SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-28560
RESEARCH ENGINEERS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-2356861
(State or other (IRS. Employer
jurisdiction of Identification No.)
incorporation)
22700 SAVI RANCH PARKWAY
YORBA LINDA, CALIFORNIA 92887
(Address of principal executive offices)
(714) 974-2500
(Registrant's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
The number of shares outstanding of the registrant's only class of Common Stock,
$.01 par value, was 5,764,396 on August 5, 1999.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RESEARCH ENGINEERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Assets
<S> <C>
Current assets:
Cash and cash equivalents $ 1,727
Accounts receivable (net of allowance for doubtful
accounts of $386) 2,654
Deferred income taxes 1,133
Notes and related party loans receivable 56
Prepaid expenses and other current assets 617
-----------
Total current assets 6,187
Property, plant and equipment, net 4,150
Goodwill and intangible assets (net of accumulated
amortization of $980) 3,157
Other assets 715
-----------
$ 14,209
===========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term bank debt $ 71
Current portion of capital lease obligations 101
Accounts payable 320
Accrued expenses 777
Income taxes payable 446
Deferred maintenance revenue 927
-----------
Total current liabilities 2,642
Long-term bank debt, net of current portion 4,445
Capital lease obligations, net of current portion 454
Deferred income taxes 304
-----------
Total liabilities 7,845
-----------
Stockholders' equity:
Preferred stock, par value $.01. Authorized
5,000,000 shares; issued and
outstanding none -
Common stock, par value $.01. Authorized
20,000,000 shares; issued and
outstanding 5,738,210 shares 57
Additional paid-in capital 6,623
Accumulated deficit (13)
Accumulated other comprehensive loss:
Cumulative foreign currency translation
adjustments (303)
-----------
Total stockholders' equity 6,364
-----------
$ 14,209
===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
RESEARCH ENGINEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
June 30, June 30,
1999 1998
----------- -----------
<S> <C> <C>
Net revenues:
Product sales $ 1,792 $ 1,743
IT services 1,219 -
Maintenance and support 448 473
----------- -----------
Total net revenues 3,459 2,216
Cost of revenues 1,072 280
----------- -----------
Gross profit 2,387 1,936
----------- -----------
Operating expenses:
Selling, general and administrative 1,924 1,487
Research and development 627 615
----------- -----------
Total operating expenses 2,551 2,102
----------- -----------
Operating loss (164) (166)
----------- -----------
Other expense (income):
Interest, net 122 16
Other 3 (16)
----------- -----------
Total other expense 125 -
----------- -----------
Loss before income taxes (289) (166)
Income tax benefit (100) (43)
----------- -----------
Net loss $ (189) $ (123)
=========== ===========
Net loss per common share:
Basic $ (0.03) $ (0.02)
=========== ===========
Diluted $ (0.03) $ (0.02)
=========== ===========
Common shares used in computing net loss per common share:
Basic 5,738,210 5,729,710
=========== ===========
Diluted 5,738,210 5,729,710
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
RESEARCH ENGINEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (189) $ (123)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 352 247
Deferred income taxes (79) (77)
Gain on investments - (21)
Changes in operating assets and
liabilities:
Accounts receivable 251 372
Notes and related party loans
receivable (6) (44)
Prepaid expenses and other current
assets (37) (41)
Other assets 1 (51)
Accounts payable, accrued expenses
and other current liabilities (169) (121)
Deferred maintenance revenue (154) (131)
Income taxes payable 40 (41)
Other long-term liabilities - -
----------- -----------
Net cash provided by (used
in) operating activities 10 (31)
----------- -----------
Cash flows from investing activities:
Purchase of property, plant and
equipment (249) (221)
Purchase of short-term investments - (365)
Sale of short-term investments - 349
Payments to acquire companies, net of
cash acquired (11) -
----------- -----------
Net cash provided by (used
in) investing activities (260) (237)
----------- -----------
Cash flows from financing activities:
Proceeds from bank debt - 58
Repayment of bank debt (14) (25)
Repayment of capital lease obligations (10) -
Common stock issuance from exercise of
options - 8
----------- -----------
Net cash provided by (used
in) financing activities (24) 41
----------- -----------
Effect of exchange rate changes on
cash and cash equivalents (10) (34)
----------- -----------
Decrease in cash and cash
equivalents (284) (261)
Cash and cash equivalents, beginning of
period 2,011 1,390
----------- -----------
Cash and cash equivalents, end of period $ 1,727 $ 1,129
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
RESEARCH ENGINEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Research
Engineers, Inc. and its wholly owned subsidiaries (the "Company"). All
significant transactions among the consolidated entities have been eliminated
upon consolidation. The Company's reported results for the fiscal quarter
ended June 30, 1998 have been restated to include the results of operations
of PacSoft Incorporated ("PacSoft") as a result of the Company's acquisition
of PacSoft in March 1999. This acquisition has been accounted for using the
pooling of interests method of accounting for business combinations.
