<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 02, 1995
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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 012378
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APERTUS TECHNOLOGIES INCORPORATED
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(Exact name of registrant as specified in its charter)
MINNESOTA 41-1349953
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7275 FLYING CLOUD DRIVE, EDEN PRAIRIE, MINNESOTA 55344
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 828-0300
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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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.05 par value 14,040,800
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Class Shares outstanding on July 02, 1995
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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<TABLE>
<CAPTION>
<S> <C>
Consolidated Statements of Operations - Three
Months Ended July 02, 1995 and
July 3, 1994............................................ 1
Consolidated Balance Sheets - July 02, 1995
and April 02, 1995...................................... 2-3
Consolidated Statements of Cash Flows - Three
Months Ended July 02, 1995 and
July 3, 1994............................................ 4
Notes to Financial Statements........................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of Operations................................... 6
Liquidity and Capital Resources......................... 6
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................. 7
ITEM 2. CHANGES IN SECURITIES.......................... 7
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................ 7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS............................... 7
ITEM 5. OTHER INFORMATION.............................. 7
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............... 7
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
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July 02 July 3
1995 1994
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<S> <C> <C>
REVENUES
Sales................... $ 8,718 $11,397
Rentals and services.... 2,350 1,630
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TOTAL..................... 11,068 13,027
COSTS AND EXPENSES
Cost of revenues........ 3,293 3,690
Research, development
and engineering....... 2,720 2,279
Selling, general and
administrative........ 4,719 4,811
Other charges........... 5,820 -
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TOTAL..................... 16,552 10,780
INCOME (LOSS) FROM
OPERATIONS.............. (5,484) 2,247
INTEREST INCOME........... 250 69
INCOME TAX EXPENSE........ (25) -
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NET INCOME (LOSS)......... $(5,259) $ 2,316
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EARNINGS PER SHARE
Net Income (Loss)....... $ (.39) $ .17
======= =======
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING............. 13,530,000 13,597,000
========== ==========
</TABLE>
See accompanying Notes to Financial Statements.
1
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BALANCE SHEETS
(Dollars in Thousands)
ASSETS
<TABLE>
<CAPTION>
UNAUDITED
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JULY 02 April 02
1995 1995
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............... $ 8,759 $13,140
Cash in Escrow - current portion........ 106 106
Marketable securities................... 7,337 6,310
Accounts receivable-net................. 12,845 14,067
Current portion of installment
receivables........................... 1,636 150
Inventories............................. 3,473 3,126
Other................................... 750 453
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Total current assets.................. 34,906 37,352
PROPERTY AND EQUIPMENT-NET................ 3,917 3,709
NOTE RECEIVABLE........................... 8,700 8,700
CAPITALIZED SOFTWARE - NET................ 5,433 3,917
CASH IN ESCROW - NET OF CURRENT PORTION... 730 757
INSTALLMENT RECEIVABLES - NET OF CURRENT
PORTION................................. 1,558 49
GOODWILL.................................. 2,089 -
OTHER..................................... 954 842
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TOTAL................................. $58,287 $55,326
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</TABLE>
See accompanying Notes to Financial Statements.
2
<PAGE>
BALANCE SHEETS
(Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
UNAUDITED
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July 02 April 02
1995 1995
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<S> <C> <C>
CURRENT LIABILITIES
Accounts payable...................... $ 4,497 $ 2,932
Accrued expenses...................... 6,359 6,437
Deferred revenue...................... 5,215 3,863
Notes Payable......................... 999 -
Current portion of long-term debt..... 151 151
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Total current liabilities........... 17,221 13,383
LONG-TERM DEBT.......................... 8,939 8,976
SHAREHOLDERS' EQUITY
Common stock--authorized, 30,000,000
shares at $.05 par value; shares
outstanding at:
July 02, 1995 - 14,040,800
April 02, 1995 - 13,526,800...... 702 676
Additional paid-in-capital............ 57,609 53,231
Accumulated deficit................... (26,006) (20,747)
Deferred compensation................. (178) (193)
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Total shareholders' equity.......... 32,127 32,967
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Total............................... $ 58,287 $ 55,326
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</TABLE>
See accompanying Notes to Financial Statements.
3
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STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
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JULY 2 July 3
1995 1994
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)................................. (5,259) 2,316
Adjustments to reconcile net income (loss)
to net cash from operations:
Depreciation and amortization................... 763 711
Other Charges................................... 5,820 -
Accounts receivable............................. 2,566 (4,377)
Installment receivables......................... (17) 271
Inventories..................................... (348) 175
Other assets.................................... (265) (94)
Accounts payable, accrued expenses and
income taxes.................................. (917) 4,911
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Net cash flows from operating activities........ 2,343 3,913
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INVESTING ACTIVITIES:
Purchase of Company (net of cash acquired)........ (4,547) -
Purchases of marketable securities................ (2,520) (15)
Maturities of marketable securities............... 1,493 1,078
Purchases of property and equipment............... (402) (173)
Capitalized software.............................. (768) (522)
Change in cash held in escrow..................... 27 26
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Net cash flows used in investing activities....... (6,717) 394
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FINANCING ACTIVITIES:
Debt transactions:
Repayments...................................... (37) (34)
Capital transactions:
Stock options exercised......................... 30 -
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Net cash flows used in financing activities....... (7) (34)
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Net increase in cash and cash equivalents........... (4,381) 4,273
Beginning cash and cash equivalents................. 13,140 2,040
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Ending cash and cash equivalents.................... $ 8,759 $ 6,313
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Supplemental disclosures of cash flow information:
Cash paid for interest............................ $ 205 $ 207
Cash paid for income taxes........................ 207 0
</TABLE>
See accompanying Notes to Financial Statements.
