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Previous: SILICON VALLEY GROUP INC, S-3, 1995-03-16 |
Next: INTERNATIONAL LEASE FINANCE CORP, 424B3, 1995-03-16 |
<PAGE>
UNITED STATES
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 January 31, 1995
------------------------------------------------
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:0-12456
---------------------------------------------------------
AMERICAN SOFTWARE, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1098795
- - ------------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
470 East Paces Ferry Road, N.E., Atlanta, Georgia 30305
- - ------------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(404) 261-4381
--------------------------------------------------------
(Registrant's telephone number, including area code)
None
- - --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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
----- _______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Classes Outstanding at March 10, 1995
- - ----------------------------- -----------------------------
<S> <C>
Class A Common Stock, $.10 par value 17,508,158 Shares
Class B Common Stock, $.10 par value 4,836,889 Shares
</TABLE>
Exhibit Index on Page 12 Page 1 of 14
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Form 10-Q
Quarter ended January 31, 1995
Index
-----
<TABLE>
<CAPTION>
Page
No.
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - Unaudited - January 31, 1995
and April 30, 1994 3-4
Condensed Consolidated Statements of Earnings
- Unaudited - Three Months and Nine Months ended January 31, 1995 and
January 31, 1994 5
Condensed Consolidated Statement of Shareholders' Equity
- Unaudited - Nine Months ended January 31, 1995 6
Condensed Consolidated Statements of Cash Flows
- Unaudited - Nine Months ended January 31, 1995 and January 31, 1994 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-10
Part II - Other Information 11
</TABLE>
2
<PAGE>
PART I FINANCIAL INFORMATION
- - ------
Item 1. Financial Statements
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
January 31, 1995 April 30, 1994
---------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,721,149 $ 2,172,745
Investments 30,575,118 38,500,941
Trade accounts receivable, less allowance for
doubtful accounts of $2,012,750 at January 31, 1995
and $3,800,000 at April 30, 1994 11,077,309 15,581,382
Unbilled accounts receivable 4,061,108 4,325,913
Current deferred income taxes 2,064,446 2,465,206
Refundable income taxes 7,791,668 6,117,848
Prepaid expenses and other current assets 2,696,801 3,177,126
----------- -----------
Total current assets 59,987,599 72,341,161
----------- -----------
Property and equipment, at cost 37,201,657 34,364,268
Less accumulated depreciation and amortization 18,674,612 16,886,676
----------- -----------
Net property and equipment 18,527,045 17,477,592
----------- -----------
Capitalized computer software development costs, net 19,990,084 20,049,606
Purchased computer software costs, net 6,077,890 5,900,292
----------- -----------
Total computer software costs 26,067,974 25,949,898
----------- -----------
Other assets, net 512,511 1,872,283
----------- -----------
$105,095,129 $117,640,934
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(continued)
3
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets(Unaudited), Continued
<TABLE>
<CAPTION>
January 31, 1995 April 30, 1994
---------------- --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,866,659 $ 4,377,914
Accrued compensation and related costs 3,353,713 5,055,926
Accrued royalties 1,025,519 1,114,376
Other current liabilities 3,781,215 2,193,017
Deferred revenue 11,462,788 13,272,252
----------- -----------
Total current liabilities 23,489,894 26,013,485
Deferred income taxes 7,339,649 7,358,968
----------- -----------
Total liabilities 30,829,543 33,372,453
----------- -----------
Shareholders' equity:
Common stock:
Class A, $.10 par value. Authorized 50,000,000
shares; issued 18,729,871 shares at
January 31, 1995 and 18,688,728 shares at
April 30, 1994 1,872,988 1,868,873
Class B, convertible, $.10 par value. Authorized
10,000,000 shares; issued and outstanding 4,840,489
shares at January 31, 1995 and April 30,1994 484,049 484,049
Additional paid-in capital 30,752,903 30,415,118
Retained earnings 52,685,342 63,105,879
----------- -----------
85,795,282 95,873,919
Less treasury stock, 1,224,982 Class A shares at
January 31, 1995 and 1,239,000 shares
at April 30, 1994, at cost 11,529,696 11,605,438
----------- -----------
Total shareholders' equity 74,265,586 84,268,481