These consolidated financial statements have been prepared by the Company and
include all adjustments which are, in the opinion of management, necessary
for a fair presentation of the financial position at June 30, 1999 and the
results of operations and the cash flows for the three months ended June 30,
1999 and 1998, pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for annual
consolidated financial statements. Results of operations for the three months
ended June 30, 1999 are not necessarily indicative of the results to be
expected for the full year ended March 31, 2000.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
3. RECLASSIFICATIONS
Certain prior quarter amounts have been reclassified to conform to the
current quarter presentation.
4. SOFTWARE REVENUE RECOGNITION
In October 1997, the Accounting Standards Executive Committee ("AcSEC") of
the AICPA issued Statement of Position ("SOP") 97-2, Software Revenue
Recognition, which superceded SOP 91-1. SOP 97-2 distinguishes between
significant and insignificant vendor obligations as a basis for recording
revenue with a requirement that each element of a software licensing
arrangement be separately identified and accounted for based on relative fair
values of each element. The Company adopted SOP 97-2 in the first quarter of
fiscal 1999, the implementation of which resulted in no material changes to
the Company's results of operations. In 1998 the AICPA issued SOP 98-9,
Modification of SOP 97-2, Software Revenue Recognition, With Respect to
Certain Transactions, which modifies SOP 97-2 to allow for use of the
residual method of revenue recognition provided that certain criteria have
been met. The Company adopted SOP 98-9 in the first quarter of fiscal 2000,
the implementation of which resulted in no material changes to the Company's
results of operations.
5
<PAGE>
5. SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE
In 1998, the AICPA issued SOP 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use, which provides guidance
concerning recognition and measurement of costs associated with developing or
acquiring software for internal use. The Company adopted SOP 98-1 in the
first quarter of fiscal 2000, the implementation of which resulted in no
material impact on the Company's results of operations.
6. START-UP ACTIVITIES
In 1998, the AICPA also issued SOP 98-5, Reporting on the Costs of Start-up
Activities, which provides guidance concerning the costs of start-up
activities. For accounting purposes start-up activities are defined as
one-time activities related to opening a new facility, introducing a new
product or service, conducting business in a new territory or with a new
class of customers, initiating a new process in an existing facility, or
commencing some new operation. The Company adopted SOP 98-5 in the first
quarter of fiscal 2000, the implementation of which resulted in no material
changes to the Company's previous practice and no material impact on the
Company's results of operations.
7. COMPREHENSIVE INCOME (LOSS)
As of April 1, 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, Reporting Comprehensive Income. SFAS No. 130
establishes new rules for the reporting and display of comprehensive income
and its components. The adoption of this statement had no impact on the
Company's reported net (loss)/income or stockholders' equity. SFAS No. 130
requires changes in unrealized gains or losses on the Company's
available-for-sale investments and foreign currency translation adjustments,
which are reported separately in stockholders' equity, to be included in
other comprehensive income (loss). For the three months ended June 30, 1999
and 1998, total comprehensive loss was $226,000 and $281,000, respectively.
