UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 December 31, 1997
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 0-132-58
BOOLE & BABBAGE, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94- 1651571
-------- -----------
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
3131 Zanker Road, San Jose, California 95134-1933
-------------------------------------------------
(Address of principal executive offices)
Registrant's Telephone number, including area code: 408-526-3000
------------
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
--- ---
18,661,559 shares of common stock of the Registrant were outstanding as of
January 30, 1998.
<PAGE>
BOOLE & BABBAGE, INC.
INDEX
Part I FINANCIAL INFORMATION Page No.
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
December 31, 1997 and September 30, 1997 1
Consolidated Statements of Income
Three Months Ended December 31, 1997 and 1996 2
Consolidated Statements of Cash Flows
Three Months Ended December 31, 1997 and 1996 3
Notes to Consolidated Financial Statements 4-5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Three Months Ended December 31, 1997 and 1996 6-11
Part II OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 12
Signatures 13
<PAGE>
<TABLE>
Boole & Babbage, Inc.
Consolidated Balance Sheets
(Amounts in thousands except shares)
(December 31, 1997 unaudited)
<CAPTION>
December 31, September 30,
Assets 1997 1997
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 32,881 $ 33,923
Short-term investments 24,100 23,050
Accounts receivable, net 29,204 26,412
Installment and other receivables, net 67,117 65,469
Deferred tax asset 6,103 6,154
Prepaid expenses and other current assets 4,780 4,513
----------- -----------
Total current assets 164,185 159,521
Purchased and internally developed software, net 12,056 12,152
Equipment, furniture and leasehold improvements, net 10,085 9,968
Long-term installment and other receivables 55,825 52,290
Long-term deferred tax asset 10,557 10,571
Costs in excess of net assets of purchased businesses, net 627 634
Other assets 18,575 15,008
----------- -----------
Total assets $271,910 $260,144
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $7,345 $8,895
Accrued payroll expense 8,729 9,840
Other accrued liabilities 29,894 27,080
Short-term borrowings 516 1,016
Notes payable due within one year 321 319
Capital lease obligations due within one year 813 933
Deferred maintenance revenue 54,302 53,432
----------- -----------
Total current liabilities 101,920 101,515
Notes payable due after one year 34 50
Capital lease obligations due after one year 1,942 1,795
Deferred maintenance revenue due after one year 40,440 38,282
Stockholders' equity:
Preferred stock, 2,000,000 shares authorized, $.001 par value, none issued -- --
Common stock, $.001 par value, authorized--45,000,000 shares; issued--
20,033,958 (19,979,810 at September 30, 1997) 20 20
Additional paid-in capital 93,771 91,970
Retained earnings 41,168 32,800
Unrealized gain on marketable securities 7,199 5,691
Foreign currency translation adjustment (4,503) (3,503)
Less treasury stock, 1,283,787 shares (1,228,788 at
September 30, 1997), at cost (10,081) (8,476)
----------- -----------
Total stockholders' equity 127,574 118,502
----------- -----------
Total liabilities and stockholders' equity $271,910 $260,144
=========== ===========
<FN>
See accompanying notes.
</FN>
</TABLE>
1
<PAGE>
<TABLE>
Boole & Babbage, Inc.
Consolidated Statements of Income
(Amounts in thousands, except earnings per share)
(Unaudited)
<CAPTION>
Three Months Ended
December 31,
-------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenue:
Product licensing $30,209 $27,278
Maintenance fees and other 22,724 22,483
----------- -----------
Total revenue 52,933 49,761
----------- -----------
Costs and expenses:
Cost of product licensing 4,211 3,978
Cost of maintenance fees and other 5,135 6,016
Product development 6,456 6,387
Sales and marketing 24,391 25,126
General and administrative 4,500 5,325
----------- -----------
Total costs and expenses 44,693 46,832
----------- -----------
Operating income 8,240 2,929
Interest and other income, net 3,383 1,588
----------- -----------
Income before provision for income taxes 11,623 4,517
Provision for income taxes 3,255 2,600
----------- -----------
Net income $8,368 $1,917
=========== ===========
Basic earnings per share $ 0.45 $ 0.11
=========== ===========
Diluted earnings per share $ 0.41 $ 0.10
=========== ===========
Common shares outstanding 18,735 18,135
=========== ===========
Common shares assuming dilution 20,450 19,700
=========== ===========
<FN>
See accompanying notes.
