<PAGE> 1
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 QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
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 0-4096
-----------------------------
COMSHARE, INCORPORATED
(Exact name of registrant as specified in its charter)
MICHIGAN 38-1804887
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 994-4800
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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of MARCH 31, 1997.
OUTSTANDING AT
CLASS OF COMMON STOCK MARCH 31, 1997
--------------------- ----------------
$1.00 PAR VALUE 9,816,310 SHARES
<PAGE> 2
COMSHARE, INCORPORATED
INDEX
Page No.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet as of
March 31, 1997 and June 30, 1996...............................3
Condensed Consolidated Statement of Operations for the
Three and Nine Months Ended March 31, 1997 and 1996............5
Condensed Consolidated Statement of Cash Flows for the
Nine Months Ended March 31, 1997 and 1996......................6
Notes to Condensed Consolidated Financial Statements..............7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...........................9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK ...........................................14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...........................................14
ITEM 2. CHANGES IN SECURITIES.......................................14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................14
SIGNATURE............................................................15
INDEX TO EXHIBITS....................................................16
2
<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
COMSHARE, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
---- ----
ASSETS (unaudited) (audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 12,030 $ 27,468
Accounts receivable, net 28,721 34,853
Prepaid expenses and other current assets 6,986 6,491
-------- --------
Total current assets 47,737 68,812
PROPERTY AND EQUIPMENT, at cost 21,536 27,945
Less - accumulated depreciation 16,341 23,426
-------- --------
Property and equipment, net 5,195 4,519
COMPUTER SOFTWARE, net 9,176 9,064
GOODWILL, net 1,700 1,947
DEFERRED INCOME TAXES 13,740 7,940
OTHER ASSETS 5,882 5,956
-------- --------
$ 83,430 $ 98,238
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
COMSHARE, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
--------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) (audited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 14,896 $ 17,934
Accrued liabilities 8,223 7,956
Current portion of long-term debt 2,574 -
Deferred revenue 19,660 18,364
-------- --------
Total current liabilities 45,353 44,254
LONG-TERM DEBT - 1,913
OTHER LIABILITIES 3,381 3,407
SHAREHOLDERS' EQUITY
Capital stock:
Preferred stock, no par value;
authorized 5,000,000 shares; none issued - -
Common stock, $1.00 par value;
authorized 20,000,000 shares; outstanding
9,816,310 shares as of March 31, 1997
and 9,691,443 shares as of June 30, 1996 9,816 9,691
Capital contributed in excess of par 39,048 38,132
Retained earnings (deficit) (9,804) 5,239
Currency translation adjustments (3,519) (3,586)
-------- --------
35,541 49,476
Less - Notes receivable 845 812
-------- --------
Total shareholders' equity 34,696 48,664
-------- --------
$ 83,430 $ 98,238
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
COMSHARE, INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited; in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------ -----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<C> <C> <C> <C> <C>
REVENUE
Software licenses $ 9,596 $ 15,586 $ 27,868 $ 46,740
Software maintenance 9,178 9,232 27,285 27,494
Implementation, consulting
and other services 5,271 6,716 15,071 18,136
-------- -------- -------- --------
TOTAL REVENUE 24,045 31,534 70,224 92,370
COSTS AND EXPENSES
Selling and marketing 13,221 13,144 41,363 38,205
Cost of revenue and support 8,140 8,045 23,138 22,533
Internal research and product development 3,385 4,302 12,084 12,388
Internally capitalized software (1,818) (1,130) (5,018) (4,564)
Software amortization 1,848 1,191 5,156 4,934
General and administrative 3,222 3,223 9,337 9,299
Unusual charge - - - 23,167
Restructuring related costs 6,245 - 6,245 -
-------- -------- -------- --------
TOTAL COSTS AND EXPENSES 34,243 28,775 92,305 105,962
-------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS (10,198) 2,759 (22,081) (13,592)
OTHER INCOME (EXPENSE)
Interest income 64 265 377 178
Exchange gain (loss) (77) 31 (321) (81)
-------- ------- -------- --------
TOTAL OTHER INCOME (EXPENSE) (13) 296 56 97
INCOME (LOSS) BEFORE TAXES (10,211) 3,055 (22,025) (13,495)
Provision (benefit) for income taxes (3,288) 1,017 (7,409) (4,179)
-------- -------- -------- --------
NET INCOME (LOSS) $ (6,923) $ 2,038 $(14,616) $ (9,316)
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
AND DILUTIVE COMMON EQUIVALENT SHARES 9,796 10,109 9,747 8,843
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE $ (0.71) $ 0.20 $ (1.50) $ (1.05)
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
COMSHARE, INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited; in thousands)
Nine Months Ended
March 31,
--------------------
1997 1996
--------- ---------
OPERATING ACTIVITIES
Net loss $ (14,616) $ (9,316)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization 6,964 6,406
Loss on sales of property and equipment 99 -
Write-off of capitalized software - 23,167
Restructuring related costs 1,317 -
Changes in operating assets and liabilities:
Accounts receivable 6,225 (9,723)
Prepaid expenses and other assets 921 (812)
Accounts payable (3,424) 4,313
Accrued liabilities 370 1,423
Deferred revenue 1,175 687
Deferred income taxes (7,255) (6,613)
Other liabilities (90) 459
---------- --------
Net cash provided by (used in)
operating activities (8,314) 9,991
INVESTING ACTIVITIES
Additions to computer software (5,120) (4,756)
Payments for property and equipment (2,591) (2,075)
Other (773) (751)
---------- --------
Net cash used in investing activities (8,484) (7,582)
FINANCING ACTIVITIES
Net borrowings under notes payable 2,485 428
Repayments under long-term debt (1,911) (3,180)
Stock options exercised 559 414
Issuance of common stock - 25,196
Other 23 340
---------- --------
Net cash provided by financing activities 1,156 23,198
EFFECT OF EXCHANGE RATE CHANGES 204 14
---------- --------
NET INCREASE (DECREASE) IN CASH (15,438) 25,621
BALANCE AT BEGINNING OF PERIOD 27,468 1,398
---------- --------
BALANCE AT END OF PERIOD $12,030 $27,019
========== ========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 133 $ 340
========== ========
Cash paid for income taxes $ 549 $ 1,295
========== ========
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
COMSHARE, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - GENERAL INFORMATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. 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 such rules and regulations. It is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's latest annual
report on Form 10-K.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring items, required to present fairly its consolidated balance
sheet as of March 31, 1997, the consolidated statement of operations for the
three and nine months ended March 31, 1997 and 1996 and the consolidated
statement of cash flows for the nine months ended March 31, 1997 and 1996.
