<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 October 01, 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 14,005,151
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Class Shares outstanding on October 01, 1995
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<TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Statements of Operations - Three and Six
Months Ended October 01, 1995 and
October 02, 1994........................................ 1
Balance Sheets - October 01, 1995 and
April 02, 1995.......................................... 2-3
Statements of Cash Flows - Six Months Ended
October 01, 1995 and October 02, 1994................... 4
Notes to Financial Statements........................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
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OCT. 1 OCT. 2 OCT. 1 OCT. 2
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
REVENUES
Sales.................. $11,609 $11,755 $20,327 $23,152
Rentals and services... 3,500 2,139 5,850 3,769
------- ------- ------- -------
TOTAL.................... 15,109 13,894 26,177 26,921
COSTS AND EXPENSES
Cost of revenues....... 4,466 5,257 7,759 8,947
Research, development
and engineering...... 3,217 2,264 5,937 4,543
Selling, general and
administrative....... 5,434 4,374 10,153 9,185
Other charges.......... - - 5,820 -
------- ------- ------- -------
TOTAL.................... 13,117 11,895 29,669 22,675
INCOME (LOSS) FROM
OPERATIONS............. 1,992 1,999 (3,492) 4,246
INTEREST INCOME.......... 167 153 417 222
INCOME TAX EXPENSE....... (78) - (103) -
------- ------- ------- -------
NET INCOME (LOSS)........ $ 2,081 $ 2,152 $(3,178) $ 4,468
======= ======= ======= =======
EARNINGS PER SHARE
Net Income (Loss)...... $ .14 $ .15 $ (.23) $ .31
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING............. 15,016,179 14,352,9277 14,017,959 14,352,927
========== =========== ========== ==========
</TABLE>
See accompanying Notes to Financial Statements.
1
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BALANCE SHEETS
(Dollars in Thousands)
ASSETS
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<CAPTION>
UNAUDITED
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OCT. 1 APRIL 2
1995 1995
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents................ $ 8,378 $13,140
Cash in escrow - current portion......... 106 106
Marketable securities.................... 4,327 6,310
Accounts receivable - net................ 17,189 14,067
Installment receivables - current
portion................................ 1,834 150
Inventories.............................. 3,378 3,126
Other.................................... 944 453
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Total current assets................... 36,156 37,352
PROPERTY AND EQUIPMENT - NET............... 3,978 3,709
NOTE RECEIVABLE............................ 8,700 8,700
CAPITALIZED SOFTWARE - NET................. 5,860 3,917
CASH IN ESCROW - NET OF CURRENT PORTION.... 1,442 757
INSTALLMENT RECEIVABLES - NET OF CURRENT
PORTION.................................. 1,536 49
GOODWILL - NET............................. 2,028 -
OTHER...................................... 866 842
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TOTAL.................................. $60,566 $55,326
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</TABLE>
See accompanying Notes to Financial Statements.
2
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BALANCE SHEETS
(Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
UNAUDITED
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OCT. 1 APRIL 2
1995 1995
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<S> <C> <C>
CURRENT LIABILITIES
Accounts payable...................... $ 6,175 $ 2,932
Accrued expenses...................... 5,447 6,437
Deferred revenue...................... 4,997 3,863
Notes Payable......................... 999 -
Current portion of long-term debt..... 151 151
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Total current liabilities........... 17,769 13,383
LONG-TERM DEBT.......................... 8,902 8,976
SHAREHOLDERS' EQUITY
Common stock--authorized, 30,000,000
shares at $.05 par value; shares
outstanding at:
October 1, 1995 - 14,005,151
April 02, 1995 - 13,526,800...... 700 676
Additional paid-in-capital............ 57,283 53,231
Accumulated deficit................... (23,925) (20,747)
Deferred compensation................. (163) (193)
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Total shareholders' equity.......... 33,895 32,967
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Total............................... $ 60,566 $ 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>
SIX MONTHS ENDED
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OCT. 1 OCT. 2
1995 1994
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).................................. $(3,178) $ 4,468
Adjustments to reconcile net income (loss)
to net cash from operations:
Depreciation and amortization.................... 1,675 2,719
Other Charges.................................... 5,820 -
Accounts receivable.............................. (1,778) (2,414)
Installment receivables.......................... (194) 459
Inventories...................................... (252) (317)
Other assets..................................... (371) 74
Accounts payable, accrued expenses and
income taxes................................... (368) 5,493
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Net cash flows provided by operating activities.. 1,354 10,482
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INVESTING ACTIVITIES:
Purchase of Company (net of cash acquired)......... (4,547) -
Purchases of marketable securities................. (2,574) (4,550)