</FN>
</TABLE>
2
<PAGE>
<TABLE>
Boole & Babbage, Inc.
Consolidated Statements of Cash Flows
(Amounts in thousands) (Unaudited)
<CAPTION>
Three Months Ended
December 31,
------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,368 $ 1,917
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation, amortization and write-off of capitalized software 2,341 2,458
Gain on sale of equity securities (422) -
Stock issued under compensatory stock plans 46 24
Changes in operating assets and liabilities excluding the effect
of acquisitions:
Accounts receivable and installment and other receivables (12,666) (9,203)
Prepaid expenses and other assets (240) (1,422)
Accounts payable and accrued expenses 749 (274)
Deferred maintenance revenue 4,156 3,022
--------- ---------
Net cash provided by (used for) operating activities 2,332 (3,478)
--------- ---------
Cash flows from investing activities:
Purchases of equipment, furniture and leasehold improvements (1,088) (869)
Payments for capitalized software (1,070) (938)
Net (purchases) sales of short-term investments (1,050) (3,249)
Investment in equity securities (2,808) (26)
Proceeds from sale of equity securities 968 -
--------- ---------
Net cash used for investing activities (5,048) (5,082)
--------- ---------
Cash flows from financing activities:
Proceeds from sale of lease contracts receivable 2,868 795
Proceeds from issuance of common stock 1,754 1,729
Treasury stock purchases (1,605) (601)
Borrowing under line of credit, net (500) (209)
Payments on notes payable (14) (48)
Payments on capital leases (286) (513)
--------- ---------
Net cash provided by financing activities 2,217 1,153
--------- ---------
Effect of exchange rate changes on cash (543) 616
--------- ---------
Net decrease in cash and cash equivalents (1,042) (6,791)
Cash and cash equivalents at beginning of period 33,923 37,260
--------- ---------
Cash and cash equivalents at end of period $ 32,881 $ 30,469
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $335 $447
Income taxes, net $366 $1,709
Supplemental disclosures of noncash investing and financing activities:
A capital lease obligation of $313,000 was incurred in 1997 for the purchase of equipment.
<FN>
See accompanying notes
</FN>
</TABLE>
3
<PAGE>
BOOLE & BABBAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying consolidated financial statements include the accounts of
all subsidiaries after the elimination of all significant inter-company
items and transactions.
A summary of the significant accounting policies of the Company is included
in Note 1 of Notes to Consolidated Financial Statements in the Company's
annual report on Form 10-K for the year ended September 30, 1997. These
consolidated financial statements should be read in conjunction with those
notes.
The consolidated financial information at December 31, 1997 and for the
three- month periods ended December 31, 1997 and 1996 is unaudited. The
statements in this report include all adjustments of a normal recurring
nature. In the opinion of management, these adjustments are necessary for a
fair statement of the interim results for the periods presented. The
interim results are not necessarily indicative of the results for the full
year.
2. Earnings Per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share", which
replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings
per share, basic earnings per share excludes any dilutive effects of
options, warrants, and convertible securities. Diluted earnings per share
is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented
to conform to the Statement 128 requirements.
(Amounts in thousands, except 3 mos. ended Dec. 31,
earnings per share) ---------------------
1997 1996
---- ----
Diluted:
Common shares outstanding 18,735 18,135
Employee stock option plans 1,715 1,565
------ ------
20,450 19,700
====== ======
Net income $8,368 $1,917
====== ======
Diluted earnings per share $.41 $.10
====== ======
Diluted earnings per common share is computed by adding to the weighted average
number of common shares outstanding during the period the number of dilutive
common shares that would be issuable upon the exercise of outstanding options
using the treasury stock method of computation.
