<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 June 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)
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<S> <C>
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)
</TABLE>
(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 June 30, 2000, 14,979,049 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
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<CAPTION>
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of June 30, 2000, 1
(Unaudited) and December 31, 1999
Consolidated Statements of Income for the Three Months and Six 2
Months ended June 30, 2000, and 1999 (Unaudited)
Consolidated Statements of Cash Flows for the Six Months ended 3
June 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 11
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
RWD TECHNOLOGIES, INC., AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
---------------------- ----------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and investments......................................... $ 24,722 $ 28,214
Contract accounts receivable, net............................ 24,999 21,731
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................... 18,419 7,232
Prepaid expenses and other................................... 1,651 1,257
Deferred tax asset........................................... -- 19
Income tax refund receivable................................. -- 1,692
----------- ----------
Total Current Assets..................................... 69,791 60,145
NET FIXED ASSETS.................................................. 16,489 11,464
GOODWILL, net..................................................... 13,602 13,421
OTHER ASSETS...................................................... 638 2,231
----------- ----------
Total Assets............................................. $ 100,520 $ 87,261
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses........................ $ 11,254 $ 8,024
Line of credit............................................... 4,762 --
Note payable................................................. -- 1,026
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................... 7,119 4,005
Deferred tax liability....................................... 264 --
Current portion of capital lease obligation.................. 19 25
----------- ----------
Total Current Liabilities................................ 23,418 13,080
NONCURRENT LIABILITIES:
Capital lease obligation, net of current portion............. 20 26
Other liabilities............................................ 532 592
Deferred tax liability....................................... 303 222
----------- ----------
Total Liabilities........................................ 24,273 13,920
----------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock................................................. 1,498 1,470
Additional paid-in capital................................... 48,456 47,210
Accumulated comprehensive income............................. 1 (45)
Retained earnings............................................ 26,292 24,706
----------- ----------
Total Stockholders' Equity............................... 76,247 73,341
----------- ----------
Total Liabilities and Stockholders' Equity........... $ 100,520 $ 87,261
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
1
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RWD TECHNOLOGIES, INC., AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) (In thousands, except per share data)
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<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------------------- -----------------------------------
2000 1999 2000 1999
------------------ ------------------ ----------------- ---------------
<S> <C> <C> <C> <C>
Revenue............................................. $ 33,527 $ 32,437 $ 64,341 $ 65,679
Cost of services.................................... 25,562 23,394 49,621 45,782
----------- ----------- ----------- -----------
Gross profit.................................... 7,965 9,043 14,720 19,897
General and administrative expenses................. 6,350 5,750 12,337 10,978
----------- ----------- ----------- -----------
Operating income.................................... 1,615 3,293 2,383 8,919
Other income, net................................... 46 397 134 857
----------- ----------- ----------- -----------
Income before taxes............................. 1,661 3,690 2,517 9,776
Income tax provision................................ 615 1,384 932 3,666
----------- ----------- ----------- -----------
Net income...................................... $ 1,046 $ 2,306 $ 1,585 $ 6,110
=========== =========== =========== ===========
Diluted earnings per share...................... $ 0.07 $ 0.15 $ 0.10 $ 0.39
=========== =========== =========== ===========
Basic earnings per share........................ $ 0.07 $ 0.15 $ 0.11 $ 0.41
=========== =========== =========== ===========
Weighted average shares outstanding -
Diluted calculation.......................... 15,260 15,783 15,332 15,851
=========== =========== =========== ===========
Basic calculation............................ 14,912 14,971 14,835 15,001
=========== =========== =========== ===========
</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>
Six Months Ended June 30,
2000 1999
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................. $ 1,585 $ 6,110
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................ 3,026 2,005
Loss on sale of fixed assets......................... 26 7
Deferred income taxes................................ -- (600)
