<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period Ended April 30, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period from ______________________ to
_________________________.
Commission file number 0-24201
---------------
Carreker-Antinori, Inc.
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(Exact name of registrant as specified in its charter)
DELAWARE 75-1622836
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
14001 N. Dallas Parkway, #1100
Dallas, Texas 75240-7304
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(Address of principal executive office) (Zip Code)
(972) 458-1981
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(Registrant's telephone number, including area code)
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(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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.01 Par Value -- 16,427,433 shares as of May 31, 1998.
<PAGE>
CARREKER-ANTINORI, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE
----
Item 1 Financial Statements
Condensed Consolidated Balance Sheets
at January 31, 1998 and April 30, 1998 3
Condensed Consolidated Statements of Operations
For the three months ended April 30, 1997
and April 30, 1998 4
Condensed Consolidated Statements of Cash Flows
For the three months ended April 30, 1997
and April 30, 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3 Quantitative and Qualitative Disclosures about Market Risk 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6 Exhibits and Reports on Form 8-K 13
SIGNATURES 13
2
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARREKER-ANTINORI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
April 30,
ASSETS January 31, 1998
1998 (Unaudited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,975 $ 1,019
Accounts receivable, net 12,755 14,092
Inventory 26 26
Income tax receivable 199 0
Prepaid expenses 646 615
Other assets -- 660
Deferred income taxes 546 477
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Total current assets 16,147 16,889
Furniture, equipment, and leasehold improvements, net 1,580 1,926
Software costs capitalized, net 2,263 2,547
Other assets 329 132
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Total assets $20,319 $21,494
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------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,036 $ 2,556
Accrued compensation and benefits 1,652 471
Other accrued expenses 849 998
Notes payable -- 1,769
Deferred revenue 4,176 3,810
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Total current liabilities 8,713 9,604
Deferred income taxes 982 847
Common Stock subject to put 2,000 2,000
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Total liabilities 11,695 12,451
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STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 2,000 shares
authorized, none issued -- --
Common Stock, $.01 par value, 100,000 shares
authorized, 12,007 and 11,922 shares issued,
respectively 120 120
Additional paid-in capital 2,078 2,078
Less treasury stock, at cost:
367 and 368 shares, respectively (510) (514)
Deferred compensation (754) (691)
Retained earnings 7,690 8,050
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Total stockholders' equity 8,624 9,043
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Total liabilities and stockholders' equity $20,319 $21,494
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------- -------
</TABLE>
See accompanying notes.
3
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CARREKER-ANTINORI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
Three Months Ended
April 30,
-------------------
1997 1998
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<S> <C> <C>
REVENUES:
Consulting and management service fees $ 4,139 $ 5,014
Software license fees 1,261 3,146
Software maintenance and implementation fees 1,793 1,859
Hardware sales 321 238
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Total revenues 7,514 10,257
COSTS OF REVENUES:
Consulting and management service fees 2,777 3,644
Software license fees 227 256
Software maintenance and implementation fees 1,051 949
Hardware sales 249 165
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Total cost of revenues 4,304 5,014
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Gross profit 3,210 5,243
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OPERATING COSTS AND EXPENSES:
Selling, general and administrative 2,442 3,500
Research and development 573 1,153
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Total operating costs and expenses 3,015 4,653
Income from operations 195 590
Other income (expense) 49 10
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Income before provisions for income taxes 244 600
Provision for income taxes 98 240
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Net income $ 146 $ 360
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------- -------
Basic earnings per share $ 0.01 $ 0.03
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------- -------
Diluted earnings per share $ 0.01 $ 0.03
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Shares used in computing basic earnings per share 11,242 11,495
Shares used in computing diluted earnings per share 12,725 13,502
</TABLE>
See accompanying notes.