----------- -----------
$105,095,129 $117,640,934
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
For the For the
--------------------------- --------------------------
Three Months Ended Nine Months Ended
--------------------------- --------------------------
January 31, January 31,
--------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
License fees $ 6,152,341 $ 8,715,827 $ 13,692,431 $ 24,107,897
Services 8,572,229 10,124,455 28,292,667 31,655,855
Maintenance 5,869,337 5,492,746 17,123,081 16,173,394
---------- ---------- ----------- ----------
Total revenues 20,593,907 24,333,028 59,108,179 71,937,146
---------- ---------- ---------- ----------
Cost of revenues:
License fees 5,963,620 8,382,267 18,329,402 24,115,611
Services 5,625,901 5,267,675 17,008,628 15,868,854
Maintenance 1,001,903 1,476,796 3,238,375 4,325,906
---------- ---------- ---------- ----------
Total cost of revenues 12,591,424 15,126,738 38,576,405 44,310,371
---------- ---------- ---------- ----------
Selling, general, and
administrative expenses 9,953,978 9,591,764 33,472,633 29,029,212
Provision for doubtful accounts - 266,603 - 4,100,804
---------- --------- ----------- -----------
Operating loss (1,951,495) (652,077) (12,940,859) (5,503,241)
Other income, net 208,266 768,598 1,247,301 2,089,551
---------- -------- ----------- -----------
Earnings (loss) before
income taxes (1,743,229) 116,521 (11,693,558) (3,413,690)
Income tax benefit (751,048) (100,000) (4,842,736) (1,760,000)
----------- -------- ----------- -----------
Net earnings (loss) $ (992,181) $ 216,521 $ (6,850,822) $(1,653,690)
=========== =========== ============ ===========
Earnings (loss) per $ (.04) $ .01 $ (.31) $ (.07)
common share =========== =========== ============ ============
Weighted average number of
common shares outstanding 22,346,511 22,408,719 22,324,261 22,337,646
=========== =========== ============ ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended January 31, 1995
-------------------------------------------------------------------------------------------------------
Common stock Additional Total
-----------------------------------------
Class A Class B paid-in Retained Treasury shareholders'
------------------ ------------------
Shares Amount Shares Amount capital earnings stock equity
------ ------ ------ ------ --------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
April 30, 1994 18,688,728 $1,868,873 4,840,489 $484,049 $30,415,118 $63,105,879 $(11,605,438) $84,268,481
Net loss -- -- -- -- -- (6,850,822) -- (6,850,822)
Cash dividends declared
$.16 per share -- -- -- -- -- (3,569,715) -- (3,569,715)
Proceeds from stock
options exercised 41,143 4,115 -- -- 143,361 -- -- 147,476
Proceeds from divided
reinvestment plan -- -- -- -- -- -- 75,742 75,742
Grants of compensatory
stock options -- -- -- -- 194,424 -- -- 194,424
---------- ---------- --------- -------- ------- ----------- ------------ -------
Balance at
January 31, 1995 18,729,871 $1,872,988 4,840,489 $484,049 $30,752,903 $52,685,342 $(11,529,696) $74,265,586
========== ========== ========= ======== =========== =========== ============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the
Nine Months Ended
-----------------------------
January 31,
-----------------------------
1995 1994
------------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,850,822) $ (1,653,690)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 8,822,470 8,915,484
Net gain on investments (104,795) (21,846)
Grants of compensatory stock options 194,424 394,091
Deferred income taxes 381,441 (480,508)
Change in operating assets and liabilities:
Net increase in money market funds (3,445,908) -
Purchases of investments (3,004,384) -
Proceeds from sales and maturities of investments 14,480,910 -
Accounts receivable 4,768,878 5,060,443
Prepaids and other assets 614,367 122,076
Accounts payable and other accrued liabilities (483,948) (2,134,825)
Income taxes (1,903,999) (229,715)
Deferred revenue (1,809,464) 37,015
----------- ---------
Net cash provided by operating activities 11,659,170 10,008,525
---------- -----------
Cash flows from investing activities:
Capitalized software development costs (5,233,554) (5,569,390)
Net decrease in money market funds - 7,641,389
Purchases of investments - (6,010,795)
Proceeds from sales and maturities of investments - 6,773,124
Purchases of property and equipment (3,530,715) (2,027,234)
Purchase of assets - (3,300,000)
------------ -----------
Net cash used in investing activities (8,764,269) (2,492,906)
------------ -----------
Cash flows from financing activities:
