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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 September 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 October 31, 1995
--------------------- ----------------
$0.01 par value 14,105,379 shares
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COMPUTER LANGUAGE RESEARCH, INC.
FORM 10-Q
September 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
6 EXHIBITS AND REPORTS ON FORM 8-K ............................. 12
i
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMPUTER LANGUAGE RESEARCH, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
September 30 December 31
------------------ -------------
1995 1994 1994
-------- -------- -------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents ............. $ 32,130 $ 17,221 $ 6,252
Short-term investments ................ -- 8,142 10,661
Accounts receivable, less allowance for
doubtful accounts of $602 at September
30, 1995, $513 at September 30, 1994,
and $605 at December 31, 1994 ........ 8,074 8,138 19,652
Other current assets .................. 3,152 2,155 3,698
Net current assets of discontinued
operations ........................... -- 3,839 1,991
-------- -------- --------
Total current assets ................ 43,356 39,495 42,254
-------- -------- --------
PROPERTY AND EQUIPMENT, AT COST:
Land .................................. 3,077 3,077 3,077
Buildings and improvements ............ 16,787 16,867 16,909
Data processing equipment ............. 32,258 33,719 31,781
Machinery and equipment ............... 5,640 5,901 5,780
Furniture and fixtures ................ 2,404 2,339 2,423
-------- -------- --------
60,166 61,903 59,970
Less accumulated depreciation ......... 39,540 40,768 38,983
-------- -------- --------
Net property and equipment .......... 20,626 21,135 20,987
-------- -------- --------
OTHER NONCURRENT ASSETS:
Software, net of accumulated amortiza-
tion of $20,997 at September 30, 1995,
$16,757 at September 30, 1994, and
$17,508 at December 31, 1994 ......... 17,152 8,215 13,367
Intangibles and other assets, net of
accumulated amortization of $5,368
at September 30, 1995, $3,447 at
September 30, 1994, and $3,879
at December 31, 1994 ................. 9,357 5,553 6,510
Net noncurrent assets of discontinued
operations ........................... -- 805 975
-------- -------- --------
Total other noncurrent assets ....... 26,509 14,573 20,852
-------- -------- --------
Total assets ....................... $ 90,491 $ 75,203 $ 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)
September 30 December 31
------------------ -------------
1995 1994 1994
-------- -------- -------------
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt and
capital lease obligations ............ $ 750 $ 259 $ --
Accounts payable ...................... 1,155 1,697 3,052
Accrued compensation, payroll taxes,
and benefits ......................... 6,294 5,356 6,846
Deferred revenue ...................... 4,358 2,221 4,221
Accrued support ....................... 1,039 1,088 2,787
Income taxes payable .................. 1,259 790 --
Other current liabilities ............. 1,960 2,209 4,220
-------- -------- --------
Total current liabilities ........... 16,815 13,620 21,126
-------- -------- --------
NONCURRENT LIABILITIES:
Long-term debt ........................ 1,125 -- --
Deferred income taxes and other
liabilities .......................... 4,625 3,919 4,648
-------- -------- --------
Total noncurrent liabilities ........ 5,750 3,919 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; 14,911 shares
issued at September 30, 1995, 14,749
shares issued at September 30, 1994,
and 14,756 shares issued at
December 31, 1994 .................... 149 147 147
Capital in excess of par value ........ 33,030 32,047 32,086
Retained earnings ..................... 40,013 30,736 31,352
Treasury stock at cost, 810 shares .... (5,266) (5,266) (5,266)
-------- -------- --------
Total shareholders' equity .......... 67,926 57,664 58,319
-------- -------- --------
Total liabilities and shareholders'
equity $ 90,491 $ 75,203 $ 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 Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
Revenues $ 22,441 $ 21,679 $ 75,797 $ 70,822
-------- -------- -------- --------
Costs and expenses:
Cost of revenues ................ 12,253 11,095 38,801 34,889
Selling, general, and
administrative ................. 9,071 7,754 26,253 22,929
-------- -------- -------- --------
Total costs and expenses ...... 21,324 18,849 65,054 57,818
-------- -------- -------- --------
Operating income ................. 1,117 2,830 10,743 13,004
Interest income .................. 526 274 1,185 778
Interest expense ................. -- 16 8 320
(Loss) gain on disposals of
property and equipment .......... (3) (151) (57) 340
-------- -------- -------- --------
Income from continuing operations
before income taxes ............. 1,640 2,937 11,863 13,802
Provision for income taxes ....... 542 1,125 3,796 5,282
-------- -------- -------- --------
