CIK: 0000313867
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, 1995
OR
___ Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 0-9505
Triad Systems Corporation
-------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2160013
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3055 Triad Drive, Livermore, CA 94550
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(Address of principal executive offices)
Registrant's telephone number, including area code: (510) 449-0606
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 March 31,1995, the registrant had outstanding 16,590,000 shares of
common stock with $.001 par value.
Triad Systems Corporation
QUARTERLY REPORT FORM 10-Q
Index
Page #
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Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1995 and
September 30, 1994 1
Consolidated Statements of Income for the Three and Six Month
Periods Ended March 31, 1995 and 1994 2
Consolidated Statements of Cash Flows for the Six Month Periods
Ended March 31, 1995 and 1994 3
Notes to Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 6-9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10-12
Signatures 13
Exhibit 11.1 Computation of Earnings Per Share 14
Exhibit 27 Financial Data Schedule 15
PART I FINANCIAL INFORMATION
Triad Systems Corporation
CONSOLIDATED BALANCE SHEETS
At March 31, 1995 and September 30, 1994
March 31, September 30,
(Amounts in thousands except share data) 1995 1994
----------- -------------
(Unaudited)
Assets
Current assets
Cash and equivalents $3,255 $7,963
Trade receivables 13,775 14,090
Investment in leases 2,467 4,152
Inventories 6,705 6,113
Prepaid expenses and other current assets 7,492 6,068
--------- ---------
Total current assets 33,694 38,386
Service parts 3,017 2,434
Property, plant and equipment, net of accumulated
depreciation and amortization of $29,265 at
March 31, 1995 and $27,486 at
September 30, 1994 26,723 27,033
Long-term investment in leases 13,723 21,836
Land for resale 25,099 25,063
Capitalized software and intangible assets 14,528 13,870
Other assets 9,235 7,741
--------- ---------
Total assets $126,019 $136,363
========= =========
Liabilities
Current liabilities
Notes payable and current portion of
long-term debt $6,652 $6,773
Accounts payable 7,280 8,940
Accrued employee compensation 7,753 8,090
Deferred income taxes 4,441 4,310
Other current liabilities and accrued expenses 10,007 10,189
--------- ----------
Total current liabilities 36,133 38,302
Long-term debt 52,902 56,633
Deferred income taxes 25,428 23,855
Other liabilities 5,387 5,432
--------- ----------
Total liabilities 119,850 124,222
Stockholders' Equity
Cumulative convertible preferred stock
$.01 par value; authorized 1,000,000 shares;
no shares issued and outstanding at
March 31,1995 and 1,000,000 shares issued
and outstanding at September 30, 1994;
liquidation value $20 million --- 10
Common stock
$.001 par value; authorized 50,000,000 shares;
issued 17,038,000 shares at March 31, 1995
and 13,896,000 shares at September 30, 1994 17 14
Treasury Stock
448,000 shares at March 31, 1995 and
270,000 shares at September 30, 1994 (2,257) (1,326)
Capital in excess of par 23,759 31,680
Accumulated deficit (15,350) (18,237)
--------- ---------
Total stockholders' equity 6,169 12,141
--------- ---------
Total liabilities and stockholders'
equity $126,019 $136,363
========= =========
The accompanying notes are an integral part of these financial statements.
