<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-12311
COMPUTER LANGUAGE RESEARCH, INC.
(Exact name of registrant as specified in its charter)
Texas 75-1297386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2395 Midway Road, Carrollton, Texas 75006
(Address of principal executive offices) (Zip Code)
(214) 250-7000
(Registrant's telephone number, including area code)
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
--- ---
Outstanding at
Class of Common Stock July 31, 1995
--------------------- -------------
$0.01 par value 14,052,379 shares
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COMPUTER LANGUAGE RESEARCH, INC.
FORM 10-Q
June 30, 1995
TABLE OF CONTENTS
ITEM PAGE
---- ----
PART I. FINANCIAL INFORMATION
1 FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheets .................................. 1-2
Consolidated Statements of Income ............................ 3
Consolidated Statements of Cash Flows ........................ 4
Notes to Consolidated Financial Statements ................... 5-7
2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .......................... 8-11
PART II. OTHER INFORMATION
4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .......... 12
6 EXHIBITS AND REPORTS ON FORM 8-K ............................. 12
i
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMPUTER LANGUAGE RESEARCH, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands, except for per share amounts)
June 30 December 31
------------------ -------------
1995 1994 1994
-------- -------- -------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents ............. $ 30,123 $ 18,505 $ 6,252
Short-term investments ................ 6,000 8,069 10,661
Accounts receivable, less allowance for
doubtful accounts of $708 at June 30,
1995, $1,024 at June 30, 1994, and
$605 at December 31, 1994 ............ 10,739 10,028 19,652
Other current assets .................. 3,355 2,282 3,698
Net current assets of discontinued
operations ........................... -- 3,448 1,991
-------- -------- --------
Total current assets ................ 50,217 42,332 42,254
-------- -------- --------
PROPERTY AND EQUIPMENT, AT COST:
Land .................................. 3,077 3,077 3,077
Buildings and improvements ............ 16,788 16,597 16,909
Data processing equipment ............. 31,338 33,277 31,781
Machinery and equipment ............... 5,684 5,868 5,780
Furniture and fixtures ................ 2,422 2,467 2,423
-------- -------- --------
59,309 61,286 59,970
Less accumulated depreciation ......... 38,412 40,367 38,983
-------- -------- --------
Net property and equipment .......... 20,897 20,919 20,987
-------- -------- --------
OTHER NONCURRENT ASSETS:
Software, net of accumulated amortiza-
tion of $19,828 at June 30, 1995,
$16,032 at June 30, 1994, and
$17,508 at December 31, 1994 ......... 15,984 7,740 13,367
Intangibles and other assets, net of
accumulated amortization of $4,749
at June 30, 1995, $3,113 at
June 30, 1994, and $3,879
at December 31, 1994 ................. 9,979 5,903 6,510
Net noncurrent assets of discontinued
operations ........................... -- 734 975
-------- -------- --------
Total other noncurrent assets ....... 25,963 14,377 20,852
-------- -------- --------
Total assets ....................... $ 97,077 $ 77,628 $ 84,093
======== ======== ========
See accompanying Notes to Consolidated Financial Statements (unaudited).
1
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COMPUTER LANGUAGE RESEARCH, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands, except for per share amounts)
June 30 December 31
------------------ -------------
1995 1994 1994
-------- -------- -------------
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt and
capital lease obligations ............ $ 750 $ 511 $ --
Accounts payable ...................... 1,569 1,062 3,052
Accrued compensation, payroll taxes,
and benefits ......................... 5,176 4,128 6,846
Deferred revenue ...................... 8,790 6,822 4,221
Accrued support ....................... 1,298 713 2,787
Income taxes payable .................. 3,107 1,620 --
Other current liabilities ............. 2,505 2,371 4,220
-------- -------- --------
Total current liabilities ........... 23,195 17,227 21,126
-------- -------- --------
NONCURRENT LIABILITIES:
Long-term debt ........................ 1,313 -- --
Deferred income taxes and other
liabilities .......................... 4,726 3,931 4,648
-------- -------- --------
Total noncurrent liabilities ........ 6,039 3,931 4,648
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1 per share par
value, 10,000 shares authorized;
none outstanding ..................... -- -- --
Common stock, $0.01 per share par
value, 40,000 shares authorized;
14,851 shares issued at June 30,
1995, 14,700 shares issued at
June 30, 1994, and 14,756 shares
issued at December 31, 1994 .......... 148 147 147
Capital in excess of par value ........ 32,640 31,789 32,086
Retained earnings ..................... 40,321 29,800 31,352
Treasury stock at cost, 810 shares .... (5,266) (5,266) (5,266)
-------- -------- --------
Total shareholders' equity .......... 67,843 56,470 58,319
-------- -------- --------
Total liabilities and shareholders'
equity ............................ $ 97,077 $ 77,628 $ 84,093
======== ======== ========
See accompanying Notes to Consolidated Financial Statements (unaudited).