Income from continuing operations 1,098 1,812 8,067 8,520
Discontinued operations:
Income from discontinued
operations, net of taxes ....... -- 518 76 813
Gain on disposal of discontinued
operations, net of taxes ....... -- -- 4,720 --
-------- -------- -------- --------
Net income ....................... $ 1,098 $ 2,330 $ 12,863 $ 9,333
======== ======== ======== ========
Earnings per share from
continuing operations ........... $ 0.08 $ 0.13 $ 0.56 $ 0.60
Earnings per share from
discontinued operations ......... -- 0.03 0.33 0.05
-------- -------- -------- --------
Earnings per share ............... $ 0.08 $ 0.16 $ 0.89 $ 0.65
======== ======== ======== ========
Dividends per share .............. $ 0.10 $ 0.10 $ 0.30 $ 0.26
======== ======== ======== ========
Weighted average number of common
and common equivalent shares
outstanding ..................... 14,455 14,280 14,391 14,256
======== ======== ======== ========
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)
Nine Months Ended
September 30
------------------
1995 1994
-------- --------
OPERATING ACTIVITIES:
Income from continuing operations ...................... $ 8,067 $ 8,520
Adjustments to reconcile income to net cash provided
by operating activities:
Depreciation and amortization ........................ 9,252 7,977
Loss (gain) on disposals of property and equipment ... 57 (340)
Changes in assets and liabilities, net of effect of
acquisitions and sale of discontinued operations:
Decrease in accounts receivable .................... 12,031 11,075
Decrease in other current assets ................... 639 2,194
Decrease in other assets ........................... 329 524
Decrease in accounts payable ....................... (1,897) (480)
(Decrease) increase in accrued compensation,
payroll taxes, and benefits ....................... (552) 640
Increase (decrease) in deferred revenue ............ 593 (1,338)
(Decrease) increase in accrued support ............. (1,824) 791
(Decrease) increase in income taxes payable ........ (1,793) 469
Decrease in other current liabilities .............. (2,332) (2,661)
(Decrease) increase in deferred income taxes and
other liabilities ................................. (23) 134
Cash provided by discontinued operations ........... 1,318 195
-------- --------
Net cash provided by operating activities ......... 23,865 27,700
-------- --------
INVESTING ACTIVITIES:
Purchases of short-term investments .................... (160) (8,240)
Proceeds from sale of short-term investments ........... 16,821 12,361
Disposals of property and equipment .................... 184 941
Net proceeds from sale of discontinued operations ...... 3,484 --
Capital expenditures ................................... (4,045) (3,069)
Additions to software .................................. (5,954) (3,525)
Cash paid for acquisitions ............................. (4,686) --
-------- --------
Net cash provided by (used in) investing activities 5,644 (1,532)
-------- --------
FINANCING ACTIVITIES:
Payments on long-term debt and capital lease obligations (375) (8,235)
Proceeds from issuance of common stock ................. 946 477
Payments of dividends .................................. (4,202) (3,613)
-------- --------
Net cash used in financing activities ............. (3,631) (11,371)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS ............... 25,878 14,797
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........ 6,252 2,424
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .............. $ 32,130 $ 17,221
======== ========
See accompanying Notes to Consolidated Financial Statements (unaudited).
4
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COMPUTER LANGUAGE RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 nine-month periods ended September 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
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COMPUTER LANGUAGE RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
September 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%. At September 30, 1995, the outstanding balance of the note
was $1.9 million.
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 September 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"). The Company retained the building which had been
partially occupied by EFS. 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. At September 30, 1995, the balance of the receivable was
approximately $63,000. The sale resulted in a gain of $4.7 million ($3.1
million after taxes).
Prior period financial statements have been restated to reflect the
discontinuation of the EFS segment. Revenues of discontinued operations
were $3.1 million for the nine months ended September 30, 1995. For the
quarter and nine months ended September 30, 1994, revenues were $2.8
million and $8.3 million, respectively.
6. EARNINGS PER SHARE
Earnings per share for the three-month and nine-month periods ended
September 30, 1995, was computed based upon the weighted average number of
shares of common stock and common stock equivalents outstanding.
