SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1997
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: 1-11859
PEGASYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2787865
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
101 Main Street
Cambridge, MA 02142-1590
(Address of principal executive offices) (zip code)
(617) 374-9600
(Registrant's telephone number including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 28,541,000 shares of the Registrant's common stock, $.01 par value
per share, outstanding on September 30, 1997.
<PAGE>
PEGASYSTEMS INC. AND SUBSIDIARY
Index to Form 10-Q
<TABLE>
<CAPTION>
Part I - Financial Information
Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at December 31, 1996 3
and September 30, 1997
Consolidated Statements of Income for the three 4
and nine months ended: September 30, 1996 and September 30, 1997
Consolidated Statements of Cash Flows for the nine 5
months ended: September 30, 1996 and September 30, 1997
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Part II - Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
<PAGE>
Form 10-Q/A Page 3 of 13
PEGASYSTEMS INC.
Consolidated Balance Sheets
(in thousands, except share-related amounts)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
------------------ -------------------
<S> <C> <C>
Assets (As Restated)
Current assets:
Cash and cash equivalents $24,201 $ 54,555
Trade and installment accounts receivable, net of allowance
for doubtful accounts of $939 at December 31, 1996 and
$2,245 at September 30, 1997 14,582 18,416
Prepaid expenses and other current assets 1,235 1,788
------------------ -------------------
Total current assets 40,018 74,759
Long-term license installments, net 23,802 26,783
Equipment and improvements, net 3,035 4,679
Purchased software and other, net -- 12,286
------------------ -------------------
Total assets $66,855 $118,507
================== ===================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 2,697 $ 3,911
Deferred revenue 53 845
Deferred income taxes 2,904 814
------------------ -------------------
Total current liabilities 5,654 5,570
------------------ -------------------
Deferred income taxes 8,816 8,787
------------------ -------------------
Stockholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized; no shares issued and outstanding -- --
Common stock, $.01 par value, 45,000,000 shares
authorized; 26,392,200 shares and 28,541,000 shares
issued and outstanding at December 31, 1996 and
September 30, 1997, respectively 264 285
Additional paid-in capital 30,206 82,784
Deferred compensation (73) (59)
Stock warrant -- 2,897
Retained earnings 22,022 18,565
Cumulative foreign currency translation adjustment (34) (322)
------------------ -------------------
Total stockholders' equity 52,385 104,150
------------------ -------------------
Total liabilities and stockholders' equity $66,855 $118,507
================== ===================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
Form 10-Q/A Page 4 of 13
PEGASYSTEMS INC.
Consolidated Statements of Income
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
-------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenue: (As Restated) (As Restated)
Software license $6,502 $ 5,090 $12,896 $12,601
Services 3,064 3,578 8,060 9,297
-------------- --------------- ------------- --------------
Total revenue 9,566 8,668 20,956 21,898
-------------- --------------- ------------- --------------
Cost of revenue:
Cost of software license 118 86 354 106
Cost of services 2,017 2,829 5,006 7,365
-------------- --------------- ------------- --------------
Total cost of revenue 2,135 2,915 5,360 7,471
-------------- --------------- ------------- --------------
Gross Profit 7,431 5,753 15,596 14,427
Operating expenses:
Research and development 2,361 4,261 5,883 10,100
Selling and marketing 1,614 4,782 3,870 11,878
General and administrative 541 721 1,329 1,967
-------------- --------------- ------------- --------------
Total operating expenses 4,516 9,764 11,082 23,945
-------------- --------------- ------------- --------------
Income (loss) from operations 2,915 (4,011) 4,514 (9,518)
License interest income 381 476 1,127 1,271
Other interest income 273 922 296 2,670
Interest expense (16) -- (85) --
-------------- --------------- ------------- --------------
Income (loss) before provision for
income taxes 3,553 (2,613) 5,852 (5,577)
Provision (benefit) for income taxes 1,386 (993) 2,285 (2,119)
-------------- --------------- ------------- --------------
Net income (loss) $2,167 $(1,620) $ 3,567 $(3,458)
============== =============== ============= ==============
Earnings per share:
Basic $ 0.08 $ (0.06) $ 0.15 $ (0.12)
============== =============== ============= ==============
Diluted $ 0.08 $ (0.06) $ 0.14 $ (0.12)
============== =============== ============= ==============
Weighted average number of common shares
outstanding:
Basic 25,805 28,520 24,268 28,264
============== =============== ============= ==============
Diluted 27,818 28,520 26,207 28,264
============== =============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
Form 10-Q/A Page 5 of 13
PEGASYSTEMS INC.