4
<PAGE>
BOOLE & BABBAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. Contingencies
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Management believes that such litigation and
claims will be resolved without material adverse effect on the Company's
financial position or results of operations.
4. Recent Accounting Pronouncements
The company intends to adopt SFAS No. 130, "Reporting Comprehensive
Income," and SFAS No. 131 "Disclosures about Segments of an Enterprise and
Related Information," in fiscal 1999. Both standards will require
additional disclosure, but will not have a material effect on the Company's
financial position or results of operations. SFAS No. 130 contains
requirements for the reporting and display of comprehensive income and will
first be reflected in the Company's first quarter of 1999 interim financial
statements. Components of comprehensive income for the Company include
items such as net income and changes in the value of available-for-sale
securities. SFAS No. 131 changes the way companies report segment
information and requires segments to be determined based on how management
measures performance and makes decisions about allocating resources. SFAS
No. 131 will first be reflected in the Company's 1999 Annual Report.
5
<PAGE>
BOOLE & BABBAGE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
When used in this discussion, the words "anticipate," "estimate," "project" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, including those
discussed below and in the Company's Form 10-K for the year ended September 30,
1997, that could cause actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Statement of Position (SOP) 97-2, "Software Revenue Recognition" was issued in
October 1997 and addresses software revenue recognition matters primarily from a
conceptual level and does not include specific implementation guidance. The SOP
supersedes SOP 91-1 and is effective for transactions entered into for fiscal
years beginning after December 15, 1997 and will therefore be adopted for the
Company's fiscal year 1999, beginning October 1, 1998. Based on its reading and
interpretation of SOP 97-2, the Company believes it is currently in compliance
with the final standard. However, detailed implementation guidelines for this
standard have not yet been issued. Once issued, such detailed implementation
guidance could lead to unanticipated changes in the Company's current revenue
accounting practices, and such changes could be material to the Company's
revenues and earnings.
As detailed on its web site (boole.com), many Boole & Babbage products are
already Year 2000 compliant. Most of the remaining products will be compliant by
the end of fiscal 1998 and the Company will ensure that all products will be
fully Year 2000 compliant before December 31, 1999.
For it's internal systems, the Company has implemented conversion projects to
properly process transactions relating to the year 2000 and beyond. The Company
plans to have programming and other changes to critical systems such as Oracle
Accounting Financial Applications completed by early 1999 in order to allow time
for testing. However, there can be no assurance that the systems of other
companies on which the Company's systems rely will be year 2000 capable or that
any failure to ensure year 2000 year capability by another company would not
have an adverse effect on the Company's systems. The Company does not expect the
cost of these projects to have a material effect on the Company's financial
position or results of operations.
REVENUES:
The Company derives its revenues primarily from the licensing of computer
software programs, the sales of software maintenance services, and from
consulting and education services. The following table shows percent of total
revenue and year-to-year percentage changes as reported and without the effect
of currency rate changes for the three months ended December 31, 1997 and 1996,
respectively.
As Without
% of Revenue Reported Currency
----------------------- ----------- -----------
1997 1996 Y/Y chg. Y/Y chg.
----------- ----------- ----------- -----------
Product licensing 57.1% 54.8% 10.7% 19.6%
Maintenance fees and other 42.9% 45.2% 1.1% 8.4%
----------- ----------- ----------- -----------
Total 100.0% 100.0% 6.4% 14.5%
----------- ----------- ----------- -----------
6
<PAGE>
BOOLE & BABBAGE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Product Licensing: As Without
Reported Currency
-------- --------
Y/Y chg. Y/Y chg.