6
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COMPUTER LANGUAGE RESEARCH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
September 30, 1995
(Unaudited)
7. INCOME TAXES
Income tax expense for the three-month and nine-month periods ended
September 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):
Nine Months Ended
September 30
------------------
1995 1994
-------- --------
Interest (net of amounts capitalized) ......... $ 8 $ 386
Income taxes (net of refunds) ................. 5,777 5,650
9. DIVIDENDS
On August 29, 1995, the Company paid a $1.4 million dividend at the rate of
$0.10 per share to shareholders of record on August 11, 1995. There were
14.1 million shares outstanding on August 11, 1995.
7
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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 Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
------ ------ ------ ------
Revenues .................... 100.0 % 100.0 % 100.0 % 100.0 %
----- ----- ----- -----
Costs and expenses:
Cost of revenues ........... 54.6 51.2 51.2 49.2
Selling, general, and
administrative ............ 40.4 35.8 34.6 32.4
----- ----- ----- -----
Total costs and expenses . 95.0 87.0 85.8 81.6
----- ----- ----- -----
Operating income ............ 5.0 13.0 14.2 18.4
Interest income ............. 2.3 1.3 1.6 1.1
Interest expense ............ -- 0.1 -- 0.5
(Loss) gain on disposals of
property and equipment ..... -- (0.7) (0.1) 0.5
----- ----- ----- -----
Income from continuing operations
before income taxes ........ 7.3 13.5 15.7 19.5
Provision for income taxes .. 2.4 5.2 5.0 7.5
----- ----- ----- -----
Income from continuing
operations ................. 4.9 8.3 10.7 12.0
Discontinued operations:
Income from discontinued
operations, net of taxes .. -- 2.4 0.1 1.2
Gain on disposal of discontinued
operations, net of taxes .. -- -- 6.2 --
----- ----- ----- -----
Net income 4.9 % 10.7 % 17.0 % 13.2 %
===== ===== ===== =====
REVENUES AND EXPENSES: 1995 COMPARED TO 1994
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 $1.9 million and $5.4 million,
respectively, for the quarter and year-to-date periods ended September 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. Revenue from these acquisitions
were $.9 million and $1.3 million for the quarter and year-to-date periods ended
September 30, 1995.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Revenues for the third quarter ended September 30, 1995, increased by $.7
million or 3.5% to $22.4 million from $21.7 million for the same period in 1994.
This increase was primarily due to the acquisitions discussed above offset by a
decrease in revenue as a result of a government contract awarded to the Company
during the third quarter of 1994. The contract's renewal options affected
revenues to a lesser extent in the current year than the original award in the
third quarter of 1994.
Year-to-date revenues increased $5.0 million or 7.0% to $75.8 million in 1995
from $70.8 million in 1994. The increase in year-to-date revenues resulted
primarily from the acquisitions noted above and increased sales to banks, offset
by the government contract discussed above, decreased revenue from accounting
firms due to contract negotiations, and decreased sales to corporations.
Cost of revenues were $12.3 million or 54.6% of revenues in the third quarter of
1995 compared to $11.1 million or 51.2% of revenues in 1994. Year-to-date cost
of revenues were $38.8 million or 51.2% of revenues in 1995 compared to $34.9
million or 49.2% of revenues for the same period in 1994.
Selling, general, and administrative expenses were $9.1 million or 40.4% of
revenues for the third quarter of 1995 compared to $7.8 million or 35.8% of
revenues in 1994. Year-to-date selling, general, and administrative expenses
were $26.3 million or 34.6% of revenues in 1995 compared to $22.9 million or
32.4% of revenues in 1994.
Higher costs and expenses in 1995, both for the quarter and nine months ended,
were primarily due to the acquisitions discussed above and increased
expenditures for product development which were anticipated and disclosed in the
second quarter. These increases were offset in part by a decrease in expenses
associated with maintenance of equipment due to the out-sourcing of this service
which was disclosed in the second quarter.
Third quarter operating profits decreased to approximately $1.1 million in 1995
from $2.8 million in 1994 primarily due to lower revenue from the government as
a result of the contract discussed above. Operating profits decreased to $10.7
million for the first nine months of 1995 from $13.0 million for the same period
in 1994 as a result of lower profits from corporations, accounting firms and the
government, offset by an increase in profit from acquisitions made since
December 1994 and increased sales to banks.