2
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COMPUTER LANGUAGE RESEARCH, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
Revenues ......................... $ 21,123 $ 19,462 $ 53,356 $ 49,143
-------- -------- -------- --------
Costs and expenses:
Cost of revenues ................ 11,569 10,061 26,548 23,794
Selling, general, and
administrative ................. 8,777 7,236 17,182 15,175
-------- -------- -------- --------
Total costs and expenses ...... 20,346 17,297 43,730 38,969
-------- -------- -------- --------
Operating income ................. 777 2,165 9,626 10,174
Interest income .................. 393 306 659 504
Interest expense ................. -- 135 8 304
(Loss) gain on disposals of
property and equipment .......... (42) (46) (54) 491
-------- -------- -------- --------
Income from continuing operations
before income taxes ............. 1,128 2,290 10,223 10,865
Provision for income taxes ....... 344 877 3,254 4,157
-------- -------- -------- --------
Income from continuing operations 784 1,413 6,969 6,708
Discontinued operations:
(Loss) income from discontinued
operations, net of taxes ....... (15) 225 76 295
Gain on disposal of discontinued
operations, net of taxes ....... 4,720 -- 4,720 --
-------- -------- -------- --------
Net income ....................... $ 5,489 $ 1,638 $ 11,765 $ 7,003
======== ======== ======== ========
Earnings per share from continuing
operations ...................... $ 0.05 $ 0.10 $ 0.49 $ 0.47
Earnings per share from
discontinued operations ......... 0.33 0.01 0.33 0.02
-------- -------- -------- --------
Earnings per share ............... $ 0.38 $ 0.11 $ 0.82 $ 0.49
======== ======== ======== ========
Dividends per share .............. $ 0.10 $ 0.08 $ 0.20 $ 0.16
======== ======== ======== ========
Weighted average number of common
and common equivalent shares
outstanding ..................... 14,323 14,212 14,358 14,244
======== ======== ======== ========
See accompanying Notes to Consolidated Financial Statements (unaudited).
3
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COMPUTER LANGUAGE RESEARCH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30
------------------
1995 1994
OPERATING ACTIVITIES: -------- --------
Net income from continuing operations ................... $ 6,969 $ 6,708
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ........................ 5,973 5,333
Loss (gain) on disposals of property and equipment ... 54 (491)
Changes in assets and liabilities, net of effect of
acquisitions and sale of discontinued operations:
Decrease in accounts receivable .................... 9,366 9,185
Decrease in other current assets ................... 622 2,067
Decrease in other assets ........................... 326 508
Decrease in accounts payable ....................... (1,483) (1,115)
Decrease in accrued compensation, payroll taxes,
and benefits ...................................... (1,825) (588)
Increase in deferred revenue ....................... 5,025 3,263
Decrease in accrued support ........................ (1,565) --
Increase in income taxes payable ................... 55 1,299
Decrease in other current liabilities .............. (2,040) (2,083)
Increase in deferred income taxes and other
liabilities ....................................... 78 146
Cash provided by discontinued operations ........... 1,318 35
-------- --------
Net cash provided by operating activities ........ 22,873 24,267
-------- --------
INVESTING ACTIVITIES:
Purchases of short-term investments .................... (160) (8,167)
Proceeds from sale of short-term investments ........... 10,821 12,361
Disposals of property and equipment .................... 176 872
Net proceeds from sale of discontinued operations ...... 3,297 --
Capital expenditures ................................... (2,774) (1,044)
Additions to software .................................. (3,654) (2,225)
Cash paid for acquisitions ............................. (4,280) --
-------- --------
Net cash provided by investing activities ............. 3,426 1,797
-------- --------
FINANCING ACTIVITIES:
Payments on long-term debt and capital lease obligations (187) (7,983)
Proceeds from issuance of common stock ................. 555 219
Payments of dividends .................................. (2,796) (2,219)
-------- --------
Net cash used by financing activities ................. (2,428) (9,983)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS ............... 23,871 16,081
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........ 6,252 2,424
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .............. $ 30,123 $ 18,505
======== ========
See accompanying Notes to Consolidated Financial Statements (unaudited).