4
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CARREKER-ANTINORI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
Three Months Ended
April 30,
--------------------
1997 1998
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<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 146 $ 360
Adjustments to reconcile net income to net
cash (used in) operating activities:
Amortization of capitalized software 154 134
Depreciation 100 282
Amortization of deferred compensation -- 63
Deferred income taxes 167 (66)
Changes in assets and liabilities:
Accounts receivable (2,573) (1,337)
Inventory (114) --
Prepaid expenses and other 159 (233)
Accounts payable and accrued expenses (1,010) (512)
Deferred revenue 567 (366)
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Net cash (used in) operating activities (2,404) (1,675)
INVESTING ACTIVITIES:
Purchase of furniture, equipment and leasehold
improvements (178) (628)
Capitalized software costs (463) (418)
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Net cash used in investing activities (641) (1,046)
FINANCING ACTIVITIES:
Purchase of treasury stock -- (4)
Proceeds from stock options exercised 159 --
Proceeds from borrowing -- 1,769
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Net cash provided by financing activities 159 1,765
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Net (decrease) in cash and cash equivalents (2,886) (956)
Cash and cash equivalents at beginning of period 3,443 1,975
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Cash and cash equivalents at end of period $ 557 $ 1,019
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------- -------
Supplemental cash flow information:
Cash paid for interest $ 4 $ 16
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------- -------
Cash paid for income taxes $ 164 $ 20
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------- -------
</TABLE>
See accompanying notes.
5
<PAGE>
CARREKER-ANTINORI, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PART I
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
reflect, in the opinion of management, all adjustments (consisting only of
normal, recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows of the Company. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to rules and regulations
promulgated by the Securities and Exchange Commission. These statements
should be read in conjunction with the audited financial statements and
notes thereto for the years ended January 31, 1996, 1997, and 1998 included
in the Company's Prospectus, dated May 20, 1998 on file with the
Commission. The results of operations for the interim periods shown herein
are not necessarily indicative of the results to be expected for any future
interim period or for the entire year.
The Company adopted Statement of Position No. 97-2, "Software Revenue
Recognition" (SOP 97-2) for all software license transactions entered into
by the Company subsequent to January 31, 1998. The adoption of SOP 97-2
did not have a material impact on the Company's revenues and earnings for
the three month period ended April 30, 1998.
2. EARNINGS PER SHARE
Basic earnings per share is computed by using the weighted average
number of shares of common stock outstanding during each period. Diluted
earnings per share is computed using the weighted average number of shares
of common stock outstanding during each period, and common equivalent
shares consisting of stock options (using the treasury stock method).
The following table sets forth the computation of basic and diluted
earnings per share for the three months ended April 30, 1997 and 1998 (in
thousands, except per share amounts):
<TABLE>
Three Months Ended
April 30,
--------------------
1997 1998
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<S> <C> <C>
Basic earnings per share:
Net income $ 146 $ 360
Weighted average shares outstanding 11,242 11,495
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Basic earnings per share $ .01 $ .03
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------- -------
Diluted earnings per share:
Net income $ 146 $ 360
Weighted average shares outstanding 11,242 11,495
Assumed conversion of employee stock options 1,483 2,007
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Shares used in diluted earnings per share
calculation 12,725 13,502
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Diluted earnings per share $ .01 $ .03
------- -------
------- -------
</TABLE>
6
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3. CREDIT ARRANGEMENTS
The Company has a revolving credit agreement ("the Revolving Credit
Agreement") with a bank which extends through July 1, 1998. The maximum
amount of borrowings allowed under the Revolving Credit Agreement at April
30, 1998 is $3.0 million against which $1,750,000 of borrowings were
outstanding as of April 30, 1998. Borrowings under the Revolving Credit
Agreement bear interest at the prime lending rate (8.5% at April 30, 1998).
4. MANAGEMENT SERVICES
During April 1998 the Company recognized as revenue from INFITEQ,
$368,000 for management services performed in prior periods.
5. SUBSEQUENT EVENTS
On May 19, 1998, the Commission declared effective the Company's
Registration Statement on Form S-1 to sell 5,100,000 defined in MD&A as
"IPO" shares of the Company's Common Stock through an initial public
offering (the Offering). Of the shares offered, 3,650,000 shares were
sold by the Company and 1,450,000 shares were sold by certain selling
stockholders. The shares were offered by an underwriting group managed
by BancAmerica Robertson Stephens, Hambrecht & Quist LLC, and Lehman
Brothers Inc. after giving affect to the deduction of underwriting
discounts but without giving effect to other anticipated offering
expenses, the Company generated net proceeds of approximately
$37,339,500 from the IPO, which it intends to use for working capital and
other general corporate purposes, as well as possible strategic alliances
and acquisitions.
Subsequent to January 31, 1998, the Company's Board of Directors and
Shareholders authorized the merger of Carreker-Antinori, a Texas
corporation ("Carreker-Antinori, Texas") into the Company. The merger
was effected through the conversion of each outstanding share of Class A
voting Common Stock of Carreker-Antinori, Texas into 7.7 shares of Common
Stock of the Company. Additionally, all options and rights to acquire
shares of Class A and Class B Common Stock of Carreker-Antinori, Texas
were converted into rights to acquire shares of Common Stock of the
Company on a basis consistent with the Common Stock conversion ratio.