INTEREST, DISPOSALS OF PROPERTY AND EQUIPMENT, AND PROVISION FOR TAXES
Interest income for the quarter and year-to-date periods ended September 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 the reduced debt levels and
the capitalization of interest related to product development. Gain on
disposals of property and equipment for the first nine months of 1995 decreased
from 1994 due to the sale of land and equipment in 1994.
Estimated income tax expense for the first nine months of 1995 declined to 32.0%
of income before taxes from 38.2% in 1994 due to the issuance of final
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
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 $1.1
million and $8.1 million for the third quarter and the first nine months of
1995, respectively, compared to $1.8 million and $8.5 million for the same
periods in 1994.
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, was income of $76,000 for the
year-to-date period ended September 30, 1995, as compared to income of
approximately $813,000 for the same period in 1994. 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 decrease
third quarter net income by $1.2 million or 52.9% to $1.1 million or $0.08 per
share in 1995 from $2.3 million or $0.16 per share in 1994. Year-to-date
results increased by $3.5 million or 37.8% to $12.9 million or $0.89 per share
in 1995 from $9.3 million or $0.65 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, third quarter operating results were lower than last year due to
the government contract discussed above. The Company expects higher revenues
and earnings in its fourth quarter than last year and expects its total year's
results from continuing operations to be ahead of 1994.
LIQUIDITY AND CAPITAL RESOURCES
The net increase in cash and cash equivalents was $11.1 million higher at the
end of the first nine months of 1995 compared to the same period in 1994 due to
decreased net cash from operations of $3.8 million offset by increased net cash
provided by investing activities of $7.2 million and decreased net cash used by
financing activities of $7.7 million. Net cash provided from operating
10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Concluded)
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 $12.5 million increase in proceeds from the sale of
short-term investments, net of purchases, and the $3.5 million received from the
sale of discontinued operations in 1995 offset by $4.7 million paid for
acquisitions and a $4.2 million net increase in capital expenditures and
software additions. The decrease in cash used by financing activities was
primarily attributable to the early payoff of debt in 1994.
The Company made investments in property and equipment of $4.0 million in the
first nine months of 1995 compared to $3.1 million for the same period in 1994.
At September 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 nine months of 1995, the Company capitalized $5.1 million of
software development costs compared to $3.4 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(REGISTERED)
applications.
At September 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 $4.2 million was available
to the Company as of September 30, 1995. There were no borrowings outstanding
under the credit line at September 30, 1995, September 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 30, 1995. The balance
of the note at September 30, 1995, was $1.9 million. 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 $1.9 million at September 30, 1995, compared to
approximately $250,000 at September 30, 1994, due to the addition of the
unsecured promissory note discussed above combined with scheduled reductions in
borrowings in 1994. The Company had no long-term debt or capital lease
obligations at December 31, 1994.
On August 29, 1995, the Company paid a $1.4 million dividend at the rate of
$0.10 per share to shareholders of record on August 11, 1995. At its October
24, 1995, meeting, the Board of Directors declared a dividend for the fourth
quarter of 1995 at a rate of $0.10 per share. The dividend is payable November
22, 1995, to shareholders of record on November 8, 1995.
11
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
During the quarter ended September 30, 1995, the Company was not required to
file a Form 8-K with the Securities and Exchange Commission.
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: November 1, 1995 By M. Brian Healy
--------------------------------------------
M. Brian Healy
Group Vice President, Finance and
Administration and Chief Financial Officer
(Principal Financial and Accounting Officer)
12
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS PRESENTED IN THE 3RD 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 32,130
<SECURITIES> 0
<RECEIVABLES> 8,676
<ALLOWANCES> 602
<INVENTORY> 0
<CURRENT-ASSETS> 43,356
<PP&E> 60,166
<DEPRECIATION> 39,540
<TOTAL-ASSETS> 90,491
<CURRENT-LIABILITIES> 16,815
<BONDS> 1,125
<COMMON> 149
0
0
<OTHER-SE> 67,777
<TOTAL-LIABILITY-AND-EQUITY> 90,491
<SALES> 75,797
<TOTAL-REVENUES> 75,797
<CGS> 38,801
<TOTAL-COSTS> 38,801
<OTHER-EXPENSES> 26,253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 11,863
<INCOME-TAX> 3,796
<INCOME-CONTINUING> 8,067
<DISCONTINUED> 4,796
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,863
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
</TABLE>
