<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 July 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 September 11, 1995
------------------------------------ ---------------------------------
<S> <C>
Class A Common Stock, $.10 par value 17,426,490 Shares
Class B Common Stock, $.10 par value 4,836,889 Shares
</TABLE>
1
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Form 10-Q
Quarter ended July 31, 1995
Index
-----
<TABLE>
<CAPTION>
<S> <C>
Page
No.
----
Part I - Financial Information
Condensed Consolidated Balance Sheets - Unaudited -
July 31, 1995 and April 30, 1995 3-4
Condensed Consolidated Statements of Operations
- Unaudited - Three Months ended July 31, 1995 and 1994 5
Condensed Consolidated Statement of Shareholders' Equity
- Unaudited - Three Months ended July 31, 1995 6
Condensed Consolidated Statements of Cash Flows
- Unaudited - Three Months ended July 31, 1995 and July 31, 1994 7
Notes to Condensed Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Part II - Other Information 10
</TABLE>
2
<PAGE>
PART I FINANCIAL INFORMATION
------
Item 1. Financial Statements
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
July 31, 1995 April 30, 1995
------------- --------------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 2,944,935 $ 1,228,461
Investments 33,763,262 31,276,773
Trade accounts receivable, less allowance for
doubtful accounts of $1,844,845 at July 31, 1995
and $1,906,284 at April 30, 1995 12,790,145 11,008,273
Unbilled accounts receivable 3,521,077 5,409,390
Current deferred income taxes 4,038,892 2,269,548
Refundable income taxes 1,226,880 8,304,601
Prepaid expenses and other current assets 2,145,736 2,474,950
------------ ------------
Total current assets 60,430,927 61,971,996
------------ ------------
Property and equipment, at cost 37,929,243 37,375,541
Less accumulated depreciation and amortization 19,899,825 19,283,211
------------ ------------
Net property and equipment 18,029,418 18,092,330
------------ ------------
Capitalized computer software development costs, net 21,328,392 20,372,465
Purchased computer software costs, net 4,859,192 5,414,553
------------ ------------
Total computer software costs 26,187,584 25,787,018
------------ ------------
Other assets, net 2,937,571 1,940,209
------------ ------------
$107,585,500 $107,791,553
============ ============
</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>
July 31, 1995 April 30, 1995
------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 5,000,944 $ 5,132,774
Accrued compensation and related costs 3,180,556 2,797,422
Accrued royalties 1,106,675 1,161,836
Other current liabilities 3,230,999 3,722,891
Deferred revenue 12,342,448 12,750,156
------------ ------------
Total current liabilities 24,861,622 25,565,079
Deferred income taxes 8,312,337 8,189,662
------------ ------------
Total liabilities 33,173,959 33,754,741
------------ ------------
Shareholders' equity:
Common stock:
Class A, $.10 par value. Authorized 50,000,000
shares; issued 18,729,871 shares at
July 31, 1995 and April 30, 1995 1,872,988 1,872,988
Class B, $.10 par value. Authorized 10,000,000
shares; issued and outstanding 4,840,489
shares at July 31, 1995 and April 30, 1995;
convertible into Class A shares on a one-for-
one basis 484,049 484,049
Additional paid-in capital 30,661,545 30,656,333
Retained earnings 53,214,948 52,846,986
------------ ------------
86,233,530 85,860,356
Less Class A treasury stock, 1,306,650 shares at
July 31, 1995 and 1,306,943 shares at
April 30, 1995, at cost 11,821,989 11,823,544
------------ ------------
Total shareholders' equity 74,411,541 74,036,812
------------ ------------
$107,585,500 $107,791,553
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the
Three Months Ended
--------------------------
July 31,
--------------------------
1995 1994
----------- -------------
<S> <C> <C>
Revenues:
License fees $ 7,449,508 $ 2,656,324
Services 7,608,850 10,076,374
Maintenance 5,899,312 5,524,327
----------- -----------
Total revenues 20,957,670 18,257,025
----------- -----------
Cost of revenues:
License fees 5,969,770 6,315,618
Services 4,846,003 5,492,760
Maintenance 1,015,291 1,152,286
----------- -----------
Total cost of revenues 11,831,064 12,960,664
----------- -----------
Selling, general, and administrative expenses 9,101,485 11,105,742
----------- -----------
Operating earnings (loss) 25,121 (5,809,381)
Other income, net 588,876 818,384
----------- -----------
Earnings (loss) before income taxes 613,997 (4,990,997)