The accompanying financial statements reflect the merger and resulting
change in capitalization as all share and per share amounts have been
retroactively restated to reflect the merger.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company, founded in 1978, is a leading provider of integrated
consulting and software solutions that enable banks to increase their
revenues, reduce their costs and enhance their delivery of customer
services. In February 1997, the Company acquired Antinori Software, Inc.,
and through that acquisition, the Company was able to significantly
enhance its portfolio of software products.
MARKETS: A substantial majority of the Company's revenues are
generated from contracts with Tier I Banks (bank holding companies with
assets over $50 billion) and Tier II Banks (bank holding companies and
independent banks with assets of between $5 billion and $50 billion).
The Company also targets smaller bank holding companies and independent
banks with assets of between $550 million and $5 billion.
SOURCE OF REVENUES: The Company derives its revenues from
consulting and management service fees, software license fees, software
maintenance and implementation fees and hardware sales. While many
customer contracts provide for both the performance of consulting
services and the license of related software, some customer contracts
require only the performance of consulting services, or only a software
license (and, at the election of the customer, related implementation
services
7
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and/or annual software maintenance services). The Company enters into
these contracts with its customers on a project-by-project basis. The
Company also derives management service fees from the performance of
comprehensive management services for the Electronic Check Clearing House
Organization ("ECCHO"), Payment Solutions Network, Inc. ("PSN"), and
INFITEQ, LLC. ("INFITEQ").
PRODUCTS AND SERVICES: The Company's services and technology
applications fall into five categories: 1) Yield Management Solutions -
designed to quickly increase a bank's revenues through improved
operational work-flows, pricing structures and liquidity and cash
management, 2) Payment Systems, and 3) Payment Electronification
Solutions - are both designed to reduce check-processing costs through
procedural and technological improvements and reduced check fraud and
other risks of loss, 4) Enabling Technologies Solutions - converting
leading-edge technologies and ideas into practical banking solutions, and
5) Management Services - providing management services for three banking
organizations - ECCHO, PSN, and INFITEQ. The Company's solutions are
sold individually, or complementary solutions may be sold together
(similarly, software products may be sold individually or as part of a
product suite).
PRICING METHODS AND REVENUE RECOGNITION: The Company employs
varying pricing methods for each of its four sources of revenue,
resulting in a number of different revenue recognition practices.
Consulting and management services are priced on (i) a time and materials
basis (revenue is recognized as the services are performed), (ii) a
fixed-price basis (revenue is recognized on a percentage-of-completion
basis) and (iii) on a value-priced basis. In the case of value-priced
contracts, the Company is paid, on an agreed upon basis with the
customer, either a specified percentage of the projected increased
revenues or decreased costs that are expected to be derived by the
customer over a period of up to twelve months following implementation of
the Company's solution, or the actual increased revenues and/or decreased
costs experienced by the customer over a period of up to twelve months
following implementation of the Company's solution, subject in either
case to a ceiling, if any is agreed to, on the total amount of payments
to be made to the Company. Revenues generated in connection with
value-priced contracts based upon projected results are recognized only
upon completion of all services and agreement upon the actual fee to be
paid (even though billings for such services may be delayed by mutual
agreement for periods generally not to exceed six months), and revenues
generated based upon actual revenues or savings to the customer are
recognized only upon the completion of all services and as the amounts of
actual revenues or savings are confirmed by the customer. Software
license fees are priced on a fixed-price basis (with revenue recognized
upon delivery, subject to certain conditions), on a value-priced basis
(with revenue recognized in a fashion similar to that for consulting and
management service fees) and in some cases on a per-transaction basis
(with the related revenue being recognized and due on a monthly basis).
Software maintenance and implementation fees are priced on a time and
materials basis or on a fixed-price basis, and the related revenues are
recognized on the basis consistent with that applied to consulting and
management service fees. Finally, hardware sales are priced on the basis
of the Company's cost plus a specified percentage, and related revenues
are recognized upon shipment of the hardware.