Effect of changes in:
Contract accounts receivable...................... (3,350) (2,918)
Costs and earnings in excess of
billings on uncompleted contracts.............. (11,188) (1,078)
Prepaid expense and other......................... 1,501 (184)
Accounts payable and accrued expenses............. 3,839 2,240
Billings in excess of earnings on
uncompleted contracts.......................... 3,243 (759)
Other liabilities................................. (60) (242)
--------- ---------
Net cash from operating activities................... (1,378) 4,581
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases)/sale of investments, net................. (663) 9,426
Payments related to acquisition...................... (1,380) (15,342)
Purchase of fixed assets............................. (5,369) (3,056)
Payments for other assets............................ (1,070) (56)
Proceeds from sale of fixed assets................... 5 18
--------- ---------
Net cash from investing activities................... (8,477) (9,010)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal portion paid on capital lease.............. -- (31)
Borrowings under line of credit...................... 12,832 --
Payments under line of credit ..................... (8,070) --
Note payable......................................... -- 1,026
Issuance of common stock............................. 891 966
Repurchase of common stock........................... -- (8,776)
--------- ---------
Net cash from financing activities................... 5,653 (6,815)
--------- ---------
NET DECREASE IN CASH AND CASH
EQUIVALENTS............................................... (4,202) (11,244)
Effect of exchange rate changes on cash...................... 7 --
CASH AND CASH EQUIVALENTS, beginning of period............... 3,760 13,328
--------- ---------
CASH AND CASH EQUIVALENTS, end of period..................... $ (435) $ 2,084
========= =========
Supplemental Cash Flow Disclosures:
Income taxes paid.................................... $ 539 $ 5,167
========= =========
Interest expense paid................................ $ 33 $ 2
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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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 From 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:
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<CAPTION>
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ---------------------------
(in thousands)
2000 1999 2000 1999
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net Income as Reported $1,046 $2,306 $1,585 $6,110
Effect of Unrealized Gains/(Loss) on
Investments Available-for-Sale 16 (40) 39 (63)
Effect of Unrealized Gain on
Foreign Exchange (15) -- 7 --
-------- --------- --------- --------
Comprehensive Net Income $1,047 $2,266 $1,631 $6,047
======== ========= ========= ========
</TABLE>
4
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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 months
ended June 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 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 Six Months Ended
June 30, June 30,
(in thousands)
2000 1999 2000 1999
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue (all external):
Latitude360 $ 9,687 $11,480 $18,740 $21,662
Enterprise Systems Group 11,518 9,773 22,310 21,881
Manufacturing Performance Group 12,322 11,184 23,291 22,136
---------- ----------- ----------- ----------
Total Revenue $33,527 $32,437 $64,341 $65,679
========== =========== =========== ==========
Gross Profit:
Latitude360 $ 1,068 $ 4,023 $ 2,007 $ 7,515
Enterprise Systems Group 3,096 1,570 5,998 5,474
Manufacturing Performance Group 3,801 3,450 6,715 6,908
---------- ----------- ----------- ----------
Total Gross Profit $ 7,965 $ 9,043 $14,720 $19,897
========== =========== =========== ==========
Depreciation and Amortization Expense Allocated To Segments:
Latitude360 $ 461 $ 273 $ 906 $ 525
Enterprise Systems Group 371 295 710 582
Manufacturing Performance Group 245 199 442 385
---------- ----------- ----------- ----------
Total Allocated to Segments 1,077 767 2,058 1,492
Amount not Allocated to Segments 561 271 968 513
---------- ----------- ----------- ----------
Total Depreciation and Amortization Expense $ 1,638 $ 1,038 $ 3,026 $ 2,005
========== =========== =========== ==========
Revenue (by geography):
United States $30,301 $29,848 $57,557 $59,867
Non-United States 3,226 2,589 6,784 5,812
---------- ----------- ----------- ----------
Total Revenue $33,527 $32,437 $64,341 $65,679
========== =========== =========== ==========
</TABLE>
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Quarter Ended June 30, 2000, Compared to Quarter Ended June 30, 1999
Revenue. Revenue for the total Company increased by $1.1 million (or 3.4
percent), from $32.4 million for the quarter ending June 30, 1999, to $33.5
million for the quarter ending June 30, 2000. Operating segment information is
as follows:
. Latitude360. Revenue for the Company's Latitude360 group decreased by
$1.8 million (or 15.6 percent), from $11.5 million in the quarter
ending June 30, 1999, to $9.7 million in the quarter ending June 30,
2000, representing 35.4 percent of the Company's revenue in 1999 and
28.9 percent of the Company's revenue in 2000. The Latitude360 group's
revenue moderated in the second quarter of 2000 over the same quarter
in 1999 due primarily to reduced market demand for the Company's
traditional IT related services. The Company is investing significantly
in its e-solutions and e-learning capabilities as these types of
services have greater future market potential.