8. NET LOSS PER SHARE
In December 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, Earnings per Share ("EPS"). SFAS No. 128 replaced the
calculation of primary and fully diluted EPS with basic and diluted EPS.
Unlike primary EPS, basic EPS excludes any dilutive effects of common stock
equivalents, such as options and warrants. Diluted EPS is very similar to the
previously reported fully diluted EPS.
The following table illustrates the computation of basic and diluted net loss
per share (in thousands):
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1999 1998
----------- -----------
<S> <C> <C>
Numerator:
Numerator for basic and diluted
net loss per share - net loss $ (189) $ (123)
=========== ===========
Denominator:
Denominator for basic net loss per
share - average number of common
shares outstanding during the period 5,738 5,730
Incremental common shares attributable
to exercise of outstanding options - -
----------- -----------
Denominator for diluted net loss per share 5,738 5,730
=========== ===========
Basic net loss per share $ (0.03) $ (0.02)
=========== ===========
Diluted net loss per share $ (0.03) $ (0.02)
=========== ===========
</TABLE>
6
<PAGE>
All options, warrants and other common stock equivalents amounting to 481,000
and 378,000 potential common shares were excluded from the computation of
diluted EPS for the quarters ended June 30, 1999 and 1998, respectively,
because the Company reported a net loss and, therefore, the effect would be
antidilutive.
9. SEGMENT AND GEOGRAPHIC DATA
The Company operates in four significant segments. The Company has
historically derived its revenues principally from sales of its stand-alone
and network-based engineering software products and from sales of software
maintenance contracts relating to these products. With the acquisition of
R-Cube in February 1999, the Company expanded into the $90 billion
information technology ("IT") services industry, providing expertise in
data-mining and embedded technologies to Internet/Intranet design and
communications. In April 1999, the Company launched the first of several
e-commerce special interest portals targeting expatriates of the Asia Pacific
region now living throughout Europe and North America. Finally, in June 1999
the Company announced that it has signed an agreement to provide digital
media services for animation projects including feature films and a
television series. The e-commerce and digital media services segments have
not experienced significant revenues or other activity to date and therefore
are not reportable segments for the first quarter of fiscal 2000. The
following are significant components of worldwide operations by reportable
operating segment:
<TABLE>
<CAPTION>
For the quarter
ended June 30,
-------------------------
1999 1998
----------- -----------
(in thousands)
<S> <C> <C>
Net revenue
Software sales, maintenance
and technical support $ 2,240 $ 2,216
IT Services 1,219 -
----------- -----------
Consolidated $ 3,459 $ 2,216
=========== ===========
Operating (loss)/income
Software sales, maintenance
and technical support $ (194) $ (166)
IT Services 136 -
Other (106) -
----------- -----------
Consolidated $ (164) $ (166)
=========== ===========
</TABLE>
The operating loss reported as "Other" represents costs related to the
development of the e-commerce and digital media services businesses.
7
<PAGE>
The Company's operations are based worldwide through foreign and domestic
subsidiaries and branch offices in the United States, Germany, India, the
United Kingdom, and Asia-Pacific. The following are significant components of
worldwide operations by geographic location:
<TABLE>
<CAPTION>
For the quarter
ended June 30,
-------------------------
1999 1998
----------- -----------
(in thousands)
<S> <C> <C>
Net revenue
United States $ 2,201 $ 1,143
The Americas (other than U.S.) 208 179
Europe 687 697
Asia-Pacific 363 197
----------- -----------
Consolidated $ 3,459 $ 2,216
=========== ===========
Export sales
United States $ 396 $ 279
=========== ===========
Long-lived Assets
United States $ 5,949 $ 3,276
Europe 596 820
Asia-Pacific 1,477 1,014
----------- -----------
Consolidated $ 8,022 $ 5,110
=========== ===========
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 as amended and
Section 21E of the Securities Exchange Act of 1934 as amended (the "Exchange
Act"), and the Company intends that such forward-looking statements be subject
to the safe harbors created thereby. The Company may experience significant
fluctuations in future operating results due to a number of factors, including,
among other things, the impact of adverse developments in overseas economies,
the size and timing of customer orders, new or increased competition, delays in
product upgrades and new product introductions, the ability to attract and
retain key technical and management personnel, the ability to penetrate the IT
services and other new markets the Company enters, Year 2000 compliance, changes
in market demand, market acceptance of new products, product returns,
integration of acquisitions, the ability to identify and consummate acquisitions
and integrate them successfully, and the ability to meet future capital
requirements. Any of these factors could cause operating results to vary
significantly from prior periods. As a result, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as any indication of future
performance. Fluctuations in the Company's operating results could cause the
price of the Company's Common Stock to fluctuate substantially.