Maturities of marketable securities................ 4,557 3,580
Purchases of property and equipment................ (816) (611)
Capitalized software............................... (1,708) (1,155)
Change in cash held in escrow...................... (685) 54
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Net cash flows used in investing activities........ (5,773) (2,682)
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FINANCING ACTIVITIES:
Debt transactions:
Repayments....................................... (74) (68)
Capital transactions:
Stock options exercised.......................... 93 354
Stock repurchased by Company..................... (362) -
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Net cash flows (used in)/provided
by financing activities.......................... (343) 286
------- -------
Net increase (decrease) in cash and
cash equivalents................................. (4,762) 8,086
Beginning cash and cash equivalents.................. 13,140 2,040
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Ending cash and cash equivalents..................... $ 8,378 $10,126
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Supplemental disclosures of cash flow information:
Cash paid for interest............................. $ 409 $ 414
Cash paid for income taxes......................... 207 72
</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)
OCT. 1 APRIL 2
1995 1995
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Raw material $ 393 $ 499
Work-in-process 1,138 1,161
Finished goods 1,847 1,466
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$3,378 $3,126
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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 paid in cash and 50% was in issued 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 in the first quarter of fiscal 1996 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 includes $5,390,000 of purchased R&D related to
the BlueLine acquisition. Additionally, the Company recorded a charge to
earnings of $430,000 for the closure of 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 three month period ending October 1, 1995 increased $1.2
million (8.8%) over the comparable period from the prior year. Net revenues for
the six month period ending October 1, 1995 decreased $744 thousand (-2.8%)
under the comparable period from the prior year. The increase in the three month
period can be attributed to the revenues associated with the acquisition of
BlueLine Software, Inc and increases in international sales when compared to the
same period in the prior year. The six month period decrease in revenue
reflects slower than anticipated market development combined with a lengthening
sales cycle for certain key accounts.
Cost of revenues, as a percentage of revenues was 30% for the three and six
month periods ended October 1, 1995 as compared to 38% and 33% for the three and
six month periods ended October 2, 1994. Excluding a $1.2 million write-off of
capitalized IBM software in the second quarter of the prior year, trends reflect
a similar mix of product sales between quarters.
Research, development, and engineering costs as a percentage of revenue were 21%
and 23% during the three and six month periods ending October 1, 1995
respectively as compared to 16% and 17% in the comparable period of fiscal 1995.
This was primarily due to increased development resources dedicated toward the
release of future products. Selling, general, and administrative costs were 36%
and 39% of revenues during the three and six month periods ending October 1,
1995 respectively as compared to 31% and 34% in the comparable periods of the
prior year. This increase reflects the costs associated with the continued
expansion in the commercial and international marketplaces.
Interest income increased due to a higher average balance in cash and marketable
securities when compared to second quarter of fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and marketable securities were $14,253,000 and
$20,313,000 at October 1, 1995 and April 2, 1995, respectively. The Company
currently anticipates making capital expenditures of $1.0 million during the
rest of fiscal year 1996. These capital expenditures will relate to research
and development, data processing and software. The company has repurchased
49,500 shares of common stock which are to be retired. 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
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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
- ------------------------------------------------------------
None
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: November 15, 1995 By /s/ Sue Hogue
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Sue Hogue
Chief Financial Officer
VP Finance
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> MAR-31-1996 APR-02-1995
<PERIOD-START> APR-03-1995 APR-04-1994
<PERIOD-END> OCT-01-1995 OCT-02-1994
<CASH> 8,484,000 13,246,000
<SECURITIES> 4,327,000 6,310,000
<RECEIVABLES> 17,189,000 14,067,000
<ALLOWANCES> 0 0
<INVENTORY> 3,378,000 3,126,000
<CURRENT-ASSETS> 36,156,000 37,352,000
<PP&E> 3,978,000 3,709,000
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 60,566,000 55,326,000
<CURRENT-LIABILITIES> 17,769,000 13,383,000
<BONDS> 0 0
<COMMON> 700,000 676,000
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 60,566,000 55,326,000
<SALES> 26,177,000 26,921,000
<TOTAL-REVENUES> 26,177,000 26,921,000
<CGS> 7,759,000 8,947,000
<TOTAL-COSTS> 29,669,000 22,675,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (3,075,000) 4,468,000
<INCOME-TAX> (103,000) 0
<INCOME-CONTINUING> (3,178,000) 4,468,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,178,000) 4,468,000
<EPS-PRIMARY> (.23) .31
<EPS-DILUTED> (.23) .31
</TABLE>