The results of operations for the three and nine months ended March 31,
1997 and 1996 are not necessarily indicative of the results to be expected in
future quarters or the full fiscal year. The software industry is generally
characterized by seasonal trends.
NOTE B - COMPUTER SOFTWARE
The costs of developing and purchasing new software products and
enhancements to existing software products are capitalized after technological
feasibility and realizability are established. The establishment of
technological feasibility and the ongoing assessment of the recoverability of
these costs require considerable judgment by management with respect to certain
external factors, including, but not limited to, anticipated gross product
revenue, estimated economic product lives and changes in software and hardware
technology. Capitalized development costs are currently amortized using the
straight-line method over a two-year service life. On an ongoing basis,
management reviews the valuation and amortization of capitalized development
costs. As part of this review, the Company considers the value of future cash
flows attributable to the capitalized development costs in evaluating potential
impairment of the asset.
NOTE C - BORROWINGS
The Company's $10 million domestic unsecured credit agreement as amended
has permitted borrowings based on a percentage of worldwide eligible accounts
receivable and cash balances in excess of $2.5 million above outstanding debt.
At March 31, 1997, the permitted borrowings available under this credit
agreement were $7.0 million, of which no borrowings were outstanding.
NOTE D - FINANCIAL INSTRUMENTS
The Company at various times enters into forward exchange contracts to
hedge certain exposures related to identifiable foreign currency transactions
that are relatively certain as to both timing and amount. Gains and losses on
the forward contracts are recognized concurrently with the gains and losses
from the underlying transactions. The forward exchange contracts used are
classified as "held for purposes other than trading." The Company does not use
any other types of derivative financial instruments to hedge such exposures,
nor does it use derivatives for speculative purposes. At March 31, 1997 and
June 30, 1996, the Company had forward foreign currency exchange contracts of
7
<PAGE> 8
COMSHARE, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
approximately $9.3 million and $5.7 million (notional amounts), respectively,
denominated in foreign currencies. The contracts outstanding at March 31, 1997
mature at various dates through May 16, 1997, and are intended to hedge various
foreign currency commitments due from foreign subsidiaries and the Company's
agents and distributors. Due to the short term nature of these financial
instruments, the fair value of these contracts is not materially different than
their notional amount at March 31, 1997 and June 30, 1996.
NOTE E - RESTRUCTURING CHARGE
During the quarter ended March 31, 1997, the Company recorded a $6.2
million pre-tax restructuring charge for management actions or plans in
connection with the consolidation of the Company's product development
activities in Ann Arbor, Michigan and reductions in staff and non-revenue
generating costs. The restructuring charge includes staff reductions of
approximately 70 employees. These cost reduction actions are expected to save
approximately $7.0 million annually. At March 31, 1997, $2.7 million remains
to be paid for termination of employment and contractual obligations related to
these restructuring actions taken during this quarter.
The foregoing statements regarding the Company's expected cost savings
from cost reduction actions contain "forward looking statements" within the
meaning of the Securities Exchange Act of 1934. Actual results could differ
materially from those in the forward looking statements due to a number of
uncertainties, including, but not limited to, those described under Item 2
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Safe Harbor Statement".
NOTE F - LITIGATION
The Company and Arbor Software Corporation ("Arbor") disagree about
certain definitions in the license agreement between the two parties related to
the calculation of royalties. Comshare and Arbor were in the process of
defining the procedure and legal and accounting issues to be resolved through
arbitration, when on September 27, 1996, Arbor filed a lawsuit against Comshare
alleging breach of contract and fraud relating to royalty calculations.
Arbor's suit principally seeks monetary damages. On October 21, 1996, Comshare
filed a denial of all of Arbor's claims and filed a counterclaim against Arbor
for defamation, unfair competition, interference with economic relationships
and breach of contract. The litigation is in its early stages, therefore the
Company does not possess sufficient information to reasonably estimate the
potential liability, if any. Management is contesting the Arbor suit
vigorously.
NOTE G - FINANCIAL ACCOUNTING STANDARDS
During 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earning per
Share", which changes the calculation of earnings per share to be more
consistent with countries outside of United States. In general, the statement
requires two calculations of earnings per share to be disclosed, basic EPS and
diluted EPS. Basic EPS is to be computed using only weighted average shares
outstanding. Diluted EPS is to be computed using the average share price for
the period when calculating the dilution of options and warrants. This
statement must be adopted by the Company in its December 31, 1997 consolidated
financial statements and early adoption is not permitted. There would have
been no material impact on the periods presented if this statement had been
adopted for the current reporting period.
