<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File Number: 0-22145
RWD TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its Charter)
Maryland 52-1552720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10480 Little Patuxent Parkway 21044-3530
Columbia, Maryland (Zip Code)
(Address of principal executive offices)
(410) 730-4377
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year - if changed since last
report)
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 __
--
As of September 30, 2000, 15,039,099 shares of common stock $0.10 par value
("Common Stock") of the Registrant were outstanding.
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RWD TECHNOLOGIES, INC.
INDEX
FORM 10-Q
<TABLE>
<CAPTION>
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C> <C>
Consolidated Condensed Balance Sheets as of September 30, 1
2000, (Unaudited) and December 31, 1999
Consolidated Statements of Income for the Three Months and 2
Nine Months ended September 30, 2000, and 1999 (Unaudited)
Consolidated Statements of Cash Flows for the Nine Months 3
ended September 30, 2000, and 1999 (Unaudited)
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk N/A
PART II - OTHER INFORMATION
Item 1. Legal Proceedings N/A
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
RWD TECHNOLOGIES, INC., AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
--------------------- ---------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and investments....................................... $ 25,556 $ 28,214
Contract accounts receivable, net.......................... 28,166 21,731
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 15,807 7,232
Prepaid expenses and other................................. 1,934 1,257
Deferred tax asset......................................... -- 19
Income tax refund receivable............................... -- 1,692
---------------------- ---------------------
Total Current Assets................................... 71,463 60,145
NET FIXED ASSETS................................................ 16,257 11,464
GOODWILL, net................................................... 13,423 13,421
OTHER ASSETS.................................................... 611 2,231
---------------------- ----------------------
Total Assets........................................... $ 101,754 $ 87,261
====================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses...................... $ 13,913 $ 8,024
Line of credit............................................. 6,532 --
Note payable............................................... -- 1,026
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 2,200 4,005
Deferred tax liability..................................... 264 --
Current portion of capital lease obligation................ 27 25
---------------------- ---------------------
Total Current Liabilities.............................. 22,936 13,080
NONCURRENT LIABILITIES:
Capital lease obligation, net of current portion 6 26
Other liabilities.......................................... 532 592
Deferred tax liability..................................... 303 222
---------------------- ---------------------
Total Liabilities...................................... 23,777 13,920
---------------------- ---------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock............................................... 1,504 1,470
Additional paid-in capital................................. 48,631 47,210
Accumulated comprehensive income........................... 43 (45)
Retained earnings.......................................... 27,799 24,706
---------------------- ---------------------
Total Stockholders' Equity............................. 77,977 73,341
---------------------- ---------------------
Total Liabilities and Stockholders' Equity......... $ 101,754 $ 87,261
====================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
RWD TECHNOLOGIES, INC., AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) (In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
----------------------------------------- --------------------------------------
2000 1999 2000 1999
------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Revenue................................... $35,670 $29,096 $100,011 $94,775
Cost of services.......................... 26,296 23,278 75,917 69,059
------------------- ----------------- ----------------- -----------------
Gross profit............................ 9,374 5,818 24,094 25,716
Selling, general and administrative
expenses................................. 6,899 5,921 19,236 16,900
------------------- ----------------- ----------------- -----------------
Operating income (loss).................. 2,475 (103) 4,858 8,816
Other income, net......................... (82) 135 52 993
------------------- ----------------- ----------------- -----------------
Income before taxes..................... 2,393 32 4,910 9,809
Income tax provision...................... 885 12 1,817 3,678
------------------- ----------------- ----------------- -----------------
Net income.............................. $ 1,508 $ 20 $ 3,093 $ 6,131
=================== ================= ================= =================
Diluted earnings per share.............. $ 0.10 $ 0.00 $ 0.20 $ 0.39
=================== ================= ================= =================
Basic earnings per share................ $ 0.10 $ 0.00 $ 0.21 $ 0.41
=================== ================= ================= =================
Weighted average shares outstanding -
Diluted calculation.................... 15,706 15,156 15,457 15,620
------------------- ----------------- ----------------- -----------------
Basic calculation...................... 15,012 14,481 14,894 14,828
=================== ================= ================= =================
</TABLE>
See accompanying notes to consolidated financial statements.
