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 March 31, 1998
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 14 Pages
Exhibit Index Appears on Page 11
1
<PAGE>
GENTIA SOFTWARE PLC
Form 6-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Financial Information:
Condensed Consolidated Balance Sheets as of March 31, 1998 (Unaudited)
and December 31, 1997 (Unaudited) 3
Condensed Consolidated Statements of Income for the three months
ended March 31, 1998 and 1997 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 (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 10
Exhibit A. First Quarter Press Release 11
</TABLE>
2
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
(unaudited) (unaudited)
(in thousands)
US$ US$
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents .............................. $18,052 $20,332
Accounts receivable, net of allowance $1,729
(Dec 31, 1997 - $1,819) ................................ 9,382 7,758
Prepaid expenses and other current assets .............. 1,490 1,921
Deferred taxes ......................................... 265 285
------- -------
Total current assets .......................................... 29,189 30,296
Property and equipment, net ............................... 2,264 2,037
Goodwill on acquisition, net of amortization of $596
(Dec 31, 1997 - $494) ..................................... 3,520 3,602
Deferred taxes ............................................ 459 459
------- -------
Total assets .................................................. $35,432 $36,394
======= =======
Liabilities and shareholders' equity
Current liabilities:
Current portion of lease obligations .................. $ 92 $ 105
Accounts payable ...................................... 2,470 1,743
Accrued liabilities ................................... 1,241 1,337
Deferred revenues ..................................... 4,449 3,630
UK valued added tax ................................... 171 227
Other accounts payable ................................ 1,275 1,110
------- -------
Total current liabilities .................................... 9,698 8,152
Non current liabilities:
Deferred taxation ..................................... 274 274
Long-term portion of lease obligations ................ 99 109
------- -------
Total liabilities 10,071 8,535
Shareholders' equity:
Ordinary shares ....................................... 2,318 2,300
Additional paid-in capital ............................ 27,578 27,406
Retained earnings ..................................... (3,868) (1,236)
Cumulative translation adjustment ..................... (667) (611)
------- -------
Total shareholders' equity ................................... 25,361 27,859
------- -------
Total liabilities and shareholders' equity ................... $35,432 $36,394
======= =======
</TABLE>
See accompanying notes
3
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
-----------------------------------------
March 31, March 31,
1998 1997
----------------- ------------------
(in thousands, except per share amounts)
<S> <C> <C>
US$ US$
Revenues:
License ........................................ $2,878 $ 3,956
Services and other ............................. 3,039 3,045
------ -------
5,917 7,001
------ -------
Cost of revenues:
License ........................................ 75 167
Services and other ............................. 1,782 1,515
------ -------
1,857 1,682
------ -------
Gross profit ........................................ 4,060 5,319
Operating expenses:
Sales and marketing ............................ 4,115 3,114
Research and development ....................... 1,639 1,215
General and administrative ..................... 1,082 1,117
Goodwill amortization .......................... 102 88
------ -------
Total operating expenses ....... 6,938 5,534
------ -------
Loss from operations ................................ (2,878) (215)
Other income ........................................ 246 303
------ -------
Income before provision for taxes ................... (2,632) 88
Provision for income taxes ..................... -- 29
------ -------
Net (loss)income .................................... (2,632) $ 59
====== =======
Basic (loss)income per share ........................ $(0.27) $ 0.01
Diluted (loss) income per share ..................... $(0.27) $ 0.01
Shares used to compute basic EPS .................... 9,637 9,004
Shares used to compute diluted EPS .................. 9,637 11,186
</TABLE>
See accompanying notes
4
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
----------------------------
March 31, March 31,
1998 1997
----------- ---------
(in thousands)
US$ US$
<S> <C> <C>
Cash flows from operating activities
Net (loss)income ................................................. $(2,632) $ 59
Adjustments to reconcile net (loss)income to net cash
(used in) provided by operating activities:
Depreciation .................................................. 241 197
Goodwill amortization ......................................... 102 88
Changes in operating assets and liabilities:
Accounts receivable ......................................... (1,534) (323)
Provision for bad debts ..................................... (90) (24)
Prepaid expenses and other receivables ...................... 431 (93)
Accounts payable ............................................ 727 (904)
Accrued liabilities and other expenses ...................... 33 (833)
Deferred revenues ........................................... 819 210
------- ------
Net cash (used in) operating activities ............................... (1,903) (1,623)
------- ------
Cash flows from investing activities:
Costs of acquisition .......................................... (20) -
Purchases of assets ........................................... (468) (425)
------- ------
Net cash used in investing activities ................................. (488) (425)
------- ------
Cash flows from financing activities:
Net proceeds on shares issued ................................. 190 124
(Repayment) of capital lease obligations ...................... (23) (22)
------- ------
Net cash provided by financing activities ............................. 167 102
------- ------
Effect of exchange rate changes on cash .......................... (56) (75)
------- -------
Net (decrease)increase in cash ................................... (2,280) (2,021)
Cash at beginning of period ...................................... 20,332 25,228
------- -------
Cash at end of period ............................................ $18,052 $23,207
======= =======
</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 is the leading supplier of analytical applications that enable clients
to maximize their competitive position through enterprise-wide deployment of
strategic management and predicive decision making solutions.