The information contained in this report is not a complete description of the
Company's business or the risks associated with an investment in the Company's
Common Stock. Before deciding to buy or maintain a position in the Company's
Common Stock, you should carefully review and consider the various disclosures
made by the Company in this report and in its other materials filed with the
SEC, including its Annual Report on Form 10-KSB for the fiscal year ended March
31, 1999 (and, in particular, in the "Outlook" section therein) that discuss the
Company's business in greater detail and that also disclose various risks,
uncertainties and other factors that may affect the Company's business, results
of operations or financial condition.
Assumptions relating to the forward-looking statements involve judgments with
respect to, among other things, future economic, competitive and market
conditions, all of which are difficult or impossible to predict accurately, and
many of which are beyond the control of the Company. In addition, the business
and operations of the Company are subject to significant risks which increase
the uncertainty inherent in the forward-looking statements. In light of this,
the inclusion of forward-looking information should not be regarded as a
representation or guarantee by the Company or any other person that the
objectives or plans of the Company will be achieved.
GENERAL
Research Engineers, Inc. and subsidiaries (the "Company") is a leading provider
of technically-sophisticated stand-alone and network-based engineering software
products that provide fully-integrated easy-to-use design automation and
analysis solutions for use by engineering analysis and design professionals
worldwide. The Company's comprehensive line of Windows-based engineering
software products includes STAAD, the Company's structural analysis and design
software, as well as mechanical, civil and process/piping engineering products.
The Company's software products assist engineers in performing a myriad of
mission-critical engineering tasks, including the analysis and design of
industrial, commercial, transportation and utility structures, pipelines,
machinery, automotive and aerospace products, and survey, contour and digital
terrain modeling.
As a result of the acquisition of R-Cube Technologies, Inc. ("R-Cube") in
February 1999, the Company has expanded into the $90 billion information
technology ("IT") services industry, providing expertise in data-mining and
embedded technologies to Internet/Intranet design and communications.
9
<PAGE>
The Company has expanded into two additional markets. In April 1999, the Company
announced that it has launched the first of several e-commerce special interest
portals targeting the 90 million expatriates of the Asia Pacific region now
living throughout Europe and North America. In June 1999, the Company announced
that it has signed an agreement to provide digital media services for animation
projects, including a television series and feature films.
The following discussion and analysis addresses the results of the Company's
operations for the three months ended June 30, 1999, as compared to the
Company's results of operations for the three months ended June 30, 1998.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
Net revenues - Net revenues for the quarter ended June 30, 1999 increased by
$1,243,000 (56%) to $3,459,000, as compared to $2,216,000 for the quarter ended
June 30, 1998. This increase in net revenues was primarily attributable to the
acquisition of R-Cube. Net revenues for R-Cube totaled $1,219,000 for the first
quarter.