Triad Systems Corporation
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Month Periods Ended March 31, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
(Amounts in thousands March 31, March 31,
except per share data) 1995 1994 1995 1994
------- ------- ------- -------
Revenues
Systems $18,106 $17,250 $35,488 $31,648
Customer support services 15,735 14,885 31,190 29,705
Information services 6,878 6,088 13,630 11,822
Finance 3,399 2,338 5,779 4,862
------- ------- ------- -------
Total revenues 44,118 40,561 86,087 78,037
------- ------- ------- -------
Costs and expenses
Systems 8,631 7,994 16,990 14,719
Services and Finance 13,474 13,026 26,441 25,065
Marketing 11,721 10,647 22,862 20,608
Product development 2,066 1,976 4,166 4,188
General & administrative and
other expenses 2,847 2,786 5,962 5,683
------- ------- ------- -------
Total costs and expenses 38,739 36,429 76,421 70,263
------- ------- ------- -------
Operating income 5,379 4,132 9,666 7,774
Interest and other expense 1,684 1,881 3,418 3,839
------- ------- ------- -------
Income before income taxes and
extraordinary charge 3,695 2,251 6,248 3,935
Provision for income taxes 1,404 855 2,374 1,495
------- ------- ------- -------
Income before extraordinary charge 2,291 1,396 3,874 2,440
Extraordinary charge on repurchase
of debt, net of taxes ---- ---- 153 ----
------- ------- ------- -------
Net income $2,291 $1,396 $3,721 $2,440
======= ======= ======= =======
Earnings per share
Primary
Income before extraordinary charge $0.13 $0.08 $0.22 $0.14
Net income $0.13 $0.08 $0.21 $0.14
Weighted average shares 18,155 17,425 17,993 17,424
Fully diluted
Income before extraordinary charge $0.13 $0.08 $0.22 $0.14
Net income $0.13 $0.08 $0.21 $0.14
Weighted average shares 18,249 17,425 18,085 17,424
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
Triad Systems Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended March 31, 1995 and 1994
(Unaudited)
Six Months Ended March 31,
(Amounts in thousands) 1995 1994*
-------- --------
Cash flows from operating activities
Income before extraordinary charge $3,874 $2,440
Adjustments to reconcile income before
extraordinary charge to net cash provided by
operating activities
Extraordinary charge on repurchase of debt,
net of taxes (153) ---
Depreciation and amortization 4,185 4,171
Receivable and inventory loss provisions 3,813 3,817
Gains from lease discounting (3,590) (2,648)
Other (1,074) 684
Changes in assets and liabilities
Trade accounts receivable (1,240) (2,724)
Leases (purchased) discounted 12,809 1,543
Inventories (902) 474
Deferred income taxes 1,704 646
Prepaid expenses and other current assets (1,423) (571)
Accounts payable (1,660) 103
Accrued employee compensation (337) (208)
Other current liabilities and accrued expenses (182) (1,170)
------- -------
Net cash provided by operating activities 15,824 6,557
Cash flows from investing activities
Investment in property, plant and equipment (1,173) (1,284)
Capitalized software (1,369) (1,589)
Other (3,840) (3,294)
------- -------
Net cash used in investing activities (6,382) (6,167)
Cash flows from financing activities
Issuance of debt 27,350 19,310
Repayment of debt (31,483) (21,205)
Redemption of preferred stock (10,000) 0
Proceeds from sale of common stock 1,637 674
Dividends paid (400) (400)
Purchase of treasury stock (932) (290)
Other (322) ---
------- -------
Net cash used in financing activities (14,150) (1,911)
Net decrease in cash and equivalents (4,708) (1,521)
Beginning cash and equivalents 7,963 8,250
------- -------
Ending cash and equivalents $3,255 $6,729
======= =======
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest $3,053 $3,538
Income Taxes 159 402
Noncash investing and financing activity
Redemption of preferred stock 11,195 ---
Capital leases 275 180
======= =======
* Certain fiscal year 1994 amounts have been restated due to correction
of an error.
The accompanying notes are an integral part of these financial statements.
Triad Systems Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995 and 1994
(Unaudited)
1. In the opinion of the Registrant, the consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position as of March 31, 1995 and
the results of operations and cash flows for the six month periods ended
March 31, 1995 and 1994. The results of operations for the three and six
month periods ended March 31, 1995 and 1994 are not necessarily indicative
of the results to be expected for the full year. The Balance Sheet does
not include all disclosure requirements under GAAP and should be read in
conjunction with the September 30, 1994 audited financial statements and
notes thereto.
2. The consolidated financial statements include the accounts of Triad
Systems Corporation and its wholly-owned subsidiaries, including Triad
Systems Financial Corporation ("Triad Financial"), after elimination of
inter company accounts and transactions. Financial information relating to
the Company's combined leasing operations is presented in Note 6.