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 March 31, 1998 and for the three months ended March
31, 1998, and 1997 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 month period ended March 31, 1998 are not necessarily indicative of
results that may be expected for the entire year. 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, 1997. In accordance with SOP 98-1, the Company
has capitalized computer software obtained for internal use.
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, as described in FAS 128.
2 LITIGATION
The Company is involved in one legal action relating to patent issues in the
United States. While the outcome of this matter is currently not determinable,
the Company is vigorously pursuing its defence and is confident that it will
prevail in the litigation.
6
<PAGE>
GENTIA SOFTWARE PLC
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the three months ended
March 31, 1998 and 1997
Three months ended March 31, 1998 and 1997.
- -------------------------------------------
Revenues
- --------
Revenues were $5.9 million in the 3 months ended March 31, 1998, a decrease of
15.5% compared to revenues of $7.0 million for the 3 months ended March 31,
1997. License revenues were $ 2.9 million in the 3 months ended March 31, 1998,
a decrease of 27.2% over license revenues of $4.0 million for the 3 months ended
March 31, 1997. Services and other revenues were $3.0 million in the 3 months
ended March 31, 1998 compared to $3.0 million for the 3 months ended March 31,
1997. The decrease in revenues reflected the Company'stransition from a
technology led to a solutions led software provider.
Gross Profit
- ------------
Gross profit was $4.1 million or 68.6% for the 3 months ended March 31,1998,
compared to $5.3 million or 76.0% for the 3 months ended March 31, 1997. The
decrease in gross margin was due to a higher proportion of services and other
revenues in the 3 months ended March 31, 1998 (March 31,1998: 51.4%; March 31,
1997: 43.5%).
Sales and Marketing
- -------------------
Sales and marketing costs were $4.1 million in the 3 months ended March 31,
1998, an increase of 32.1% compared to $3.1 million in the 3 months ended March
31, 1997. The increase in expenditure reflects the Company's increased
investment in its sales and marketing organization. The Company expects these
expenses will continue as a result of its continued investment. The Company is
also expanding its geographic coverage and will continue to do so.
Research and Development
- ------------------------
Research and development costs were $1.6 million in the 3 months ended March 31,
1998, an increase of 34.9% compared to $1.2 million in the 3 months ended March
31, 1997. The increase is as a result of further resources being utilised in the
Company's development program especially in the development of the Balanced
Scorecard application. It is the Company's intention to continue 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 $1.1 million in the 3 months ended March
31, 1998, compared to $1.1 million for the 3 months ended March 31, 1997.
Other Income
- ------------
Other income was $246,000 in the 3 months ended March 31, 1998 compared to
$303,000 in the 3 months ended March 31,1997. Other income was primarily
interest income earned on bank deposits.
7
<PAGE>
Liquidity and Capital Resources
- -------------------------------
At March 31, 1998, the Company had cash and cash equivalents of $18.1 million
compared to $20.3 million at December 31, 1997.
Accounts receivable at March 31, 1998 were $9.4 million, an increase of 20.9%
compared to $7.8 million at December 31, 1997 reflecting amongst a number of
items, significant support and maintenance billing at the quarter end as shown
by the $819,000 increase in deferred revenues. In the three months ended March
31, 1998 the Company's operating activities consumed cash of $1.9 million
compared to $1.6 million in the three months ended March 31, 1997.
