SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
GENTIA SOFTWARE PLC
Tuition House
St George's Road
Wimbledon
London SW19 4EU
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
------------------ -----------------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
------------------ -----------------
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82- N.A.
Page 1 of 15 Pages
Exhibit Index Appears on Page 11
<PAGE>
GENTIA SOFTWARE PLC
Form 6-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Financial Information:
Condensed Consolidated Balance Sheets as of June 30, 1997
(Unaudited) and December 31, 1996 (Audited) 3
Condensed Consolidated Statements of Income for the three and
six months ended June 30, 1997 and 1996 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 1997 and 1996 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements
(Unaudited) 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations. 7
Exhibit Index 11
Exhibit A. Second Quarter Press Release 12
</TABLE>
2
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------------- ----------------------
(unaudited) (audited)
(in thousands)
US$ US$
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $21,744 $25,228
Accounts receivable, net of allowance $421
(Dec 31, 1996 - $478) 11,621 9,953
Prepaid expenses and other current assets 1,857 821
------------- -------------
Total current assets $35,222 $36,002
------------- -------------
Property and equipment, net 2,243 2,013
Goodwill on acquisition, net of amortization of $301
(Dec 31, 1996 - $122) 3,261 3,388
Deferred taxation 148 148
------------- -------------
Total assets $40,874 $41,551
============= =============
Liabilities and shareholders' equity
Current liabilities:
Current portion of lease obligations $175 $194
Accounts payable 1,234 1,648
Taxes payable 1,392 1,373
Accrued liabilities 1,238 1,778
Deferred revenues 2,981 2,969
UK value added tax 264 346
Other accounts payable 885 985
------------- -------------
Total current liabilities 8,169 9,293
Non current liabilities:
Deferred taxation 29 29
Long-term portion of lease obligations 167 225
------------- -------------
Total liabilities 8,365 9,547
Shareholders' equity:
Ordinary shares 2,156 2,152
Additional paid-in capital 27,302 27,182
Retained earnings 3,350 2,747
Cumulative translation adjustment (299) (77)
------------- -------------
Total shareholders' equity 32,509 32,004
------------- -------------
Total liabilities and shareholders' equity $40,874 $41,551
============= =============
</TABLE>
See accompanying notes
3
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------------------- ----------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------------- ----------- ----------- ------------
(in thousands, except per share amounts)
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Revenues:
License $5,018 $3,966 $8,974 $7,279
Services and other 3,088 2,138 6,133 4,028
----------- ----------- ---------- -----------
8,106 6,104 15,107 11,307
----------- ----------- ---------- -----------
Cost of revenues:
License 116 109 283 211
Services and other 1,662 1,275 3,177 2,307
----------- ----------- ---------- -----------
1,778 1,384 3,460 2,518
----------- ----------- ---------- -----------
Gross profit 6,328 4,720 11,647 8,789
Operating expenses:
Sales and marketing 3,591 2,314 6,705 4,381
Research and development 1,005 775 2,220 1,372
General and administrative 1,163 989 2,280 1,874
Goodwill amortization 91 - 179 -
----------- ----------- ---------- -----------
Total operating expenses 5,850 4,078 11,384 7,627
----------- ----------- ---------- -----------
Income from operations 478 642 263 1,162
Other income 295 269 598 267
----------- ----------- ----------- ----------
Income before provision for taxes 773 911 861 1,429
Provision for income taxes 229 337 258 529
----------- ----------- ----------- ----------
Net income $ 544 $ 574 $ 603 $ 900
=========== =========== ========== ===========
Net income per share $ 0.05 $ 0.05 $ 0.06 $ 0.09
Weighted average shares outstanding 10,896 10,614 10,928 9,755
</TABLE>
See accompanying notes
4
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
-------------------- --------------------
June 30, 1997 June 30, 1996
-------------------- --------------------
(in thousands)
US$ US$
<S> <C> <C>
Cash flows from operating activities
Net income 603 900
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 388 265
Goodwill 179 -
Loss on disposal of assets (2) -
Changes in operating assets and liabilities:
Accounts receivable (1,611) (1,995)
Provision for bad debts (57) 15
Prepaid expenses and other receivables (1,036) (381)
Accounts payable (414) 1,715
Accrued liabilities and other expenses (703) 1,505
Deferred revenues 12 248
------------- --------------
Net cash provided by operating activities (2,641) 2,272
------------- --------------
Cash flows from investing activities:
Proceeds on disposal of assets 45 -
Costs of acquisition (52) (192)
Purchases of assets (687) (526)
------------- --------------
Net cash used in investing activities (694) (718)
------------- --------------
Cash flows from financing activities:
Net proceeds on shares issued 124 26,406
(Repayment) of capital lease obligations (94) (67)
(Decrease) in bank overdraft - (391)
------------- --------------
Net cash provided by financing activities 30 25,948
Effect of exchange rate changes on cash (179) (11)
------------- --------------
Net (decrease) increase in cash (3,484) 27,491
Cash at beginning of period 25,228 2,280
------------- --------------
Cash at end of period 21,744 29,771
============= ==============
</TABLE>
See accompanying notes
5
<PAGE>
GENTIA SOFTWARE PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
- --------
Gentia Software plc (the "Company") is incorporated in England and Wales. The
Company develops, markets and supports high performance client/server decision
support software for business planning and decision making. The Company changed
its name from Gentia Software plc on July 1, 1997.