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1997
-------------------- -------------------
<S> <C> <C>
Cash flows from operating activities: (As Restated)
Net income (loss) $ 3,567 $ (3,458)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Provision for deferred income taxes 2,037 (2,119)
Depreciation and amortization 1,152 2,258
Provision for doubtful accounts -- 1,315
Changes in operating assets and liabilities:
Trade and installment accounts receivable (8,438) (8,096)
Prepaid expenses and other current assets (116) (553)
Accounts payable and accrued expenses (198) 1,214
Deferred revenue 149 792
-------------------- -------------------
Net cash used in operating activities (1,847) (8,647)
Cash flows from investing activities:
Purchase of equipment and improvements (1,067) (3,277)
Purchased software -- (10,000)
-------------------- -------------------
Net cash used in investing activities (1,067) (13,277)
Cash flows from financing activities:
Repayments of long-term debt (1,598) --
Issuance of common stock, net 29,396 51,943
Exercise of stock options 60 623
-------------------- -------------------
Net cash provided by financing activities 27,858 52,566
-------------------- -------------------
Effect of exchange rate on cash and cash equivalents (36) (288)
-------------------- -------------------
Net increase in cash and cash equivalents 24,908 30,354
-------------------- -------------------
Cash and cash equivalents, at beginning of period 511 24,201
-------------------- -------------------
Cash and cash equivalents, at end of period $25,419 $ 54,555
==================== ===================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
Form 10-Q/A Page 6 of 13
PEGASYSTEMS INC.
Notes to Consolidated Interim Financial Statements
September 30, 1997
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Pegasystems Inc.
(the "Company") presented herein, as restated, have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine-month periods ended September 30, 1997
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. The Company suggests that these interim condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31, 1996,
included in the Company's Annual Report to Stockholders filed with the
Securities and Exchange Commission.
Note B - Subsequent Events
The Company restated its consolidated financial statements for the unaudited
quarters ended March 31, 1997, June 30, 1997, and September 30, 1997. The
restatements reflect changes in the timing of revenue recognition and expense on
certain contracts and increased reserves for revenue and doubtful accounts. In
the opinion of management, all material adjustments necessary to correct the
financial statements have been recorded.
A summary of the impact of such restatements on the financial statements
for the unaudited three months and nine months ended September 30, 1997 is as
follows:
<TABLE>
<CAPTION>
Unaudited Unaudited
Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
Previously As Previously As
Reported Restated Reported Restated
-------------- --------------------------------------- -----------------
<S> <C> <C> <C> <C>
Software license revenue $3,273 $5,090 $13,734 $12,601
Services revenue 3,737 3,578 9,742 9,297
Total revenue 7,010 8,668 23,476 21,898
Income (loss) from operations (5,009) (4,011) (6,102) (9,518)
Net (loss) income (2,239) (1,620) (1,340) (3,458)
Earnings per share: Basic $(0.08) ($0.06) $0.05 ($0.12)
Earnings per share: Diluted $(0.08) ($0.06) $0.05 ($0.12)
Total assets $121,023 $118,507 $121,023 $118,507
</TABLE>
<PAGE>
Form 10-Q/A Page 7 of 13
Note C - Net Income Per Share
The Company has adopted Statement of Financial Accounting Standards (SFAS)
No. 128, "Earnings Per Share." SFAS No. 128 establishes standards for computing
and presenting earnings per share and applies to entities with publicly held
common stock or potential common stock. In accordance with the Securities and
Exchange Commission's Staff Accounting Bulletin (SAB) No. 98, the Company has
determined that there were no nominal issuances of common stock or potential
common stock in the period prior to the Company's initial public offering (IPO).