3. Primary and fully diluted earnings per share are based on the average
common shares outstanding, the dilutive effect of the stock options and the
assumed conversion of the preferred stock and exercise of warrants. On
March 31, 1995, Triad Systems Corporation (the "Registrant") effected an
exchange ("Exchange") of all of the outstanding units ("Units") (consisting
of 1,000,000 shares of the Registrant's Senior Cumulative Convertible
Preferred Stock and associated Warrants to purchase 3.5 million shares of
the Registrant's Common Stock par value $.001 held by entities affiliated
with Richard C. Blum & Associates, L.P. for an aggregate of $10,000,000 and
2,222,222 shares of Registrant's Common Stock. Please refer to the Liquidity
section of the Management Discussion & Analysis for explanation of the
exchange. Dilution from common equivalents have been adjusted under the
treasury stock method in fiscal year 1995 and further adjusted under the
modified treasury stock method in fiscal year 1994.
4. Trade accounts receivable at March 31,1995 and September 30,1994
include allowances for doubtful accounts of $1,264,000 and $1,166,000,
respectively.
5. Inventories are stated at the lower of cost (first-in, first-out method)
or market and include amounts which ultimately may be capitalized as
equipment or service parts.
(Amounts in thousands) March 31, 1995 September 30, 1994
- ---------------------- -------------- ------------------
Purchased Parts $2,976 $2,404
Work in process 422 448
Finished Goods 3,308 3,261
------ ------
Inventories $6,705 $6,113
------ ------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. Triad Financial is a wholly-owned subsidiary which purchases Triad
systems and other products and leases those products to third parties under
full-payout, direct financing leases. Summarized financial information of
the Company's combined leasing operations, included in the Consolidated
Financial Statements is as follows:
CONDENSED COMBINED BALANCE SHEETS
At March 31, 1995 and September 30, 1994
March 31, September 30,
(Amounts in thousands) 1995 1994
------------ -------------
(Unaudited)
Assets
Cash $99 $---
Net investment in leases 16,190 25,988
Residual value retained on leases discounted 6,268 5,544
Receivable from parent company 36,960 25,633
Other assets 3,696 2,857
-------- --------
Total Assets $63,213 $60,022
======== ========
Liabilities and Stockholder's Equity
Other liabilities and accrued expenses $7,825 $8,115
Deferred income 2,223 1,955
Debt 1,785 2,171
Stockholder's equity 51,380 47,781
-------- --------
Total Liabilities and Stockholder's Equity $63,213 $60,022
======== ========
CONDENSED COMBINED STATEMENTS OF INCOME
For the Three and Six Month Periods Ended March 31, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
(Amounts in thousands) 1995 1994 1995 1994
------- ------- ------- -------
Revenues $3,399 $2,338 $5,779 $4,862
Selling and administrative expenses 485 567 980 1,112
Provision for doubtful accounts 699 525 1,303 1,104
------- ------- ------- -------
Operating income 2,215 1,246 3,496 2,646
Intercompany income 1,288 650 2,485 1,267
------- ------- ------- -------
Income before taxes 3,503 1,896 5,981 3,913
Provision for income taxes 1,326 720 2,369 1,487
------- ------- ------- -------
Net income $2,177 $1,176 $3,612 $2,426
======= ======= ======= =======
Triad Systems Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Summary
The quarterly results provided the seventh consecutive record revenue
quarter for the Company. The Automotive market, which includes systems,
services and finance revenues from the Jobber, Service Dealer and Warehouse
segments, showed a 7% improvement in quarterly revenues of $29.0 million
and an 8% improvement in the first half revenues of $56.8 million when
compared to the prior year. Hardlines and Lumber market revenues of
$13.5 million for second quarter and $26.1 million for the first half were
better than a year ago by 6% and 7%, respectively. Improved operating
income margins on higher revenues during the quarter increased operating
profit 30% to $5.4 million. Net income rose 64% to $2.3 million when
compared to the second quarter of 1994. First half operating profit of
$9.7 million improved 24% and net income (before the 1995 extraordinary
charge) of $3.9 million improved 59% when compared to the prior year.
Second quarter earnings per share were 13 cents, a 63% improvement over
the prior year, and first half 1995 earnings per share on net income of
21 cents compared to 14 cents a year ago. The Company discounted an
incremental $7 million of portfolio to help fund the exchange of 1 million
preferred shares and 3.5 million warrants. (Please refer to liquidity
section of this document for further explanation of the equity exchange.)
The discounting had a positive effect of two cents per share for the
quarter.