2
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RWD TECHNOLOGIES, INC., AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited) (In thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
2000 1999
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................ $ 3,093 $ 6,131
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization...................... 4,789 3,264
Loss on sale of fixed assets....................... 2 6
Deferred income taxes.............................. -- (900)
Effect of changes in:
Contract accounts receivable..................... (6,560) (3,037)
Costs and earnings in excess of
billings on uncompleted contracts.............. (8,575) (3,254)
Prepaid expense and other........................ 1,130 304
Accounts payable and accrued expenses............ 6,729 3,916
Billings in excess of earnings on
uncompleted contracts.......................... (1,677) (926)
Other liabilities................................ (60) (242)
------------- -------------
Net cash from operating activities................. (1,129) 5,262
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases)/sale of investments, net............... (982) 10,955
Payments related to acquisition.................... (1,380) (15,377)
Purchase of fixed assets........................... (6,727) (4,513)
Payments for other assets.......................... (1,042) (825)
Proceeds from sale of fixed assets................. 54 39
------------- -------------
Net cash from investing activities................. (10,077) (9,721)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal portion paid on capital lease............ -- (32)
Borrowings under line of credit.................... 31,380 1,265
Payments under line of credit...................... (24,848)
Issuance of common stock........................... 946 1,045
Repurchase of common stock......................... -- (8,776)
------------- -------------
Net cash from financing activities................. 7,478 (6,498)
------------- -------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS.......................................... (3,728) (10,957)
Effect of exchange rate changes on cash................. 34 --
CASH AND CASH EQUIVALENTS, beginning of period.......... 3,760 13,328
------------- -------------
CASH AND CASH EQUIVALENTS, end of period................ $ 66 $ 2,371
============= =============
Supplemental Cash Flow Disclosures:
Income taxes paid.................................. $ 1,533 $ 5,511
============= =============
Interest expense paid.............................. $ 120 $ 2
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
RWD TECHNOLOGIES, INC., AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies:
Organization and Business
-------------------------
RWD Technologies, Inc., and subsidiaries (the ``Company'') was incorporated on
January 22, 1988, in the State of Maryland. The Company provides a broad range
of integrated solutions designed to improve the productivity and effectiveness
of workers in complex operating environments.
The Company's operations depend upon, among other things, the Company's
ability to attract, develop, and retain a sufficient number of highly skilled
professional employees. In addition, the Company's revenue is generated from a
limited number of clients in specific industries. Future operations may be
affected by its ability to retain these clients and cyclical and economic
factors that could have an impact on those industries.
Basis of Presentation
---------------------
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q.
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
adjustments considered necessary for a fair presentation, have been included.
These financial statements should be read in conjunction with the audited
consolidated financial statements of the Company for the fiscal year ended
December 31, 1999, included in the Company's Annual Report on Form 10-K.
In the first quarter of 2000 the Company changed the way it reports gross
profit margins. The Company previously included selling expenses with cost of
sales and has now included these expenses with selling, general and
administrative expenses. Historical bottom line results obviously do not change;
however, prior quarter comparisons are restated to reflect consistently this
change. The amounts for 1999 were reclassified to conform to the 2000 period
presentation.
Comprehensive Income
--------------------
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. The Company's comprehensive income for the periods
presented is listed below:
<TABLE>
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
(in thousands)
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Income as Reported $1,508 $ 20 $3,093 $6,131
Effect of Unrealized Gains/(Loss) on
Investments Available-for-Sale 14 (52) 54 (115)
Effect of Unrealized Gain on
Foreign Exchange 27 -- 34 --
------------- ------------- ------------- -------------
Comprehensive Net Income (Loss) 1,549 $ (32) $3,181 $6,016
============= ============= ============= =============
</TABLE>
4
<PAGE>
2. Business Segments:
The Company believes it has reportable operating segments, as defined by
Statement of Financial Accounting Standards No. 131. The Company has identified
three distinct operating segments: Latitude360; Enterprise Systems Group; and
Manufacturing Performance Group.