8
<PAGE> 9
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis sets forth information for the three
and nine months ended March 31, 1997 compared to the three and nine months
ended March 31, 1996. This information should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain financial
data as a percentage of total revenue.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------ ------------------------------------------------
1997 1996 1997 1996
----- -------- ------------- -------------
<C> <C> <C> <C> <C>
REVENUE
Software licenses 39.9 % 49.4 % 39.7 % 50.6 %
Software maintenance 38.2 29.3 38.9 29.8
Implementation and consulting services 21.9 21.3 21.4 19.6
--------- -------- ---------- ----------
Total revenue 100.0 100.0 100.0 100.0
COSTS AND EXPENSES
Selling and marketing 55.0 41.7 58.9 41.3
Cost of revenue and support 33.8 25.5 32.9 24.4
Internal research and product development 14.1 13.6 17.2 13.4
Internally capitalized software (7.6) (3.6) (7.1) (4.9)
Software amortization 7.7 3.8 7.3 5.3
General and administrative 13.4 10.2 13.3 10.1
Unusual charge - - - 25.1
Restructuring related costs 26.0 - 8.9 -
--------- -------- ---------- ----------
Total costs and expenses 142.4 91.2 131.4 114.7
INCOME (LOSS) FROM OPERATIONS (42.4) 8.8 (31.4) (14.7)
OTHER INCOME (EXPENSE)
Interest income 0.3 0.8 0.5 0.2
Exchange gain (loss) (0.3) 0.1 (0.4) (0.1)
--------- -------- ---------- ----------
Total other income (expense) 0.0 0.9 0.1 0.1
INCOME (LOSS) BEFORE INCOME TAXES (42.4) 9.7 (31.3) (14.6)
Provision (benefit) for income taxes (13.7) 3.2 (10.6) (4.5)
--------- -------- ---------- ----------
NET INCOME (LOSS) (28.7) % 6.5 % (20.7) % (10.1) %
========= ======== ========== ==========
</TABLE>
9
<PAGE> 10
REVENUE
<TABLE>
<CAPTION>
Three Months Ended Percent Nine Months Ended Percent
March 31, Change March 31, Change
---------------------- ------------ ------------------------ ------------
1997 1996 1997 1996
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Software licenses $9,596 $15,586 (38.4) % $27,868 $ 46,740 (40.4) %
Software maintenance 9,178 9,232 (0.6) 27,285 27,494 (0.8)
Implementation and consulting services 5,271 6,716 (21.5) 15,071 18,136 (16.9)
---------- ---------- -------- --------
TOTAL REVENUE $24,045 $31,534 (23.7) % $ 70,224 $ 92,370 (24.0) %
========== ========== ========= ========
</TABLE>
Total revenue decreased 23.7% and 24.0% in the three and nine months ended
March 31, 1997 compared to the prior year primarily due to the decrease in
software licenses revenue. The decline in license fee revenue in the three and
nine months ended March 31, 1997 was primarily due to transitional changes in
the Company's sales organization, and the loss of sales momentum and turnover in
the European sales force mainly as a result of the Company's investigation into
violations of the Company's revenue recognition policies.
Software maintenance revenue was flat in the three and nine months ended
March 31, 1997 compared to the same period last year. Client/server software
maintenance revenue in the three and nine months ended March 31, 1997
represented 77% and 75% of total software maintenance revenue and grew 8.8% and
11.1% compared with the prior year. Mainframe software maintenance revenue
decreased 22.9% and 25% in the three and nine months ended March 31, 1997
compared to last year primarily due to mainframe maintenance cancellations and
continued migration to client/server platforms. Mainframe software maintenance
revenue is expected to continue to decline.
Implementation, consulting and other service revenue decreased 21.5% and
16.9% in the three and nine months ended March 31, 1997 compared to last year
primarily due to the decreased demand for such services resulting from the
decline in software license revenue and to the sale of the Company's Australian
business to an agent.
10
<PAGE> 11
COSTS AND EXPENSES
<TABLE>
<CAPTION>
Three Months Ended Percent Nine Months Ended Percent
March 31, Change March 31, Change
--------------------- ---------- ---------------------- --------
1997 1996 1997 1996
-------- --------- -------- -----
<C> <C> <C> <C> <C> <C> <C>
COST AND EXPENSES
Selling and marketing $13,221 $13,144 0.6 % $41,363 $38,205 8.3 %
Cost of revenue and support 8,140 8,045 1.2 23,138 22,533 2.7
Internal research and product development 3,385 4,302 (21.3) 12,084 12,388 (2.5)
Internally capitalized software (1,818) (1,130) 60.9 (5,018) (4,564) 9.9
Software amortization 1,848 1,191 55.2 5,156 4,934 4.5
General and administrative 3,222 3,223 - 9,337 9,299 0.4
------- --------- -------- -------
Total costs and expenses before unusual
charge and restructuring related costs 27,998 28,775 (2.7) 86,060 82,795 3.9
Unusual charge - - * - 23,167 *
Restructuring related costs 6,245 - * 6,245 - *
------- --------- -------- --------
TOTAL COSTS AND EXPENSES $34,243 $28,775 19.0 % $92,305 $105,962 (12.9) %
======= ========= ======== ========
</TABLE>
* % not meaningful.