Percent of Revenues
Three Months Ended Six Months Ended
March 31, March 31,
1995 1994 1995 1994
Revenues 100.0% 100.0% 100.0% 100.0%
Costs and expenses
Cost of systems, services and finance 50.1 51.8 50.5 51.0
Marketing 26.6 26.2 26.6 26.4
Product development 4.7 4.9 4.8 5.4
General & administrative and other
expense 6.5 6.9 6.9 7.3
Total costs and expenses 87.8 89.8 88.8 90.0
Operating income 12.2 10.2 11.2 10.0
Interest and other expense 3.8 4.6 4.0 4.9
Income before taxes and extraordinary
charge 8.4 5.5 7.3 5.0
Provision for taxes 3.2 2.1 2.8 1.9
Income before extraordinary charge 5.2 3.4 4.5 3.1
Extraordinary charge on repurchase
of debt, net of taxes --- --- 0.2 ---
Net income 5.2% 3.4% 4.3% 3.1%
Revenues
Second quarter revenues improved nearly $2.5 million in the two markets
served - the Automotive market and the Hardlines and Lumber market. The
quarterly revenues includes a $1.1 million improvement in Finance due to
higher discounting of $9.6 million compared to the prior year. Systems,
Customer Support Services and Information Services revenues showed
improvements of approximately $.8 million each. First half revenues also
provided favorable results from last year of $3.8 million in Systems,
$1.8 million in Information Services, $1.5 million in Customer Support
Services and $.9 million in Finance.
Systems
Systems revenue for the quarter and the year to date improved over the same
periods a year ago by $.9 million and $3.8 million, respectively, as a
result of strong Automotive and multi-vendor sales. The multi-vendor
systems business that began in mid 1994 provided $.8 million of the second
quarter improvement and $1.6 million of the year to date improvement. The
Automotive market, which includes the Jobber, Service Dealer, Warehouse and
International system sales, contributed an increase of $.3 million compared
to second quarter of the prior year and $2.1 million on a year to date
basis. The Hardlines and Lumber market declined by $.2 million for the
quarter due to lower sales productivity. On a year to date basis,
Hardlines and Lumber improved by $.2 million compared to the prior year.
During the third quarter, the Company suspended the second phase of the
Triad PrismTM ("Prism B") shipments primarily due to a software problem in a
software product which is provided by a third party. A correction has been
received by the Company and initial testing indicates that this problem has
been resolved. The Company does not believe that the cost of correcting
the software on previously sold systems will be significant. Delivery of
the Prism B product is anticipated to remain on hold until late May,
providing sufficient time for the Company to fully test the correction.
Upon release, Prism B products are anticipated to resume the controlled
roll out, allowing the Company to closely monitor the product. This
monitoring reflects the Company's caution concerning the normal new product
issues relating to defect correction and performance tuning in
installation. The Company anticipates that this pause will result in fewer
Prism B units being shipped in the third quarter than were shipped in the
second quarter.
Services
Second quarter 1995 Services revenues of $22.6 million improved 8% when
compared to the same period in 1994. Information services business at
$6.5 million improved $.5 million or 9% over the prior year due to continued
penetration of the markets it serves. The Company's new Point-of-Sale
(POS) businesses showed the most significant percentage increase, as they
are in the investment stage and developing as expected. Customer Support
Services revenues of $15.7 million improved $.9 million or 6% when compared
to last year, with growth of $.3 million each in education revenues and
multi-vendor services revenues. Business Products continues to grow as
evidenced by a 44% or $.4 million revenue improvement from a year ago.
First half Services revenues of $44.8 million improved $3.3 million from
last year primarily in Information Services with an increase of
$1.8 million resulting from expanding market presence and new POS services.
Customer Support Services showed a 3% improvement or $.8 million and
Business Products continues to expand its sales with an increase of 37% or
$.7 million from the prior year.
Finance
Second quarter and first half Finance revenues of $3.4 million and
$5.8 million, respectively, are $1.1 million and $.9 million higher than a
year ago, resulting from additional discounting to help fund the
March 31, 1995 exchange of the outstanding preferred shares and warrants
for common stock (please refer to the Liquidity section of this document
for further explanation of the equity exchange).