The Company has applied the provisions of SFAS No. 128 and SAB No. 98
retroactively to all periods presented. The net loss amounts for the three and
nine months ended September 30, 1997 reflect the restatement adjustments
discussed in Note B. Calculations of basic and diluted net income per share and
potential common share are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
-------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
(in thousands, except per share data)
Basic
Net income $2,167 $(1,620) $3,567 $(3,458)
============== ============ ============== =============
Weighted average common shares outstanding 25,805 28,520 24,268 28,264
============== ============ ============== =============
Basic earnings per share $0.08 $(0.06) $0.15 $(0.12)
============== ============ ============== =============
Diluted
Net income $2,167 $(1,620) $3,567 $(3,458)
============== ============ ============== =============
Weighted average common shares outstanding 25,805 28,520 24,268 28,264
Effect of: Assumed exercise of stock options 2,013 -- 1,939 --
-------------- ------------ -------------- -------------
Weighted average common shares outstanding,
assuming dilution 27,818 28,520 26,207 28,264
============== ============ ============== =============
Diluted earnings per share $0.08 $(0.06) $0.14 $(0.12)
============== ============ ============== =============
</TABLE>
Note D - Software License and Support and Warrant Agreements
On June 27, 1997, the Company entered into Software License and Support and
Warrant Agreements with First Data Resources, Inc. (FDR).
The provisions of the Software License and Support Agreement give FDR the right
to use the Company's software in connection with new products and also the
exclusive right to market, distribute and sublicense the Company's software and
new products to FDR customers and prospects. In addition to the granting of a
license to use its software, the Company will also provide services to FDR in
connection with the new products. For the right to the license and the services,
FDR is expected to pay the Company a base fee of $49.25 million. FDR will pay
$5.0 million in 1997 and remaining fees are expected to be paid on a monthly
basis over the term of the agreement. The initial term of this agreement
commences on June 27, 1997 and runs through December 31, 2002.
In accordance with the Software License and Support Agreement, the Company was
granted a license for access to and use of the designs, specifications and code
of FDR's ESP Product. As consideration for this right, the Company paid FDR
$10.0 million. This amount was recorded as purchased software on the
accompanying consolidated balance sheet.
In connection with the Software License and Support Agreement on June 27, 1997,
the Company committed to provide a warrant to FDR. Pursuant to the Warrant
Agreement, the Company gave FDR the right to purchase 284,876 shares of the
Company's Common Stock at a purchase price of $28.25 per share which represented
the fair market value of the common stock on the date of the agreement. The
warrant will become exercisable on June 27, 1998 and will expire on June 27,
2002. The warrant was valued at $2.9 million and the corresponding deferred
asset was capitalized and included in "purchased software and other" on the
accompanying consolidated balance sheet.
The Company will recognize the base fee revenue and also amortize the value of
the purchased software and the warrant on a pro rata basis over the initial
5-1/2 year term of the agreement.
<PAGE>
Form 10-Q/A Page 8 of 13
PEGASYSTEMS INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Three and Nine Months Ended September 30, 1997 Compared to Three and Nine Months
Ended September 30, 1996
The Company restated its consolidated financial statements for the
unaudited three-month and nine-month periods ended September 30, 1997. The
restatements reflect changes in the timing of revenue recognition and expense on
certain contracts and increased reserves for revenue and doubtful accounts. In
the opinion of management, all material adjustments necessary to correct the
financial statements have been recorded.
Revenue
Total revenue for the three months ended September 30, 1997 (the "1997 Three
Month Period") decreased 9.4% to $8.7 million from $9.6 million for the three
months ended September 30, 1996 (the "1996 Three Month Period"). This decrease
was primarily due to a decrease in software license revenue. Total revenue for
the nine months ended September 30, 1997 (the "1997 Nine Month Period")
increased 4.5% to $21.9 million from $21.0 million for the nine months ended
September 30, 1996 (the "1996 Nine Month Period"). This increase was primarily
due to an increase in software license revenue.