Selling and marketing expense increased slightly in the three months ended
March 31, 1997 compared to the prior year mainly due to increased spending on
marketing activities to promote the Company's new applications, offset by the
cost reduction actions taken early in the current quarter and decreased
commissions on lower software license revenue. Selling and marketing expense
increased 8.3% in the nine months ended March 31, 1997 compared to the same
period last year primarily due to increased spending on marketing activities to
launch the Company's new applications.
Cost of revenue and support increased 1.2% and 2.7% in the three and nine
months ended March 31, 1997 compared to the prior year principally due to
increased third party royalties on client server maintenance revenue.
Internal research and product development expense decreased 21.3% and 2.5%
in the three and nine months ended March 31, 1997 compared to last year mainly
due to the cost reduction actions taken early in the current quarter in
connection with the consolidation of the Company's product development
activities in Ann Arbor, Michigan and reductions in staff.
Internally capitalized software increased in the three and nine months
ended March 31, 1997 compared to the prior year mainly due to the increased
levels of development costs that were capitalizable. Software amortization
expense increased in the three and nine months ended March 31, 1997 primarily
due to the increased levels of capitalized software.
During the third quarter ended March 31, 1997, the Company recorded a $6.2
million restructuring charge for management actions or plans in connection with
the consolidation of the Company's product development activities in Ann Arbor,
Michigan and reductions in staff and non-revenue generating costs. The
restructuring had a $4.2 million negative after tax impact on net income. The
restructuring charge includes staff reductions of approximately 70 employees.
These cost reduction actions are expected to save approximately $7.0 million
annually. At March 31, 1997, $2.7 million remains to be paid for termination
of employment and contractual obligations related to these restructuring
actions taken during this quarter.
11
<PAGE> 12
During the second quarter ended December 31, 1995, the Company recorded a
$23.2 million non-cash charge to write off certain capitalized software. The
write-off had a $15.5 negative after tax impact on net income. The write-off
was the result of strong customer interest in the Company's product, Commander
Decision, for customizable decision support applications, which substantially
reduced the realizable value of the Company's older desktop products. The
write-off also reflected the reduction of the estimated useful service life of
the Company's products and the amortization period of its capitalized software
costs, prompted by the Company's acceleration of its product development cycles
in response to changes in the technological environment in the decision support
applications market.
NON-OPERATING INCOME AND EXPENSE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------------- ---------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
OTHER INCOME (EXPENSE)
Interest income $ 64 $ 265 $ 377 $ 178
Exchange gain (loss) (77) 31 (321) (81)
----- ----- ----- -----
TOTAL OTHER INCOME (EXPENSE) $ (13) $ 296 $ 56 $ 97
===== ===== ===== =====
</TABLE>
Interest income declined in the three months ended March 31, 1997
primarily due to lower cash levels as a result of cash used in operating and
investment activities. Interest income increased in the nine months ended
March 31, 1997 principally due to investment of the net proceeds received from
the public offering of the Company's common stock in the quarter ended December
31, 1995. The foreign exchange loss principally reflects the strengthening of
the British pound against other foreign currencies during the nine months ended
March 31, 1997.
PROVISION (BENEFIT) FOR INCOME TAXES
The effective income tax rate in the three and nine months ended March 31,
1997 was 32% and 34%, compared with 33% and 31% for the same periods a year
ago. The lower effective tax rate for the current quarter was primarily the
result of not recognizing state tax benefits on the net loss from operations.
The lower tax rate on the net loss before taxes for the nine months ended March
31, 1996 was primarily due to the lower tax benefits from the software
write-off. The net tax assets remaining at March 31, 1997 are projected by the
Company to be utilized, primarily through income from future operations, before
expiration.
FOREIGN CURRENCY
In the three and nine months ended March 31, 1997, 44% and 48% of the
Company's total revenue was from outside North America compared with 54% in the
three and nine months ended March 31, 1996. Most of the Company's
international revenue is denominated in foreign currencies. The Company
recognizes currency transaction gains and losses in the period of occurrence.
As currency rates are constantly changing, these gains and losses can, at
times, fluctuate greatly.
During the three and nine months ended March 31, 1997 foreign currency
fluctuations on revenue denominated in a foreign currency were offset by
currency fluctuations on expenses denominated in a foreign currency. For the
three months ended March 31, 1997 the decrease in total revenue, at actual
exchange rates, was $460,000 less than at comparable exchange rates. The
increase in total expenses, at actual exchange rates, was $377,000 more than at
comparable exchange rates. As a result of the changes in the foreign currency
exchange rates, the increase in net loss before taxes, at actual exchange
rates, was $83,000 less than at comparable exchange rates. For the nine
months ended March 31, 1997 the decrease in total revenue, at actual exchange
rates, was $1,030,000 less than at comparable
12
<PAGE> 13
exchange rates. The decrease in total expenses, at actual exchange rates, was
$375,000 less than at comparable exchange rates. As a result of the changes in
the foreign currency exchange rates, the increase in the net loss before taxes,
at actual exchange rates, was $655,000 less than at comparable exchange rates.
The Company had several forward exchange contracts totaling $9.3 million
outstanding at March 31, 1997. See Note D of Notes to Condensed Consolidated
Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, cash and cash equivalents were $12 million, compared
with cash of $27.5 million at June 30, 1996. The decrease in cash and cash
equivalents is principally due to the net cash used for operating activities in
the nine months ended March 31, 1997.