Costs and Expenses
Gross margin as a percentage of systems revenues was 52.3% for the current
quarter and 52.1% for the first half, a decline of 1.4% and 1.5% over the
prior year's second quarter and first half, respectively. The traditional
businesses, such as Automotive, Service Dealer, Warehouse and Hardlines and
Lumber, show an improved gross margin percentage, however more sales of the
lower margin multi-vendor systems in the current year offset these
improvements at the total systems margin level. Gross margin as a
percentage of services revenues improved 2.6% to 41.1% for the quarter and
improved 1.6% to 41.8% for the first half when compared to the same periods
a year ago. The improvements in Services margins were due to lower
Customer Services headcount.
Marketing expenses of $11.7 million for the quarter were up $1.1 million or
.3% of revenue, primarily due to continued investments in the Hardlines and
Lumber and the Service Dealer segments. Product Development costs after
capitalization of software development expense were $2.1 million for the
quarter and $4.2 million for the first half, remained at 5% of revenue and
were similar to last year periods. General and administrative costs were
in line with the prior year expenses of 7% of revenue. The current quarter
and first half administrative costs were 6.5% and 6.9% of revenue at
$2.8 million and $6.0 million, respectively.
Interest and other expense decreased $.2 million for the quarter and $.4
million for the first half primarily due to an $11 million lower debt
balance at March 31,1995 versus 1994, partially offset by slightly higher
interest rates on the floating rate debt. The early retirement of
$2.9 million in senior fixed rate notes in October 1994 generated an
extraordinary charge of $153,000 after taxes (one cent per share) that
included a premium to retire the debt of $198,000, unamortized debt costs
of $49,000 less taxes of $94,000.
Future Operating Results
The Company's future operating results will depend upon conditions in its
markets that may affect demand for its products, and upon the Company's
ability to introduce products and enhancements on a timely basis. Results
will also be affected by seasonal changes in product demand, market
acceptance of new products and enhancements, the size and experience of the
sales force and the mix of products sold. All could cause operating
results to fluctuate, especially on a quarterly basis.
Liquidity
Working Capital - management believes that working capital and the
Company's ability to generate working capital by discounting its investment
in Triad Financial's lease portfolio is sufficient to meet foreseeable
business needs. The Company manages current assets, particularly cash, to
maximize the return on assets. The Company utilizes its cash in excess of
operating requirements to fund Triad Financial's lease portfolio and to
reduce the Company's debt level.
On March 31, 1995 the Company completed the exchange of 1 million shares of
preferred stock and associated warrants to purchase 3.5 million shares of
common stock for $10 million cash and approximately 2.2 million shares of
Triad common stock. The transaction resulted in a reduction to preferred
stock equity of approximately $20 million, offset by an increase in common
stock equity of approximately $10 million for a net reduction to
stockholder's equity of approximately $10 million. The Company financed
the exchange by discounting approximately $7.5 million of its portfolio and
with $2.5 million of cash. The exchange eliminated $400,000 in preferred
shares dividend payments over the second half of the current year and up to
$2 million annually in future years. The company obtained consent from a
majority of the senior fixed noteholders; the sole senior floating
noteholder; and the senior bank for the exchange and also negotiated
certain changes in the covenants which will provide the Company with
flexibility in certain circumstances in the future. In addition, the
Company's revolving line of credit increased from $13.1 million to
$17.5 million. (Please refer to the Company's Current Form 8-K filed in
May 1995 for further information.)
Cash provided by operating activities was $15.8 million for the first half
compared to $6.6 million a year ago. Lease discounting was up $11.3 million
primarily to fund the preferred shares exchange and to retire debt.
Depreciation and amortization was even with the prior year at $4.2 million.
Cash used in investing activities increased slightly at $6.4 million the
first half compared to $6.2 million a year ago. Capital expenditures for
the first half of $1.2 million were about even with the prior year. A
planned information systems upgrade in 1995 will result in $1 million more
capital expenditures than in 1994.
Cash used in financing activities was $14.1 million for the first half, a
$12.1 million increase from a year ago. The $10.0 million cash paid for
the redemption of the preferred stock shares in the preferred stock
exchange accounted for the majority of the variance. In addition, the
Company retired $2.9 million of the senior fixed rate notes in October 1994.
Business Resources
Management believes available cash resources, primarily generated from
operations, lease discounting and credit lines, will provide adequate funds
to finance foreseeable operating needs. The Company maintains $17.5 million
in bank lines of credit and there were no borrowings at March 31, 1995.