Income tax expense (benefit) 246,035 (2,023,990)
----------- -----------
Net earnings (loss) $ 367,962 $(2,967,007)
=========== ===========
Net earnings (loss) per common and common equivalent share $.02 $(.13)
=========== ===========
Weighted average number of common and common
equivalent shares outstanding 23,391,219 22,298,934
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Three months ended July 31, 1995
--------------------------------------------------------------------------------------------------
Common stock
------------------------------------------
Class A Class B Additional Total
---------------------- ------------------ 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, 1995 18,729,871 $1,872,988 4,840,489 $484,049 $30,656,333 $52,846,986 $(11,823,544) $74,036,812
Net earnings -- -- -- -- -- 367,962 -- 367,962
Proceeds from dividend
reinvestment and stock
purchase plan -- -- -- -- -- -- 1,555 1,555
Grants of compensatory
stock options -- -- -- -- 5,212 -- -- 5,212
---------- ---------- --------- -------- ----------- ----------- ------------ -----------
Balance at
July 31, 1995 18,729,871 $1,872,988 4,840,489 $484,049 $30,661,545 $53,214,948 $(11,821,989) $74,411,541
========== ========== ========= ======== =========== =========== ============ ===========
</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
Three Months Ended
---------------------------
July 31,
---------------------------
1995 1994
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 367,962 $(2,967,007)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization 2,910,124 2,945,327
Net gain on investments (303,846) (324,308)
Grants of compensatory stock options 5,212 64,808
Equity in loss of investee 100,345 -
Deferred income taxes (1,646,669) (448,752)
Change in operating assets and liabilities:
Net (increase) decrease in money market funds (3,154,712) 1,235,611
Purchases of investments (1,282,964) (2,403,500)
Proceeds from sales and maturities of investments 2,255,033 3,808,872
Accounts receivable 106,441 2,797,187
Prepaids and other assets 292,765 570,812
Accounts payable and other accrued liabilities (295,749) 281,464
Income taxes 5,977,721 (1,651,185)
Deferred revenue (407,708) (845,583)
----------- -----------
Net cash provided by operating activities 4,923,955 3,063,746
----------- -----------
Cash flows from investing activities:
Capitalized software development costs (2,655,334) (1,310,900)
Purchases of property and equipment (553,702) (1,188,235)
----------- -----------
Net cash used in investing activities (3,209,036) (2,499,135)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of stock options - 67,803
Proceeds from dividend reinvestment
and stock purchase plan 1,555 -
Dividends paid - (1,783,518)
----------- -----------
Net cash provided by (used in) financing activities 1,555 (1,715,715)
----------- -----------
Net increase (decrease) in cash 1,716,474 (1,151,104)
Cash at beginning of period 1,228,461 2,172,745
----------- -----------
Cash at end of period $ 2,944,935 $ 1,021,641
=========== ===========
Supplemental disclosure of cash received during the
period for income taxes $(4,085,017) $(3,541,352)
=========== ===========
</TABLE>
7
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
July 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 1995 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 and Common Equivalent Share
------------------------------------------------------
Earnings (loss) per common and common equivalent share are based on the
weighted average number of Class A and B shares outstanding, since the
Company considers the two classes of common stock as one class for the
purposes of the earnings (loss) per share computation, and share
equivalents from dilutive stock options outstanding during each period.
Share equivalents are excluded from the aforementioned computation during
loss periods.
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 July 31, 1995, revenues totaled $20,957,670, up 15% from
$18,257,025 in the corresponding quarter of fiscal 1995. Software license fees
were 180% higher than the first quarter of 1995 due to an increase in the number
of contracts and an increase in their average value. Management believes that a
significant factor contributing to the increase in software license fees was the
number and experience of the sales force that was put in place during fiscal
1995. Services revenues were 24% lower than the corresponding quarter a year
ago. This decrease is due to lower license fee revenues in fiscal 1995.
