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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
dated May 17, 1999
ILOG S.A.
9 Rue De Verdun BP 85
94253 Gentilly, France
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F
Form 20-F __X__ Form 40-F ________ .
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934
Yes _____ No __X__.
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
82- __N.A__.
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ILOG S.A.
FORM 6-K
ILOG S.A. (the "Company") reported its results for the three months
and nine months ended March 31, 1999 in a press release dated April 22, 1999.
Such press release is attached as EXHIBIT 99.1 hereto and is incorporated by
reference herein.
EXHIBIT INDEX
Exhibit Press release, dated April 22, 1999, announcing the results of
99.1 ILOG S.A. for the three months and nine months ended March 31, 1999.
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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.
ILOG S.A.
By: /s/ Roger Friedberger
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Roger Friedberger
Chief Financial Officer
Date: May 17, 1999
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[ILOG LOGO]
FOR IMMEDIATE RELEASE
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Contact:
Roger Friedberger, ILOG
(650) 567-8115 (USA)
+33-1-49083574 (Europe)
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Taylor Rafferty Associates
(212) 889-4350 (USA)
+44-171-606-1149 (Europe)
ILOG REPORTS RESULTS FOR THIRD QUARTER ENDED MARCH 31, 1999
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PARIS, FRANCE -- April 22, 1999 -- ILOG S.A. (NASDAQ: ILOG and EURO.NM:
ILOG), the world's leading provider of software components, today reported
revenues of $15.3 million for its third quarter, ended March 31, 1999,
compared to $15.1 million in the March 1998 quarter.
The Company had a loss from operations of $1.7 million in the March 1999
quarter compared to an operating profit of $1.4 million, excluding the
write-off of acquired intangibles of $1.3 million in the March 1998 quarter
related to the acquisition of CPLEX Optimization, Inc. Loss per share for the
March 1999 quarter was $0.09 on 14.1 million shares, compared to earnings per
share of $0.01, including the write off of acquired intangibles, on 13.0
million shares in the March 1998 quarter.
ILOG's results this quarter were impacted by the widely reported temporary
deceleration in the growth of the Supply Chain Management (SCM) software
market and the deferral of spending decisions on new software development
caused by a short-term shift in priorities away from adopting new business
applications and toward resolving "Year 2000" issues in existing software.
These factors have also impacted recent operating results for several
enterprise application vendors, some of them business partners of ILOG.
Following earlier evidence of a slowdown in the SCM market, ILOG instituted
in January various cost control and growth-restraint measures. These measures
have resulted in a reduction of recurring operating costs of approximately
$200,000 compared to the December 1998 quarter despite overall headcount
growing from 460 to 480 in the March quarter. Since February, headcount has
stabilized at this level and further increases are not anticipated for the
immediate future.
During the quarter, ILOG reached new agreements and received renewed
commitments with over 20 independent software vendors (ISVs), including a
number of major business application and telecom application vendors. These
contracts are expected to provide ILOG with future royalty streams and
reflect the continuing success of the "Powered by ILOG" ISV strategy. For
example,
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Nokia (NYSE: NOK) became a customer and represents the last of the top 10
telecom equipment manufacturers to become a "Powered by ILOG" vendor. Also in
the quarter, LHS (NASDAQ: LHSG and EURO.NM: LHI), a leading provider of
billing systems for the telecom industry, expanded its commitment to ILOG as
did McHugh Software, Novazen, Paragon Management Systems and Severn Trent
Systems.
In March, the Company announced ILOG OPL Studio, a new development
environment that is designed to accelerate the adoption of the Company's
optimization solutions and broaden ILOG's reachable market, by shortening and
simplifying the design and deployment of optimization applications. ILOG OPL
Studio is available as an internet downloadable product, thus allowing
customers to immediately access the company's optimization solutions. Also
during the quarter, ILOG introduced new releases of its CPLEX and ILOG
Planner optimization components that set new performance records.