Basis of Presentation
- ---------------------
The consolidated financial statements are stated in United States dollars and
are prepared under United States generally accepted accounting principles.
Interim Financial Information
- -----------------------------
The financial information at June 30, 1997 and for the three and six months
ended June 30, 1997 and 1996 is unaudited but includes all adjustments which the
Company considers necessary for a fair presentation of the financial position at
such date and the operating results and cash flows for those periods. Results
for the three and six months period ended June 30, 1997 are not necessarily
indicative of results that may be expected for the entire year. The condensed
consolidated balance sheet at June 30, 1997 has been derived from the audited
consolidated financial statements at that date. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with United States generally accepted accounting principles have been condensed
or omitted pursuant to the Securities and Exchange Commission Rules and
Regulations. These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes for the
year ended December 31, 1996.
Principles of Consolidation
- ---------------------------
The accompanying financial statements consolidate the accounts of the Company
and its wholly and majority owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Foreign Exchange
- ----------------
The consolidated balance sheets of the Company and its foreign subsidiaries are
translated from their respective functional currencies to United States dollars
at period-end exchange rates and the statements of operations and cash flows at
average rates for the relevant periods. Gains and losses resulting from
translation are accumulated as a separate component of shareholders' equity. Net
gains and losses resulting from foreign exchange transactions, which are not
material in any of the reporting periods, are included in the consolidated
statement of operations.
Per Share Information
- ---------------------
Net income per share information is computed based on the weighted average
number of shares outstanding and dilutive share equivalents of outstanding share
options using the treasury stock method. Net income per share is based upon the
weighted average number of shares and equivalent shares outstanding during the
period. Equivalent shares consist of share options and are excluded for the
computation if their effect is anti-dilutive except that, pursuant to the
Securities and Exchange Commission Staff Account Bulletins.
2 LITIGATION
The Company is involved in one legal action arising in relation to patents in
the United States. While the outcome of this matter is currently not
determinable, it is management's opinion that this matter will not have a
material adverse effect on the Company's consolidated financial condition or
results of its operations.
6
<PAGE>
GENTIA SOFTWARE PLC
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the three and six months ended June 30, 1997 and 1996
Three months ended June 30, 1997 and 1996.
- ------------------------------------------
Revenues
- --------
Revenues were $8.1 million in the three months ended June 30, 1997, an increase
of 32.8.% compared to revenues of $6.1 million for the three months ended June
30, 1996. License revenues were $5 million in the three months ended June 30,
1997, an increase of 26.5% over license revenues of $4.0 million for the three
months ended June 30, 1996. Services and other revenues were $3.1 million in the
three months ended June 30, 1997, an increase of 44.4% when compared to $2.1
million for the three months ended June 30, 1996. The increase in revenues
reflected both increased sales of the Company's Gentia product as well as
increased consulting and maintenance services related thereto.
Gross Profit
- ------------
Gross profit was $6.3 million or 78.1% for the three months ended June 30, 1997,
compared to $4.7 million or 77.3% for the three months ended June 30, 1996. The
increase in gross margin was primarily due to a higher margin obtained on
service and other revenue in the three months ended June 30, 1997.