Repurchases of common stock - (734,624)
Proceeds from exercise of stock options 147,476 119,527
Proceeds from dividend reinvestment plan 75,742 -
Dividends paid (3,569,715) (5,365,567)
----------- -----------
Net cash used in financing activities (3,346,497) (5,980,664)
----------- ----------
Net change in cash (451,596) 1,534,955
Cash at beginning of period 2,172,745 1,259,550
---------- ----------
Cash at end of period $ 1,721,149 $ 2,794,505
=========== ===========
Supplemental disclosure of cash received during the
period for income taxes $ (3,541,352) $ (1,049,777)
============== ============
</TABLE>
7
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
January 31, 1995
A. Basis of Presentation
---------------------
The accompanying condensed consolidated financial statements are unaudited.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. These financial
statements should be used in conjunction with the consolidated financial
statements and related notes contained in the 1994 Annual Report on Form
10-K. The financial information presented in the condensed consolidated
financial statements reflects all normal recurring adjustments which are,
in the opinion of management, necessary for a fair presentation of the
period indicated.
B. Earnings (Loss) Per Common Share
--------------------------------
Earnings (loss) per common share is based on the weighted average number of
shares of Class A common stock outstanding during each period after
increasing the number of Class A shares to give effect to the assumption
that all Class B shares had been converted on a one-for-one basis during
each period. Common equivalent shares have been excluded from the
aforementioned computations since the effect is anti-dilutive due to the
losses incurred.
C. Investments
-----------
Effective May 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 115 (SFAS 115) "Accounting for Certain
Investments in Debt and Equity Securities." Pursuant to the provisions of
SFAS 115, the Company has elected to classify its investment portfolio as
"trading." Accordingly, the "trading" portfolio is recorded at fair value
and unrealized holding gains and losses are included in the determination
of net earnings/losses. The effect of adopting SFAS 115 was not significant
and has been included in other income, net in the accompanying 1995 interim
condensed consolidated statement of earnings.
8
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
- - ---------------------
For the quarter ended January 31, 1995, revenues totaled $20,593,907, down 15%
from $24,333,028 in the corresponding quarter of fiscal 1994. Revenues for the
nine months ended January 31, 1995 totaled $59,108,179, down 18% from
$71,937,146 in the prior year period. Software license fees were 29% lower than
the third quarter of fiscal 1994 and 43% lower for the nine month period ended
January 31, 1995 compared to the prior year. While license fee revenues were
below those of the prior year, they improved from the first quarter to the third
quarter of the current fiscal year. In fiscal 1995, License fee revenues were
$2,656,324 for the first quarter, $4,883,766 for the second quarter, and
$6,152,341 in the third quarter. Services revenues were 15% lower than the
corresponding quarter a year ago and 11% lower than the corresponding nine
months a year ago. This decrease follows the decline of license fees in fiscal
1994 and 1995. Generally, the consulting and custom programming components of
services revenues tend to increase or decrease with software license fee revenue
fluctuations, often lagging six to nine months behind changes in license fee
revenues. Outsourcing revenues, a component of services revenues, increased 37%
over the third quarter of 1994 and increased 72% versus the corresponding nine
months a year ago. Maintenance revenues increased 7% from third quarter 1994 and
increased 6% for the current nine months compared to fiscal 1994. This increase
is consistent with the long-term growth in the installed base of Company
software.
The cost of revenues for license fees decreased 29% compared to the third
quarter of fiscal 1994 and decreased 24% for the nine months ended January 31,
1995 due principally to the employee reductions during the year. Services costs
increased 7% for the quarter and 7% for the nine months compared to the prior
year periods reflecting the growth of the outsourcing services business. In
addition, maintenance costs decreased 32% compared to the year ago third
quarter, and decreased 25% for the nine months ended January 31, 1994, due
principally to the employee reductions during the year.