The Company currently invests its available cash resources in the lease
portfolio of Triad Financial due to the higher yields achieved and the
flexibility to offer customers financing. Triad Financial financed 58% of
Triad's domestic business systems sales and $8.4 million in non-Triad
equipment through client lease programs during the first half of 1995.
Additionally, Triad Financial received $24.4 million and $39.8 million of
proceeds from discounting in the second quarter and first half,
respectively.
Limited and full-recourse discounting agreements are maintained with banks
and lending institutions. The discounting agreements contain certain
restrictive covenants which allow Triad Financial to discount only while in
compliance with such covenants. The Company is in compliance with the
restrictive covenants and management believes that it will maintain
compliance with such covenants in the foreseeable future. Under the
discounting agreements, Triad Financial is contingently liable for losses
in the event of lessee nonpayment. The agreements provide for limited
recourse of up to 10% or full recourse at 100% of discounting proceeds,
depending on the credit risk associated with specific leases. At March 31,
1995, the portfolio available for discounting was $16.2 million and
commitments for $53.3 million in discounting lines were available.
PART II OTHER INFORMATION
Item 1. Not applicable
Item 2. (b) Changes in the rights of the Company's security holders.
On March 31, 1995, Triad Systems Corporation (the "Registrant")
effected an exchange ("Exchange") of all of the outstanding units ("Units")
(consisting of 1,000,000 shares of the Registrant's Senior Cumulative
convertible Preferred Stock and associated Warrants to purchase 3.5 million
shares of the Registrant's Common Stock par value $.001 held by entities
affiliated with Richard C. Blum & Associates, L.P. for an aggregate of
$10,000,000 and 2,222,222 shares of Registrant's Common Stock. For further
information concerning the exchange, please refer to the Management's
Discussion and Analysis of Finanical Condition and Results of Operations -
"Liquidity" in Part I of this report and the Company's Current Report on
Form 8-K filed May 11, 1995.
Item 3. Not applicable
Item 4. Submission of Matters to a vote of Security Holders.
Registrant's Annual Meeting of Stockholders was held on February 9,
1995. The following director was elected at the annual meeting, to serve a
three year term until the 1998 Annual Meeting of Stockholders and his
successor is duly elected and qualified: Henry M. Gay; the number of shares
in favor were 11,419,622; and the number of shares withheld were 134,569.
James R. Porter, George O. Harmon, William W. Stevens and Richard C. Blum
continue to serve as directors. At the Annual Meeting, the stockholders
approved an amendment to the Triad Systems Corporation 1990 Employee Stock
Purchase Plan (the "Purchase Plan") to increase the number of shares
reserved for issuance under the Purchase Plan from 650,000 shares to
1,150,000 shares. The number of shares voting for such proposal was
10,709,096; the number of shares voting against such proposal was 451,938;
the number of shares abstaining from voting on such proposal was 120,139;
and the number of broker non-votes was 273,018.
Item 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index for March 31, 1995 Sequentially
Exhibit Numbered
Number Page
- ------- -------------
4.6 Exchange Agreement and Second Amendment to Unit
Purchase Agreement by and among Triad Systems
Corporation, Richard C. Blum & Associates, L.P.
and certain holders dated March 31, 1995,
incorporated by reference from Exhibit 1 to the
Company's Current Report on Form 8-K filed
May 11, 1995 ("May 1995" Form 8-K).
4.7 Consent Agreement between Triad Systems Corporation
and certain holders of the Fixed Rate Notes dated
March 31, 1995, incorporated by reference from
Exhibit 2 to the May 1995 Form 8-K.
4.8 Consent Agreement between Triad Systems Corporation
and certain holders of the Floating Rate Notes dated
March 31, 1995, incorporated by reference from
Exhibit 3 to the May 1995 Form 8-K.
4.9 First Supplemental Indenture between Triad Systems
Corporation and BankAmerica National Trust Company
dated March 31, 1995, incorporated by reference to
Exhibit 4 to the May 1995 Form 8-K.
4.10 First Supplemental Indenture between Triad Systems
Corporation and Chase Manhattan Bank N.A. dated
March 31, 1995, incorporated by reference to Exhibit 5
to the May 1995 Form 8-K. 10
4.11 Triad Systems Corporation Amended Senior Floating
Rate Note Due 1997, dated March 31, 1995, incorporated
by reference to Exhibit 7 to the May 1995 Form 8-K.