Net cash used in operating activities was $8.3 million in the nine months
ended March 31, 1997, compared with net cash provided by operating activities
of $10 million in the nine months ended March 31, 1996. The decrease in net
cash provided by operating activities was primarily due to the net loss from
operations, and a $2.4 million payment to terminate the Company's lease
obligation on its vacated London office facility.
Net cash used in investing activities was $8.5 million in the nine months
ended March 31, 1997, compared with $7.6 million in the nine months ended March
31, 1996. The increase in net cash used in investing activities was primarily
due to the increase in capitalized computer software and property and equipment
purchases. At March 31, 1997, the Company did not have any material capital
expenditure commitments.
Net cash provided by financing activities was $1.2 million in the nine
months ended March 31, 1997 compared with $23.2 million in the nine months
ended March 31, 1996. The Company completed a public offering in which it
received net proceeds of $25.2 million in the second quarter ended December 31,
1995.
Total assets were $83.4 million at March 31, 1997, compared with total
assets of $98.2 million at June 30, 1996. Working capital as of March 31, 1997
was $2.4 million, compared with $24.6 million as of June 30, 1996. The
decrease in both total assets and working capital from June 30, 1996 to March
31, 1997 was primarily due to the decline in cash and cash equivalents and
accounts receivable.
The Company's $10 million domestic unsecured credit agreement as
amended has permitted borrowings based on a percentage of worldwide eligible
accounts receivable and cash balances in excess of $2.5 million above
outstanding debt. At March 31, 1997, the permitted borrowings available under
this credit agreement were $7.0 million, of which no borrowings were
outstanding.
The Company believes that the combination of present cash balances, future
operating cash flows and amounts available under credit facilities will be
sufficient to meet the Company's currently anticipated cash requirements for at
least the next twelve months.
SAFE HARBOR STATEMENT
Certain information in this Form 10-Q contains "forward looking
statements" within the meaning of the Securities Exchange Act of 1934,
including those concerning the Company's future results and expected cost
savings from cost reduction actions described in Item 1 "Financial Statements
- - Note E to Notes to Condensed Consolidated Financial Statements" and Item 2
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Costs and Expenses". Actual results could differ materially from
those in the forward looking statements due to a number of uncertainties,
including, but not limited to, the demand for the Company's products and
services; the size, timing and recognition of revenue from significant orders;
increased competition; the Company's success in and expense associated with
developing, introducing and shipping new products; new product introductions
and announcements by the Company's competitors; changes in Company strategy;
product life cycles; the cost and continued availability of third party
software and technology incorporated into the Company's products; the impact of
rapid technological advances, evolving industry standards and changes in
customer requirements; the impact of recent transitional changes in North
American and international management and sales personnel; the impact of the
investigation into violations of the Company's revenue recognition policies on
the Company's ongoing operations;
13
<PAGE> 14
cancellations of maintenance and support agreements; software defects;
variations in the amount and timing of cost savings anticipated to result from
cost reduction actions; the impact of off-setting increases in operating
expenses; the impact of cost reduction actions on the Company's operations;
fluctuations in foreign exchange rates; and economic conditions generally or in
specific industry segments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Four separate class action suits were filed against the Company and
certain of its officers and directors in the United States District Court for
the Eastern District of Michigan between August 9, 1996 and September 5, 1996,
as reported in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996. These suits were filed on behalf of shareholders who had
purchased the Company's common stock between April 17, 1996 and August 6, 1996,
following the Company's announcement of certain violations of Company's revenue
recognition policies. The court has since consolidated the four suits into one
class action, and the plaintiffs have amended their complaint to expand the
class to shareholders who had purchased the Company's common stock between
August 2, 1995 and August 6, 1996. The action alleges that the plaintiffs
sustained losses as a result of the defendants' alleged untrue statements of
material facts and alleged omissions to state material facts necessary in
order to make the statements not misleading, and seeks unspecified damages and
costs. The Company is vigorously contesting the plaintiffs' claims.
ITEM 2. CHANGES IN SECURITIES
On March 10, 1997, the Company granted an option to Mr. Daniel T. Carroll
to purchase 10,000 shares of the Company's common stock at an exercise price
of $15.75 per share, the closing price of the common stock on that date.
The option was granted in consideration for his increased responsibilities in
assuming the position of Chairman of the Board of the Company. The option will
vest on the later of March 10, 1998 or the date on which Mr. Carroll ceases to
be Chairman of the Board of the Company; provided that the option will vest
immediately in the event of a change in control of the Company. The option
expires 30 months from the grant date or the date six months after which Mr.
Carroll ceases to be Chairman of the Board of the Company, whichever occurs
earlier. The Company did not register, and does not plan to register, the
option or the common stock issuable upon the exercise of the option under the
Securities Act of 1933, as amended (the "Act"), based upon exemptions from
registration set forth in Section 4(2) of the Act and Regulation D. The
Company relied upon these exemptions based upon Mr. Carroll's agreement to
provide a signed investment representation at he time of the exercise of the
option, his position as Chairman of the Board of the Company and the negotiated
nature of the transaction.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) The exhibits included herewith are set forth on the Index to Exhibits.
(b.) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter ended
March 31, 1997.
14
<PAGE> 15
SIGNATURE
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.
Date: MAY 15, 1997 COMSHARE, INCORPORATED
(Registrant)
/s/ Kathryn A. Jehle
-----------------------------------
Kathryn A. Jehle
Senior Vice President,
Chief Financial Officer,
Treasurer and Assistant Secretary
15
<PAGE> 16
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
4.08 Fourth Amendment to Comshare, Incorporated Amended and
Restated Credit Agreement between Comshare, Incorporated and NBD
Bank, formerly known as NBD Bank , N.A., Michigan dated March 31,
1997.