Investing activities consumed $488,000 in the three months ended March 31, 1998
compared to $425,000 in the three months ended March 31, 1997. Investing
activities primarily represent additional assets purchased.
Financing activities generated $167,000 in the three months ended March 31, 1998
compared to $102,000 in the three months ended March 31, 1997.
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.
8
<PAGE>
The information contained in Exhibit 1 hereto, consisting of the registrant's
unaudited financial statements for the three months ended March 31, 1998, 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 George Sprenkle]
George Sprenkle
Chief Financial Officer
Date: May 11, 1998
9
<PAGE>
EXHIBIT INDEX
Page
Exhibit 99 First Quarter Press Release - (1998) 11
10
First Quarter Press Release
GENTIA SOFTWARE
Tuition House, St. George's Road
Wimbledon
London SW19 4EU
(Nasdaq: GNTIY)
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
George Sprenkle For Analyst Info: Julie Creed (312) 640-6724
Chief Financial Officer For General Info: Kelly Lofts (212) 661-8030
44 181 971 4000 For Media Info: Alicia Nieva-Woodgate (212) 661-8030
FOR IMMEDIATE RELEASE
April 28, 1998
GENTIA REPORTS FIRST QUARTER RESULTS
LONDON, April 28, 1998 -- Gentia Software (Nasdaq: GNTIY), developer of
analytical applications for enterprise-wide deployment, today reported first
quarter results. Revenues for the first quarter of 1998 totaled $5.9 million,
compared with revenues of $5.5 million for the fourth quarter ended December 31,
1997 and $7.0 million for the first quarter ended March 31, 1997. Comparing the
first quarter ended March 31, 1998 with the fourth quarter ended December 31,
1997, revenues increased 7.1% and costs of revenues decreased 9.0%, resulting in
a 16.6% increase in gross profit.
The Company reported a net loss of $2.6 million for the most recent
quarter, or $0.27 cents per share, compared with a net loss of $3.1 million, or
$0.33 per share, in the fourth quarter of 1997 and a profit of $0.06 million, or
$0.01 per share, in the first quarter of 1997. The most recent quarter results
include approximately $0.5 million in software development expenditures, made
during the quarter to develop the Balanced Scorecard application. Although
eligible for capitalization under the FAS 86 guidelines, the Company elects to
expense these costs in the most recent period rather than amortize them over the
product's life.
The Company continued its strong working capital management, ending the
quarter with over $18 million in cash.
Paul Rolph, Chairman and Chief Executive Officer of Gentia, said "Our
transition to an analytical applications company is on track. We are very
encouraged by several recent events, most notably our partnership with
Renaissance Worldwide, pioneers of the Balanced Scorecard management approach.
The Balanced Scorecard application, powered by Gentia's leading business
intelligence software, enables senior management to communicate and manage
strategy from the `Boardroom to the Back room'."
"We are beginning to realize benefits from our relationship and the ability
to deliver a high impact business solution. We believe the Balanced Scorecard's
potential to impact the marketplace is endorsed by the positive reaction we have
received to our worldwide seminar series. Within two weeks of announcing the
available dates, over 1,100 people enrolled, the majority being senior level
management."
"The analytical applications market has gained recognition from industry
analysts as one of the fastest growing segments in the software industry. We are
investing in the development of such applications that complement the Balanced
Scorecard, because we believe that an applications focus will open up new
business opportunities for Gentia. We are exploring the potential to partner
with leading solution providers to enhance our distribution capacity," concluded
Mr. Rolph.
11
<PAGE>
First Quarter Highlights
o The Company shipped Gentia release 4.0--the first Business Intelligence
environment capable of supporting 30 languages. Gentia now supports all the
world's most widely spoken languages, including French, German, Spanish,
Portuguese and Japanese. This multi-language support is critical to global
companies that need to deploy the same solutions to diverse users around
the world.
o On March 30, 1998 Gentia launched its Renaissance Balanced Scorecard,
which is the only solution in the marketplace that completely automates the
Balanced Scorecard approach in a packaged enterprise application.
o Gentia closed major deals during the first quarter with JP Morgan,
Principal Insurance, Top Lease, Heineken and Bell Canada, three of which
were Balanced Scorecard deals.
o Gentia continued to strengthen its management team and sales force during
the first quarter. In addition to adding ten direct salespeople to its
force, four in the U.S., five in Europe and one in the South Pacific. The
Company also appointed three senior managers to accelerate its European
business growth.
o Meta Group, a leading IT industry independent research organization,
recently identified the Balanced Scorecard as the exciting new application
area in Data Warehousing and noted that Gentia is a company to watch
carefully in this rapidly emerging market.