ABOUT ILOG
ILOG is a leading provider of advanced C, C++ and Java software components
for advanced graphics and resource optimization. ILOG products deliver
high-performance data visualization for 2-D and 3-D user interfaces; integer,
linear and constraint solvers for resource optimization, scheduling,
logistics and planning applications; dynamic rule systems for intelligent
agents and real-time data flow control, and components for integrating
modules with real-time and relational data sources. ILOG was founded in 1987
and now employs approximately 480 people in seven countries. Visit
www.ilog.com for additional information.
ILOG and CPLEX are registered trademarks of ILOG. All other product and
company names are trademarks or registered trademarks of their respective
owners.
RESULTS AND PRESS RELEASE FOR FRENCH SHAREHOLDERS
A translation of this press release in the French language and with the
financial statements expressed in French Francs is also available.
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ILOG S.A.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
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MAR 31. MAR. 31 MAR. 31 MAR. 31
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Revenues:
License fees $ 8,449 $ 9,554 $28,335 $ 24,415
Services 6,828 5,511 18,554 14,478
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Total reveneus 15,277 15,065 46,889 38,893
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Cost of revenues
License fees 225 232 702 801
Services 3,993 3,034 11,051 7,744
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Total cost of revenues 4,218 3,266 11,753 8,545
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Gross profit 11,059 11,799 35,136 30,348
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Operating expenses
Marketing and selling 8,117 7,042 23,165 19,948
Research and development 2,541 1,782 7,304 4,769
General and administrative 2,074 1,602 5,596 4,309
Nouveau Marche expenses - - 466 -
Write-off of acquired intangibles 62 1,291 1,970 30,985
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Total operating expenses 12,794 11,717 38,501 60,011
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Income (loss) from operations (1,735) 82 (3,365) (29,663)
Net interest income (expense) and other 454 61 (17) (21)
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Net income (loss) $(1,281) $ 143 $(3,382) $(29,684)
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Net income (loss) per share -
basic & fully diluted $ (0.09) $ 0.01 $ (0.24) $ (2.37)
Share and share equivalents used in per share
calculations - basic 14,055 13,004 13,967 12,529
- fully diluted 14,055 14,428 13,967 12,529
</TABLE>
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ILOG S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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(IN THOUSANDS)
<TABLE>
<CAPTION>
MAR. 31 JUNE 30
1999 1998
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<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 19,043 $ 20,101
Accounts receivable 16,688 15,328
Other receivables and prepaid expenses 4,800 4,370
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Total current assets 40,531 39,799
Property and equipment-net and other assets 4,981 3,850
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Total assets $ 45,512 $ 43,649
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 11,807 $ 10,772
Current debt 1,938 2,055
Deferred revenue 7,615 5,044
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Total current liabilities 21,360 17,871
Long-term portion of debt 5,656 5,979
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Total liabilities 27,016 23,850
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Shareholders' equity
Paid-in capital 62,414 60,296
Accumulated deficit and currency translation adjustment (43,918) (40,497)
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Total shareholders' equity 18,496 19,799
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Total liabilities and shareholders' equity $ 45,512 $ 43,649
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</TABLE>
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DISCUSSION OF FINANCIAL HIGHLIGHTS
NINE-MONTH RESULTS
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The company reported revenues of $46.9 million for the nine months ended
March 31, 1999, an increase of 21% compared to $38.9 million in the prior
year. Excluding the one-time write offs of acquired intangibles (FY 1999 and
1998) and Nouveau Marche listing expenses (FY 1999) totaling $2.4 million and
$31.0 million in FY1999 and 1998, respectively, the results from operations
for the nine-month period were a $0.9 million loss compared to a $1.3 million
profit in the corresponding period of the prior year. Loss per share for the
nine-month period, including one-time write-offs, was $0.24 on 14.0 million
shares, compared to $2.37 on 12.5 million shares in the corresponding period
of the prior year.
