SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(b)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 0-21359
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0374596
(State of Incorporation) (I.R.S. Employer Identification No.)
Kungsgatan 12-14, Box 7733
103 95 Stockholm, Sweden
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (011)(468) 676-5000
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 than 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 close of the period covered by this
report.
Class: Outstanding October 31, 1997:
Common Stock ($.01 par value) 16,214,164 shares
Class B Common Stock ($.01 par value) 12,088,200 shares
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<TABLE>
PART I. - FINANCIAL INFORMATION
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share figures)
<CAPTION>
10/31/97 4/30/97
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $25,564 $ 9,023
Short-term investments 7,362 9,952
Accounts receivable, less allowance
for doubtful accounts of $202
and $214 at October 31, 1997 and
April 30, 1997, respectively 14,936 22,463
Contract receivables 971 1,010
Prepaid expenses 1,824 1,773
Income taxes receivable 280 28
Other current assets 169 111
------ ------
Total current assets 51,106 44,360
------ ------
Non-current assets:
Property and equipment, net 4,099 3,484
Deferred income taxes 1,225 1,643
Goodwill 1,090 1,107
Other non-current assets 320 369
------ ------
Total non-current assets 6,734 6,603
------ ------
Total Assets $57,840 $50,963
======= =======
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Current portion of capital
lease obligations $ 791 $ 422
Accounts payable 1,319 1,426
Accrued expenses and other
current liabilities 2,789 2,455
Accrued payroll and employee benefits 3,817 5,509
Deferred revenue 5,752 3,717
------ ------
Total current liabilities 14,468 13,529
------ ------
Long-term liabilities:
Capital lease obligations 1,264 554
Accrued pensions liability 2,007 1,674
Deferred income taxes 264 68
Other long-term liabilities 399 384
------ ------
Total long-term liabilities 3,934 2,680
------ ------
Total liabilities 18,402 16,209
Shareholders' equity:
Common Stock; voting, $.01 par value;
62,500,000 shares authorized;
16,214,164 and 15,591,558 shares
issued and outstanding at
October 31, 1997 and April 30,
1997, respectively 162 156
Class B Common Stock; non-voting,
$.01 par value; 12,500,000 shares
authorized; 12,088,200 shares issued
and outstanding 121 121
Additional paid-in capital 48,197 43,379
Accumulated deficit (400) (4,106)
Cumulative translation adjustment (2,331) (2,270)
Notes receivable from stockholders (6,311) (2,526)
------- -------
Total shareholders' equity 39,438 34,754
------- -------
Total Liabilities and Shareholders' equity $57,840 $50,963
======== =======
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
PAGE
<PAGE>
<TABLE>
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share figures)
<CAPTION>
THREE MONTHS ENDED
10/31/97 10/31/96
--------------- ----------------
<S> <C> <C>
Revenues:
Licenses $10,036 $ 4,836
Service and maintenance 13,025 7,875
Other 173 793
------- -------
Total revenues 23,234 13,504
------- -------
Cost of revenues:
Licenses 193 653
Service and maintenance 9,439 5,741
Other 89 404
------- -------
Total cost of revenues 9,721 6,798
------- -------
Gross profit 13,513 6,706
------- -------
Operating expenses:
Product development 2,875 2,624
Sales and marketing 4,685 2,782
General and administrative 2,142 1,084
------- -------
Total operating expenses 9,702 6,490
------- -------
Income from operations 3,811 216
------- -------
Other income (expense):
Interest income 267 88
Interest expense (20) (103)
Miscellaneous expense (34) (104)
------- -------
Total other income (expense) 213 (119)
------- -------
Income from continuing operations
before income taxes 4,024 97
Provision (benefit) for income taxes 834 (87)
------- -------
Income from continuing operations 3,190 184
Income from discontinued operations 0 365
------- -------
Net income $ 3,190 $ 549
======= =======
Earnings per share $ 0.11 $ 0.02
======= =======
Weighted average number of
shares outstanding 28,960,126 25,568,000
========== ==========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
PAGE
<PAGE>
<TABLE>
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share figures)
<CAPTION>
SIX MONTHS ENDED
10/31/97 10/31/96
--------------- ---------------
<S> <C> <C>
Revenues
Licenses $15,827 $ 7,132