Sales and Marketing
- -------------------
Sales and marketing costs were $3.6 million in the three months ended June 30,
1997, an increase of 55.2% compared to $2.3 million in the three months ended
June 30, 1996. The increase in dollar expenditure reflects the Company's
increased investment in its sales and marketing organization especially in the
United States. The Company expects these expenses will continue to increase as a
result of its continued investment in its sales and marketing organization. The
Company is expanding its geographic coverage and will continue to do so.
Research and Development
- ------------------------
Research and development costs were $1 million in the three months ended June
30, 1997, an increase of 29.7% compared to $775,000 in the three months ended
June 30, 1996. The increase is primarily as a result of hiring additional
personnel to continue the Company's development program. It is the Company's
intention to accelerate its expenditure on research and development of new
products when it considers it appropriate to do so. The Company's research and
development expenditure is predominantly incurred in pounds sterling.
General and Administrative
- --------------------------
General and administrative costs were $1.2 million in the three months ended
June 30, 1997, an increase of 17.6% compared to $989,000 in the three months
ended June 30, 1996.
Other Income (Expenses)
- -----------------------
Other income was $295,000 in the three months ended June 30, 1997 compared to
$269,000 in the three months ended June 30, 1996. Additional income is primarily
due to interest income on funds received due to the Company's Initial Public
Offering which was completed on April 30, 1996.
7
<PAGE>
GENTIA SOFTWARE PLC
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Six months ended June 30, 1997 and 1996
- ---------------------------------------
Revenue
- -------
Revenues were $15.1 million in the six months ended June 30, 1997, an increase
of 33.6% compared to revenues of $11.3 million for the six months ended June 30,
1996. License revenues were $9 million in the six months ended June 30, 1997, an
increase of 23.3% over license revenues of $7.3 million for the six months ended
June 30, 1996. Services and other revenues were $6.1 million in the six months
ended June 30, 1997, an increase of 52.3% compared to $4 million for the six
months ended June 30, 1996. The increase in revenues reflected both increased
sales of the Company's Gentia product as well as increased consulting and
maintenance services related thereto.
Gross Profit
- ------------
Gross profit was $11.6 million or 77.1% for the six months ended June 30, 1997,
compared to $8.8 million or 77.7% for the six months ended June 30, 1996.
Sales and Marketing
- -------------------
Sales and marketing costs were $6.7 million in the six months ended June 30,
1997, an increase of 53% compared to $4.4 million in the six months ended June
30, 1996. This increase in dollar expenditure reflects the Company's increased
investment in its sales and marketing organization especially in the United
States. The Company expects these expenses will continue to increase as a result
of its continued investment in its sales and marketing organization. The Company
is expanding its geographic coverage and will continue to do so.
Research and Development
- ------------------------
Research and development costs were $2.2 million in the six months ended June
30, 1997, an increase of 61.8% compared to $1.4 million in the six months ended
June 30, 1996. The increase is primarily as a result of hiring additional
personnel to continue the Company's development program. It is the Company's
intention to accelerate its expenditure on research and development of new
products when it considers it appropriate to do so. The Company's research and
development expenditure is incurred predominantly in pounds sterling.
General and Administrative
- --------------------------
General and administrative costs were $2.3 million in the six months ended June
30, 1997, an increase of 21.7% compared to $1.9 million in the six months ended
June 30, 1996. The Company expects general and administrative expenditure to
continue to increase in absolute dollar terms.
Other Income (Expenses)
- -----------------------
Other income was $598,000 in the six months ended June 30, 1997 compared to
$267,000 in the six months ended June 30, 1996. The additional income was
primarily due to additional interest income received from the Company's Initial
Public Offering completed on April 30, 1996.
8
<PAGE>
Liquidity and Capital Resources
- -------------------------------
As of June 30, 1997, the Company had cash and cash equivalents of $21.7m.
Accounts receivable at June 30, 1997 were $11.6 million, an increase of 16.8%
compared to December 31, 1996 reflecting extended terms given on certain
contracts. In the six months ended June 30, 1997, the Company's operating
activities consumed cash of $2.6 million compared to a generation of cash of
$2.3million in the six months ended June 30, 1996. This was primarily due to an
increase in accounts receivable as described above and a decrease in accounts
payable and liabilities and expenses accrued at the year end.
Investing activities consumed $694,000 in the six months ended June 30, 1997
compared to $718,000 in the six months ended June 30, 1996. In the six months
ending June 30, 1997 the company had invested $687,000 in the purchase of
assets, predominantly computer equipment.