QUARTER'S RESULTS
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REVENUES AND GROSS MARGIN
Revenues in the quarter ended March 31, 1999 were $15.3 million compared to
$15.1 million for the same quarter in the preceding year, with license fee
revenue declining by 12% and services revenue increasing by 24%. The decline
in license fees is attributed to Year 2000 spending distractions,
particularly in France, but contrasts with the growth in services revenue,
which is due to ISV demand for the company's consulting services. In the U.S.
and Asia, revenues grew by 13% and 27%, respectively, over the same period in
the prior year, whereas European revenues declined by 11%.
Overall gross margin for the quarter was 72% compared to 78% for the same
period in the preceding year, reflecting an increased mix of services
revenue, which in the quarter was 45% of revenues compared to 37% in the same
period of the preceding year. Gross margin for services revenues in the
quarter declined to 42% from 45% in the same period of the preceding year,
reflecting lower capacity utilization of consulting resources in North
America.
OPERATING EXPENSES
Marketing and selling expenses for the quarter ended March 31, 1999 increased
by 15% over the same period in the prior year as headcount growth and
commission expense stabilized. Research and development expenses for the
quarter increased by 43% over the same period in the prior year, reflecting
headcount growth from 70 to 92 between March 31, 1998 and 1999, representing
investments in new products. General and administrative expenses for the
quarter increased by 29% over the same period in the prior year, reflecting
augmentation of the bad debt reserve.
OTHER INCOME (EXPENSE)
Net interest and other income (expense) for the quarter increased from
$61,000 to $454,000, due principally to unrealized foreign currency exchange
gains in the quarter. However, currency fluctuations generally did not have a
material effect on the company's income from operations for the quarter ended
March 31, 1999.
BALANCE SHEET
Cash at March 31, 1999 increased to $19.0 million from $14.8 million at
December 31, 1998, primarily reflecting the collection of receivables in the
quarter. Days sales outstanding of receivables improved to 98 days at March
31, 1999 from 106 days at December 31, 1998. Property and equipment at March
31, 1999 increased to $5.0 million from $4.5 million at December 31, 1998,
primarily reflecting infrastructure expenditures associated with the
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Company's move to new premises in North America. Deferred revenues increased
to $7.6 million at March 31, 1999 from $5.2 million at December 31, 1998 due
to new and renewed maintenance contract commitments by customers.
Long-term debt during the quarter decreased by $0.5 million to $ 5.7 million
at March 31, 1999 and short-term debt increased by $0.5 million to $ 1.9
million, reflecting the reclassification to short-term of certain borrowings.
At March 31, 1999 shareholders' paid-in capital increased to $62.4 million
(14.1 million shares), from $61.8 million (14.0 million shares) at December
31, 1998, reflecting the issuance of shares in connection with the Company's
employee share purchase plans. Shareholders' equity decreased to $18.5
million, from $19.8 million at June 30, 1998, reflecting the net loss for the
nine-month period and the increase in paid-in capital.
PRIOR YEAR COMPARATIVE DATA
ILOG's results of operations for the quarter and nine months ended March 31,
1999 and the balance sheet as of June 30, 1998 have been restated to include
those of Compass Modeling Solutions, Inc., which was acquired in August 1998
and accounted for as a pooling of interests. For the quarter and nine months
ended March 31, 1998, Compass had net revenues of $164,000 and $530,000,
respectively, and profits of $1,000 and $86,000, respectively.
FORWARD-LOOKING INFORMATION
This release contains "forward-looking" information within the meaning of the
United States Securities laws that involve risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Potential risks and uncertainties include, without limitation,
the economic, political and currency risks associated with the company's
European, North American and Asian operations, the timing of significant
revenues, "Year 2000" customer spending decisions, the evolution and growth
of the Supply Chain Management (SCM) software market, the success of the
"Powered by ILOG" ISV strategy and those risks and uncertainties mentioned
under "Risk Factors" in the Company's form 20-F for the year ended June 30,
1998, which is on file with the United States Securities and Exchange
Commission.
