these violations, and the Company and the
bank restructured their relationship under a factoring agreement, which replaces
the revolving line of credit. The factoring agreement provides for borrowing by
the Company of up to $1.5 million, to be effected by the bank's purchase of
eligible accounts receivable and payment to the Company of an amount equal to
80% of the purchased accounts receivable. Purchases of receivables and
corresponding advances to the Company are at the discretion of the bank. There
is a 0.5% administrative fee for each receivable purchased and a 1.75% monthly
finance charge for as long as each purchased receivable remains outstanding.
The factoring agreement renews, unless terminated by the Company or the bank, in
April 1998 and is terminable by the Company or the bank at any time. The
agreement also provides that the borrowings are secured by all tangible and
intangible assets of the Company. As of April 30, 1997, the outstanding balance
on the capital equipment facility was $684,000. As part of the new agreement,
no further draws will be available and the Company will establish cash
collateral for this balance. The Company expects to pay off this balance and
relieve the cash collateral by obtaining asset-backed lending from another
source.
11
<PAGE>
Capital expenditures of $1.0 million during the first quarter of 1997 were
primarily for computer equipment and leasehold improvements related to the
Company's occupancy of a new facility during February 1997.
Net cash used for operations was $.5 million for the quarter ending March 31,
1997, including the $3.0 million net loss for the first quarter of 1997. For the
quarter ending March 31, 1996, net cash used for operations was $3.5 million.
Unbilled revenue decreased to $3.2 million at March 31, 1997 compared to $3.9
million at December 31, 1996. The decrease in unbilled revenue was primarily
related to the decrease in the number of large contract sales and add-on and
upgrade sales to existing customers for software, hardware and services.
Historically, the Company's typical contract billing terms were based on
completion of a series of events (from contract execution through final
acceptance), generally spanning six to twelve months, which did not coincide
with the Company's revenue recognition policy, resulting in unbilled revenues.
The Company implemented a new billing policy during 1996 that is intended to
better match the timing of the billing with recognition of revenue, which should
reduce the level of unbilled revenue. Unbilled revenue at March 31, 1996
decreased $5.4 million from June 30, 1996. There can be no assurance that the
Company will continue to realize such improvements in the future or that
collections of amounts billed will occur as expected.
Net cash used for operations attributed to accounts payable was $1.3 million for
the quarters ending March 31, 1997 and March 31, 1996 respectively.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
12
<PAGE>
11.01 Computation of Earnings (loss) per Share
27.1 Financial Data Schedule
(b) There have been no reports filed on Form 8-K during the quarter ended
March 31, 1997.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Ultradata
Corporation has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ULTRADATA CORPORATION
Date May 15, 1997 By /s/ ROBERT J. MAJTELES
--------------------------- ----------------------
Robert J. Majteles
President and Chief Executive Officer
By /s/ PHILIP D. RANGER
-------------------
Philip D. Ranger
Vice President and Chief Financial
Officer
14
<PAGE>
Exhibit 11.01
11.01 COMPUTATION OF EARNINGS (LOSS) PER SHARE (IN THOUSANDS EXCEPT PER
SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
------- -------
<S> <C> <C>
Net Income (loss) $(2,976) $ 387
======= ======
Weighted average outstanding shares 7,559 6,431
Common stock equivalents -- --
Common stock equivalents accounted for
under Staff Accounting Bulletin No. 83 392
------- ------
7,810 6,823
======= ======
$ (.39) $ .06
======= ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the quarter ended March 31, 1997 and is qualified in its entirety
as reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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0
0
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</TABLE>