Generally, the consulting and custom programming components of services revenues
tend to increase or decrease with software license fee revenue fluctuations,
typically lagging six to nine months behind changes in the related license fee
revenues. Maintenance revenues increased 7% from first quarter 1995, and
represented 28% of total revenues for the quarter ended July 31, 1995 compared
to 30% for the quarter ended July 31, 1994. This increase is due to the long-
term growth in the installed base of the Company's software.
All components of cost of revenues decreased from first quarter of fiscal 1995
primarily due to costs related to reductions in the number of employees during
fiscal 1995.
Selling, general and administrative expenses decreased 18% over the same period
in fiscal 1995. The decrease is primarily due to decreases in salaries and
other costs associated with fewer employees.
The effective tax rate was an expense of 40% in first quarter of fiscal 1996
compared to a benefit of 41% in the same quarter a year ago. These
fluctuations are due to the loss in the first quarter of fiscal 1995.
FINANCIAL CONDITION
-------------------
The Company's consolidated balance sheet remains very strong with a current
ratio of 2.4 to 1. Liquidity also remains strong with cash and short-term
investments totaling 34% of total assets. 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.
9
<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 10.1 Amended and restated 1991 Employee Stock Option Plan
effective September 6, 1995.
Exhibit 11 Statement re: computation of Per Share Earnings (Loss).
(b) No reports on Form 8-K were filed during the quarter ended
July 31, 1995.
10
<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.
AMERICAN SOFTWARE, INC.
DATE September 13, 1995 /s/ James C. Edenfield
------------------ -----------------------------------
James C. Edenfield
President, Chief Executive Officer
and Treasurer
DATE September 13, 1995 /s/ Peter W. Pamplin
------------------ -----------------------------------
Peter W. Pamplin
Chief Accounting Officer
11
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page
------- ----
10.1 Amended and restated 1991 Employee Stock Option Plan
effective September 6, 1995. 13
11 Statement re: computation of Per Share Earnings (Loss) 18
12
<PAGE>
AMERICAN SOFTWARE, INC.
1991 EMPLOYEE STOCK OPTION PLAN
(Amended and Restated Effective September 6, 1995)
--------------------------------------------------
1. PURPOSE. This Plan shall be known as the "1991 Employee Stock Option
-------
Plan" (hereinafter referred to as "the Plan" or "this Plan"). The purpose of
the Plan is to provide certain key employees of American Software, Inc. (the
"Company") and its subsidiaries with additional incentive to increase their
efforts on the Company's behalf and to remain in the employ of the Company or
any of its subsidiaries by granting key employees from time to time options to
purchase Class A Common Shares of the Company.
The options granted under this Plan may, but need not, constitute
"incentive stock options" (referred to herein as "Incentive" options) within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). An option granted which does not constitute an Incentive option shall
for purposes of the Plan constitute a "Non-Qualified" option. The terms
"subsidiary" or "subsidiaries" mean and include any corporation or other entity
at least a majority of the outstanding voting shares of which is, at the time,
directly or indirectly owned by the Company or by one or more subsidiaries.
2. SHARES. The shares to be optioned under the Plan shall be the
------
Company's Class A Common Shares, $0.10 par value (the "Shares"), which Shares
may either be authorized but unissued Shares or treasury Shares. The aggregate
number of Shares for which options may be granted under the Plan shall (subject
to the provisions of paragraph 8) be (i) 2,150,000 Shares (inclusive of the
total number of Shares with respect to which no options have been granted under
the Company's Incentive Stock Option Plan and Nonqualified Stock Option Plan
(collectively the "Prior Plans") on the Effective Date as provided in paragraph
15), plus (ii) the total number of Shares as to which options granted under the
Prior Plans or this Plan terminate (including options terminated upon the
granting of replacement options or otherwise) or expire without being wholly
exercised. New options may be granted under this Plan covering the number of
Shares to which such termination or expiration relates.