4
<PAGE>
COMPUTER LANGUAGE RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
1. INTERIM FINANCIAL STATEMENTS
During interim periods, the Company follows the accounting policies set
forth in its Annual Report and its Report on Form 10-K filed with the
Securities and Exchange Commission. Users of financial information
produced for interim periods are encouraged to refer to the footnotes
contained in the Annual Report when reviewing interim financial results.
In June, 1995, the Company sold substantially all of the assets of its
wholly-owned subsidiary, Electronic Form Systems Incorporated ("EFS"). The
operating results of EFS have been treated as discontinued operations, and
previously published financial statements have been restated to conform
with this presentation.
In the opinion of management, the accompanying financial statements include
all material adjustments necessary (consisting only of normal recurring
accruals) for a fair presentation of the Company's consolidated financial
position and results of operations. The results of operations for the
three-month and six-month periods ended June 30, 1995, are not necessarily
indicative of the results to be expected for the full year. Certain prior
period amounts have been reclassified to be consistent with the
presentation in the current period statements.
2. ACQUISITIONS
On April 14, 1995, the Company purchased an auditing software product line
and certain intangibles from Sequel/McGladrey Software for $4.0 million.
The purchase price consisted of cash of $1.8 million and an unsecured note
payable for $2.2 million. The purchase price was allocated primarily to
intangible assets in the amount of $3.4 million (estimated fair values at
date of acquisition), including $910,000 of cost in excess of fair values
of net assets acquired which will be amortized over 5 years.
On June 16, 1995, the Company acquired substantially all of the assets of
Rent Roll, Inc. ("Rent Roll") and its affiliates. Rent Roll markets
residential property management software and services to multi-family
property management and development companies. The purchase price was
approximately $2.8 million consisting of cash of $2.2 million, the
assumption of $76,000 in ongoing support obligations and a liability of
$480,000 for noncompete agreements payable in annual installments over 4
years. The purchase price was allocated based on estimated fair values of
assets and support obligations acquired at date of acquisition, including
intangible assets of $1.1 million which will be amortized over 5 years.
Such allocation did not result in cost in excess of fair values of net
assets acquired. The acquisition has been accounted for under the purchase
method, and accordingly, the results of its operations have been included
in the Company's Consolidated Financial Statements beginning June 16, 1995.
The acquisition did not have a material pro forma impact on operations.
5
<PAGE>
COMPUTER LANGUAGE RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
June 30, 1995
(Unaudited)
3. LONG-TERM DEBT
On April 14, 1995, the Company signed an unsecured promissory note in the
amount of $2.2 million in connection with the purchase of an audit software
product line and customer base. The note is payable in twelve equal
quarterly payments of $187,500 from June 30, 1995, to March 31, 1998, with
interest at 9%.
4. RELATED PARTY GUARANTEE
The Company is currently guarantor for repayment of up to $2.0 million
related to a four-year bank loan made to the Company's President effective
September 24, 1993. In this regard the Company has caused to be issued a
letter of credit in favor of the lender for the amount of the guarantee
under its own bank line of credit. The President is obligated to reimburse
the Company for any amount it may be required to pay in honoring the
guarantee. He has collateralized that obligation with shares of the
Company's common stock with a market value, at June 30, 1995, substantially
in excess of the Company's guarantee.
5. DISCONTINUED OPERATIONS
In June, 1995, the Company sold substantially all of the assets of its
wholly-owned subsidiary, Electronic Form Systems Incorporated ("EFS"),
to Vanier Graphics Corporation, a wholly-owned subsidiary of American
Business Products, Inc. ("ABP"). As consideration for the sale, the
Company received cash of $3.0 million, shares of ABP common stock valued
at $6.0 million and a receivable for approximately $800,000 to be paid
within 90 days of closing. The sale resulted in a gain of $4.7 million
after taxes of $3.1 million.