About the Company
Gentia Software (NASDAQ: GNTIY) is the leading supplier of analytical
applications that enable clients to maximize their competitive position through
enterprise-wide deployment of strategic management and predictive decision
making solutions. By leveraging the only networked Business Intelligence
environment designed for enterprise-wide deployment, Gentia enables a new class
of analytical applications, such as the Balanced Scorecard, which ensure
information delivery to key decision makers' desktops and browsers throughout an
enterprise. Gentia Software's worldwide client list of more than 470 customers
includes JP Morgan and Company, Citibank, Volvo, McDonald's Restaurants,
Heineken Export Group, Swiss Reinsurance and Sun Microsystems. The Company has
dual headquarters in Boston and London and operates in more than 20 countries
worldwide.
For additional information about Gentia, visit the Company's Web site at
www.gentia.com or call 1-888-4GENTIA or 1-781-224-0750. To receive additional
information via fax at no charge, dial 1-800-PRO-INFO and enter code GNTIY.
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.
(Tables to Follow)
12
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
---------------------------------------
March 31, March 31,
1998 1997
--------------- -----------------
(in thousands, except per share amounts)
<S> <C> <C>
US$ US$
Revenues:
License .................................. $ 2,878 $3,956
Services and other ....................... 3,039 3,045
------- ------
5,917 7,001
Cost of revenues:
License .................................. 75 167
Services and other ....................... 1,782 1,515
------- ------
1,857 1,682
Gross profit ............................... 4,060 5,319
Operating expenses:
Sales and marketing ...................... 4,115 3,114
Research and development ................. 1,639 1,215
General and administrative ............... 1,082 1,117
Goodwill amortization .................... 102 88
------- ------
Total operating expenses ......... 6,938 5,534
Loss from operations ....................... (2,878) (215)
Other income ............................... 246 303
------- ------
Income before provision for taxes .......... (2,632) 88
Provision for income taxes ............... - 29
------- ------
Net (loss)income ........................... $(2,632) $ 59
======= ======
Basic (loss)income per share ............... $ (0.27) $ 0.01
Diluted (loss) income per share ............ $ (0.27) $ 0.01
Shares used to compute basic EPS ........... 9,637 9,004
Shares used to compute diluted EPS ......... 9,637 11,186
</TABLE>
13
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
(unaudited (unaudited)
(in thousands)
US$ US$
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents .................... $18,052 $20,332
Accounts receivable, net of allowance $1,729
(Dec 31, 1997 - $1,819) ...................... 9,382 7,758
Prepaid expenses and other current assets .... 1,490 1,921
Deferred taxes ............................... 265 285
------- -------
Total current assets ................................ 29,189 30,296
Property and equipment, net ..................... 2,264 2,037
Goodwill on acquisition, net of amortization
of $596 (Dec 31, 1997 - $494) ................... 3,520 3,602
Deferred taxes .................................. 459 459
------- -------
Total assets ........................................ $35,432 $36,394
======= =======
Liabilities and shareholders' equity
Current liabilities:
Current portion of lease obligations ......... $ 92 $ 105
Accounts payable ............................. 2,470 1,743
Accrued liabilities .......................... 1,241 1,337
Deferred revenues ............................ 4,449 3,630
UK value added tax ........................... 171 227
Other accounts payable ....................... 1,275 1,110
------- -------
Total current liabilities ........................... 9,698 8,152
Non current liabilities:
Deferred taxation ............................ 274 274
Long-term portion of lease obligations ....... 99 109
------- -------
Total liabilities ................................... 10,071 8,535
Shareholders' equity:
Ordinary shares .............................. 2,318 2,300
Additional paid-in capital ................... 27,578 27,406
Retained earnings ............................ (3,868) (1,236)
Cumulative translation adjustment ............ (667) (611)
------- -------
Total shareholders' equity .......................... 25,361 27,859
------- -------
Total liabilities and shareholders' equity .......... $35,432 $36,394
======= =======
</TABLE>