International net revenues as a percentage of total revenues for the quarter
ended June 30, 1999 decreased to 36%, down from 48% for the quarter ended June
30, 1998. The net revenues from international customers actually grew by
$185,000 (17%) to $1,258,000, as compared to $1,073,000 for the quarter ended
June 30, 1998. The decrease in international net revenues as a percentage of
total net revenues was primarily due to the expansion into the IT services
industry. Currently, all of the Company's IT services revenue is generated
within the United States, thus this segment's revenues increase the percentage
of consolidated net revenues generated domestically. The Company's domestic
revenues are denominated in U.S. Dollars, while revenues and expenses for the
Company's foreign subsidiaries and sales offices are usually recorded in the
applicable foreign currency and translated into U.S. Dollars. There were no
foreign exchange gains or losses that were material to the Company's financial
results during the three-month periods ended June 30, 1999 and 1998.
Gross profit - Gross profit increased by $451,000 (23%) to $2,387,000 in the
quarter ended June 30, 1999 as compared to $1,936,000 for the quarter ended June
30, 1998. This increase was primarily due to the acquisition of R-Cube. Gross
profit for R-Cube was $361,000 for the first quarter of fiscal 2000. Gross
margin decreased to 69% of sales in the quarter ended June 30, 1999 as compared
to 87% for the quarter ended June 30, 1998. This change is due to the growth of
the IT services segment, for which the cost of generating revenues is
significantly higher than for sales of software products.
Selling, general and administrative expense - Selling, general and
administrative ("SG&A") expense increased by $437,000 (29%) to $1,924,000 for
the quarter ended June 30, 1999 as compared to $1,487,000 for the quarter ended
June 30, 1998, but decreased as a percentage of net revenues to 56% from 67% in
the comparable quarter of the prior year. The majority of the increase in
expenses is due to the expansion into IT services upon the acquisition of
R-Cube. SG&A expenses for the IT services segment totaled $225,000, however,
this represents only 18% of the IT services net revenues. The Company was able
to achieve an increase in revenues with the expansion into IT services without a
comparable increase in SG&A expenses due to administrative infrastructure
already in place. The remainder of SG&A expense represents 76% of the Company's
non-IT services revenue, an increase from the 67% experienced in the prior year.
This remaining increase was largely experienced in India and was related to the
development of the e-commerce and digital media services businesses.
Research and development expense - Research and development expense increased by
$12,000 (2%) to $627,000 in the quarter ended June 30, 1999 as compared to
$615,000 for the quarter ended June 30, 1998, and decreased as a percentage of
net revenues to 18% from 28% in the comparable quarter of the prior year. The
decrease in research and development expense as a percentage of revenues is
primarily due to the addition of R-Cube. The results for the first quarter of
fiscal 2000 include added net revenue for R-Cube with no addition to research
and development expense.
10
<PAGE>
Other (income) expense - Net interest expense increased by $106,000 to $122,000
for the quarter ended June 30, 1999 as compared to $16,000 for the quarter ended
June 30, 1998. The increase is primarily due to the increase in long-term debt
used to finance the acquisition of R-Cube.
Income taxes - Income tax benefit increased by $57,000 to $100,000 in the
quarter ended June 30, 1999 as compared to $43,000 for the quarter ended June
30, 1998. This increase in income tax benefit is primarily due to an increase in
pretax loss in the United States and Singapore for the three months ended June
30, 1999 and the related tax benefit.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently finances its operations (including capital expenditures)
primarily through cash flows from operations as well as its cash and cash
equivalents.
The Company's principal sources of liquidity at June 30, 1999 consisted of
$1,727,000 of cash and cash equivalents.
The decrease in total cash and cash equivalents during the three months ended
June 30, 1999 was largely attributable to the purchase of capital assets,
primarily in India in connection with the development of the e-commerce and
digital media services businesses, combined with decreases in accounts payable,
accrued expenses, deferred maintenance revenue and other current liabilities,
and increases in prepaid and other current assets, offset by a decrease in
accounts receivable.
The Company believes that its current cash and cash equivalents balances and
cash generated from operations will provide adequate working capital to fund the
Company's operations at currently anticipated levels through June 30, 2000. To
the extent that such amounts are insufficient to finance the Company's working
capital requirements, the Company will be required to raise additional funds
through public or private equity or debt financings. There can be no assurance
that such additional financings will be available, if needed, or, if available,
will be on terms satisfactory to the Company.