Software license revenue for the 1997 Three Month Period decreased 21.7% to $5.1
million from $6.5 million for the 1996 Three Month Period. This decrease in
software license revenue for the 1997 Three Month Period was primarily
attributable to fewer renewals of licenses by existing customers. Software
license revenue for the 1997 Nine Month Period decreased 2.3% to $12.6 million
from $12.9 million for the 1996 Nine Month Period. This decrease in software
license revenue for the 1997 Nine Month Period was primarily attributable to
fewer software license acceptances by new customers.
Services revenue for the 1997 Three Month Period increased 16.8% to $3.6 million
from $3.1 million for the 1996 Three Month Period. Services revenue for the 1997
Nine Month Period increased 15.3% to $9.3 million from $8.1 million for the 1996
Nine Month Period. The increase in services revenue was primarily attributable
to increased implementation services for new customers, additional consulting
services provided to existing customers, and to a lesser extent, increased
maintenance revenue from a larger installed product base.
Cost of Revenue
Cost of software license for the 1997 Three Month Period decreased 27.1% to
$0.09 million from $0.12 million for the 1996 Three Month Period, and decreased
slightly as a percentage of total revenue to 1.0% for the 1997 Three Month
Period from 1.2% for the 1996 Three Month Period. As a percentage of software
license revenue, cost of software license decreased to 1.7% for the 1997 Three
Month Period from 1.8% for the 1996 Three Month Period. Cost of software license
for the 1997 Nine Month Period decreased 70.1% to $0.11 million from $0.35
million for the 1996 Nine Month Period, and decreased as a percentage of total
revenue to 0.5% for the 1997 Nine Month Period from 1.7% for the 1996 Nine Month
Period. As a percentage of software license revenue, cost of software license
decreased to 0.8% for the 1997 Nine Month Period from 2.7% for the 1996 Nine
Month Period.
<PAGE>
Form 10-Q/A Page 9 of 13
Cost of services for the 1997 Three Month Period increased 40.3% to $2.8 million
from $2.0 million for the 1996 Three Month Period, and increased as a percentage
of total revenue to 32.6% for the 1997 Three Month Period from 21.1% for the
1996 Three Month Period. As a percentage of service revenue, cost of services
increased to 79.1% for the 1997 Three Month Period from 65.8% for the 1996 Three
Month Period. Cost of services for the 1997 Nine Month Period increased 47.1% to
$7.4 million from $5.0 million for the 1996 Nine Month Period, and increased as
a percentage of total revenue to 33.6% for the 1997 Nine Month Period from 23.9%
for the 1996 Nine Month Period. As a percentage of service revenue, cost of
services increased to 79.2% for the 1997 Nine Month Period from 62.1% for the
1996 Nine Month Period. These increases were primarily due to the buildup of new
staff, primarily in the Company's regional offices, and use of the Company's
service personnel to build templates which can be reused in other customer
applications.
Operating Expenses
Research and development expenses for the 1997 Three Month Period increased
80.5% to $4.3 million from $2.4 million for the 1996 Three Month Period. As a
percentage of total revenue, research and development expenses increased to
49.2% for the 1997 Three Month Period from 24.7% for the 1996 Three Month
Period. Research and development expenses for the 1997 Nine Month Period
increased 71.7% to $10.1 million from $5.9 million for the 1996 Nine Month
Period. As a percentage of total revenue, research and development expenses
increased to 46.1% for the 1997 Nine Month Period from 28.1% for the 1996 Nine
Month Period.
Selling and marketing expenses for the 1997 Three Month Period increased 196.3%
to $4.8 million from $1.6 million for the 1996 Three Month Period. As a
percentage of total revenue, selling and marketing expenses increased to 55.2%
for the 1997 Three Month Period from 16.9% for the 1996 Three Month Period.