. Enterprise Systems. Revenue for the Company's Enterprise Systems group
increased by $1.7 million (or 17.9 percent), from $9.8 million in the
quarter ending June 30, 1999, to $11.5 million in the quarter ending
June 30, 2000, representing 30.1 percent of the Company's revenue in
1999 and 34.4 percent of the Company's revenue in 2000. The Company's
Enterprise Systems business increased due to a strong ERP market and
partnerships with key ERP related companies.
. Manufacturing Performance. Revenue for the Company's Manufacturing
Performance group increased by $1.1 million (or 10.2 percent), from
$11.2 million in the quarter ending June 30, 1999, to $12.3 million in
the quarter ending June 30, 2000, representing 34.5 percent of the
Company's revenue in 1999 and 36.7 percent of the Company's revenue in
2000. This increase in revenue was primarily attributable to a
significant contract award in the quarter with a significant
established client.
Gross Profit. Gross profit for the total Company decreased by $1.1 million
(or 11.9 percent), from $9.0 million in the quarter ending June 30, 1999, to
$8.0 million in the quarter ending June 30, 2000, and decreased from 27.9
percent of revenue in 1999 to 23.8 percent of revenue in 2000. This decrease in
gross profit as a percentage of revenue resulted primarily from decreases in
staff utilization in the Company's Latitude360 group (its IT related business),
and increases in other employee related expenses. Gross profit for individual
operating segments were as follows:
. Latitude360. Gross profit for Latitude360 decreased by 73.5 percent
from $4.0 million in the quarter ending June 30, 1999, to $1.1 million
in the quarter ending June 30, 2000. Gross profit margin for
Latitude360 decreased from 35.0 percent of this segment's revenue in
the second quarter of 1999 to 11.0 percent in 2000. This decrease in
gross profit margin resulted primarily from decreases in staff
utilization and reduced demand for the Company's traditional IT related
services.
. Enterprise Systems. Gross profit for Enterprise Systems increased by
97.2 percent from $1.6 million in the quarter ending June 30, 1999, to
$3.1 in the quarter ending June 30, 2000. Gross profit margin for
Enterprise Systems increased from 16.1 percent of this segment's
revenue in the second quarter of 1999 to 26.9 percent in 2000. This
significant increase in gross profit margin was due primarily to an
increase in staff utilization as a result of enhanced marketing efforts
and partnerships with key ERP related companies.
6
<PAGE>
. Manufacturing Performance. Gross profit for Manufacturing Performance
increased by 10.2 percent from $3.5 million in the quarter ending June
30, 1999, to $3.8 million in the quarter ending June 30, 2000. Gross
profit margin for Manufacturing Performance remained the same at 30.9
percent for each period. This increase in gross profit is primarily
attributable to a significant contract award in the current quarter
with a significant established client.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $600,500 (or 10.4 percent), from $5.7
million in the second quarter of 1999 to $6.4 million in the second quarter of
2000, increasing from 17.7 percent of revenue in 1999 to 18.9 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 employee related expenses.
Operating Income. As a result of the foregoing, the Company's operating
income decreased by $1.7 million (or 51.0 percent), from $3.3 million in the
second quarter of 1999 to $1.6 million in the second quarter of 2000 and
decreased from 10.2 percent of revenue in the second quarter of 1999 to 4.8
percent of revenue in the second quarter of 2000.