*10.1 Triad Systems Corporation Amended and Restated 1982
Stock Option Plan as amended on October 22, 1993,
incorporated by reference from Exhibit 10.1 to the
Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1993.
10.2 Form of Indemnification Agreement, incorporated by
reference from Exhibit 10.4 to the Company's
Registration Statement on Form S-2 (File No. 33-2966)
filed July 3, 1989 (the "1989 Form-2 Registration
Statement").
*10.3 Nonqualified Stock Option Agreement between the
Company and James R. Porter dated January 13, 1987,
incorporated by reference from Exhibit 10.5 to the
1987 Form S-2 Registration Statement,
(File No. 33-13599) (the "1987 Company's Form S-2
Registration Statement").
10.4 Development Agreement between the Company and the
City of Livermore dated December 2, 1985, incorporated
by reference from Exhibit 10.5 to the 1987 Form S-2
Registration Statement.
10.5 Subdivision Improvement Agreement between the Company
and the City of Livermore dated December 2, 1985,
incorporated by reference from Exhibit 10.7 to the 1987
Form S-2 Registration Statement.
10.6 Mortgage between Variable Annuity Life Insurance
Company and 3055 Triad Drive dated August 23, 1988,
incorporated by reference from Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1988 (the "1988 Form 10-K").
*10.7 Nonqualified Stock Option Agreement between the Company
and James R. Porter dated as of February 17, 1987,
incorporated by reference from Exhibit 10.7 of the 1988
Form 10-K.
*10.8 Nonqualified Stock Option Agreement between the Company
and James R. Porter dated November 12, 1988,
incorporated by reference from Exhibit 10.8 of the
1988 Form 10-K.
*10.9 Triad Systems Corporation 1990 Stock Option Plan as
amended on October 22, 1993, incorporated by reference
from Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1993.
*10.10 Triad Systems Corporation Amended and Restated Outside
Directors Stock Option Plan, incorporated by reference
from Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1991.
10.11 Revolving Credit Loan Agreement dated as of
June 30, 1992, as amended, between the Company and
Plaza Bank of Commerce, incorporated by reference from
Exhibit 10.3 to the Company's Current Report on
Form 8-K filed August 17, 1992.
10.12 Unit Purchase Agreement dated as of July 2, 1992,
between the Company, Richard C. Blum & Associates, Inc.
and certain purchasers, together with the First
Amendment to Unit Purchase Agreement dated as of
August 3, 1992, and the form of irrevocable Proxy,
incorporated by reference from Exhibit 10.4 to the
Company's Current Report on Form 8-K filed
August 17, 1992.
10.13 Unit Certificate evidencing Units to purchase
Preferred Stock and Warrants, together with Form of
Warrant Certificate, attached as Exhibit A thereto,
incorporated by reference from Exhibit 3.2 to the
Company's Current Report on Form 8-K filed
August 17, 1992.
10.14 Registration Rights Agreement between the Company and
certain purchasers under the Unit Purchase Agreement
dated as of August 3, 1992, incorporated by reference
from Exhibit 10.5 to the Company's Current Report on
Form 8-K filed August 17, 1992.
10.15 Grant Agreement between the Industrial Development
Authority and Triad Systems Ireland Limited, Triad
Systems Corporation and Tridex Systems Limited and
related agreements, incorporated by reference from
Exhibit 10.15 to the 1992 Form S-4 Registration
Statement.
10.16 Cancellation of Development Agreement between the
Company and the City of Livermore dated July 15, 1993,
incorporated by reference from Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1993.
10.17 Amended and Restated Subdivision Improvement Agreement
between the Company and the City of Livermore
dated May 12, 1993, incorporated by reference from
Exhibit 10.17 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1993.
*10.18 Supplemental Deferred Compensation Plan between the
Company and a select group of Triad Key Employees and
their beneficiaries dated April 1, 1994, incorporated
by reference from Exhibit 10.18 to the Company's
Form 10-Q for the fiscal quarter ended June 30, 1994.
*10.19 Amendment to the Amended and Restated 1982 Stock
Option Plan dated April 25, 1994, incorporated by
reference from Exhibit 10.19 to the Company's
Form 10-Q for the fiscal quarter ended June 30, 1994.