Selling and marketing expenses for the 1997 Nine Month Period increased 206.9%
to $11.9 million from $3.9 million for the 1996 Nine Month Period. As a
percentage of total revenue, selling and marketing expenses increased to 54.2%
for the 1997 Nine Month Period from 18.5% for the 1996 Nine Month Period. These
increases were primarily attributable to the hiring of additional direct sales
and marketing personnel, commission payments on new sales, increased investment
in marketing support activities and materials, additional trade show activities,
preparations for the Company's User Meetings, and the opening of additional
regional offices. Although selling and marketing expenses increased as a
percentage of total revenue for both the Three Month and Nine Month Periods,
these increases were mainly due to slower growth in the Company's total revenue.
General and administrative expenses for the 1997 Three Month Period increased
33.3% to $0.7 million from $0.5 million for the 1996 Three Month Period. As a
percentage of total revenue, general and administrative expenses increased to
8.3% for the 1997 Three Month Period from 5.7% for the 1996 Three Month Period.
General and administrative expenses for the 1997 Nine Month Period increased
48.0% to $2.0 million from $1.3 million for the 1996 Nine Month Period. As a
percentage of total revenue, general and administrative expenses increased to
9.0% for the 1997 Nine Month Period from 6.3% for the 1996 Nine Month Period.
These increases were due to increased investment in the infrastructure needed to
support the Company's growth. Although general and administrative expenses
increased as a percentage of total revenue for both the Three Month and Nine
Month Periods, these increases were mainly due to slower growth in the Company's
total revenue.
License Interest Income
License interest income which is the portion of all license fees due under
software license agreements which was not recognized upon product acceptance or
license renewal increased 24.9% to $0.5 million for the 1997 Three Month Period
from $0.4 million for the 1996 Three Month Period. License interest income
increased 12.8% to $1.3 million for the 1997 Nine Month Period from $1.1 million
for the 1996 Nine Month Period due to the increase in the Company's installed
customer base.
Provision (Benefit) for Income Taxes
<PAGE>
Form 10-Q/A Page 10 of 13
The provision for federal, state and foreign taxes was $1.4 million for the 1996
Three Month Period. For the 1997 Three Month Period, there was a tax benefit of
$1.0 million. The provision for federal, state and foreign taxes was $2.3
million for the 1996 Nine Month Period. For the 1997 Nine Month Period, there
was a tax benefit of $2.1 million. The effective tax rate decreased from 39.0%
for 1996 Three and Nine Month Periods, respectively, to 38.0% for the 1997 Three
and Nine Month Periods, respectively. These decreases were due to the
re-instatement by the Internal Revenue Service of the research and development
tax credit in May 1996.
Liquidity and Capital Resources
Since its inception, the Company had funded its operations primarily through
cash flow from operations and bank borrowings. In July 1996, the Company issued
and sold 2.7 million shares of Common Stock in connection with its initial
public offering. Net proceeds to the Company from such offering were
approximately $29.4 million. In January 1997, the Company issued and sold 1.8
million shares of Common Stock in connection with a second public offering. Net
proceeds to the Company from such offering were approximately $51.9 million. At
September 30, 1997, the Company had cash and cash equivalents of approximately
$54.6 million and working capital of approximately $69.2 million. The Company's
approach of charging license fees payable in installments over the term of its
licenses has historically deferred the receipt of cash and, prior to its initial
public offering, had limited the availability of working capital.
Net cash used in operating activities for the 1997 Nine Month period was $8.6
million, primarily due to an increase in accounts receivable, prepaid expenses
and other current assets, partially offset by an increase in accounts payable
and accrued expenses, and also in deferred revenue.
Net cash used in investing activities was $13.3 million during the 1997 Nine
Month Period of which $10 million was attributable to the Company's purchase of
FDR's ESP software and the balance was attributable to the purchase of property
and equipment consisting mainly of computer hardware and software and furniture
and fixtures to support the Company's growing employee base.