During the three months ended March 31, 2000, the Company changed its
reportable segments from Information Technology, Enterprise Resource Planning,
Lean Manufacturing Consulting, and Technology Performance Support; to
Latitude360, Enterprise Systems Group, and Manufacturing Performance Group. The
change was made to conform the Company's reporting to how it now manages its
business. As a result, the Company has restated the results of the three and
nine months ended September 30, 1999 segment reporting disclosure to conform to
its new segments.
The accounting policies for these segments are the same as those described in
the summary of significant accounting policies. Depreciation and amortization
expense is reported in each operating segment. However, the Company's tangible
assets are not managed as distinct asset groups. All tangible assets not
specifically identified to a segment are recorded at the corporate level with
depreciation expense allocated to operating segments based on headcount.
Interest expense, interest income, and income taxes are reported at the
corporate level only and are not disclosed below.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands)
2000 1999 2000 1999
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenue (all external):
Latitude360 $ 9,747 $ 9,478 $ 28,487 $31,141
Enterprise Systems Group 13,066 7,983 35,376 29,864
Manufacturing Performance Group 12,857 11,635 36,148 33,770
------------- ------------- -------------- -------------
Total Revenue $35,670 $29,096 $100,011 $94,775
============= ============= ============== =============
Gross Profit:
Latitude 360 $ 1,721 $ 1,330 $ 3,728 $ 8,844
Enterprise Systems Group 4,059 670 10,057 6,145
Manufacturing Performance Group 3,594 3,818 10,309 10,727
------------- ------------- -------------- -------------
Total Gross Profit $ 9,374 $ 5,818 $ 24,094 $25,716
============= ============= ============== =============
Depreciation and Amortization Expense Allocated To Segments
Latitude360 $ 467 $ 330 $ 1,374 $ 854
Enterprise Systems Group 399 301 1,109 883
Manufacturing Performance Group 268 210 710 596
------------- ------------- -------------- -------------
Total Allocated to Segments 1,134 841 3,193 2,333
Amount not Allocated to Segments 629 418 1,596 931
------------- ------------- -------------- -------------
Total Depreciation and Amortization Expense $ 1,763 $ 1,259 $ 4,789 $ 3,264
============= ============= ============== =============
Revenue (by geography)
United States $32,404 $26,035 $ 89,961 $85,902
Non-United States 3,266 3,061 10,050 8,873
------------- ------------- -------------- -------------
Total Revenue $35,670 $29,096 $100,011 $94,775
============= ============= ============== =============
</TABLE>
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Quarter Ended September 30, 2000, Compared to Quarter Ended September 30, 1999
Revenue. Revenue for the total Company increased by $6.6 million (or 22.6
percent), from $29.1 million for the quarter ending September 30, 1999, to $35.7
million for the quarter ending September 30, 1999. Operating segment information
is as follows:
. Latitude360. Revenue for the Company's Latitude360 group increased by $0.3
million (or 2.8 percent), from $9.5 million in the quarter ending September
30, 1999, to $9.7 million in the quarter ending September 30, 2000,
representing 32.6 percent of the Company's revenue in 1999 and 27.3 percent
of the Company's revenue in 2000. The Latitude360 group's revenue increased
moderately in the third quarter of 2000 over the same quarter in 1999. The
Company is investing significantly in its eSolutions and eLearning
capabilities as these types of services have significant future market
potential.
. Enterprise Systems. Revenue for the Company's Enterprise Systems group
increased by $5.1 million (or 63.7 percent), from $8.0 million in the quarter
ending September 30, 1999, to $13.1 million in the quarter ending September
30, 2000, representing 27.4 percent of the Company's revenue in 1999 and 36.6
percent of the Company's revenue in 2000. The Company's Enterprise Systems
business increased due to a strong ERP market and relationships with key ERP
related companies.