10.22 Stock Option Agreement, effective as of March 10, 1997, between
Comshare, Incorporated and Daniel T. Carroll.
11.1 Computation of Net Income (Loss) per Common Share.
27 Financial Data Schedule.
16
<PAGE> 1
EXHIBIT 4.08
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of March 31, 1997 (this "Amendment"), is among COMSHARE, INCORPORATED, a
Michigan corporation (the "Company"), the Banks set forth on the signature
pages hereof (collectively, the "Banks") and NBD BANK, formerly known as NBD
Bank, N.A., as agent for the Banks (in such capacity, the "Agent").
RECITALS
A. The Company, the Banks and the Agent are parties to an Amended and
Restated Credit Agreement, dated as of October 31, 1994, as amended by a First
Amendment to Credit Agreement dated May 19, 1995, a Second Amendment to Credit
Agreement dated July 31, 1995 and a Third Amendment to Credit Agreement dated
as of November 19, 1995 (the "Credit Agreement").
B. The Company has requested that the Agent and the Banks amend the Credit
Agreement as set forth herein, and the Agent and the Banks have agreed to do
so.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. The Credit Agreement is amended as follows:
1.1 The following definition shall be added to Section 1.1 in
appropriate alphabetical order:
"Funded Indebtedness" of any person shall mean, as of
any date, the sum of all interest bearing indebtedness
(including all obligations under Capital Leases) of
such person.
1.2 Clause (vi) of Section 5.2(c) is restated in its entirety to read
as follows:
(vi) As of March 31, 1997 and as of the last day of
any fiscal quarter thereafter, the sum of $48,450,000
plus (x) 50% of the Consolidated Net Income of the
Company and its Subsidiaries, such Consolidated Net
Income to be added as of the end of each fiscal
quarter commencing with the fiscal quarter ending June
30, 1997, provided that if such Consolidated Net
Income is less than zero for any fiscal quarter, the
amount added for such fiscal quarter shall be zero, and
plus (y) 100% of the proceeds (net of any investment
<PAGE> 2
banking fees, attorneys' fees, accountants' fees, underwriting
discounts and commissions and other customary fees and other costs
and expenses actually incurred in connection with any offering of
capital stock) of any capital stock or other equity securities
(including without limitation any securities exchangeable for or
convertible into capital stock and any warrants, rights or other
options to purchase or otherwise acquire capital stock, excluding,
however, any of the foregoing, including any capital stock or other
equity securities, which are sold to any director, officer or other
employee of the Company pursuant to any stock option plan or other
benefit or compensation plan for any director, officer or employee
of the Company) of the Company offered or otherwise sold at any
time after March 31, 1997.
1.3 A new Section 5.2(o) shall be added at the end of Section 5.2 to
read as follows:
(o) Cash. Permit or suffer consolidated cash of the
Company and its Subsidiaries minus $2,500,000 minus
consolidated Funded Indebtedness of the Company and
its Subsidiaries at any time to be less than $0.
ARTICLE II. REPRESENTATIONS. The Company represents and warrants to the Agent
and the Banks that:
2.1 The execution, delivery and performance of this Amendment is within
its powers, has been duly authorized and is not in contravention with any law,
of the terms of its Articles of Incorporation or By-laws, or any undertaking to
which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligation of the
Company enforceable against it in accordance with the terms hereof.
2.3 After giving effect to the amendments herein contained, the
warranties contained in Article IV of the Credit Agreement are true on and as
of the date hereof with the same force and effect as if made on and as of the
date hereof.
2.4 After giving effect to the amendments herein contained, no Event of
Default or Default exists or has occurred and is continuing on the date hereof.
ARTICLE III. MISCELLANEOUS.
3.1 References in the Credit Agreement or in any note, certificate,
instrument or other document to the Credit Agreement shall be deemed to be
references to the Credit Agreement as
FOURTH AMENDMENT TO CREDIT AGREEMENT Page 2
<PAGE> 3
amended hereby and as further amended from time to time.
3.2 The Company agrees to pay and to hold the Agent and the Banks
harmless for the payment of all costs and expenses arising in connection
with this Amendment, including the reasonable fees of counsel to the Agent in
connection with preparing this Amendment.
3.3 Except as expressly amended hereby, the Company agrees that the
Credit Agreement, the Notes, the Security Documents and all other documents and
agreements (which have not been previously terminated) executed by the Company
in connection with the Credit Agreement in favor of the Agent or the Banks are
ratified and confirmed and shall remain in full force and effect and that it
has no set off, counterclaim or defense with respect to any of the foregoing.
Terms used but not defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement.
3.4 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties signing this Amendment have caused this
Amendment to be executed and delivered as May 12, 1997 to be effective as of
March 31, 1997.
COMSHARE, INCORPORATED
By: /s/ Kathryn Jehle
--------------------------------
Its: SVP & CFO
------------------------------
NBD BANK, formerly known as NBD Bank, N.A.,
Individually as a Bank and as Agent
By: /s/ Martha Radek-Smith
--------------------------------
Its: Vice President
------------------------------
FOURTH AMENDMENT TO CREDIT AGREEMENT Page 3
<PAGE> 1
EXHIBIT 10.22
COMSHARE, INCORPORATED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made effective the 10th day of March, 1997,
by and between Comshare, Incorporated, a Michigan corporation ("the Company"),
and Daniel T. Carroll, (the "Optionee"). The Optionee holds the office of
Chairman of the Board of the Company, and the Company desires to compensate the
Optionee and to provide an incentive for his services.