Service and maintenance 22,809 14,654
Other 304 935
------- -------
Total revenues 38,940 22,721
------- -------
Cost of revenues:
Licenses 281 753
Service and maintenance 16,934 10,819
Other 174 500
------- -------
Total cost of revenues 17,389 12,072
------- -------
Gross profit 21,551 10,649
------- -------
Operating expenses:
Product development 5,391 4,580
Sales and marketing 8,405 5,375
General and administrative 3,532 2,070
------- -------
Total operating expenses 17,328 12,025
------- -------
Income (loss) from operations 4,223 (1,376)
------- -------
Other income (expense):
Interest income 507 101
Interest expense (35) (230)
Miscellaneous expense (99) (167)
------- -------
Total other income (expense) 373 (296)
------- -------
Income (loss) from continuing operations
before income taxes 4,596 (1,672)
Provision (benefit) for income taxes 776 (792)
------- -------
Income (loss) from continuing operations 3,820 (880)
Income from discontinued operations 0 367
------- -------
Net income (loss) $ 3,820 $ (513)
======= =======
Earnings per share $ 0.13 $ (0.02)
======= =======
Weighted average number of
shares outstanding 28,702,951 25,035,000
========== ==========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
<CAPTION>
SIX MONTHS ENDED
10/31/97 10/31/96
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 3,820 $ (513)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 859 462
Provision for doubtful accounts (167) (63)
Deferred income taxes 657 (747)
(Gain) loss on disposal of plant
property and equipment 20 (2)
Write-down on plant and equipment 0 3
Changes in operating assets
and liabilities:
Accounts receivable 7,663 3,064
Accrued receivables and
prepaid expenses 62 454
Income taxes (258) 22
Other assets 0 (231)
Accounts payable (150) 929
Accrued expenses and other
current liabilities 1,316 (2,379)
Accrued payroll, employee benefits
and deferred revenue 183 (910)
Accrued pensions liability 259 217
------- -------
Net cash provided by continuing operations 14,264 306
Net cash provided by discontinued operations 0 (265)
------- -------
Net cash provided by operating activities 14,264 41
------- -------
Cash flows from investing activities:
Purchase of short-term investments (17,250) 0
Proceeds from sale of short-term
Investments 19,840 0
Additions to property and equipment (1,493) (435)
Payment for Ceratina (1,025) 0
Proceeds from sale of property
and equipment 1,364 7
Collection of notes receivable 361 0
------- -------
Net cash provided by (used in) investing
activities 1,797 (428)
------- -------
Cash flows from financing activities:
Net payments under lines of credit 0 (7,764)
(Payments) on short-term borrowings 0 (97)
Principal payments on capital
lease obligations (179) (190)
Issuance of Common Stock 678 28,532
Other (118) 250
------- -------
Net cash flows provided by
financing activities 381 20,731
------- -------
Translation differences on cash and
cash equivalents 99 23
------- -------
Net increase in cash and cash
equivalents $16,541 $20,367
======= =======
Cash and cash equivalents at beginning
of period $ 9,023 $ 558
Cash and cash equivalents at end ------- -------
of period $25,564 $20,925
------- -------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 69 $ 305
------- -------
Income taxes $ 313 $ 4
------- -------
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
<PAGE>
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Interim Financial Statements
The unaudited condensed consolidated financial statements included
herein have been prepared by Industri-Matematik International Corp. and its
subsidiaries (collectively, the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, they
do not contain all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurr-
ing adjustments) considered necessary for a fair presentation of the
Company's financial condition at April 30, 1997 (audited), and October 31,
1997 (unaudited), and the results of operations and cash flows for the six
months ended October 31, 1996, and 1997. These financial statements should
be read in conjunction with the audited consolidated financial statements
of the Company as presented in the Company's Annual Report on Form 10-K for
the fiscal year ended April 30, 1997. Results of operations and cash flows
for the period ended October 31, 1997, are not necessarily representative
of the results that may be expected for the fiscal year ending April 30,
1998, or any other future period.