3. ADMINISTRATION. The Plan shall be administered by the Employee Stock
--------------
Option Plan Committee (the "Committee") of the Company's Board of Directors (the
"Board"). The Committee shall consist of such members (not less than two) of
the Board as shall be appointed from time to time by the Board. No member of
the Committee while serving as such shall be eligible for participation in the
Plan. Subject to the provisions of the Plan, the Committee shall have exclusive
power to select the employees to whom options will be granted under the Plan, to
determine the number of options to be awarded to each employee selected and to
determine the time or times when options will be awarded. The Committee shall
have full power and authority to administer and interpret the Plan and to adopt
such rules, regulations, agreements and instruments for implementing the Plan
and for the conduct of its business as the Committee deems necessary or
advisable. The Committee's interpretation of the Plan, and all determinations
made by the Committee pursuant to the powers vested in it hereunder, shall be
conclusive and binding on all persons having any interest in the Plan or in any
options granted hereunder.
1
<PAGE>
4. ELIGIBILITY. Participants in the Plan shall be selected by the
-----------
Committee from among key personnel of the Company or a subsidiary; provided,
however, that no director, officer or 10% shareholder (as such terms are defined
pursuant to Section 16 of the Securities Exchange Act of 1934, as amended) of
the Company shall be eligible to participate in the Plan. Options held by a
person who subsequently becomes a director, officer or 10% shareholder shall not
be affected by this restriction. Options shall be granted to individuals solely
in connection with their employment with the Company or a subsidiary.
5. GRANT OF OPTIONS. The Committee may from time to time grant options
----------------
to purchase Shares to such of the eligible employees as may be selected by the
Committee and for such number or numbers of shares as may be determined by the
Committee. Each grant of an option pursuant to this Plan shall be granted
within ten years from the date this Plan is adopted by the Board. Each grant of
an option pursuant to this Plan shall be made upon such terms and conditions as
may be determined by the Committee at the time of grant, subject to the terms,
conditions and limitations set forth in this Plan.
An individual optionee may be granted (i) an Incentive option, (ii) a Non-
Qualified option, or (iii) an Incentive option and a Non-Qualified option at the
same time.
6. TERMS, CONDITIONS AND FORM OF OPTIONS. Each option shall be evidenced
-------------------------------------
by a written agreement ("option agreement") in such form as the Board shall from
time to time approve, which agreement shall comply with and be subject to the
following terms and conditions:
6.1 OPTION EFFECTIVE DATE. Each option agreement shall specify an
---------------------
effective date, which shall be the date on which the option is granted by the
Committee.
6.2 OPTION TERM. (a) An option shall in no event be exercisable
-----------
after the expiration of ten years from the effective date of the option. In
addition, and in limitation of the above, the option period of any option shall
terminate three months after the termination of the option holder's employment
by the Company for any reason except the Retirement (as hereinafter defined),
death or disability of the option holder-employee (the "optionee").
(b) (i) The term "Retirement" means the voluntary termination of
employment by an option holder whose age and/or years of employment qualify that
employee for normal retirement under the policies of the Company in effect from
time to time.
(ii) For any option granted on or before August 23, 1994, the
Committee may in its discretion amend that option, on an individual basis, to
permit the exercise of such option beyond the date of Retirement, through the
expiration date of the option.
2
<PAGE>
(iii) The Committee may in its discretion provide in standard
option grant agreements that any option granted after August 23, 1994 may be
exercised after the date of Retirement, through the expiration date of the
option.
(iv) Notwithstanding the foregoing, no option may be exercised
after the expiration of ten years from the effective date of the option, nor may
an option be exercised beyond the amount which is vested as of the date of
Retirement.
(c) In the event of termination of employment due to the death or
disability of an optionee, the option period of the option held by him upon the
date of such termination shall terminate upon the earlier of (a) twelve months
after the date of the optionee's death or termination due to disability, as the
case may be, or (b) the date of termination of such option as determined by his
option agreement. In the event of termination of an optionee's employment due
to the death of the optionee, such optionee's options may be exercised during
the 12-month period by his estate or by the person who acquired the right to
exercise such options through bequest or inheritance.
