<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[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.
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______.
Commission File Number 0-16376
TIMBERLINE SOFTWARE CORPORATION
(Name of small business issuer in its charter)
Oregon 93-0748489
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9600 S.W. Nimbus Avenue, Beaverton, Oregon 97008
(Address of principal executive offices) (Zip code)
(503) 626-6775
Issuer's telephone number
Check whether the issuer (1) 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 [ ]
At May 5 1995, 3,400,440 shares of common stock of the registrant
were outstanding, after giving effect to a three-for-two stock
split declared by the registrant's Board of Directors to
shareholders of record on such date.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [x]
<PAGE>
TIMBERLINE SOFTWARE CORPORATION
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
TABLE OF CONTENTS
- ---------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheets, March 31, 1995 and
December 31, 1994 ............................... 3
Condensed statements of operations for the three
months ended March 31, 1995 and 1994 ............ 4
Condensed statements of cash flows for the three
months ended March 31, 1995 and 1994 ............ 5
Notes to condensed financial statements ........... 6
Item 2. Management's Discussion and Analysis or
Plan of Operation ............................... 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................. 10
SIGNATURES ................................................. 10
EXHIBIT INDEX .............................................. 11
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
TIMBERLINE SOFTWARE CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
- ----------------------------------------------------------------
<TABLE><CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 1,402,440 $ 1,411,611
Temporary cash investments 3,932,230 3,484,282
Accounts receivable, less allowance
for doubtful accounts
(March 31, 1995, $426,982;
December 31, 1994, $251,982) 2,842,267 3,489,521
Other receivables 98,479 84,366
Inventories 197,211 215,655
Other current assets 642,147 515,819
----------- -----------
Total current assets 9,114,774 9,201,254
----------- -----------
Property and equipment 5,649,823 5,392,571
Less accumulated depreciation
and amortization 3,269,873 3,039,283
------------ -----------
Property and equipment - net 2,379,950 2,353,288
----------- -----------
Capitalized software costs - net 410,260 480,272
Purchased software - net 243,645 189,629
Other assets 114,882 126,054
----------- -----------
Total $12,263,511 $12,350,497
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 674,068 $ 644,545
Accrued commissions/royalties 127,573 166,543
Accrued income taxes 318,758 588,685
Deferred revenues 5,117,535 4,514,684
Accrued employee expenses 589,277 975,919
Other current liabilities 220,879 241,091
----------- -----------
Total current liabilities 7,048,090 7,131,467
----------- -----------
Accrued rent expense 71,957 76,979
Deferred income taxes 384,000 398,000
Shareholders' equity:
Common stock, without par value
authorized, 8,000,000 shares;
issued - March 31, 1995,
3,393,840 shares; December 31,
1994, 3,419,040 shares 339,384 341,904
Additional paid in capital 900,347 897,690
Retained earnings 3,519,733 3,504,457
----------- -----------
Total shareholders' equity 4,759,464 4,744,051
----------- -----------
Total $12,263,511 $12,350,497
=========== ===========
</TABLE>
See notes to condensed financial statements.<PAGE>
TIMBERLINE SOFTWARE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
Net revenue $5,893,559 $4,682,989
---------- ----------
Cost and expenses:
Cost of revenue 649,762 593,447
Customer support 1,196,017 958,541
Product development 1,248,773 887,208
Sales and marketing 1,417,914 1,315,720
General and administrative 1,086,326 902,731
---------- ----------
Total cost and expenses 5,598,792 4,657,647
---------- ----------
Income from operations 294,767 25,342
Other income 84,813 45,928
---------- ----------
Income before income taxes 379,580 71,270
Provision for income taxes 146,000 27,000
---------- ----------
Net income $ 233,580 $ 44,270
========== ==========
Earnings per share $ .07 $ .01
========== ===========
Weighted average common shares
outstanding 3,565,683 3,481,088
========== ==========
See notes to condensed financial statements.
/TABLE
<PAGE>
TIMBERLINE SOFTWARE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
Net cash provided by
operating activities $ 958,323 $1,325,290
---------- ----------
Cash flows from investing
activities:
Payments for property
and equipment (294,156) (243,530)
Capitalized software costs (8,686) (84,331)
Proceeds from temporary
cash investments 1,500,000
Purchase of temporary
cash investments (1,947,948)
Other investing activities 1,463 2,431
----------- ----------
Net cash used in investing
activities (749,327) (325,430)
----------- ----------
Cash flows from financing
activities:
Proceeds from issuance of
common stock 10,000 99,135
Common stock reacquired (159,750)
Dividends paid (68,417)
----------- ----------
Net cash provided by (used in)
financing activities (218,167) 99,135
----------- ----------
Net increase (decrease) in cash
and cash equivalents (9,171) 1,098,995
Cash and cash equivalents,
beginning of the year 1,411,611 2,336,471
----------- ----------
Cash and cash equivalents,
end of period $1,402,440 $3,435,466
========== ==========
Supplemental information:
Cash paid during the period for:
Income taxes $ 497,327 $ 150,430
Interest expense 112 --
See notes to condensed financial statements.