-------- --------
Product Group:
Client/Server 72.0% 86.9%
Mainframe (3.1%) 4.4%
--------- --------
10.7% 19.6%
========= ========
Sales Channel:
Domestic 13.2% 13.2%
International 9.2% 23.5%
--------- --------
10.7% 19.6%
========= ========
The Company licenses its products to customers for use on their computer
systems. As is common in the industry, more than 50% of the Company's license
revenue is derived from transactions that close in the last month of a quarter,
which can make quarterly revenues difficult to forecast. Since operating
expenses are relatively fixed, failure to achieve projected revenues could
materially and adversely affect the Company's operating results. This, in turn,
could result in an immediate and adverse effect on the market price of the
Company's stock.
Products:
The Company anticipates that the Client/Server group will continue to show high
growth rates for fiscal 1998. However, the Company competes with certain
companies who have greater financial and operational resources along with larger
customer bases. This could allow those companies to bundle competing products
with more established non-competing products in order to gain a marketing
advantage. In addition, the Company is dependent on the success of its new
Explorer family of Windows NT and Web-based products relating to its new
Desired-State Management initiative. This initiative represents a significant
expansion of the SpaceView, COMMAND/POST and Command MQ product lines. There is
also a potential diversion of customers' business attention and project funding
to Year 2000 projects. Due to these factors, there can be no assurances that new
or even existing products will achieve significant market acceptance or
competitive success and thus contribute to revenue growth.
Mainframe products include Plex products, which enable customers to handle large
groups of computer processors, particularly the parallel processing machines by
IBM. In the mainframe market, industry analysts have projected that systems
management spending will only grow at 5% per year through the year 2000. They
also project that while the majority of large data centers have adopted a
sysplex strategy, mid-size data centers will not broadly adopt these parallel
processors until 1998 or later. Thus, despite a somewhat flat mainframe market,
the Company's product licensing growth has benefited by data centers adopting
this new technology. This has also helped to increase the number of competitive
replacements which in the first quarter of fiscal 1998 accounted for
approximately 15% of licensing revenue and occur primarily through multi-year
licensing agreements which comprised approximately 55% of licensing revenue.
Thus, future growth rates could be materially and adversely impacted if the
parallel processors do not gain significant market acceptance among the mid-size
data centers, if the rate of successful competitive replacements slows, or if
customer spending shifts away from traditional mainframes to technology
platforms where the Company does not have significant product acceptance.
7
<PAGE>
BOOLE & BABBAGE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sales Channels
Domestic:
Domestic licensing comprised 38.4% and 37.5% of total product licensing for the
first quarter of fiscal 1998 and 1997, respectively. For growth to continue in
the domestic market, the company is dependent on continued productivity
increases as well as the ability to generate larger size transactions, primarily
through multi-year contracts and competitive replacements.
International:
The Company's licensing from its international operations, comprised of foreign
subsidiaries and marketing agents, increased as a result of solid growth in
Europe, Japan and South America despite unfavorable currency exchange rates. In
the Asia-Pacific area, the Company took a conservative position and only booked
new revenues from its subsidiaries in Japan and Australia to avoid potential
impact from the current economic turmoil and uncertainties regarding payment on
product orders from the distributors in the other markets of this region. In
addition to the risks described above, since the majority of product licensing
is derived from international markets, the Company's overall operations and
financial results could be significantly and adversely affected by such
international factors as changes in currency exchange rates and specific
regional or country political and economic circumstances.
Maintenance fees and other:
Maintenance revenue is generated from services the Company provides including
technical support, product enhancements, system updates and user documentation.
Maintenance revenue also includes maintenance services for an initial period
ranging from six months to one year which is included in the initial charge when
the Company licenses its software products under a long-term agreement.