As used herein, "disability" shall mean the inability of the employee
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or has lasted or can be expected to last for a continuous period of at
least twelve months.
No transfer of an option by an optionee by will or by the laws of
descent and distribution shall be effective unless the Company shall have been
furnished with written notice thereof and a copy of the will and/or such other
evidence as the Committee may deem necessary to establish the validity of the
transfer and the acceptance by the successor-in-interest or successors-in-
interest of the terms and conditions of the option.
(d) If an optionee is placed on leave of absence status by the Company
or any subsidiary, any then exercisable option shall be suspended at such time.
If an optionee is placed on lay-off status by the Company or any subsidiary, any
then exercisable option may be exercised during the following period of three
months and shall be suspended thereafter. In either case, the unexercised
portion of the option shall either (i) terminate three months after the
optionee's termination of employment with the Company and its subsidiaries or
(ii) be reinstated upon such optionee being re-employed from leave of absence or
lay-off status by the Company or any subsidiary.
6.3 EXERCISE PRICE. The exercise price of options shall be the price
--------------
per share fixed by the Committee (the "Exercise Price"); provided, however, that
the Exercise Price per Share for Incentive options shall not be less than the
fair market value of a Share on the date the option is granted. In the event
that the Shares are then listed on an established stock exchange, such fair
market value shall be deemed to be the closing price of the Shares on such stock
exchange on the day the option is granted or, if no sale of the Shares shall
have been made on any stock exchange on that day, the fair market value shall be
determined as such price for the next preceding day upon which a sale shall have
occurred. In the event that the Shares are not listed upon an established
exchange but are
3
<PAGE>
quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), the fair market value shall be deemed to
be the closing price for the Shares as quoted on NASDAQ on the day the option is
granted. If no sale of the Shares shall have been made on NASDAQ on that day,
the fair market value shall be determined by such prices on the next preceding
day on which a sale shall have occurred. In the event that the Shares are
neither listed on an established stock exchange nor quoted on NASDAQ, the fair
market value on the day the option is granted shall be determined by the
Committee.
6.4 NONTRANSFERABILITY OF OPTIONS. An option shall not be
-----------------------------
transferable by the optionee otherwise than by will, by the laws of descent and
distribution or by a qualified domestic relations order, and shall be exercised
during the lifetime of the optionee only by the optionee or by his guardian or
legal representative. No option or interest therein may be transferred,
assigned, pledged or hypothecated by the optionee during this lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
7. EXERCISE OF OPTIONS. An option granted pursuant to this Plan shall be
-------------------
exercisable at any time within the option period, subject to the terms and
conditions of such option. Exercise of any option shall be made by the
delivery, during the period that such option is exercisable, to the Company in
person or by mail of (i) written notice from the optionee stating that he is
exercising such option and (ii) the payment of the aggregate purchase price of
all Shares as to which such option is then exercised. Such aggregate purchase
price shall be paid to the Company at the time of exercise. Payment shall
normally be made by cash or check; provided, however, that in its sole
discretion the Committee may approve of payment in whole or in part by the
giving of a note with adequate stated interest or by the surrender of common
stock. Upon the exercise of an option in compliance with the provisions of this
paragraph, and upon the receipt by the Company of the payment for said Shares,
the Company shall (i) deliver or cause to be delivered to the optionee so
exercising his option a certificate or certificates for the number of Shares
with respect to which the option is so exercised and payment is so made, and
(ii) register or cause such Shares to be registered in the name of the
exercising optionee.
8. CHANGES IN CAPITAL STRUCTURE. Appropriate adjustments shall be made
----------------------------
to the price of the Shares and the number of Shares subject to outstanding
options and the number of Shares issuable under this Plan if there are any
changes in the Shares by reason of stock dividends, stock splits, reverse stock
splits, mergers, recapitalizations or consolidations.
9. CONTROLLING TERMS. Option agreements pertaining to options granted
-----------------
pursuant hereto may include conditions that are more (but not less) restrictive
to the optionee than the conditions contained herein and, in such event, the
more restrictive conditions shall apply.