All statements other than statements of historical fact contained in
this report, including statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" concerning the
Company's financial position and liquidity, results of operations,
prospects for future growth, and other matters are forward-looking
statements. Although the Company believes that the expectations reflected
in such forward-looking statements are reasonable, no assurance can be
given that such expectations will prove correct. Factors that could
cause the Company's results to differ materially from the results
discussed in, or contemplated by, such forward-looking statements include
the risks described under "Risk Factors" in the Company's Prospectus
dated May 20, 1998 on file with the Commission. Such risks include,
without limitation, the risks associated with the Company's dependence on
the banking industry, fluctuations in quarterly operating results, the
Company's limited operating history as a combined company (with Antinori
Software, Inc.), customer concentration, customer project risks, the
Company's ability to manage growth, market acceptance of the
8
<PAGE>
Company's solutions, the absence of long-term agreements with customers,
the potential for software and/or solutions defects, competition within
the markets in which the Company competes, the Company's use of
independent contractors, the Company's dependence on key personnel, the
Company's ability to attract and retain qualified personnel, the impact
of technological advances on the Company's business, the Company's
dependence on proprietary technology and the risks associated with
infringement, Year 2000 issues, the potential for liability claims, the
risks associated with potential strategic alliances or acquisitions,
government regulation and the risks associated with international
operations. All forward-looking statements in this report are expressly
qualified in their entirety by the cautionary statements in this
paragraph, in "Risk Factors" (as set forth in the aforementioned
Prospectus) and elsewhere in this report.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, the
percentages 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>
Three Months Ended
April 30,
------------------
1997 1998
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<S> <C> <C>
Revenues:
Consulting and management service fees 55.1% 48.9%
Software license fees 16.8 30.7
Software maintenance and implementation fees 23.9 18.1
Hardware sales 4.3 2.3
----- -----
Total revenues 100.0 100.0
Costs of revenues:
Consulting and management service fees 37.0 35.5
Software license fees 3.0 2.5
Software maintenance and implementation fees 14.0 9.3
Hardware sales 3.3 1.6
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Total cost of revenues 57.3 48.9
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Gross profit 42.7 51.1
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Operating costs and expenses:
Selling general and administrative 32.5 34.1
Research and development 7.6 11.2
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Total operating costs and expenses 40.1 45.3
Income from operations 2.6 5.8
Other income (expense) .6 --
----- -----
Income before provisions for income taxes 3.2 5.8
Provision from income taxes 1.3 2.3
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Net income 1.9% 3.5%
----- -----
----- -----
</TABLE>
9
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REVENUES. The Company's total revenues increased 36.5% to $10.3
million for the three months ended April 30, 1998 from $7.5 million for
the three months ended April 30, 1997. The increase in revenue was
primarily attributable to growth in software license fees, which
increased 149.5% to $3.1 million for the three months ended April 30,
1998, from $1.3 million for the three months ended April 30, 1998.
Shipments of risk management software contributed to much of the
increase. Consulting and management service fees, which increased by
21.1% to $5.0 million for the three months ended April 30, 1998, from
$4.1 million for the three months ended April 30, 1997, primarily
reflected continued growth in demand for time and material consulting
engagements.
COST OF REVENUES. The Company's cost of revenues increased 16.5% to
$5.0 million for the three months ended April 30, 1998, from $4.3 million
for the three months ended April 30, 1997. The increase in cost of
revenues was primarily attributable to growth in consulting and
management service fees, which increased 31.2% to $3.6 million for the
three months ended April 30, 1998, from $2.8 million for the three months
ended April 30, 1997. Cost growth in this category was generated by
increases in personnel engaged in time and material and value priced
engagements. Cost of revenues as a percentage of revenues decreased 8.4%
to 48.9% for the three months ended April 30, 1998 from 57.3% for the
three months ended April 30, 1997. This decrease is primarily
attributable to the growth in software license fee revenue as a
percentage of total revenue, which has a relatively low cost compared to
other revenue categories. Software license fee revenue as a percentage
of total revenue increased to 30.7% for the three months ended April 30,
1998 from 16.8% for the three months ended April 30, 1997.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses generally consist of personnel costs associated
with selling, marketing, general management and software management, as
well as fees for professional services and other related costs. Selling,
general and administrative expenses increased 43.3% to $3.5 million for
the three months ended April 30, 1998, from $2.4 million for the three
months ended April 30, 1997. The increase in these expenses reflected
growth in additional management and marketing staff over the prior period
to support the Company's expanding operations. As a percentage of
revenues, selling, general and administrative expenses increased to 34.1%
for the three months ended April 30, 1998 from 32.5% for the three months
ended April 30, 1997.