. Manufacturing Performance. Revenue for the Company's Manufacturing
Performance group increased by $1.2 million (or 10.5 percent), from $11.6
million in the quarter ending September 30, 1999, to $12.9 million in the
quarter ending September 30, 2000, representing 40.0 percent of the Company's
revenue in 1999 and 36.1 percent of the Company's revenue in 2000. This
increase in revenue was primarily attributable to work performed in the
current quarter under a significant contract with an important established
client.
Gross Profit. Gross profit for the total Company increased by $3.6 million
(or 61.1 percent), from $5.8 million in the quarter ending September 30, 1999,
to $9.4 million in the quarter ending September 30, 2000, and increased from
20.0 percent of revenue in 1999 to 26.3 percent of revenue in 2000. This
increase in gross profit as a percentage of revenue resulted primarily from
higher rates and a favorable mix of business. Gross profit for individual
operating segments were as follows:
. Latitude360. Gross profit for Latitude360 increased by 29.4 percent from $1.3
million in the quarter ending September 30, 1999, to $1.7 million in the
quarter ending September 30, 2000. Gross profit margin for Latitude360
increased from 14.0 percent of this segment's revenue in the third quarter of
1999 to 17.7 percent in 2000. This increase in gross profit margin resulted
primarily from higher workforce utilization.
. Enterprise Systems. Gross profit for Enterprise Systems increased by 505.4
percent from $0.7 million in the quarter ending September 30, 1999, to $4.1
million in the quarter ending September 30, 2000. Gross profit margin for
Enterprise Systems increased from 8.4 percent of this segment's revenue in
the third quarter of 1999 to 31.1 percent in 2000. This significant increase
in gross profit margin was due primarily to an increase in staff utilization
and higher billing rates.
6
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. Manufacturing Performance. Gross profit for Manufacturing Performance
decreased by 5.9 percent from $3.8 million in the quarter ending September
30, 1999, to $3.6 million in the quarter ending September 30, 2000. Gross
profit margin for Manufacturing Performance decreased from 32.8 percent of
this segment's revenue in the third quarter of 1999 to 28.0 percent in 2000.
This decrease in gross profit is primarily attributable to lower base rates
of a significant incentives-type contract in 2000 with a significant
established client.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $977,400 (or 16.5 percent), from $5.9
million in the third quarter of 1999 to $6.9 million in the third quarter of
2000, decreasing from 20.4 percent of revenue in 1999 to 19.3 percent of revenue
in 2000. This decrease in selling, general and administrative expenses as a
percentage of revenue resulted primarily from the significant increase in sales
from the low level of 1999 without a required proportionate increase in such
expenses.
Operating Income. As a result of the foregoing, the Company's operating
income increased by $2.6 million from an operating loss of $0.1 million in the
third quarter of 1999 to $2.5 million in the third quarter of 2000 and increased
from a negative 0.4 percent of revenue in the third quarter of 1999 to 6.9
percent of revenue in the third quarter of 2000.
Other Income. Other income was $135,000 in the third quarter of 1999 and a
loss of $82,000 in the third quarter of 2000. This income consisted primarily of
interest income from cash and investment balances partially offset by interest
expense from the Company's line of credit and capital leases.
Net Income. Net income increased by $1.5 million from $20,400 in the third
quarter of 1999 to $1.5 million in the third quarter of 2000, increasing from
0.1 percent of revenue in 1999 to 4.2 percent of revenue in 2000.
Nine Months Ended September 30, 2000, Compared to Nine Months Ended September
30, 1999
Revenue. Revenue for the total Company increased by $5.2 million (or 5.5
percent), from $94.8 million for the nine months ending September 30, 1999, to
$100.0 million for the nine months ending September 30, 2000. Operating segment
information is as follows:
. Latitude360. Revenue for Latitude360 decreased by $2.7 million (or 8.5
percent), from $31.1 million in the nine months ending September 30, 1999, to
$28.5 million in the nine months ending September 30, 2000, representing 32.9
percent of the Company's revenue in 1999 and 28.5 percent of the Company's
revenue in 2000. A key factor in the revenue decrease is a reduced demand for
the Company's traditional IT related services. The Company is aggressively
investing in the eSolutions and eLearning business sectors of the business to
further enhance its image in the marketplace and return to traditional
revenue and profit margin growth rates.