Prior period financial statements have been restated to reflect the
discontinuation of the EFS segment. Revenues of discontinued operations
were $1.4 million and $3.1 million, respectively, for the quarter and six
months ended June 30, 1995. For the quarter and six months ended June 30,
1994, revenues were $2.7 million and $5.5 million, respectively.
The Company retained the building which had been partially occupied by EFS.
6. EARNINGS PER SHARE
Earnings per share for the three-month and six-month periods ended June 30,
1995, was computed based upon the weighted average number of shares of
common stock and common stock equivalents outstanding.
6
<PAGE>
COMPUTER LANGUAGE RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
June 30, 1995
(Unaudited)
7. INCOME TAXES
Income tax expense for the three months and six months ended June 30, 1995,
is approximately 32.0% of income before taxes compared to 38.2% in 1994.
The lower tax rate in 1995 is due to the issuance of final regulations
under the Research and Experimentation Credit. The Company has undergone a
study and has determined that more of its research activities will qualify
as Research and Experimentation under these regulations.
8. SUPPLEMENTAL DISCLOSURES FOR CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, cash equivalents are considered to be
temporary cash investments purchased with a maturity of three months or
less.
Supplemental schedules of cash payments are provided below (in thousands):
Six Months Ended
June 30
------------------
1995 1994
-------- --------
Interest (net of amounts capitalized) .............. $ 8 $ 366
Income taxes (net of refunds) ...................... 3,378 3,276
9. DIVIDENDS
On June 5, 1995, the Company paid a $1.4 million dividend at the rate of
$0.10 per share to shareholders of record on May 18, 1995. There were 14.0
million shares outstanding on May 18, 1995.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Consolidated Statements of Income expressed as a percentage of revenues.
Percentage of Total Revenues
--------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
------ ------ ------ ------
Revenues .................... 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Costs and expenses:
Cost of revenues ........... 54.8 51.7 49.8 48.4
Selling, general,
and administrative ........ 41.5 37.2 32.2 30.9
----- ----- ----- -----
Total costs and expenses . 96.3 88.9 82.0 79.3
----- ----- ----- -----
Operating income ............ 3.7 11.1 18.0 20.7
Interest income ............. 1.8 1.6 1.2 1.0
Interest expense ............ -- 0.7 -- 0.6
(Loss) gain on disposals of
property and equipment ..... (0.2) (0.2) (0.1) 1.0
----- ----- ----- -----
Income from continuing
operations before taxes .... 5.3 11.8 19.1 22.1
Provision for income taxes .. 1.6 4.5 6.0 8.5
----- ----- ----- -----
Income from continuing
operations ................. 3.7 7.3 13.1 13.6
Discontinued operations:
(Loss) income from
discontinued operations ... (--) 1.1 0.1 0.6
Gain on disposal of
discontinued operations ... 22.3 -- 8.9 --
----- ----- ----- -----
Net income .................. 26.0% 8.4% 22.1% 14.2%
===== ===== ===== =====
REVENUES AND EXPENSES: 1995 COMPARED TO 1994
Revenues for the second quarter ended June 30, 1995, increased by $1.6 million
or 8.5% to $21.1 million from $19.5 million for the same period in 1994. This
increase was primarily due to the acquisitions discussed below and from
increased sales to banks and corporations.
Year-to-date revenues increased $4.3 million or 8.6% to $53.4 million in 1995
from $49.1 million in 1994. The increase in year-to-date revenues resulted
primarily from those same acquisitions and increased sales to accounting firms
and banks offset by lower year-to-date sales to corporations.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Effective December 1, 1994, the Company acquired operations formerly conducted
by Prentice-Hall Professional Software, Inc. Revenues from this acquisition,
included in consolidated results, were $1.8 million and $3.4 million,
respectively, for the quarter and year-to-date periods ended June 30, 1995. In
addition, in April of this year the Company completed the purchase of an
auditing software product line and customer base from Sequel/McGladrey Software,
followed in June by the purchase of a residential property management software
line and customer base from Rent Roll, Inc.
Cost of revenues were $11.6 million or 54.8% of revenues in the second quarter
of 1995 compared to $10.1 million or 51.7% of revenues in 1994. Year-to-date
cost of revenues were $26.5 million or 49.8% of revenues in 1995 compared to
$23.8 million or 48.4% of revenues for the same period in 1994.