RESEARCH AND DEVELOPMENT. Research and development expenses
generally consist of personnel and related costs of developing solutions.
Research and development expenses increased 101.2% to $1.2 million for
the three months ended April 30, 1998, from $570,000 for the three months
ended April 30, 1997. Increases in research and development expense
reflect a higher level of software development activity, as well as a
greater portion of total software development spending being expensed,
rather than capitalized.
OTHER INCOME (EXPENSE). Other income (expense) generally consists
of interest income and expense. Other income (expense) decreased 79.6%
to $10,000 for the three months ended April 30, 1998, from $49,000 for
the three months ended April 30, 1997. The decrease in other income
(expense) resulted from increased interest expense from short term
borrowings to fund working capital requirements.
PROVISION FOR INCOME TAXES. The income tax provision increased
144.9% to $240,000 for the three months ended April 30, 1998, from
$98,000 for the three months ended April 30, 1997. The provision for
income taxes is based on the estimated effective annual effective tax
rate, and includes federal and state income taxes. The Company's
effective income tax rate was 40% for the three months ended April 30,
1997 and 1998.
10
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LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 1998, the Company had $7.3 million of working
capital, including $1.0 million in cash and cash equivalents, as compared
to $7.4 million of working capital as of January 31,1998, including $2.0
million of cash and cash equivalents. Operating activities during this
period consumed $1.7 million of available cash largely through growth in
accounts receivable of $1.3 million, and through reductions of accounts
payable and accrued expenses of $500,000.
Accounts receivable net of allowances for doubtful accounts, increased
to $14.1 million at April 30, 1998, from $12.8 million at January 31,1998,
primarily due to the timing of closing sales transactions and extended
payment programs associated with some value priced engagements.
Average days' sales outstanding was 119 days for the twelve month
period ended April 30, 1998 as compared to 115 days for the twelve month
period ended January 31, 1998. Average days' sales outstanding can
fluctuate for a variety of reasons, including the timing of billings
specified by contractual agreement, and billings for related revenue
which may not yet be recognizable.
Cash used in investing activities during the period ended April 30,
1998, was $1.0 million and was used to purchase $600,000 of furniture,
equipment, and leasehold improvements related to growth in staff, and
$400,000 was invested in capitalized software.
Cash generated through financing activities for the period ended
April 30, 1998, was $1.8 and resulted from borrowings under the Company's
revolving credit facility.
The Company has a $3.0 million revolving credit facility (the
"Facility"). As of April 30, 1998, the Company had $1,750,000 outstanding
under the Facility. Principal amounts outstanding under the Facility bear
interest at national prime (8.5% at April 30, 1998). Availability under
the Facility is calculated based on 70% of qualified accounts receivable.
All indebtedness under the Facility matures July 1, 1998. The Company
has pledged its inventory accounts receivable and certain intangible
rights to secure indebtedness under the Facility. Under the Facility,
the Company is subject to certain covenants regarding its operations and
corporate actions. The Company has entered into discussions with the
bank to extend the Facility.
In May 1998 the Company completed the initial public offering of its
Common Stock (the "IPO"). After giving effect to the deduction of
underwriting discounts but without giving effect to other anticipated
offering expenses, the Company generated net proceeds of approximately
$37,339,500 from the IPO, which it intends to use for working capital and
other general corporate purposes. The Company may also use a portion of
the net proceeds for possible strategic alliances and acquisitions of
businesses, products and technologies that are complementary to those of
the Company. Pending such uses, the Company plans to invest the net
proceeds from the IPO in short-term, interest-bearing, investment-grade
securities. See also "Part II: Other Information, Item 2. Changes in
Securities and Use of Proceeds."
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("FASB 131"), which
supersedes existing accounting standards related to disclosure of
operating segment information beginning fiscal 1998. Although the
Company currently operates in only one industry segment, the Company is
in the process of evaluating the impact this new standard will have on
the Company's financial statement disclosures in fiscal 1998. The
adoption of FASB 131 will have no impact on the Company's consolidated
results of operations, financial position or cash flows and any effect
will be limited to the presentation of its Consolidated Financial
Statements.