Other Income. Other income was $396,700 in the second quarter of 1999 and
$46,200 in the second quarter of 2000. In both periods, 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 $1.3 million (or 54.7 percent), from
$2.3 million in the second quarter of 1999 to $1.0 million in the second quarter
of 2000, decreasing from 7.1 percent of revenue in 1999 to 3.1 percent of
revenue in 2000.
Six Months Ended June 30, 2000, Compared to Six Months Ended June 30, 1999
Revenue. Revenue for the total Company decreased by $1.3 million (or 2.0
percent), from $65.7 million for the six months ending June 30, 1999, to $64.3
million for the six months ending June 30, 2000. Operating segment information
is as follows:
. Latitude360. Revenue for Latitude360 decreased by $2.9 million (or 13.5
percent), from $21.7 million in the six months ending June 30, 1999, to
$18.7 million in the six months ending June 30, 2000, representing 33.0
percent of the Company's revenue in 1999 and 29.1 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 this sector 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 $429,300 (or 2.0 percent), from $21.9 million in the six
months ending June 30, 1999, to $22.3 million in the six months ending
June 30, 2000, representing 33.3 percent of the Company's revenue in
1999 and 34.7 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 partnerships with key ERP related
companies.
. Manufacturing Performance. Revenue for the Company's Manufacturing
Performance Group increased by $1.2 million (or 5.2 percent), from
$22.1 million in the six months ending June 30, 1999, to $23.3 million
in the six months ending June 30, 2000, representing 33.7 percent of
the Company's revenue in 1999 and 36.2 percent of the Company's revenue
in 2000. This increase in revenue was primarily attributable to a
significant contract award with an existing client, and overall
increases in billing rates charged to clients.
7
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Gross Profit. Gross profit for the total Company decreased by $5.2 million
(or 26.0 percent), from $19.9 million in the six months ending June 30, 1999, to
$14.7 million in the six months ending June 30, 2000, and decreased from 30.3
percent of revenue in 1999 to 22.9 percent of revenue in 2000. Gross profit for
individual operating segments were as follows:
. Latitude360. Gross profit for Latitude360 decreased by 73.3 percent
from $7.5 million in the six months ending June 30, 1999, to $2.0
million in the six months ending June 30, 2000. Gross profit margin for
Latitude360 decreased from 34.7 percent of this segment's revenue in
the first six months of 1999 to 10.7 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
9.6 percent from $5.5 million in the six months ending June 30, 1999,
to $6.0 million in the six months ending June 30, 2000. Gross profit
margin for Enterprise Systems increased from 25.0 percent of this
segment's revenue in the first six months of 1999 to 26.9 percent in
2000. This increase in gross profit margin was primarily attributed to
increases in staff utilization from the increase in business level from
the first half of 1999.
. Manufacturing Performance. Gross profit for Manufacturing Performance
decreased by 2.8 percent from $6.9 million in the six months ending
June 30, 1999, to $6.7 million in the six months ending June 30, 2000.
Gross profit margin for Manufacturing Performance decreased from 31.2
percent of this segment's revenue in the first six months of 1999 to
28.8 percent in 2000. This decrease in gross profit margin resulted
primarily from a slow first quarter of 2000 as a result of a contract
deferral from a significant automotive client.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $1.4 million (or 12.4 percent), from $11.0
million in the six months ending June 30, 1999 to $12.3 million in the same
period of 2000, increasing from 16.7 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 decreases as a percentage of revenue in
facility rent expense.
Operating Income. As a result of the foregoing, the Company's operating
income decreased by $6.5 million (or 73.3 percent), from $8.9 million in the six
months ending June 30, 1999 to $2.4 million in the same period of 2000 and
decreased from 13.6 percent of revenue in the six months ending June 30, 1999 to
3.7 percent of revenue in the same period of 2000.
Other Income. Other income was $857,300 for the six months ending June 30,
1999 and $134,400 for the same period of 2000. In both periods, 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 $4.5 million (or 74.1 percent), from
$6.1 million in the six months ending June 30, 1999 to $1.6 million in the same
period of 2000, decreasing from 9.3 percent of revenue in 1999 to 2.5 percent of
revenue in 2000.