Selling, general and administrative expenses were $8.8 million or 41.5% of
revenues for the second quarter of 1995 compared to $7.2 million or 37.2% of
revenues in 1994. Year-to-date selling, general and administrative expenses
were $17.2 million or 32.2% of revenues in 1995 compared to $15.2 million or
30.9% of revenues in 1994.
As anticipated, higher costs and expenses in 1995 were primarily due to the
acquisitions discussed above and increased expenditures for product development.
Second quarter operating profits decreased to approximately $800,000 in 1995
from $2.2 million in 1994 primarily due to increased product development costs
and lower operating profits from banks and corporations. Operating profits
decreased slightly to $9.6 million for the first six months of 1995 from $10.2
million for the same period in 1994 as a result of the revenue increases which
were offset by increased product development costs and lower operating profits
from sales to corporations.
INTEREST, DISPOSALS OF PROPERTY AND EQUIPMENT, AND PROVISION FOR TAXES
Interest income for the quarter and year-to-date periods ended June 30, 1995,
increased as compared to the same periods in 1994 due to higher balances of cash
equivalents and short-term investments as well as higher interest rates in 1995.
Interest expense declined in 1995 due to reduced debt levels. Gain on disposals
of property and equipment for the first six months of 1995 decreased from 1994
due to the sale of land and equipment in 1994.
The estimated income tax expense for the first six months of 1995 declined to
32.0% of income before taxes from 38.2% in 1994 due to the issuance of final
regulations under the Research and Experimentation Credit. The Company has
undergone a study and has determined that more of its research activities will
qualify as Research and Experimentation under these regulations.
INCOME FROM CONTINUING OPERATIONS
The Company recorded income from continuing operations of approximately $800,000
and $7.0 million for the second quarter and the first six months of 1995,
respectively, compared to $1.4 million and $6.7 million for the same periods in
1994, respectively.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
DISCONTINUED OPERATIONS
On June 23, 1995, the Company sold substantially all of the assets of its
wholly-owned subsidiary, Electronic Form Systems Incorporated ("EFS"), reported
previously as the electronic form systems business segment. All periods have
been restated to reflect discontinued operations. The Company's results from
discontinued operations, net of income tax effect, were a loss of approximately
$15,000 for the quarter and income of $76,000 for the year-to-date period ended
June 30, 1995, as compared to income of approximately $225,000 and $295,000 for
the same periods in 1994, respectively. A portion of the operating expenses
allocated to this business segment will continue to be reported by the Company.
A gain of $4.7 million, net of income taxes, on the sale of EFS was recorded
during the second quarter of 1995. For additional information, see Note 5 in
the Notes to Consolidated Financial Statements.
NET RESULTS
The impact on the Company of all the changes described above was to increase
second quarter net income by $3.9 million or 235.1% to $5.5 million or $0.38 per
share in 1995 from $1.6 million or $0.11 per share in 1994. Year-to-date
results increased by $4.8 million or 68.0% to $11.8 million or $0.82 per share
in 1995 from $7.0 million or $0.49 per share for the same period in 1994.
Excluding the gain on the sale of EFS, the Company anticipates that operating
profits for the year will not be materially effected by the disposal of the
segment.
As expected, second quarter operating results were lower than last year due to
seasonal revenue changes and higher overall product development expenses. The
Company expects a similar downward trend in the third quarter with improved
results in the fourth quarter.
LIQUIDITY AND CAPITAL RESOURCES
The net increase in cash and cash equivalents was $7.8 million higher at the end
of the first six months of 1995 compared to the same period in 1994 due to
decreased net cash from operations of $1.4 million offset by increased net cash
provided by investing activities of $1.6 million and decreased net cash used by
financing activities of $7.6 million. Net cash provided from operating
activities decreased primarily due to net working capital fluctuations in the
ordinary course of business. Net cash provided by investing activities
increased primarily due to a $6.4 million increase in net proceeds from the sale
of short-term investments and the $3.3 million received from the sale of
discontinued operations in 1995 offset by $4.3 million paid for acquisitions and
a $3.8 million net increase in capital expenditures and software. The decrease
in cash used by financing activities was primarily attributable to the early
payoff of debt in 1994.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Concluded)
The Company made investments in property and equipment of $2.8 million in the
first six months of 1995 compared to $1.0 million for the same period in 1994.