2. Net Income per Share
For the three and six months ended October 31, 1997 net income per
share was based on the weighted average number of shares of common stock
and common stock equivalents outstanding during the period. Common stock
equivalents are calculated using the treasury stock method and represent
shares issuable upon the exercise of outstanding stock options.
3. Accrued Expenses and Other Current Liabilities
<TABLE>
<CAPTION>
October 31, 1997 April 30, 1997
---------------- --------------
(unaudited)
(in thousands)
<S> <C> <C>
Accrued purchases $1,631 $ 651
Acquisition of Ceratina 0 1,025
Accrued pension taxes 551 407
Employee withholding taxes 404 0
Value-added tax 151 160
Other 52 212
------ ------
$2,789 $2,455
====== ======
</TABLE>
4. Accrued Payroll and Employee Benefits
<TABLE>
<CAPTION>
October 31, 1997 April 30, 1997
---------------- --------------
(unaudited)
(in thousands)
<S> <C> <C>
Accrued commissions $ 80 $2,500
Accrued payroll taxes 660 1,392
Accrued vacation pay 898 1,030
Accrued salaries and bonus 1,309 297
Accrued pension expenses 338 290
Accrued expenses ESPP 532 0
------ ------
$3,817 $5,509
====== ======
</TABLE>
5. Income Taxes
For the three and six month periods ended October 31, 1996, and October
31, 1997, a deferred tax asset was recognized for the period relating to
the Company's net operating loss. At October 31, 1997, the Company had
approximately $1.5 million of gross deferred tax assets comprised primarily
of net operating loss carryforwards in Sweden. During the three and six
month periods ended October 31, 1996 and 1997, the Company reduced its
valuation allowance relating to its net operating loss carryforwards based
upon evidence indicating an increased likelihood of the utilization of such
net operating loss carryforwards in offsetting future tax expense.
Estimated future earnings necessary to fully realize the net deferred tax
asset are $3.2 million. Such earnings are forecasted to be realized within
the fiscal year ending April 30, 1998. There can be no assurance that
future earnings, if any, will meet currently forecasted levels; however it
is management's opinion that the realization of such earnings in the future
is more likely than not.
6. Stock Options
Under the Industri-Matematik International Corp. Stock Option Plan,
497,500 options were granted during the six months ended October 31, 1997,
All options were issued at an exercise price equal to the estimated fair
market value of the Company's common stock at the date of grant.
7. Subsequent Events
The Company completed in November, 1997, a secondary public offering of
8,136,250 common shares, priced at $20.00 per share, of which 4,030,625
shares were sold by the Company and 4,105,625 by existing shareholders.
After deducting the underwriter's discount, the net proceeds to the Company
were $19.075 per share, or $76,884,171. At the closing of the secondary
offering, all outstanding shares of Class B Common Stock were converted to
Common Stock. As a result of this offering, the total number of shares
outstanding increased to 32,332,989.
PAGE
<PAGE>
ITEM 2.
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements that involve risks and
uncertainties. The actual future results of the Company could differ
materially from those statements. Factors that could cause or contribute
to such differences include, but are not limited to, uncertainties regard-
ing continued market acceptance of new products and product enhancements,
delays in the introduction of new products and product enhancements, and
risks associated with managing the Company's rapid growth, as well as
factors discussed in the Company's Annual Report on Form 10-K for the
fiscal year ended April 30, 1997, and the Prospectus dated October 31,
1997, relating to the secondary public offering of the Company's Common
Stock.
Overview.
The Company develops, markets and supports client/server application
software that enables manufacturers, distributions, wholesalers, and third-
party logistics companies to manage more effectively the "demand chain".
Demand chain management encompasses the execution of multiple customer-
centric order fulfillment processes, including order management, dis-
tribution logistics, inventory replenishment, and demand planning. The
Company's principal product, System ESS, has been designed specifically to
meet complex or high-volume demand chain management requirements of large
manufacturers, distributors, wholesalers, and third-party logistics
companies. System ESS allows customers to leverage the value of their
existing systems by integrating with legacy and new client/server manu-
facturing, planning, and financial information systems.