8
<PAGE>
Liquidity and Capital Resources
The Company's cash and investments were $24.7 million at June 30, 2000,
compared to $28.2 million at December 31, 1999. Decreases in cash and
investments at June 30, 2000 were attributable primarily to the continued
slowness of client invoicing as a result of the Company's implementation of a
new accounting system and the purchase of capital equipment. The Company's
working capital was $46.4 million at June 30, 2000, and $47.1 million at
December 31, 1999.
The Company's operating activities used cash of approximately $1.4 million
for the six months ended June 30, 2000, compared to providing $4.6 million for
the same period in 1999. The cash used by operations in the first six months of
2000 resulted primarily from a reduction in net income, increases in trade
accounts receivable and unbilled revenue.
Investing activities used cash of $8.5 million in the six months ended June
30, 2000, compared to $9.0 million for the same period in 1999. Cash used for
investing activities in the six months ended June 30, 2000, consisted primarily
of the purchase of capital equipment, funded by the sale of marketable
securities, and the final note payments for the purchase of Merrimac Interactive
Media Corporation.
Financing activities provided cash of $5.7 million in the six months ended
June 30, 2000, compared to the use of $6.8 million for the same period in 1999.
Cash provided by financing activities in the six months ended June 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
June 30, 2000) plus 0.875 percent. The Company utilizes this line of credit to
finance a portion of its working capital needs. There was $4.8 million
outstanding on the line of credit as of June 30, 2000, and zero outstanding on
December 31, 1999.
During the six months ending June 30, 2000, the Company made $7.1 million in
capital expenditures, primarily for office furniture, computer and office
equipment, and leasehold improvements to support the growth in its professional
and administrative staff. 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
9
<PAGE>
operating results, various risks associated with the success and profitability
of individual projects, and its dependence on key personnel.
10
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities.
(c) Issuance of Securities
N/A
Item 4. Submission of Matters to a Vote of Security Holders
(a) Proxies for the annual meeting were solicited pursuant to Regulation 14A
under the Securities and Exchange Act of 1934. There was no solicitation in
opposition to management's nominees as listed in the proxy statement, and all
such nominees were re-elected.
(b) The annual meeting of stockholders of the Company was held on April 28,
2000, and approved the following matters:
(c) (1) Election of Directors
The following director was elected to serve as a Class I director to
serve until the 2001 annual meeting of stockholders:
<TABLE>
<CAPTION>
Name For Withheld Against
---- --- -------- -------
<S> <C> <C> <C>
William M. Bambarger, Jr. 13,577,537 258,357 0
</TABLE>
The following directors were elected to serve as Class III directors to
serve until the 2003 annual meeting of stockholders:
<TABLE>
<CAPTION>
Name For Withheld Against
---- --- -------- -------
<S> <C> <C> <C>
James R. Kinney 13,577,537 258,357 0
Jerry P. Malec 13,577,537 258,357 0
Robert T. O'Connell 13,577,537 258,357 0
Jeffrey W. Wendel 13,577,537 258,357 0
</TABLE>
(2) The approval of the Company's amendment to the 1998 Omnibus Stock Incentive
Plan:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
10,755,092 1,161,058 5,345
</TABLE>
(3) The ratification of the appointment by the Board of Directors of Arthur
Andersen, LLP as auditors of the Company.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
13,829,124 5,291 1,479
</TABLE>
11
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4. Amended 1998 Omnibus Stock Incentive Plan
27. Financial Data Schedule
(b) Current Reports on Form 8-K
N/A
12
<PAGE>
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
Treasurer, and Director
Dated: August 11, 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, August 11, 2000
------------------------------------ Chief Executive Officer, and Director
Robert W. Deutsch
/s/ Robert T. O'Connell Senior Vice President, Chief Financial Officer, August 11, 2000
------------------------------------ Treasurer, and Director
Robert T. O'Connell
</TABLE>
13