Financing activities generated $30,000 in the six months ended June 30, 1997
compared to $25.9 million on the six months ended June 30, 1996. The significant
change arises because of the receipt of proceeds from the Company's IPO on April
30, 1996. During the six months ended June 30, 1997 the company had received
$124,000 on the exercise of share options.
The Company believes that existing cash, cash equivalents and cash generated by
operations will be sufficient to meet the Company's working capital needs and
currently planned capital expenditure requirements for the next twelve months.
9
<PAGE>
The information contained in Exhibit 1 hereto, consisting of the registrant's
unaudited financial statements for the six months ended June 30, 1997, has been
distributed to its security holders and is furnished to the Commission pursuant
to Rule 13a-16 under the Securities Act of 1934, as amended (the "Act"). This
report and the information furnished herewith shall not be deemed to be "filed"
for the purposes of Section 18 of the Act or otherwise subject to the
liabilities of that section.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused the Report to be signed on its behalf by the
undersigned, thereunto duly authorised.
GENTIA SOFTWARE plc
By: [Signature of Anthony K. Fox]
-----------------------------
Anthony K. Fox
Chief Financial Officer
Date: 31st July, 1997
10
<PAGE>
EXHIBIT INDEX
Page
Exhibit A Second Quarter Press Release - (1997) 12-15
11
EXHIBIT A
Second Quarter Press Release
GENTIA SOFTWARE REPORTS RECORD SECOND QUARTER REVENUES
------------------------------------------------------
Continues to Dominate Networked Business Intelligence Market
Success in Competing for Blue Chip Customers
New Strategic Partnerships
BOSTON, July 31, 1997 - Gentia Software plc (Nasdaq: GNTIY - formerly Planning
Sciences International plc) developer of the world's only networked business
intelligence environment for enterprise-wide deployment, today reported net
income of $544,000 or $0.05 per share, on record second quarter revenues of $8.1
million. In last year's second quarter the company's net income was $574,000 or
$0.05 per share, on revenues of $6.1 million.
Paul Rolph, chairman and chief executive officer, noted that Gentia's revenue in
this year's second quarter was 16% higher than in the preceding quarter and 33%
higher than in the comparable period of 1996.
"Our gains in the U.S. market have been particularly strong," Mr. Rolph said.
"After formal competitive assessment, in the second quarter, Gentia was selected
by major American corporations including J.P. Morgan and Company, Federal
Express, Sun Microsystems and Hewlett-Packard. In addition, we announced
partnerships with Sybase and Informix that we expect to contribute significantly
to our continued success."
Mr. Rolph said Gentia sees great opportunities to accelerate its momentum and
increase its market share by making a significantly greater investment in sales
and marketing in the second half of 1997.
"We intend to seize these opportunities, and we believe that doing so will
enhance our ability to continue rapid rates of growth in 1998 and beyond," he
said. "Gentia Software sees itself as being in a battle for market share. We
know we have the technology to win that battle, and we are going to be
relentless in our pursuit of success."
Mr. Rolph said Gentia is continuing to win more than 80 per cent of competitive
bid situations in which it is a candidate. He said the new "Networked Business
Intelligence" marketing campaign, initiated by worldwide marketing vice
president Scott Silk, is proving to be an important factor in revenue growth.
"We also changed our company name from Planning Sciences International plc to
Gentia Software plc at the end of the second quarter," Mr. Rolph said. "Though
the costs of this change had a moderately adverse impact on the quarter's net
income, the change is more than worth the cost. The new name reinforces both our
product brand and our position as the world leader in Networked Business
Intelligence."
In this year's second quarter the company had noteworthy competitive success not
only in the U.S. but also in Europe, where it has been selected recently by
accounts such as Swiss Reinsurance in the financial sector.
Approximately 42% of Gentia's first half 1997 revenues came from the U.S., while
27% came from the U.K. This compares with 39% from the U.S. and 40% from the
U.K. a year earlier. While U.S. sales have exceeded Gentia's targets, a recent
failure to meet objectives in the U.K. has led to extensive staffing and
structural changes there.
"The change we've made in our U.K. sales operations have been far-reaching," Mr.
Rolph said. "The problems that made those changes necessary have now been
addressed, and our actions have cleared the way to greatly improved performance.
I am confident of better results in the U.K. by year-end."