At June 30, 1995, the Company had no material commitments and it is anticipated
that investments in property and equipment will be approximately $5.5 million
for the year ended December 31, 1995.
During the first six months of 1995, the Company capitalized $3.0 million of
software development costs compared to $2.1 million for the same period in 1994.
As anticipated, capitalized software development costs increased in 1995 due to
the accelerated development of Microsoft (REGISTERED) Windows(TRADEMARK)
applications.
At June 30, 1995, the Company had a maximum line of credit commitment from two
banks of $12.0 million. Availability under the $12.0 million credit facility is
reduced by the $2.0 million letter of credit referred to in Note 4 in the Notes
to Consolidated Financial Statements. Applying the availability formula
contained in the loan agreement, a maximum of $6.5 million was available to the
Company as of June 30, 1995. There were no borrowings outstanding under the
credit line at June 30, 1995, June 30, 1994, or December 31, 1994. The $12.0
million facility expires in June 1996. The availability of this line of credit,
together with funds generated from operations, is expected to be sufficient for
seasonal liquidity requirements and capital needs of the Company.
In connection with the acquisition of the Sequel/McGladrey software, the Company
signed a $2.2 million unsecured promissory note on April 14, 1995. For
additional information, see Note 3 in the Notes to Consolidated Financial
Statements.
Long-term debt and capital lease obligations, including the current portion,
increased to approximately $2.1 million at June 30, 1995, compared to
approximately $500,000 at June 30, 1994, due to the addition of the unsecured
promissory note in the second quarter of 1995 coupled with scheduled reductions
in borrowings in 1994. The Company had no long-term debt or capital lease
obligations at December 31, 1994.
On June 5, 1995, the Company paid a $1.4 million dividend at the rate of $0.10
per share to shareholders of record on May 18, 1995. At its July 25, 1995,
meeting, the Board of Directors declared a dividend for the third quarter of
1995 at a rate of $0.10 per share. The dividend is payable August 29, 1995, to
shareholders of record on August 11, 1995.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 2, 1995, for
the purpose of electing a board of directors and voting on a proposal to approve
the Computer Language Research, Inc. Non-Employee Directors' 1994 Stock Option
Plan and to authorize issuance of an aggregate of 250,000 shares of the
Company's common stock for the plan. Proxies for the meeting were solicited
pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there was
no solicitation in opposition to management's solicitations. All of
management's nominees for directors as listed in the proxy statement were
elected.
The proposal to approve the Computer Language Research, Inc. Non-Employee
Directors' 1994 Stock Option Plan was passed by the following vote:
Shares Voted Shares Voted Shares Voted
"FOR" "AGAINST" "ABSTAINING"
------------ ------------ ------------
13,291,925 91,209 7,390
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
During the quarter ended June 30, 1995, the Company filed a Form 8-K dated June
23, 1995, with the Securities and Exchange Commission to report the sale of
Electronic Form Systems Incorporated.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPUTER LANGUAGE RESEARCH, INC.
DATE: August 9, 1995 By M. Brian Healy
--------------------------------------------
M. Brian Healy
Group Vice President, Finance and
Administration and Chief Financial Officer
(Principal Financial and Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS PRESENTED IN THE 2ND QUARTER 1995 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 30,123
<SECURITIES> 6,000
<RECEIVABLES> 11,447
<ALLOWANCES> 708
<INVENTORY> 0
<CURRENT-ASSETS> 50,217
<PP&E> 59,309
<DEPRECIATION> 38,412
<TOTAL-ASSETS> 97,077
<CURRENT-LIABILITIES> 23,195
<BONDS> 0
<COMMON> 148
0
0
<OTHER-SE> 67,695
<TOTAL-LIABILITY-AND-EQUITY> 97,077
<SALES> 53,356
<TOTAL-REVENUES> 53,356
<CGS> 26,548
<TOTAL-COSTS> 26,548
<OTHER-EXPENSES> 17,182
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,223
<INCOME-TAX> 3,254
<INCOME-CONTINUING> 6,969
<DISCONTINUED> 4,796
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,765
<EPS-PRIMARY> .82
<EPS-DILUTED> .82
</TABLE>