Selling, general and administrative expenses increased 4% for the quarter and
15% for the nine months over the same periods in fiscal 1994. This increase is
primarily due to increases in sales channel costs designed to improve the
Company's sales coverage.
The allowance for doubtful accounts at January 31, 1995 of $2,012,750 was lower
than the allowance of $3,800,000 at April 30, 1994 due primarily to the write-
off of two accounts.
The effective tax rate was a benefit of 43% compared to 86% in the third quarter
of fiscal 1994 and decreased to a benefit of 41% compared to 52% for the nine
months ended January 31, 1994.
9
<PAGE>
FINANCIAL CONDITION
- - -------------------
The Company's consolidated balance sheet remains strong with a current ratio of
2.6 to 1. Liquidity also remains strong with cash and short-term investments
totaling 31% of total assets. The dividend was suspended in the second quarter
of fiscal 1995 and no dividends have been paid in the third fiscal quarter. The
Company believes that existing cash and short-term investments as well as cash
from operations will be sufficient to meet its operational objectives for at
least the next twelve month period.
10
<PAGE>
PART II OTHER INFORMATION
- - -------
Item 1. Legal Proceedings
- - ------- -----------------
Not applicable
Item 2. Changes in Securities
- - ------- ---------------------
Not applicable
Item 3. Defaults Upon Senior Securities
- - ------- -------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
- - ------- ---------------------------------------------------
Not applicable
Item 5. Other Information
- - ------- -----------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K
- - ------- --------------------------------
(a) Exhibit 11 Statement re: computation of Per Share Earnings
(Loss).
(b) No reports on Form 8-K were filed during the quarter ended
January 31, 1995.
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.
AMERICAN SOFTWARE, INC.
DATE March 13, 1995 /s/ Joseph L. Wiley
---------------------- ---------------------------------
Joseph L. Wiley
Vice President, Finance and Administration
Chief Financial Officer
DATE March 13, 1995 /s/ Peter W. Pamplin
---------------------- ---------------------------------
Peter W. Pamplin
Chief Accounting Officer
11
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page
------- ----
<C> <S> <C>
11 Statement re: computation of Per Share Earnings (Loss) 13
27 Financial Data Schedule 14
</TABLE>
12
<PAGE>
EXHIBIT 11
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Statement re: computation of Per Share Earnings (Loss)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------ ------------------------
January 31, January 31,
------------------------ ------------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Common stock:
Weighted average common
shares outstanding:
Class A shares 17,506,022 17,454,019 17,483,772 17,485,000
Class B shares 4,840,489 4,842,622 4,840,489 4,852,646
---------- ---------- ---------- ----------
22,346,511 22,296,641 22,324,261 22,337,646
Dilutive effect of outstanding
Class A common stock
options (as determined by
the application of the treasury
stock method using the
average market price for
the period) - 112,078 - -
---------- ------------ ---------- ----------
Totals 22,346,511 22,408,719 22,324,261 22,337,646
========== ========== ========== ==========
Net earnings (loss) $(992,181) $ 216,521 $(6,850,822) $(1,653,690)
========= ============ =========== ===========
Earnings (loss) per common share $ (.04) $ .01 $ (.31) $ (.07)
========= =========== =========== ===========
</TABLE>
13
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
EXHIBIT 27
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
SOFTWARE, INC. CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 1,721,149
<SECURITIES> 30,575,118
<RECEIVABLES> 17,151,167
<ALLOWANCES> 2,012,750
<INVENTORY> 0
<CURRENT-ASSETS> 59,987,599
<PP&E> 37,201,657
<DEPRECIATION> 18,674,612
<TOTAL-ASSETS> 105,095,129
<CURRENT-LIABILITIES> 23,489,894
<BONDS> 0
<COMMON> 2,357,037
0
0
<OTHER-SE> 83,438,245
<TOTAL-LIABILITY-AND-EQUITY> 105,095,129
<SALES> 0
<TOTAL-REVENUES> 59,108,179
<CGS> 0
<TOTAL-COSTS> 38,576,405
<OTHER-EXPENSES> 33,472,633
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,693,558)
<INCOME-TAX> (4,842,736)
<INCOME-CONTINUING> (6,850,822)
<NET-INCOME> (6,850,822)
<EPS-PRIMARY> (.31)
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