10.20 Amendment No. Three to Revolving Credit Loan Agreement
and Consent (to Exchange Agreement) between Triad
Systems Corporation, Triad Systems Financial
Corporation and Comerica Bank-California dated
March 31, 1995, incorporated by reference from
Exhibit 6 to the May 1995 Form 8-K.
11.1 Computation of Earnings Per Share. 14
27.0 Financial Data Schedule 15
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on May 11, 1995,
which described under Item 5 - Other Events, the Company's
March 31, 1995 exchange of 1,000,000 shares of preferred
stock and associated warrants to purchase 3,500,000 shares
of common stock for $10,000,000 cash and 2,222,222 shares
of Triad common stock, and the respective amendments to
the Revolving Credit Loan Agreement and the Indentures
governing the Fixed Rate Notes and Floating Rate Notes.
- --------
* Compensatory or employment agreement
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, a duly authorized officer of the Registrant.
Triad Systems Corporation
-------------------------
(Registrant)
Date: May 11, 1995 /s/ STANLEY F. MARQUIS
------------ -----------------------
Stanley F. Marquis
Vice President, Finance
(Principal Financial Officer)
Exhibit 11.1
Triad Systems Corporation
COMPUTATION OF EARNINGS PER SHARE
For the Three and Six Month Periods Ended March 31, 1995 and 1994
Three Months Ended Six Months Ended
March 31, March 31,
(Amounts in thousands
except per share data) 1995 1994 1995 1994
------- ------- ------- -------
Calculation of number of shares
entering into computations
Weighted average shares outstanding 14,215 12,743 14,007 12,673
Assumed conversion of preferred
stock and exercise of warrants 3,137 3,137 3,137 3,137
------ ------ ------ ------
17,352 15,880 17,144 15,810
Net effect of dilutive stock options
and warrants based on the average
stock price 803 1,545 849 1,614
------ ------ ------ ------
Average primary shares outstanding 18,155 17,425 17,993 17,424
------ ------ ------ ------
Net effect of dilutive stock options
and warrants based on the ending
stock price 94 ---- 92 ----
------ ------ ------ ------
Average fully diluted shares
outstanding 18,249 17,425 18,085 17,424
====== ====== ====== ======
Income before extraordinary charge $2,291 $1,396 $3,874 $2,440
Net interest costs associated with
assumed retirement of debt ---- 21 ---- 56
------ ------ ------ ------
Adjusted income before extraordinary
charge 2,291 1,417 3,874 2,496
Extraordinary charge on repurchase
of debt, net of taxes ---- ---- 153 ----
------ ------ ------ ------
Adjusted net income $2,291 $1,417 $3,721 $2,496
====== ====== ====== ======
Earnings per share
Primary
Income before extraordinary charge $0.13 $0.08 $0.22 $0.14
Net income $0.13 $0.08 $0.21 $0.14
Fully diluted
Income before extraordinary charge $0.13 $0.08 $0.22 $0.14
Net income $0.13 $0.08 $0.21 $0.14
====== ====== ====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted
from the Consolidated Balance Sheets at March 31, 1995 and
the Consolidated Statement of Income and Statement of Cash
Flow for the six months ended March 31, 1995, and is qualified
in its entirety by reference to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,255
<SECURITIES> 0
<RECEIVABLES> 15,039
<ALLOWANCES> 1,264
<INVENTORY> 6,705
<CURRENT-ASSETS> 33,694
<PP&E> 55,988
<DEPRECIATION> 29,265
<TOTAL-ASSETS> 126,019
<CURRENT-LIABILITIES> 36,133
<BONDS> 52,902
<COMMON> 17
0
0
<OTHER-SE> 6,152
<TOTAL-LIABILITY-AND-EQUITY> 126,019
<SALES> 35,488
<TOTAL-REVENUES> 86,087
<CGS> 16,990
<TOTAL-COSTS> 43,431
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,813
<INTEREST-EXPENSE> 3,418
<INCOME-PRETAX> 6,248
<INCOME-TAX> 2,374
<INCOME-CONTINUING> 3,874
<DISCONTINUED> 0
<EXTRAORDINARY> 153
<CHANGES> 0
<NET-INCOME> 3,721
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