</TABLE>
<PAGE>
TIMBERLINE SOFTWARE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
- ----------------------------------------------------------------
1. Condensed financial statements
Certain information and note disclosures normally included
in financial statements prepared in accordance with
generally accepted accounting principles have been omitted
from these condensed financial statements. These condensed
financial statements should be read in conjunction with the
financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended December 31, 1994.
The balance sheet at December 31, 1994 has been condensed
from the audited balance sheet as of that date. The results
of operations for the three months ended March 31, 1995 and
1994 are not necessarily indicative of the operating results
for the full year.
In the opinion of management, all adjustments, consisting of
normal recurring adjustments, have been made to present
fairly the Company's financial position at March 31, 1995
and the results of its operations and its cash flows for the
three months ended March 31, 1995 and 1994.
2. Subsequent event: Stock split
On April 25, 1995, the Company's Board of Directors approved
a three-for-two stock split to shareholders of record on
May 5, 1995. The number of shares issued as of March 31,
1995 and December 31, 1994 as shown on the condensed balance
sheets and the earnings per share amounts and weighted
common shares outstanding shown on the condensed statements
of operations for the three months ended March 31, 1995 and
1994 have been retroactively adjusted to reflect this
change.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
Operation
TIMBERLINE SOFTWARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ----------------------------------------------------------------
Results of Operations
- ---------------------
NET REVENUE. Net revenue increased 26 percent to $5,894,000 in
the three months ended March 31, 1995 compared to $4,683,000 in
the comparable period in 1994. The major component of net
revenue, software sales, increased 14 percent to $3,062,000 in
the 1995 period from $2,689,000 in the 1994 period, primarily due
to increased sales of construction accounting software, particu-
larly Construction Gold. Construction Gold sales increased 51
percent in the three months ended March 31, 1995 over the same
period in 1994. Sales of estimating and property management
software also increased slightly during the three months ended
March 31, 1995, but were partially offset by a decrease in sales
of architect and engineer software. Software sales represented
52 percent of net revenue in the three months ended March 31,
1995 compared to 57 percent of net revenue in the same period in
1994.
Service fees from maintenance, support and training, which
represented 46 and 41 percent of net revenue for the three months
ended March 31, 1995 and 1994, respectively, increased 44 percent
to $2,729,000 in the 1995 period from $1,897,000 in the 1994
period. The increases in service fees was due principally to
increased maintenance and support fees resulting from the
Company's larger customer base, an expanded number of training
classes offered by the Company and increased demand for on-site
consulting services. The Company anticipates that service fees
will continue to represent a significant percentage of net
revenue as the Company's installed customer base continues to
increase.
COST OF REVENUE. Cost of revenue decreased to 11 percent of net
revenue for the three months ended March 31, 1995 from 13 percent
for the comparable period in 1994. This decrease primarily
resulted from service fees representing a greater percentage of
net revenue in the 1995 period. Most of the costs associated
with service fees are accounted for as customer support expenses.
OPERATING EXPENSES. Operating expenses increased 22 percent to
$4,949,000 for the three months ended March 31, 1995 from
$4,064,000 for the same period in 1994. Customer support
expenses increased 25 percent to $1,196,000 for the three months
ended March 31, 1995 from $959,000 for the same period in 1994,
primarily due to additional personnel required to handle the
increased demand for support, consulting and training services
resulting from increased sales of Construction Gold software.
The Company anticipates continued increases in customer support
expenses in order to meet the demands of its customers and to
maintain a high quality level of service.
Product development expenses increased 41 percent to $1,249,000
for the three months ended March 31, 1995 from $887,000 for the
same period in 1994, primarily due to additional personnel
necessary to maintain the Company's existing products and to
develop and test new software products in the graphical user
interface ("GUI") environment. Additional personnel were also
needed to meet the Company's software development schedule due to
the complexity involved in developing and testing GUI software
products. The Company anticipates that eventually all of its
products will operate in the GUI environment and that additional
personnel will be required in the product development area in
1995.