NOW, THEREFORE, it is agreed between the parties as follows:
1. Grant of Option. Subject to the terms and conditions hereof, the
Company hereby grants to the Optionee the right and option to purchase from the
Company up to, but not exceeding in the aggregate, 10,000 shares of the
Company's Common Stock, at a price of $15.75 per share. The Optionee agrees to
remain as Chairman of the Board of the Company for a period of not less than
twelve (12) months from the date of grant, provided that nothing herein shall
restrict the right of the Board of Directors (the "Board") or the shareholders
of the Company to terminate the Optionee's position at any time with or without
cause.
2. Accrual of Right to Exercise Option. The option hereby granted may not
be exercised prior to the later of March 10, 1998, or the date on which the
Optionee ceases to be Chairman of the Board, at which time this option shall be
fully exercisable. Notwithstanding the above, however, the option may be
exercised sooner, upon the occurrence of a change in control, defined as
follows:
(i) the acquisition of ownership by a person (including an
individual, a corporation, partnership, joint venture, trust or other
entity) or a group of persons acting together of fifty-one (51%) percent
or more of the outstanding common stock of the Company;
(ii) a sale of all or substantially all of the assets of the
Company to any entity not controlled by persons who were members of the
Board of Directors or officers of the Company as of the 1996 Annual
Meeting of Shareholders or by any employee stock ownership plan for the
benefit of employees of the Company; or
(iii) a merger, consolidation or similar transaction between the
Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not persons (A) who are members of
the Board of Directors of the Company immediately before the change in
control and (B) who also were members of the Board of Directors of the
Company immediately following the 1996 Annual Meeting of Shareholders.
Any provision of this Agreement notwithstanding, this option shall not be
exercisable on
<PAGE> 2
or after the date thirty (30) months from the date of grant of this option.
3. Termination of Office. If, prior to the date that this option shall
first become exercisable, the Optionee's position as Chairman of the Board
shall be terminated, with or without cause, or by the act, death, disability or
retirement of the Optionee, the Optionee's right to exercise this option shall
terminate and all rights hereunder shall cease.
If, on or after the date that this option shall first become exercisable,
the Optionee's position shall be terminated for any reason other than death or
disability, the Optionee shall have the right, within six months after such
termination, to exercise this option to the extent that it shall have been
exercisable and unexercised on the date of such termination, subject to any
other limitation on the exercise of such option in effect at the date of
exercise.
If, on or after the date that this option shall first become exercisable,
the Optionee shall die or become disabled, (as defined in Section 105(d)(4) of
the Internal Revenue Code), the Optionee or the executor or administrator of
the estate of the Optionee (as the case may be) or the person or persons to
whom the option shall have been transferred by will or the laws of descent and
distribution, shall have the right, within six months from the date of the
Optionee's death or termination due to disability, to exercise this option to
the extent that it was exercisable and unexercised on the date of the
Optionee's death or termination of services due to disability, subject to any
other limitation on exercise in effect at the date of exercise.
4. Exercise of Option. The Optionee, from time to time during the period
when the option hereby granted may by its terms be exercised, may exercise the
option in whole or in part by delivery to the Company of: (a) a written notice
signed by the Optionee (i) stating the number of shares that the Optionee has
elected to purchase at that time from the Company, (ii) upon the request of the
Company, a signed statement from the Optionee representing that he is acquiring
the shares being purchased for investment and not for resale; and (b) cash,
personal check, certified or bank cashier's check, or, (c) the surrender of
previously-acquired shares of the Company's Common Stock, duly endorsed for
transfer (or with duly executed stock powers attached), for an amount equal to
the purchase price of the shares then to be purchased; shares of the Company's
Common Stock surrendered as payment for shares purchased pursuant to the
exercise of this option shall be valued, for such purpose, at the last sale
price of the Company's Common Stock as reported on the NASDAQ Stock Market at
the close of business on the day prior to exercise or, if there was no trading
on such date, on the last preceding trading date. The Optionee shall reimburse
the Company for any tax withholding requirements and provide the Company such
information and data as the Company may deem necessary.
After receipt of the foregoing and subject to Section 5 below, the Company
shall issue the shares in the name of the Optionee and deliver the certificates
therefor to the Optionee.
<PAGE> 3
5. Compliance With Securities Laws. Anything to the contrary herein
notwithstanding, the Company's obligation to sell and deliver stock under this
option is subject to such compliance with federal and state laws, rules and
regulations applying to the authorization, issuance or sale of securities as
the Company deems necessary or advisable. The Company shall not be required to
sell and deliver stock pursuant hereto unless and until it receives
satisfactory proof that the issuance or transfer of such shares will not
violate any of the provisions of the Securities Act of 1933 or the Securities
Exchange Act of 1934 or the rules and regulations of the Securities Exchange
Commission promulgated thereunder or the provisions of any state law governing
the sale of securities, or that there has been compliance with the provisions
of such acts, rules, regulations and state laws. If the Optionee fails to
accept delivery and pay for all or any part of the number of shares specified
by such notice upon tender of delivery thereof the Optionee's right to exercise
this option with respect to such undelivered shares may be terminated by the
Company.