Thereafter on each anniversary date of the license, the customer may elect to
renew its maintenance contract with the Company. Customers may also elect to
purchase advance maintenance at the time of product licensing for maintenance
periods beyond the first year. Included in maintenance fees and other is revenue
from consulting and educational services, computer services, hardware sales and
royalties from IBM for a jointly developed CICS product. In July 1996, the
Company entered into a long-term licensing agreement requiring IBM to make
royalty payments, based upon their sales of the product, of up to a maximum of
approximately $10 million for the period from the fourth quarter of 1996 through
the second quarter of fiscal 1999. The Company has recognized $6.5 million of
revenue of which $5.4 million has been paid through December 31, 1997. Since
there are no minimum generated amounts, actual royalties due to the Company may
be significantly below the maximum amount. This increase in maintenance fees and
other is mainly the result of increased product licensing in the previous year
combined with relatively high renewal rates and increased royalties from IBM
under the July 1996 agreement. The maintenance revenue growth rate is lower than
the licensing growth rate primarily as a result of fewer customer sites due to
the consolidation of customer data centers; reduced revenue associated with
customers' conversion to non-CPU specific pricing systems such as MIPS-based
pricing; and higher discount levels offered by the Company on multiple-year
maintenance packages.
8
<PAGE>
BOOLE & BABBAGE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company anticipates that maintenance revenues in fiscal 1998 will increase
due to the higher license revenue growth in 1997, although it will be negatively
impacted by reduced revenue associated with site consolidations, non-CPU
specific pricing and multiple-year maintenance package discounts. The Company
must continue to generate new product licensing revenues and also continue to
provide high quality maintenance support and upgrades to ensure future
maintenance revenue increases.
COSTS AND EXPENSES :
<TABLE>
The following table shows percent of total revenue and year-to-year percentage
changes of costs and expenses as reported and without the effect of currency
rate changes for the three months ended December 31, 1997 and 1996,
respectively.
<CAPTION>
As Without
% of Revenue Reported Currency
------------ -------- ---------
1997 1996 Y/Y chg. Y/Y chg.
------------ ----------- ------------ ---------
<S> <C> <C> <C> <C>
Cost of product licensing 8.0% 8.0% 5.9% 15.2%
Cost of maintenance fees and other 9.7% 12.1% (14.6%) (7.7%)
Product development 12.2% 12.8% 1.1% 2.8%
Sales and marketing 46.1% 50.5% (2.9%) 4.2%
General and administrative 8.5% 10.7% (15.5%) (9.6%)
------------ ----------- ------------ ---------
Total 84.5% 94.1% (4.6%) 1.8%
------------ ----------- ------------ ---------
</TABLE>
Cost of product licensing:
Cost of product licensing consists primarily of royalties paid to independent
software authors and amortization of purchased and internally developed
software. The increase relates primarily to higher royalty costs due to
increased third party sales. In general, fluctuations in the relationship of
cost of product licensing to licensing revenue are caused primarily by changes
in licensing revenue mix, royalty agreements and amortization of capitalized
software.
Cost of maintenance fees and other:
Cost of maintenance fees and other consists primarily of cost of product
maintenance support, royalties paid to independent software authors,
amortization of purchased and internally developed software, the cost to provide
educational and consulting services and costs related to certain computer
services. In 1998, the decrease was primarily due to less costs to provide
consulting services relating to a consulting contract of MAXM Systems
Corporation, ("MAXM"). MAXM was acquired in January 1997 and was accounted for
using the pooling of interests method. In general, fluctuations in the
relationship of cost of maintenance fees and other to revenue are caused
primarily by changes in maintenance revenue mix, maintenance support, royalty
agreements, and amortization of capitalized software.
9
<PAGE>
BOOLE & BABBAGE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Product development:
The increase in product development in 1998 is primarily attributable to higher
research and development ("R&D") personnel costs due to increased headcount
offset by decreased expenses relating to supporting the IBM jointly developed
CICS product. R&D expenditures were 17% of revenue (excluding third party) in
1998 and 15% in 1997 while the amount of R&D capitalized was 14% of gross R&D
costs in both years. The Company capitalizes certain development costs in
accordance with Statement of Financial Accounting Standard No. 86. To the extent
the Company capitalizes its product development costs, the effect is to defer
such costs to future periods and match them to the revenue generated by the
products. Product development expenses may fluctuate annually depending in part
upon the number and status of internal software development projects.