11
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The Company has taken precautions to address the nature and extent
of the work required to make its products and systems Year 2000
compliant. The Company believes that its products are Year 2000
compliant, with the possible exception of certain software developed by a
third party and imbedded in one of the Company's products (the Company
will continue its efforts with respect to Year 2000 compliance for this
embedded software). The Company's Year 2000 compliance activities are
being performed as part of the Company's normal development activity.
The Company is evaluating the software employed in its internal
operations and does not believe it will incur any significant Year 2000
costs associated with its internal systems. As a consequence, Year 2000
compliance costs are not expected to result in any material incremental
costs to the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NONE
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Commission declared the Registration Statement on Form S-1 (File
No. 333-48399) relating to the Company's IPO effective on May 19, 1998.
The IPO is now complete. In the IPO, the Company issued and sold
3,650,000 shares of Common Stock for an aggregate price to the public of
$40,150,000 and certain Selling Stockholders sold 1,450,000 shares of
Common Stock for an aggregate price to the public of $15,950,000. The
IPO was a firm commitment underwriting, and the managing underwriters of
the IPO were BancAmerica Robertson Stephens, Hambrecht & Quist LLC and
Lehman Brothers, Inc. The underwriting discount incurred by the Company
relating to the IPO was $2,810,500. The IPO generated net offering
proceeds, after giving effect to the payment of the underwriting discount
but without giving effect to other expenses associated with the offering,
of $37,339,500. Inasmuch as the IPO was completed subsequent to the
ending date of this reporting period, none of the offering proceeds had
yet been applied.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
The Company notes several minor corrections to figures included in
its Prospectus dated May 20, 1998 on file with the Commission. Under
"Management's Discussion and Analysis of Financial Condition and Results
of Operations - Results of Operations - Year Ended January 31, 1997
(Fiscal 1996) Compared to Year Ended January 31, 1998 (Fiscal 1997) -
Revenues," the increase in software license revenue growth in fiscal 1997
over fiscal 1996 was partially attributable to increased sales of the
Company's ReserveLink product of $1.0 million, rather than $1.5 million.
Total ReserveLink license fees accounted for 36.5%, rather than 28.1%, of
software license revenue in fiscal 1996. Increased ReserveLink products
sales contributed to increased software implementation fees in the amount
of $463,000, rather than $860,000, and increased software maintenance
fees in the amount of $322,000, rather than $340,000, in fiscal 1997. In
addition, under "-Year Ended January 31, 1996 (Fiscal 1995) Compared to
Year Ended January 31, 1997 (Fiscal 1996) -Revenues," growth in software
license revenues attributable to the successful rollout of the
ReserveLink
12
<PAGE>
product amounted to approximately $2.3 million, rather than $2.2 million.
Finally, the increase in software maintenance and implementation
revenues in fiscal 1996 over fiscal 1995 was due to $1.0 million, rather
than $580,000, of increased ReserveLink sales.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The Company entered into various agreements during the three-
month period ended April 30, 1998, but before the Company became a
reporting Company under the Securities Exchange Act of 1934. All of
such agreements were filed with the Company's Registration Statement
on Form S-1 (File No. 333-48399) and are hereby incorporated by
reference.
Number Exhibit Description
------ -------------------
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CARREKER-ANTINORI, INC.
By: /s/ John D. Carreker, Jr. Date: July 2, 1998
-------------------------------- -----------------
John D. Carreker, Jr.
Chairman of the Board and
Chief Executive Officer
By: /s/ Terry L. Gage Date: July 2, 1998
-------------------------------- -----------------
Terry L. Gage
Executive Vice President and
Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CARREKER-ANTINORI, INC.'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE MONTHS ENDED APRIL 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 1,019
<SECURITIES> 0
<RECEIVABLES> 14,659
<ALLOWANCES> 567
<INVENTORY> 26
<CURRENT-ASSETS> 16,889
<PP&E> 3,698
<DEPRECIATION> 1,772
<TOTAL-ASSETS> 21,494
<CURRENT-LIABILITIES> 9,604
<BONDS> 0
0
0
<COMMON> 120
<OTHER-SE> 8,923
<TOTAL-LIABILITY-AND-EQUITY> 21,494
<SALES> 10,257
<TOTAL-REVENUES> 10,257
<CGS> 5,014
<TOTAL-COSTS> 5,014
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 51
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<INCOME-PRETAX> 600
<INCOME-TAX> 240
<INCOME-CONTINUING> 360
<DISCONTINUED> 0
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<CHANGES> 0
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<EPS-PRIMARY> .03
<EPS-DILUTED> .03
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