IMPACT OF YEAR 2000
Many existing software programs use only two digits to identify the year in the
date field. If such programs are not corrected, date data concerning the Year
2000 could cause many computer applications to fail, lock-up or generate
erroneous results.
The Company has identified its mission-critical systems related to the Year 2000
and has committed the resources necessary to resolve any potential Year 2000
issues. This identification and assessment also involved identification of
vendors that may have a significant impact on the Company's operations and their
expected completion of any conversions. Although the Company is addressing such
issues in what it considers to be sufficient time prior to the century rollover,
there can be no assurance that there will be no interruption of operations or
other limitations of system functionality, or that the Company will not incur
substantial costs to avoid such occurrences. The Company has determined that it
will not need to modify or replace significant portions of its software sold to
customers, as it does not contain any date-specific material, and does not
believe its significant vendors will require significant modification of their
internal systems.
The Company's systems (both IT and non-IT), equipment and processes were
substantially Year 2000 ready by the end of March 1999. The actual cost of
remediation is approximately $250,000, most of which represents lease payments
for software that will be paid ratably through 2002. The Company is currently
working on its contingency plan for Year 2000 issues, which is expected to be in
place by the end of August 1999.
11
<PAGE>
In addition, the Company has initiated communications with its significant
suppliers and large customers to determine the extent to which the Company's
internal applications and other interface systems are vulnerable to those third
parties' failure to remedy their own Year 2000 issues. There can be no assurance
that other companies' systems on which the Company's systems rely will be timely
converted and would not have an adverse effect on the Company's systems. The
most reasonably likely worst case scenario would be that the Company's
significant customers' inability to remedy their own Year 2000 issues would
prevent them from purchasing the Company's products.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. The provisions of
the statement require the recognition of all derivatives as either assets or
liabilities in the consolidated balance sheet and the measurement of those
instruments at fair value. The accounting for the changes in fair value of a
derivative depends on the intended use of the derivative and the resulting
designation. In June, 1999, the Financial Accounting Standards Board issued SFAS
No. 137, Accounting for Derivative Instruments and Hedging Activities Deferral
of the Effective Date of FASB Statement No. 133 - an amendment of FASB Statement
No. 133. This statement delays the required implementation of SFAS No. 133 by
one year. The Company is required to adopt the statement in the first quarter of
fiscal year 2002. The Company is currently studying the impact of this
pronouncement on its consolidated financial statements but has not yet
determined the impact on its results of operations.
12
<PAGE>
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
27.2 Restated Financial Data Schedule
(b) Reports on Form 8-K
None
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 13, 1999
RESEARCH ENGINEERS, INC.
By: /S/ WAYNE BLAIR
------------------------------
Wayne Blair
Chief Financial Officer, Secretary
and Treasurer (principal financial
and accounting officer)
14
<PAGE>
EXHIBIT INDEX
Exhibit 27.1 Financial Data Schedule
Exhibit 27.2 Restated Financial Data Schedule
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,727
<SECURITIES> 0
<RECEIVABLES> 2,654
<ALLOWANCES> 386
<INVENTORY> 0
<CURRENT-ASSETS> 6,187
<PP&E> 5,679
<DEPRECIATION> 1,529
<TOTAL-ASSETS> 14,209
<CURRENT-LIABILITIES> 2,642
<BONDS> 5,071
0
0
<COMMON> 57
<OTHER-SE> 6,307
<TOTAL-LIABILITY-AND-EQUITY> 14,209
<SALES> 2,240
<TOTAL-REVENUES> 3,459
<CGS> 214
<TOTAL-COSTS> 1,072
<OTHER-EXPENSES> 3
<LOSS-PROVISION> 30
<INTEREST-EXPENSE> 122
<INCOME-PRETAX> (289)
<INCOME-TAX> (100)
<INCOME-CONTINUING> (189)
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