. Enterprise Systems. Revenue for the Company's Enterprise Systems Group
increased by $5.5 million (or 18.5 percent), from $29.9 million in the nine
months ending September 30, 1999, to $35.4 million in the nine months ending
September 30, 2000, representing 31.5 percent of the Company's revenue in
1999 and 35.4 percent of the Company's revenue in 2000. This growth was due
primarily to growth in the ERP related marketplace and increased revenue
resulting from the Company's relationships with key ERP related companies.
. Manufacturing Performance. Revenue for the Company's Manufacturing
Performance Group increased by $2.4 million (or 7.0 percent), from $33.8
million in the nine months ending September 30, 1999, to $36.1 million in the
nine months ending September 30, 2000, representing 35.6 percent of the
Company's revenue in 1999 and 36.1 percent of the Company's revenue in 2000.
This increase in
7
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revenue was primarily attributable to services provided under a significant
contract with an existing client, and overall increases in billing rates
charged to clients.
Gross Profit. Gross profit for the total Company decreased by $1.6 million
(or 6.3 percent), from $25.7 million in the nine months ending September 30,
1999, to $24.1 million in the nine months ending September 30, 2000, and
decreased from 27.1 percent of revenue in 1999 to 24.1 percent of revenue in
2000. Gross profit for individual operating segments were as follows:
. Latitude360. Gross profit for Latitude360 decreased by 57.8 percent from $8.8
million in the nine months ending September 30, 1999, to $3.7 million in the
nine months ending September 30, 2000. Gross profit margin for Latitude360
decreased from 28.4 percent of this segment's revenue in the first nine
months of 1999 to 13.1 percent in 2000. This decrease in gross profit margin
resulted primarily from decreases in staff utilization as demand for the
Company's traditional IT related services decreased.
. Enterprise Systems. Gross profit for Enterprise Systems increased by 63.7
percent from $6.1 million in the nine months ending September 30, 1999, to
$10.1 million in the nine months ending September 30, 2000. Gross profit
margin for Enterprise Systems increased from 20.6 percent of this segment's
revenue in the first nine months of 1999 to 28.4 percent in 2000. This
increase in gross profit margin was primarily attributed to higher billing
rates and increases in staff utilization reflecting the increase in business
level from the first nine months of 1999.
. Manufacturing Performance. Gross profit for Manufacturing Performance
decreased by 3.9 percent from $10.7 million in the nine months ending
September 30, 1999, to $10.3 million in the nine months ending September 30,
2000. Gross profit margin for Manufacturing Performance decreased from 31.8
percent of this segment's revenue in the first nine months of 1999 to 28.5
percent in 2000. This decrease in gross profit margin resulted primarily from
lower base billing rates on an incentives-type contract with a significant
automotive client.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $2.3 million (or 13.8 percent), from $16.9
million in the nine months ending September 30, 1999 to $19.2 million in the
same period of 2000, increasing from 17.8 percent of revenue in 1999 to 19.2
percent of revenue in 2000. This increase in selling, general and administrative
expenses as a percentage of revenue resulted primarily from increases in sales
and marketing expenses, depreciation on capital equipment, and legal and
accounting fees, partially offset by a decrease in facility rent expense as a
percentage of revenue.
Operating Income. As a result of the foregoing, the Company's operating
income decreased by $4.0 million (or 44.9 percent), from $8.8 million in the
nine months ending September 30, 1999 to $4.9 million in the same period of 2000
and decreased from 9.3 percent of revenue in the nine months ending September
30, 1999 to 4.9 percent of revenue in the same period of 2000.
Other Income. Other income was $993,000 for the nine months ending September
30, 1999 and $52,000 for the same period of 2000. This income consisted
primarily of interest income from cash and investment balances partially offset
by interest expense from the Company's line of credit and capital leases.