Results of Operations
The following table sets forth, for the periods indicated, the per-
centages that selected items in the unaudited Condensed Consolidated
Statements of Operations bear to total revenues. The period to period
comparisons of financial results are not necessarily indicative of future
results.
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
October 31, October 31,
---------------- ------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Licenses 40.6% 31.4% 43.2% 35.8%
Service and maintenance 58.6 64.5 56.1 58.3
Other 0.8 4.1 0.7 5.9
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
Cost of revenues:
Licenses 0.7 3.3 0.8 4.8
Service and maintenance 43.5 47.6 40.6 42.5
Other 0.4 2.2 0.4 3.0
----- ----- ----- -----
Total cost of revenues 44.6 53.1 41.8 50.3
----- ----- ----- -----
Gross profit 55.4 46.9 58.2 49.7
----- ----- ----- -----
Operating expenses:
Product Development 13.8 20.2 12.4 19.4
Sales and marketing 21.6 23.7 20.2 20.6
General & administrative 9.1 9.1 9.2 8.0
----- ----- ----- -----
Total operating expenses 44.5 53.0 41.8 48.0
----- ----- ----- -----
Income (loss) from operations 10.9 (6.1) 16.4 1.7
----- ----- ----- -----
Other income (expenses):
Interest income 1.4 0.4 1.1 0.7
Interest expense (0.1) (1.0) (0.1) (0.8)
Miscellaneous income (expense) (0.3) (0.7) (0.1) (0.8)
----- ----- ----- -----
Income (loss) from continuing
operations before income taxes 11.9 (7.4) 17.3 0.8
Provision (benefit) for income
taxes 2.0 (3.5) 3.6 (0.6)
----- ----- ----- -----
Income (loss) from continuing
operations 9.9 (3.9) 13.7 1.4
Income (loss) from discontinued
operations 0.0 1.6 0.0 2.7
----- ----- ----- -----
Net Income (loss) 9.9% (2.3%) 13.7% 4.1%
===== ===== ===== =====
</TABLE>
REVENUES
The Company's revenues consist of software license revenues, service
and maintenance revenues, and other revenues. Software license revenues
consist of sales of software licenses which are recognized upon execution
of a contract and shipment of the software, provided that no significant
vendor obligations remain outstanding, amounts are due within one year and
collection is considered probable by management. Service revenues are
derived from fees for consulting, training, and client-specific development
services and are recognized as services are performed. Maintenance
revenues are derived from customer support agreements generally entered
into in connection with the initial license sales and subsequent renewals.
Maintenance revenues are recognized ratably over the term of the
maintenance period. Payments for maintenance fees are generally made in
advance. Other revenues are primarily third-party hardware sales necessary
to help certain customers implement System ESS.
Total revenues increased 72.1% to $23.2 million in the quarter ended
October 31, 1997, from $13.5 million in the quarter ended October 31, 1996.
In the first six months of fiscal 1998, total revenues increased 71.4% to
$38.9 million from $22.7 million in the first six months of fiscal 1997.
The Company currently derives substantially all of its revenues from System
ESS licenses and related service and maintenance. As a result of the
Company's dependence on the continued market acceptance of System ESS,
there can be no assurance that total revenues will continue to grow at the
rates experienced in prior periods, if at all.
Revenues generated in the United States were approximately 57% and 51%
of total revenues in the quarters ended October 31, 1997, and October 31,
1996, respectively. U.S. revenues were approximately 57% and 45% of total
revenues in the first six months of fiscal 1998 and fiscal 1997,
respectively. The significant increase in U.S. revenues in fiscal 1998
from 1997 is primarily due to the expansion of the Company's U.S. sales and
services operations in the last year.
License Revenues. Revenues from software licenses increased 107.5% to
$10.0 million in the quarter ended October 31, 1997, from $4.8 million in
the quarter ended October 31, 1996. In the first six months of fiscal
1998, revenues from software licenses increased 121.9% to $15.8 million
from $7.1 million in the first six months of fiscal 1997. The significant
increase in software license revenues was due primarily to the growing
market acceptance of System ESS and the expansion of the Company's sales
and marketing organizations in the U.S. and Europe.
