<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 June 30, 1996
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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 14,061,955
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Class Shares outstanding on June 30, 1996
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statement of Operations - Three
Months Ended June 30, 1996 and
July 2, 1995............................................ 1
Consolidated Balance Sheets - June 30, 1996
and March 31, 1996...................................... 2-3
Consolidated Statements of Cash Flows - Three
Months Ended June 30, 1996 and July 2, 1995. 4
Notes to Financial Statements........................... 5-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations................................... 7
Liquidity and Capital Resources......................... 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................. 8
ITEM 2. CHANGES IN SECURITIES.......................... 8
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................ 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS............................... 8
ITEM 5. OTHER INFORMATION.............................. 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............... 8
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
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June 30 July 02
1996 1995
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<S> <C> <C>
REVENUES
Sales....................................... $ 7,523 $ 8,718
Rentals and services........................ 2,954 2,350
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TOTAL......................................... 10,477 11,068
COSTS AND EXPENSES
Cost of revenues............................ 3,631 3,293
Research, development and engineering....... 2,476 2,720
Selling, general and administrative......... 5,561 4,719
Other charges............................... - 5,820
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TOTAL......................................... 11,668 16,552
INCOME (LOSS) FROM OPERATIONS................. (1,191) (5,484)
Interest Expense.............................. (18) -
Interest Income............................... 130 250
Income Tax Expense............................ (50) (25)
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NET INCOME (LOSS)............................. $ (1,129) $ (5,259)
========== ==========
EARNINGS PER SHARE
Net Income (Loss)........................... (.08) $ (.39)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING......... 14,032,000 13,530,000
========== ==========
</TABLE>
See accompanying Notes to Financial Statements.
1
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CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
ASSETS
<TABLE>
<CAPTION>
Unaudited
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June 30 March 31
1996 1996
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents.................... $ 5,295 $ 5,455
Cash in escrow............................... 763 1,539
Marketable securities........................ 1,982 4,318
Accounts receivable - net.................... 16,298 14,216
Current portion of installment
receivables - net.......................... 778 1,018
Note receivable.............................. - 8,700
Inventories.................................. 3,743 3,881
Other........................................ 435 388
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Total current assets....................... 29,294 39,515
PROPERTY AND EQUIPMENT - NET................... 4,653 5,005
CAPITALIZED SOFTWARE - NET..................... 6,474 6,286
INSTALLMENT RECEIVABLES - NET OF CURRENT
PORTION...................................... 1,259 1,310
GOODWILL - NET................................. 1,629 1,697
OTHER.......................................... 801 876
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TOTAL...................................... $44,110 $54,689
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</TABLE>
See accompanying Notes to Financial Statements.
2
<PAGE>
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unaudited
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June 30 March 31
1996 1996
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<S> <C> <C>
CURRENT LIABILITIES
Accounts payable...................... $ 4,629 $ 5,100
Accrued expenses...................... 5,729 6,029
Deferred revenue...................... 4,465 4,255
Notes payable......................... 1,000 1,000
Current portion of long-term debt..... - 8,976
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Total current liabilities........... 15,823 25,360
SHAREHOLDERS' EQUITY
Common stock--authorized, 30,000,000
shares at $.05 par value; shares
outstanding at:
June 30, 1996 - 14,061,955
March 31, 1996 - 14,028,455...... 703 701
Additional paid-in-capital............ 57,128 57,062
Accumulated deficit................... (29,366) (28,237)
Deferred compensation................. (178) (197)
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Total shareholders' equity.......... 28,287 29,329
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Total............................... $ 44,110 $ 54,689
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</TABLE>
See accompanying Notes to Financial Statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
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JUNE 30 July 02
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income........................................ $(1,129) $(5,259)
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization................... 1,117 763
Other charges................................... - 5,820
Accounts receivable............................. (2,082) 2,566
Installment receivables......................... 291 (17)
Inventories..................................... 138 (348)
Other assets.................................... 28 (265)
Accounts payable, accrued expenses, deferred
revenue and income taxes...................... (561) (917)
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Net cash flows from, (used in) operating
activities.................................... (2,198) 2,343
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INVESTING ACTIVITIES:
Purchase of Company (net of cash acquired)........ - (4,547)
Purchases of marketable securities................ - (2,520)
Maturities of marketable securities............... 2,336 1,493
Purchases of property and equipment............... (64) (402)
Capitalized software.............................. (802) (768)
Note Receivable................................... 8,700 -
Change in cash held in escrow..................... 776 27
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Net cash flows from, (used in) investing
activities....................................... 10,946 (6,717)
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FINANCING ACTIVITIES:
Debt transactions:
Repayments...................................... (8,976) (37)
Capital transactions:
Stock options exercised......................... 68 30
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Net cash flows from, (used in) financing
activities...................................... (8,908) (7)
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Net increase (decrease)in cash and
cash equivalents.................................. (160) (4,381)
Beginning cash and cash equivalents................. 5,455 13,140
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Ending cash and cash equivalents.................... $ 5,295 $ 8,759
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Supplemental disclosures of cash flow information:
Cash paid for interest............................ $ 162 $ 205
Cash paid (received) for income taxes............. 13 207
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
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 March 31, 1996.