Net Income. Net income decreased by $3.0 million (or 49.5 percent), from $6.1
million in the nine months ending September 30, 1999 to $3.1 million in the same
period of 2000, decreasing from 6.5 percent of revenue in 1999 to 3.1 percent of
revenue in 2000.
8
<PAGE>
Liquidity and Capital Resources
The Company's cash and investments were $25.6 million at September 30, 2000,
compared to $28.2 million at December 31, 1999. The decrease in cash and
investments at September 30, 2000 was attributable to slower client invoicing as
a result of the Company's implementation of a new accounting system and the
greater working capital requirements of a higher level of business. The
Company's working capital was $48.5 million at September 30, 2000, and $47.1
million at December 31, 1999.
The Company's operating activities used cash of approximately $1.1 million for
the nine months ended September 30, 2000, compared to providing $5.3 million for
the same period in 1999. The cash used by operations in the first nine months of
2000 resulted primarily from a reduction in net income and increases in trade
accounts receivable and unbilled revenue, partially offset by an increase in
accounts payable.
Investing activities used cash of $10.1 million in the nine months ended
September 30, 2000, compared to $9.7 million for the same period in 1999. Cash
used for investing activities in the nine months ended September 30, 2000,
consisted primarily of the purchase of capital equipment, funded by use of the
Company's line of credit.
Financing activities provided cash of $7.5 million in the nine months ended
September 30, 2000, compared to the use of $6.5 million for the same period in
1999. Cash provided by financing activities in the nine months ended September
30, 2000 consisted of net borrowings under the Company's operating line of
credit and proceeds from the issuance of common stock due to the exercise of
employee stock options.
The Company has a $10.0 million unsecured revolving line of credit with a
commercial bank, which bears interest at the 30-day, LIBOR rate (6.6 percent on
September 30, 2000) plus 0.875 percent. The Company utilizes this line of credit
to finance a portion of its working capital needs. There was $6.5 million
outstanding on the line of credit as of September 30, 2000, and zero outstanding
on December 31, 1999.
During the nine months ending September 30, 2000, the Company made $8.4
million in capital expenditures, primarily for office furniture, computer and
office equipment, and leasehold improvements to support the growth in its
worldwide office structure. Capital expenditures currently are funded from
available cash, although the Company may consider alternative financing methods,
such as equipment leases or asset-based borrowings in future periods.
Effects of Inflation
Inflation has not had a significant effect on the Company's business during
the past three years. The Company cannot predict what effect, if any, inflation
may have on its future results of operations.
Forward Looking Statements
Certain statements contained herein, including statements regarding
development of the Company's services, markets, and future demands for the
Company's services, and other statements regarding matters that are not
historical facts, are forward-looking statements (as defined in the Private
Securities Litigation Reform Act of 1995). Such forward-looking statements
include risks and uncertainties; consequently, actual results may differ from
those expressed or implied thereby. Factors that could cause actual results to
differ materially are described in the Company's filings with the Securities and
Exchange Commission including its most recent Form 10-K, and include reliance on
strategic alliances, geographic expansion, slower growth in the Enterprise
Resource Planning industry, rapid change in the Information Technology sector,
customer and industry revenue concentration, attracting and retaining personnel,
increasing competition, and other factors such as the Company's ability to
effectively manage its growth, the inherent variability of its operating
results, various risks associated with the success and profitability of
individual projects, and its dependence on key personnel.
9
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
(b) Current Reports on Form 8-K
N/A
10
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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.
RWD TECHNOLOGIES, INC.
By:/s/ Robert T. O'Connell
---------------------------------------
Robert T. O'Connell
Senior Vice President, Chief Financial
Officer, and Director
Dated: November 13, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Capacity Date
---- -------- ----
<S> <C> <C>
/s/ Robert W. Deutsch Chairman of the Board, November 13, 2000
----------------------------- Chief Executive Officer, and Director
Robert W. Deutsch
/s/ Robert T. O'Connell Senior Vice President, Chief Financial Officer, November 13, 2000
----------------------------- and Director
Robert T. O'Connell
</TABLE>
11