Service and Maintenance Revenues. Revenues from service and main-
tenance increased 65.4% to $13.0 million in the quarter ended October 31,
1997, from $7.9 million in the quarter ended October 31, 1996. In the
first six months of fiscal 1998, revenues from service and maintenance
increased 55.7% to $22.8 million from $14.7 million in the first six months
of fiscal 1997. The increase in the absolute dollar amounts of service and
maintenance revenues was related primarily to an increase in the number of
System ESS licenses sold during fiscal 1998 from fiscal 1997 and a signifi-
cant expansion of the Company's consulting organization in the U.S. and
Europe. The increase in service and maintenance revenues is lower than the
increase in license revenues as a result of the Company's use, where advan-
tageous, of third-party consultants to provide services to the Company's
customers as well as the fact that service and maintenance revenues are not
necessarily proportional to license revenues. Service and maintenance
revenues as a percentage of total revenues have decreased to 56.1% in the
quarter ended October 31, 1997, from 58.3% in the quarter ended October 31,
1996, and have decreased to 58.6% in the first six months of fiscal 1998
from 64.5% in the first six months of fiscal 1997.
Other Revenues. Other revenues are primarily third-party hardware
sales to the Company's Scandinavian customer base. Other revenues
decreased 78.2% to $173,000 in the quarter ended October 31, 1997, from
$793,000 in the quarter ended October 31, 1996. In the first six months of
fiscal 1998, other revenues decreased 67.5% to $304,000 from $935,000 in
the first six months of fiscal 1997. Other revenues as a percentage of
total revenues decreased to 0.7% in the quarter ended October 31, 1997,
from 5.9% in the quarter ended October 31, 1996, and decreased to 0.8% in
the first six months of fiscal 1998 from 4.1% in the first six months of
fiscal 1997. The decrease in other revenues as a percentage of total
revenues reflects a reduction by the Company in its efforts to provide
third-party hardware and support.
Cost of Revenues
Cost of License Revenues. Cost of software licenses consists primarily
of license fees paid with respect to third-party software included with the
licenses of System ESS and, occasionally, the cost of third-party comple-
mentary software that is licensed together with System ESS without being an
integral part of System ESS. Cost of license revenues was $193,000 and
$653,000 in the quarters ended October 31, 1997, and 1996, representing
1.9% and 13.5% of license revenues, respectively. Cost of license revenues
was $281,000 and $753,000 in the first six months of fiscal 1998 and 1997,
representing 1.8% and 10.6% of license revenues, respectively. The
decrease in cost of license revenues both in absolute dollar amounts and as
a percentage of license revenues was primarily due to the decrease in
licenses of third-party complementary software.
Cost of Service and Maintenance Revenues. Cost of service and main-
tenance consists primarily of costs associated with consulting, imple-
mentation, and training services and, occasionally, the use by the Company
of third-party consultants to perform implementation services for the
Company's customers. Cost of service and maintenance revenues also in-
cludes the cost of providing software maintenance to customers, such as
telephone hotline support.
Cost of service and maintenance revenues was $9.4 million and $5.7
million in the quarters ended October 31, 1997, and 1996, representing
72.5% and 72.9% of service and maintenance revenues, respectively. Cost of
service and maintenance revenues was $16.9 million and $10.8 million in the
first six months of fiscal 1998 and fiscal 1997, representing 74.2% and
73.8% of service and maintenance revenues, respectively.
Cost of Other Revenues. Cost of other revenues consists primarily of
the cost of third-party hardware supplied to certain customers. Cost of
other revenues was $89,000 and $404,000 in the quarters ended October 31,
1997 and 1996, representing 51.4% and 50.9% of other revenues, respec-
tively. Cost of other revenues was $174,000 and $500,000 in the first six
months of fiscal 1998 and fiscal 1997, representing 57.2% and 53.5% of
other revenues, respectively.
Product Development. Product development expenses were $2.9 million
and $2.6 million in the quarters ended October 31, 1997, and October 31,
1996, representing 12.4% and 19.4% of total revenues, respectively. These
same expenses were $5.4 million and $4.6 million in the first six months of
fiscal 1998 and 1997, representing 13.8% and 20.2% of total revenues,
respectively. The increases in product development expenses in dollar
amount were primarily due to an increase in the number of product develop-
ment personnel and other related costs incurred in connection with expand-
ing the Company's product development department and, to a lesser extent,
the costs relating to third-party translation work. The Company expects
that the dollar amount of product development expenses will continue to
increase as the Company continues to invest in developing new applications,
product enhancements, and localization and translation of System ESS.