Sales and marketing expenses increased 8 percent to $1,418,000 in
the three months ended March 31, 1995 from $1,316,000 for the
same period in 1994, primarily due to increased personnel in the
sales and telemarketing areas. As a percentage of net revenue,
sales and marketing expenses declined to 24 percent in the 1995
period from 28 percent in the 1994 period.
General and administrative expenses increased 20 percent to
$1,086,000 for the three months ended March 31,1995 from $903,000
for the same period in 1994, but declined, as a percentage of net
revenue, to 18 percent in 1995 from 19 percent in 1994. The
increase in general and administrative expenses in the three
months ended March 31, 1995 was due primarily to the addition of
$175,000 to the allowance for bad debts for a receivable from a
large Canadian customer that has filed for bankruptcy protection.
It is uncertain at this time if any recovery will be made on this
account.
OTHER INCOME. Other income increased 85 percent to $85,000 for
the three months ended March 31, 1995 from $46,000 for the
comparable period in 1994, primarily due to larger amounts of
investable funds and higher interest rates earned on cash
investments.
Capital Resources and Liquidity
- -------------------------------
During the three months ended March 31, 1995, net cash provided
by operations was $958,000 compared to $1,325,000 for the same
period in 1994. Working capital remained relatively constant
since December 31, 1994 and was $2,067,000 at March 31, 1995.
Cash, cash equivalents and temporary cash investments, which
represented 44 percent of the Company's total assets at March 31,
1995, increased $439,000 during the three months due principally
to the increase in cash provided by operations. Net accounts
receivable at March 31, 1995 decreased $647,000, reflecting a
seasonal decline in sales in the first quarter of 1995 and the
addition of $175,000 to the allowance for doubtful accounts
discussed above. Other current assets increased $126,000 during
the three months ended March 31, 1995, primarily due to an
increase in deferred tax assets and prepaid expenses.
Accrued income taxes decreased $270,000 during the three months
ended March 31, 1995, primarily as a result of the payment of
federal income taxes owed for 1994. Deferred revenues increased
$603,000 in the same period, primarily due to increased billings
for annual maintenance and support services. Revenue from these
billings is recognized monthly over the term of the contracts.
Accrued employee expenses decreased $387,000 during the first
quarter of 1995, primarily as a result of the payment of the
Company's 1994 contribution to its 401(k) plan and payments to
employees of 1994 profit sharing bonuses.
The Company repurchased 27,000 shares of Common Stock during the
three months ended March 31, 1995. As of that date, the
Company's Board of Directors had authorized management to
repurchase up to 188,250 additional shares on the open market.
The number of shares has been adjusted to reflect a three-for-two
stock split to shareholders of record as of May 5, 1995. See
Note 2 of Notes to Condensed Financial Statements.
In January 1995, the Company declared a quarterly cash dividend
of $68,000, which represented $.03 per share before giving effect
to the three-for-two stock split.
As of March 31, 1995, the Company had expended $294,000 of its
1995 capital expenditure budget of $1,200,000 for computer and
telecommunication equipment. Subsequent capital expenditures in
1995 are expected to be funded through current cash balances and
cash provided from operations. The Company has a $1,000,000
working capital line of credit that expires in May 1996. At
March 31, 1995, there were no outstanding borrowings under the
line of credit.
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
No Form 8-K was filed during the three months ended
March 31, 1995.
SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TIMBERLINE SOFTWARE CORPORATION
-------------------------------
(Registrant)
/s/ Thomas P. Cox
Date May 11, 1995 _____________________________
Thomas P. Cox, Senior Vice President-Finance
(Chief Financial Officer)
<PAGE>
FORM 10-QSB
Exhibit Index
Exhibit Page
- ------- ----
(27) Financial Data Schedule 12
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM TIMBERLINE SOFTWARE CORPORATION'S CONDENSED
FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY REPORT ON
FORM 10-QSB FOR THE PERIOD ENDING MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,402,440
<SECURITIES> 3,932,230
<RECEIVABLES> 3,269,249
<ALLOWANCES> 426,982
<INVENTORY> 197,211
<CURRENT-ASSETS> 9,114,774
<PP&E> 5,649,823
<DEPRECIATION> 3,269,873
<TOTAL-ASSETS> 12,263,511
<CURRENT-LIABILITIES> 7,048,090
<BONDS> 0
<COMMON> 339,384
0
0
<OTHER-SE> 4,420,080
<TOTAL-LIABILITY-AND-EQUITY> 12,263,511
<SALES> 5,893,559
<TOTAL-REVENUES> 5,893,559
<CGS> 649,762
<TOTAL-COSTS> 5,598,792
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 112
<INCOME-PRETAX> 379,580
<INCOME-TAX> 146,000
<INCOME-CONTINUING> 233,580
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 233,580
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