He said the company also plans to enter the Japanese market by the end of 1997.
About the Company
Gentia Software focuses on the development of the networked business
intelligence environment also named Gentia. The company's headquarters are in
Boston, Massachusetts, and London, England, and has offices in Denver, Atlanta,
Los Angeles, San Francisco, New York City and New Jersey in the U.S. and also in
Australia, Hong Kong, South Africa, Germany, Belgium and The Netherlands.
12
<PAGE>
Gentia is the world's only networked business intelligence environment for
complex business analysis and reporting. Gentia applications are deployed using
a distributed object-based architecture which assures delivery of key
information on the desktops of decision-makers throughout an organization.
Gentia has more than 400 corporate and public-sector clients. Among them are
major organizations such as J.P. Morgan and Company, Federal Express, Swiss
Reinsurance, Sun Microsystems, Motorola, Barclays Bank, Volvo, Hewlett-Packard
and McDonnell Douglas.
Internet users can obtain further information via the Gentia Software home page
http://www.gentia.com.
This news release contains statements of a forward looking nature relating to
the financial performance of Gentia Software. Such statements are based upon the
information available to management at this time, and they necessarily involve
risk because actual results could differ materially from current expectations.
Among the many factors that could cause actual results to differ from those set
forth in the Company's forward looking statements are changes in general
economic conditions, actions taken by customers or competitors, and the receipt
of more or fewer orders than expected.
Financial Tables follow
13
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------------- ----------------------
(unaudited) (audited)
(in thousands)
US$ US$
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $21,744 $25,228
Accounts receivable, net of allowance $421
( Dec 31, 1996 - $478) 11,621 9,953
Prepaid expenses and other current assets 1,857 821
------------- -------------
Total current assets $35,222 $36,002
------------- -------------
Property and equipment, net 2,243 2,013
Goodwill on acquisition, net of amortization of $301
(Dec 31, 1996 - $122) 3,261 3,388
Deferred taxation 148 148
------------- -------------
Total assets $40,874 $41,551
============= =============
Liabilities and shareholders' equity
Current liabilities:
Current portion of lease obligations $175 $194
Accounts payable 1,234 1,648
Taxes payable 1,392 1,373
Accrued liabilities 1,238 1,778
Deferred revenues 2,981 2,969
UK value added tax 264 346
Other accounts payable 885 985
------------- -------------
Total current liabilities 8,169 9,293
Non current liabilities:
Deferred taxation 29 29
Long-term portion of lease obligations 167 225
------------- -------------
Total liabilities 8,365 9,547
Shareholders' equity:
Ordinary shares 2,156 2,152
Additional paid-in capital 27,302 27,182
Retained earnings 3,350 2,747
Cumulative translation adjustment (299) (77)
------------- -------------
Total shareholders' equity 32,509 32,004
------------- -------------
Total liabilities and shareholders' equity $40,874 $41,551
============= =============
</TABLE>
14
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------------------- ----------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------------- ----------- ----------- ------------
(in thousands, except per share amounts)
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Revenues:
License $5,018 $3,966 $8,974 $7,279
Services and other 3,088 2,138 6,133 4,028
----------- ----------- ---------- -----------
8,106 6,104 15,107 11,307
----------- ----------- ---------- -----------
Cost of revenues:
License 116 109 283 211
Services and other 1,662 1,275 3,177 2,307
----------- ----------- ---------- -----------
1,778 1,384 3,460 2,518
----------- ----------- ---------- -----------
Gross profit 6,328 4,720 11,647 8,789
Operating expenses:
Sales and marketing 3,591 2,314 6,705 4,381
Research and development 1,005 775 2,220 1,372
General and administrative 1,163 989 2,280 1,874
Goodwill amortization 91 - 179 -
----------- ----------- ---------- -----------
Total operating expenses 5,850 4,078 11,384 7,627
----------- ----------- ---------- -----------
Income from operations 478 642 263 1,162
Other income 295 269 598 267
----------- ----------- ---------- -----------
Income before provision for taxes 773 911 861 1,429
Provision for income taxes 229 337 258 529
----------- ----------- ---------- -----------
Net income $ 544 $ 574 $ 603 $ 900
=========== =========== ========== ===========
Net income per share $ 0.05 $ 0.05 $ 0.06 $ 0.09
Weighted average shares outstanding 10,896 10,614 10,928 9,755
15
</TABLE>