In accordance with Statement of Financial Accounting Standards No. 86,
software development expenses are expensed as incurred until technological
feasibility has been established, at which time such costs are capitalized
until the product is available for general release to customers. To date
the establishment of technological feasibility of the Company's products
and general release of such software have substantially coincided. As a
result, software development costs qualifying for capitalization have been
insignificant, and, therefore, the Company has not capitalized any software
development costs.
Sales and Marketing. Sales and marketing expenses include personnel
costs, commissions, and related costs for sales and marketing personnel, as
well as the cost of office facilities, travel, promotional events, and
public relations programs. Sales and marketing expenses were $4.7 million
and $2.8 million in the quarters ended October 31, 1997, and October 31,
1996, representing 20.2% and 20.6% of total revenues, respectively. These
same expenses were $8.4 million and $5.4 million in the first six months of
fiscal 1998 and 1997, representing 21.6% and 23.7% of total revenues,
respectively. The increase in sales and marketing expenses in absolute
dollar amounts was primarily due to (i) increased staffing as the Company
established new sales offices and expanded its existing direct sales force
and (ii) increased sales commissions associated with significantly higher
license revenues. The Company expects to continue to increase
significantly its sales and marketing expenses in order to expand its
international sales operations and to enter into new vertical markets.
General and Administrative. Ongoing general and administrative
expenses consist primarily of salaries and costs of the Company's finance,
human resources, information systems, administrative, and executive staff
and the fees and expenses associated with legal, accounting, and other
requirements. General and administrative expenses were $2.1 million and
$1.1 million in the quarters ended October 31, 1997, and 1996, representing
9.2% and 8.0% of total revenues, respectively. These same expenses were
$3.5 million and $2.1 million in the first six months of fiscal 1998 and
1997, representing 9.1% and 9.1% of total revenues, respectively. The
increase in the absolute dollar amounts of general and administrative
expenses was primarily the result of increased staffing and related costs
associated with the growth of the Company's business during fiscal 1998 and
1997.
Other Income (Expense)
Other income (expense) comprises interest income, interest expenses,
and miscellaneous income and expenses. Interest income was $267,000 and
$88,000 in the quarters ended October 31, 1997, and 1996, representing 1.1%
and 0.7% of total revenues, respectively. Interest income was $507,000 and
$101,000 in the first six months of fiscal 1998 and 1997, representing 1.4%
and 0.4% of total revenues, respectively. The increase is due to the
Company's investment of a portion of the proceeds of its initial public
offering in short-term investments and interest-bearing accounts. Interest
expenses were $20,000 and $103,000 in the quarters ended October 31, 1997,
and October 31, 1996, representing 0.1% and 0.8% of total revenues,
respectively. These same expenses were $35,000 and $230,000 in the first
six months of fiscal 1998 and 1997, representing 0.1% and 1.0% of total
revenues, respectively. The decrease in interest expenses is primarily due
to the Company's repayment of its outstanding loans after its initial
public offering.
Liquidity and Capital Resources
As of October 31, 1997, the Company had $36.6 million of working
capital, including $25.6 million in cash and cash equivalents and $7.4
million in short-term investments, as compared to $30.8 million of working
capital as of April 30, 1997, including $9.0 million in cash and cash
equivalents and $10.0 million in short-term investments.
Accounts receivable decreased to $14.9 million at October 31, 1997,
from $22.5 million at April 30, 1997, and the average days' sales out-
standing, including contract receivables, was 61 days for the quarter ended
October 31, 1997, as compared to 99 days for the year ended April 30,
1997. The decrease in average days' sales outstanding was primarily due to
the collection of several large trade receivable balances outstanding at
April 30, 1997, and early collection of certain large receivables connected
to sales in the six month period ended October 31, 1997. Average days'
sales outstanding can fluctuate for a variety of reasons including the
timing and billing of receivables for which the related revenues may not
yet be recognizable.