4
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NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. MANAGEMENT REPRESENTATION
The accompanying unaudited interim financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of
operations for any interim period are not necessarily indicative of results
for the year. These statements should be read in conjunction with the
financial statements and related notes included in the Company's Annual
Report on Form 10-K for the year ended April 2, 1995.
2. EARNINGS PER SHARE
Earnings per common and common equivalent shares was computed by dividing
net income/(loss) by the weighted average number of shares of common stock
outstanding plus common stock equivalents (if applicable).
3. INVENTORIES
Inventories consisted of: (Dollars in thousands)
<TABLE>
<CAPTION>
JULY 2 April 2
1995 1995
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<S> <C> <C>
Raw material $ 550 $ 499
Work-in-process 1,190 1,161
Finished goods 1,733 1,466
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$3,473 $3,126
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</TABLE>
4. ACQUISITION OF BLUELINE SOFTWARE INC.
Effective the close of business on June 30, 1995, the Company purchased the
stock of BlueLine Software Inc. The total purchase price was $8,750,000 of
which approximately 50% was in cash and 50% was in Apertus common stock.
BlueLine develops and markets a suite of products for the centralized
management of enterprise networks. The acquisition was accounted for under
the purchase method with the operations of BlueLine included in the
financial statements from the date of acquisition. The acquisition, based
on preliminary information, resulted in goodwill of $2,089,000 which will be
amortized on a straight-line basis over 7 years. The purchase included a
charge to earnings of $5,390,000 related to the write-down of purchased
research and development and other acquisition costs.
5. OTHER CHARGES
Other charges of $5,820,000 include $5,390,000 of purchased R&D and
acquisition costs related to BlueLine and the company recorded a charge to
earnings of $430,000 for the closure of the DTS operations in Oregon.
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues for the first quarter of fiscal year 1996 decreased $1.9 million
(15%) from the first quarter of fiscal year 1995. This was mainly attributed to
the slower than anticipated market development, a lengthening sales cycle for
certain key accounts, and some deferred purchasing in anticipation of new
Apertus products.
Cost of revenues, as a percentage of revenues, remained constant when comparing
the first quarter of fiscal 1996 (29%) to Cost of Revenues in the comparable
quarter of fiscal 1995 (28%). This trend reflects a similar mix of product
sales between quarters.
Research, development, and engineering costs were 24% of first quarter fiscal
1996 revenues as compared with 17% in the comparable prior year quarter. This
was primarily due to increased development resources dedicated toward the
completion of future projects combined with the decreased sales volume. Selling,
general, and administrative costs were 45% of revenues in the first quarter of
fiscal 1996 as compared to 36% in the prior year comparable quarter. This
increase reflects the costs associated with the continued expansion in the
commercial and international marketplaces combined with the decreased sales
volume.
Interest income increased due to a higher average balance in cash and marketable
securities when compared to first quarter of fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and marketable securities were $16,932,000 and
$20,313,000 at July 2, 1995 and April 2, 1995 respectively. The Company
currently anticipates making capital expenditures of $1,600,000 during the rest
of fiscal year 1996. These capital expenditures will relate to research and
development, data processing and software. The Company believes that cash, cash
equivalents and marketable securities will be adequate to meet its anticipated
cash needs for working capital and capital expenditures for the balance of
fiscal year 1996.
6
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual meeting of shareholders was held on July 20, 1995. Three Class
Two directors, Clarence W. Spangle, Robert W. Fischer, and George E.
Hubman were re-elected receiving 12,221,114, 12,218,714 and 12,242,392
votes respectively with 101,653, 104,053, and 80,375 withholding
authority respectively. The second matter was the approval of the 1995
Employee Stock Purchase Plan with 11,925,414 voting for, 318,529 voting
against, 78,064 abstaining, and 760 as a Broker Non-vote. The third
matter approved at the meeting was the ratification of the Board of
Directors appointment of Ernst and Young LLP as the Company's
independent auditors for the current fiscal year. The proposal was
approved with 12,264,606 voting for, 20,608 voting against and 37,533
abstaining.
ITEM 4. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A Form 8-K outlining the BlueLine acquisition was filed in July, 1995.
This filing included financial statements of the business acquired and
pro-forma consolidated statements as of March 31, 1995.
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APERTUS TECHNOLOGIES INCORPORATED
Date: August 14, 1995 By /s/ Sue Hogue
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Sue Hogue
Chief Financial Officer
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> MAR-31-1996 APR-02-1995
<PERIOD-START> APR-03-1995 APR-04-1994
<PERIOD-END> JUL-02-1995 JUL-03-1994
<CASH> 8,865,000 13,246,000
<SECURITIES> 1,337,000 6,310,000
<RECEIVABLES> 12,845,000 19,067,000
<ALLOWANCES> 0 0
<INVENTORY> 3,473,000 3,126,000
<CURRENT-ASSETS> 34,906,000 37,352,000
<PP&E> 3,917,000 3,709,000
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 58,287,000 55,326,000
<CURRENT-LIABILITIES> 17,221,000 13,383,000
<BONDS> 0 0
<COMMON> 702,000 696,000
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 58,287,000 55,326,000
<SALES> 11,068,000 13,027,000
<TOTAL-REVENUES> 11,068,000 13,027,000
<CGS> 3,293,000 3,690,000
<TOTAL-COSTS> 16,552,000 10,780,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (5,234,000) 2,316,000
<INCOME-TAX> 25,000 0
<INCOME-CONTINUING> (5,259,000) 2,316,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,259,000) 2,316,000
<EPS-PRIMARY> (.39) .17
<EPS-DILUTED> (.39) .17
</TABLE>