2. INCOME PER SHARE
Earnings per common and common equivalent share was computed by dividing the
net loss by the weighted average number of shares of common stock
outstanding.
3. INVENTORIES
Inventories consisted of: (Dollars in thousands)
<TABLE>
<CAPTION>
June 30 March 31
1996 1996
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<S> <C> <C>
Raw material $ 744 $ 652
Work-in-process 1,548 1,542
Finished goods 1,451 1,687
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$3,743 $3,881
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</TABLE>
4. SALE OF FORMER HEADQUARTERS.
Effective June 12, 1996 Apertus concluded the sale of its former
headquarters by paying off the $8,976 remaining on its mortgage with
Prudential and collecting the $8,700 note receivable from Best Buy. At this
time cash held in escrow totalling $776 was released to Apertus.
5. ACQUISITION OF BLUELINE SOFTWARE INC.
Effective the close of business on June 30, 1995, the Company purchased the
stock of BlueLine Software Inc (BlueLine). The total purchase price was
$8,750 of which approximately 50% was in cash and 50% was in Apertus common
stock. The acquisition was accounted for under the purchase method of
accounting. The acquisition resulted in goodwill of approximately $1,900
which is being amortized on a straight line basis over 7 years. The purchase
included a charge to earnings of $5,390 in quarter one fiscal 1996 related
to the write down of purchased research and development costs and other
acquisition costs.
5
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6. OTHER CHARGES
In the first quarter of fiscal 1996 the Company recorded other charges of
$5,820. These charges related primarily to the acquisition of BlueLine (see
note 5) and the closing of a West coast location.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
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CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
RESULTS OF OPERATIONS
Net revenues for the first quarter of fiscal year 1997 decreased $591 (5%) from
the first quarter of fiscal year 1996. This is mainly due to revenue taken in
quarter one of fiscal 1996 associated with a large GTE licence contract which
was concluded in quarter three of fiscal 1996. The mix of revenues between
domestic and international quarter over quarter increased from approximately 21%
to 32% respectively.
The cost of revenues, as a percentage of revenues, increased to 35% in the
first quarter of fiscal 1997 from 30% in the comparable quarter of fiscal
1996. This increase was due primarily to the GTE revenue recognized in quarter
one of fiscal 1996 which had no associated costs.
Research, development, and engineering costs remained relatively flat as a
percentage of revenue and accounted for 24% of first quarter fiscal 1997
revenues as compared with 25% in the comparable prior year quarter. Significant
activity in this category includes the addition of BlueLine R&D expenses
included in operations effective July 1, 1995 and the reduction in expenses
associated with the revamping of the Company at the end of fiscal 1996. The
net result of this activity is that R&D expenses remained relatively flat
quarter over quarter. Selling, general, and administrative costs were 53% of
revenues in the first quarter of fiscal 1997 as compared to 43% in the prior
year comparable quarter. This increase reflects the additional costs associated
with the BlueLine acquisition which are reflected in the quarter one fiscal 1997
figures but not in the quarter one fiscal 1996 amounts.
Interest income decreased due to a lower average balance in cash and marketable
securities between periods.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and marketable securities were $8,040 and $11,312 at June
30, 1996 and March 31, 1996 respectively. The Company currently anticipates
making capital expenditures of approximately $750 during the rest of fiscal year
1997. 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 1997.
7
<PAGE>
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
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None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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An annual meeting of shareholders was held on July 18, 1996. Two Class
One directors, George E. Hubman and Arch J. McGill were re-elected
receiving 13,140,671 and 13,137,984 votes for respectively with 239,848
and 242,535 withholding authority respectively. The second matter was
the ratification of the Board of Directors appointment of Ernst and
Young as the Company's independent auditors for the current fiscal year.
The proposal was approved with 13,209,603 for and 100,114 against and
70,802 abstaining.
ITEM 5. OTHER INFORMATION
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None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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None
8
<PAGE>
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 12, 1996 By /s/ Sue Hogue
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Sue Hogue
Vice President Finance
Chief Financial Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,058
<SECURITIES> 1,982
<RECEIVABLES> 18,127
<ALLOWANCES> 1,829
<INVENTORY> 3,743
<CURRENT-ASSETS> 29,294
<PP&E> 15,750
<DEPRECIATION> 11,097
<TOTAL-ASSETS> 44,110
<CURRENT-LIABILITIES> 15,823
<BONDS> 1,000
<COMMON> 0
0
57,831
<OTHER-SE> (29,544)
<TOTAL-LIABILITY-AND-EQUITY> 44,110
<SALES> 7,523
<TOTAL-REVENUES> 10,477
<CGS> 3,631
<TOTAL-COSTS> 11,668
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (18)
<INCOME-PRETAX> (1,079)
<INCOME-TAX> (50)
<INCOME-CONTINUING> (1,129)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,129)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