The Company believes that existing cash and cash equivalent balances,
short-term investments, available borrowings under the revolving credit
agreement, and potential cash flow from operations will satisfy the
Company's working capital and capital expenditure requirements for at least
the next 12 months. It is noted that during November, 1997, the Company
realized net proceeds of $76,884,171 for its secondary offering of Common
Stock.
<PAGE>
<PAGE>
PART II. - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of the shareholders of the Company held on October 9,
1997, Stig G. Durlow, Jeffrey A. Harris, William H. Janeway, Martin
Leimdorfer, and Geoffrey W. Squire were re-elected as directors of the
Company, the Company's 1997 Employee Stock Purchase Plan was approved, and
the selection of Ohrlings Coopers & Lybrand AB as the Company's independent
public accountants for the fiscal year ending April 30, 1998, was ratified.
The tabulation of the votes is as follows:
Votes For Votes Withheld
--------- --------------
Stig G. Durlow 14,815,239 10,821
Jeffrey A. Harris 14,815,239 10,821
William H. Janeway 14,815,239 10,821
Martin Leimdorfer 14,815,239 10,821
Geoffrey W. Squire 14,809,639 16,421
Votes For Against Abstain
--------- ------- -------
Approval of 1997 Employee
Stock Purchase Plan 13,937,703 855,350 33,007
Ratification of Accountants 14,817,622 4,798 3,640
ITEM 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibit 11. Computation of Per Share Earnings
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
No reports have been filed on Form 8-K during the quarter
ended October 31, 1997.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it's behalf by the
undersigned thereunto duly authorized.
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
BY: s/ Stig Durlow
---------------------------
Stig Durlow
Principal Executive Officer
BY: s/ Lars-Goran Peterson
---------------------------
Lars-Goran Peterson
Principal Financial Officer
DATE: December 15, 1997
<TABLE>
INDUSTRI-MATEMATIK INTERNATIONAL CORP.
AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share figures)
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
10/31/97 10/31/97
---------------- ------------------
<S> <C> <C>
Net income $ 3,820 $ 3,190
======= ======
Weighted average number
of shares outstanding 28,004 28,244
Net effect of dilutive
stock options based on
the treasury method 699 716
------- ------
Total 28,703 28,960
======= ======
Per share amounts:
Net income $ 0.13 $ 0.11
======= ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND BALANCE SHEETS OF
INDUSTRI-MATEMATIK INTERNATIONAL CORP. AND SUBSIDIARIES ANNEXED HERETO AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001016243
<NAME> INDUSTRI-MATEMATIK INTERNATIONAL CORP.
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> APR-30-1998 APR-30-1998
<PERIOD-START> AUG-1-1997 MAY-1-1997
<PERIOD-END> OCT-31-1997 OCT-31-1997
<CASH> 25,564,000 25,564,000
<SECURITIES> 7,362,000 7,362,000
<RECEIVABLES> 15,138,000 15,138,000
<ALLOWANCES> 202,000 202,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 51,106,000 51,106,000
<PP&E> 8,570,000 8,570,000
<DEPRECIATION> 4,471,000 4,471,000
<TOTAL-ASSETS> 57,840,000 57,840,000
<CURRENT-LIABILITIES> 14,468,000 14,468,000
<BONDS> 0 0
<COMMON> 283,000 283,000
0 0
0 0
<OTHER-SE> 39,155,000 39,155,000
<TOTAL-LIABILITY-AND-EQUITY> 57,840,000 57,840,000
<SALES> 23,061,000 38,636,000
<TOTAL-REVENUES> 23,234,000 38,940,000
<CGS> 9,632,000 17,215,000
<TOTAL-COSTS> 9,721,000 17,389,000
<OTHER-EXPENSES> 9,702,000 17,328,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 20,000 35,000
<INCOME-PRETAX> 4,024,000 4,596,000
<INCOME-TAX> 834,000 776,000
<INCOME-CONTINUING> 3,190,000 3,820,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,190,000 3,820,000
<EPS-PRIMARY> .11 .13
<EPS-DILUTED> .11 .13
</TABLE>