10. TERMINATION OF THE PLAN. This Plan shall terminate upon the close of
-----------------------
business of the day preceding the tenth anniversary of the approval of this Plan
by the Board unless it shall have been sooner terminated by the Board or by
reason of there having been granted and fully exercised stock options covering
all of the Shares subject to this Plan. Upon such termination, no further
options may be granted hereunder. If, after termination of this Plan upon the
tenth anniversary hereof or by Board
4
<PAGE>
action as provided above, there are
outstanding options which have not been fully exercised, such options shall
remain in effect in accordance with their terms and shall remain subject to the
terms of this Plan.
11. AMENDMENT OR DISCONTINUANCE OF PLAN. The Board may amend, suspend or
-----------------------------------
discontinue this Plan at any time without restriction; provided, however, that
the Board may not alter, amend, discontinue, revoke or otherwise impair any
outstanding options which have been granted pursuant to this Plan and which
remain unexercised, except in the event that there is secured the written
consent of the holder of the outstanding option proposed to be so altered or
amended. Nothing contained in this paragraph, however, shall in any way
condition or limit the termination of an option, as hereinabove provided, where
reference is made to termination of employment of an optionee, or as provided in
an option agreement.
12. LIMITATION OF RIGHTS.
--------------------
12.1 NO IMPLIED EMPLOYMENT AGREEMENT. Neither this Plan nor the
-------------------------------
granting of an option nor any other action taken pursuant to this Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company or any subsidiary will retain any person as an employee for any
period of time.
12.2 NO RIGHTS AS SHAREHOLDER. An optionee shall have no rights as a
------------------------
shareholder with respect to Shares covered by his option until the date of
exercise of the option, and, except as provided in paragraph 8, no adjustment
will be made for dividends or other rights for which the record date is before
the date of such exercise.
13. LIQUIDATION OF THE COMPANY. In the event of the complete liquidation
--------------------------
or dissolution of the Company, other than as an incident to a merger,
reorganization or other adjustment referred to in paragraph 8, any options
granted pursuant to this Plan and remaining unexercised shall be deemed
cancelled without regard to or limitation by any other provisions of this Plan.
14. INTENTION OF CONSTRUCTION. To the extent options granted hereunder
-------------------------
are intended to constitute Incentive options and comply with Section 422 of the
Code and all provisions of this Plan, all such options and all option agreements
relating thereto shall be construed in such a manner as to effectuate that
intent.
15. SHAREHOLDER APPROVAL; EFFECTIVE DATE. This Plan shall become
------------------------------------
effective on the date it is approved by the shareholders of the Company (the
"Effective Date").
5
<PAGE>
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Statement re: computation of Per Share Earnings (Loss)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
July 31,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
Common stock:
Weighted average common shares outstanding
Class A shares 17,423,061 17,458,445
Class B shares 4,840,489 4,840,489
---------- ----------
22,263,550 22,298,934
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) 1,127,669 -
---------- ----------
Totals 23,391,219 22,298,934
========== ==========
Net earnings (loss) $ 367,962 $ (2,967,007)
============ ===========
Net earnings (loss) per common and common
equivalent share $ .02 $ (.13)
============ ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<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> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 2,944,935
<SECURITIES> 33,763,262
<RECEIVABLES> 18,156,067
<ALLOWANCES> 1,844,845
<INVENTORY> 0
<CURRENT-ASSETS> 60,430,927
<PP&E> 37,929,243
<DEPRECIATION> 19,899,825
<TOTAL-ASSETS> 107,585,500
<CURRENT-LIABILITIES> 24,861,622
<BONDS> 0
<COMMON> 2,357,037
0
0
<OTHER-SE> 83,876,493
<TOTAL-LIABILITY-AND-EQUITY> 107,585,500
<SALES> 0
<TOTAL-REVENUES> 20,957,670
<CGS> 0
<TOTAL-COSTS> 11,831,064
<OTHER-EXPENSES> 9,101,485
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 613,997
<INCOME-TAX> 246,035
<INCOME-CONTINUING> 367,962
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 367,962
<EPS-PRIMARY> .02
<EPS-DILUTED> 0
</TABLE>