6. Non-Assignability. The option hereby granted shall not be transferable
by the Optionee other than by will or the laws of descent and distribution, and
the option may be exercised during the Optionee's lifetime only by the
Optionee. Any transferee of the option shall take the same subject to the
terms and conditions of this Agreement. No such transfer of the option shall
be effective to bind the Company unless the Company shall have been furnished
with written notice thereof and a copy of the will and/or such other evidence
as the Company may deem necessary to establish the validity of the transfer and
the acceptance by the transferee or transferees of the terms and conditions of
this Agreement. No assignment or transfer of this option, or of the rights
represented thereby, whether voluntary or involuntary, by operation of law or
otherwise, except a transfer by the Optionee by will or by the laws of descent
and distribution, shall vest in the purported assignee or transferee any
interest or right herein whatsoever.
7. Disputes. As a condition to the granting of the option granted hereby,
the Optionee and the Optionee's successors and assigns agree that any dispute
or disagreement which shall arise under or as a result of this Agreement shall
be determined by the Board in its sole discretion and judgment and that any
such determination and any interpretation by the Board of the terms of this
Agreement shall be final and shall be binding and conclusive for all purposes.
8. Adjustments. In the event of any stock dividend on the Stock,
subdivision or combination of shares of the Stock, reclassification of the
Stock, and (in accordance with the provisions of the next paragraph of this
Section 8) in the event of a merger or consolidation in which the Company shall
be the surviving corporation, the number and class of shares subject to this
option and the option price shall be proportionately adjusted.
After any merger of one or more corporations into the Company, or after
any consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, the Optionee shall, at no
additional cost, be entitled upon any exercise of his option, to receive
(subject to any required action by shareholders), in lieu of the number of
shares as to which such option shall then be so exercised, the number and class
of shares of stock or other securities to which the Optionee would have been
entitled pursuant to the terms of the
<PAGE> 4
agreement of merger or consolidation if at the time of such merger or
consolidation the Optionee had been a holder of record of a number of shares of
Stock of the Company equal to the number of shares as to which such option
shall then be so exercised. Comparable rights shall accrue to the Optionee in
the event of successive mergers or consolidations of the character described
above. Anything contained herein to the contrary notwithstanding, upon the
dissolution or liquidation of the Company, the option granted under this
Agreement shall terminate.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined by the Board in its sole discretion. Any such
adjustment may provide for the elimination of any fractional share which might
otherwise become subject to the option.
9. Rights as Shareholder. The Optionee shall have no rights as a
shareholder of the Company with respect to any of the shares covered by this
option until the issuance of a stock certificate or certificates upon the
exercise of the option in full or in part, and then only with respect to the
shares represented by such certificate or certificates.
10. Notices. Every notice relating to this Agreement shall be in writing
and if given by mail shall be given by registered or certified mail with return
receipt requested. All notices to the Company shall be delivered to the
Company's, Treasurer, at the principal office of the Company. All notices by
the Company to the Optionee shall be delivered to the Optionee personally or
addressed to the Optionee at the Optionee's last residence address as then
contained in the records of the Company or such other address as the Optionee
may designate. Either party by notice to the other may designate a different
address to which notices shall be addressed. Any notice given by the Company
to the Optionee at the Optionee's last designated address shall be effective to
bind any other person who shall acquire rights hereunder.
11. "Optionee" to Include Certain Transferees. Whenever the word
"Optionee" is used in any provision of this Agreement under circumstances where
the provision should logically apply to any other person or persons to whom the
option, in accordance with the provisions of Section 6 hereof, may be
transferred, the word "Optionee" shall be deemed to include such person or
persons.
12. Governing Law. This Agreement has been made in and shall be construed
in accordance with the laws of the State of Michigan.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMSHARE, INCORPORATED
By: /s/ KATHRYN A. JEHLE
-------------------------
Its: SENIOR VP AND CFO
------------------------
/s/ DANIEL T. CARROLL
------------------------
Optionee
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
(unaudited; in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- ---------------------
1997 1996 1997 1996
-------- ---------- --------- ----------
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE SHARES:
Common shares outstanding 9,796 9,626 9,747 8,843
Common equivalent shares, treasury stock method - 483 - -
-------- ---------- -------- ----------
9,796 10,109 9,747 8,843
======== ========== ======== ==========
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) $(6,923) $2,038 $(14,616) $(9,316)
Share used in per common share computation 9,796 10,109 9,747 8,843
Net income (loss) per common share $ (0.71) $ 0.20 $ (1.50) $ (1.05)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 12,030,000
<SECURITIES> 0
<RECEIVABLES> 28,721,000<F1>
<ALLOWANCES> 920,000
<INVENTORY> 0
<CURRENT-ASSETS> 47,737,000
<PP&E> 21,536,000
<DEPRECIATION> 16,341,000
<TOTAL-ASSETS> 83,430,000
<CURRENT-LIABILITIES> 45,353,000
<BONDS> 0
0
0
<COMMON> 9,816,000
<OTHER-SE> 24,880,000
<TOTAL-LIABILITY-AND-EQUITY> 83,430,000
<SALES> 0
<TOTAL-REVENUES> 70,224,000
<CGS> 0
<TOTAL-COSTS> 92,305,000
<OTHER-EXPENSES> (366,000)<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 310,000
<INCOME-PRETAX> (22,025,000)
<INCOME-TAX> (7,409,000)
<INCOME-CONTINUING> (14,616,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,616,000)
<EPS-PRIMARY> (1.50)
<EPS-DILUTED> 0
<FN>
<F1>Accounts receivable are stated at net of allowance for doubtful accounts.
<F2>Comprised of $687,000 of interest income and $321,000 of exchange loss.
</FN>
</TABLE>