Sales and marketing:
The increase in sales and marketing (without currency effect) in 1998 is
primarily a result of higher commissions on increased product licensing and
higher product marketing and international sales operating costs. The effect of
these increases was mitigated by eliminating duplicate facility and personnel
costs as a result of the MAXM acquisition
General and administrative:
General and administrative expenses decreased in 1998 primarily because
redundant corporate facility and personnel costs related to MAXM were
eliminated.
Interest and other income, net:
Interest and other income consists principally of interest income and expense
and gains and losses from sale of investments, currency or disposal of assets.
An increase of 113% over 1997 is mainly due to higher interest income on more
lease contracts receivable, currency gains in Europe in the current year versus
a loss in the prior year, and gains on sales of equity investments.
Income Taxes:
Income taxes have been provided based upon the estimated effective tax rate for
the year of 28%. In 1997, the effective tax rate was 30% exclusive of the tax
effect of operating losses of MAXM in the first quarter for which no tax benefit
is recognized
The effective tax rate differs from the federal statuary rate due primarily to
permanently invested earnings of foreign subsidiaries being taxed at rates lower
than the federal statutory rate and tax credits for increased research and
development. Management believes future taxable income will be sufficient to
realize the tax benefit of the net deferred tax asset of approximately $16.7
million.
10
<PAGE>
BOOLE & BABBAGE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
At December 31, 1997, the Company's cash, cash equivalents and short-term
investments were $56,981,000. The Company continues to use installment payment
plans to gain a competitive advantage during the sales process and had
outstanding installment receivables of $129,930,000 at December 31, 1997. The
Company periodically sells portions of installments receivables subject to
limited recourse provisions. During 1998, the Company sold $2,868,000.
The Company continues to finance its growth through funds generated from
operations. For the quarter ended December 31, 1997 net cash provided by
operating activities was $2,332,000. Net cash used in investing activities in
1998 was $5,048,000, primarily for internally developed and purchased
capitalized software, acquisition of computers and related equipment, the
purchase of equity securities, and the net purchases of short-term investments.
Cash provided by investing activities was due to the sale of equity securities.
Net cash provided by financing activities in 1998 was $2,217,000, primarily from
the sale of lease contracts receivable, the exercise of employee stock options
and stock purchases through the Employee Stock Purchase Plan. Cash used for
financing activities relates to the Company's stock repurchase program and to
debt payment.
The Company continues to evaluate business acquisition opportunities that
complement its strategic plans and believes existing cash balances and funds
generated from operations will be sufficient to meet its liquidity requirements
for the foreseeable future.
11
<PAGE>
BOOLE & BABBAGE, INC.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibit is filed herewith.
Exhibit
Number Description of Document
------ -----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K - None.
12
<PAGE>
BOOLE & BABBAGE, INC. 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.
BOOLE & BABBAGE, INC.
February 11, 1998 \Paul E. Newton\
- ----------------- --------------------------
Paul E. Newton
President and Director
(Principal Executive Officer)
February 11, 1998 \Arthur F. Knapp, Jr.\
- ----------------- --------------------------
Arthur F. Knapp, Jr.
Senior Vice President
Chief Financial Officer
(Principal Financial Officer)
February 11, 1998 \Carla J. Dorow\
- ----------------- --------------------------
Carla J. Dorow
Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 32881
<SECURITIES> 24100
<RECEIVABLES> 154196
<ALLOWANCES> 2050
<INVENTORY> 0
<CURRENT-ASSETS> 164185
<PP&E> 47241
<DEPRECIATION> 37158
<TOTAL-ASSETS> 271910
<CURRENT-LIABILITIES> 101920
<BONDS> 0
0
0
<COMMON> 20
<OTHER-SE> 127554
<TOTAL-LIABILITY-AND-EQUITY> 271910
<SALES> 52933
<TOTAL-REVENUES> 52933
<CGS> 0
<TOTAL-COSTS> 9346
<OTHER-EXPENSES> 35347
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 335
<INCOME-PRETAX> 11623
<INCOME-TAX> 3255
<INCOME-CONTINUING> 8366
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8368
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.41
</TABLE>