Net cash provided by financing activities was $52.6 million during the 1997 Nine
Month Period mainly due to the completion of the Company's second public
offering.
The Company's capital commitments consist primarily of operating leases for
office space and equipment. At September 30, 1997, the Company's commitments
under non-cancellable operating leases for office space with terms in excess of
one year totaled $0.4 million, $1.5 million and $0.6 million for 1997, 1998 and
1999, respectively. The Company's total payments under such leases was $1.1
million for the 1997 Nine Month Period.
The Company's $5.0 million revolving credit line, which was set to expire on
June 30, 1997, was renewed with the same bank and currently has a maturity date
of June 30, 1999. At September 30, 1997, the Company had no borrowings under its
revolving credit line. The Company's credit agreement prohibits the payment of
dividends, has profitability requirements and requires maintenance of specified
levels of tangible net worth and certain financial ratios.
The Company recorded bad debt expense of $1.3 million in the 1997 Nine Month
Period as a result of indications that certain receivables relating primarily to
consulting and installation services rendered by the Company may not be
collected in full.
The Company believes that the net proceeds from its two recent public offerings
together with cash generated by operations and availability under its bank
credit facility will be sufficient to fund the Company's operations for at least
the next year. However, there can be no assurance that additional capital beyond
the amounts currently forecasted by the Company will not be required or that any
such required additional capital will be available on reasonable terms, if at
all, at such time as required by the Company.
<PAGE>
Form 10-Q/A Page 11 of 13
Inflation
Inflation has not had a significant impact on the Company's operating results to
date, nor does the Company expect it to have a significant impact in the future
due to the fact that the Company's license and maintenance fees are typically
subject to annual increases based on recognized inflation indexes.
Forward-Looking Statements
Certain statements contained in this Form 10-Q/A are "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of 1995.
These statements involve various risks and uncertainties which could cause the
Company's actual results to differ from those expressed in such forward-looking
statements. These risks and uncertainties include the seasonal variation of the
Company's operations and fluctuations in the Company's quarterly results, rapid
technological change involving the Company's products, delays in product
development and implementation, the technological compatibility of the Company's
products with its customers' systems, the Company's dependence on customers in
the financial services market, intense competition in the markets for the
Company's products, risk of non-renewal by current customers, management of the
Company's growth, and other risks and uncertainties. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates," and "should" and
similar words and expressions are intended to identify the forward-looking
statements contained in this Form 10-Q/A. These statements are based on
estimates, projections, beliefs, and assumptions of the Company and its
management and are not guarantees of future performance. Further information
regarding those factors which could cause the Company's actual results to differ
materially from any forward-looking statements contained herein is included in
the Company's filings with the Securities and Exchange Commission.
<PAGE>
Form 10-Q/A Page 12 of 13
PEGASYSTEMS INC.
Part II - Other Information:
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
None
<PAGE>
Form 10-Q/A Page 13 of 13
PEGASYSTEMS INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Pegasystems Inc.
Date: April 15, 1998 /s/ Ira Vishner
------------------------------------
Ira Vishner
Vice President, Corporate Services,
Treasurer, Chief Financial Officer
and Director
(principal financial officer and
chief accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 54,555
<SECURITIES> 0
<RECEIVABLES> 20,661
<ALLOWANCES> 2,245
<INVENTORY> 0
<CURRENT-ASSETS> 74,759
<PP&E> 8,765
<DEPRECIATION> (4,086)
<TOTAL-ASSETS> 118,507
<CURRENT-LIABILITIES> 5,570
<BONDS> 0
0
0
<COMMON> 285
<OTHER-SE> 103,865
<TOTAL-LIABILITY-AND-EQUITY> 118,507
<SALES> 21,898
<TOTAL-REVENUES> 21,898
<CGS> 7,471
<TOTAL-COSTS> 7,471
<OTHER-EXPENSES> 23,945
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,577)
<INCOME-TAX> (2,119)
<INCOME-CONTINUING> (3,458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,458)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
