<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15946
DELPHI INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0021975
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3501 ALGONQUIN ROAD
ROLLING MEADOWS, IL 60008
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 708-506-3100
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date. 8,368,953 shares as of
July 31, 1995. ----------------------
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<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
DELPHI INFORMATION SYSTEMS, INC.
INDEX
Part I - FINANCIAL INFORMATION Page
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Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at June 30, 1995
and March 31, 1995 ................................................. 3
Consolidated Statements of Operations for the Three
Months Ended June 30, 1995 and 1994................................. 4
Consolidated Statements of Cash Flows for the Three Months
Ended June 30, 1995 and 1994........................................ 5
Notes to Consolidated Financial Statements............................ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................... 11
SIGNATURE................................................................. 12
2
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PART 1. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Financial Statements
DELPHI INFORMATION SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
June 30, March 31
1995 1995
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<S> <C> <C>
CURRENT ASSETS:
Cash $455 $877
Accounts receivable, net 7,542 7,639
Inventories 890 983
Prepaid expenses and other assets 1,483 1,424
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TOTAL CURRENT ASSETS 10,370 10,923
Property and equipment, net 3,342 3,630
Software development, net 4,449 4,389
Goodwill and customer lists, net 5,075 5,284
Purchased software, net 2,287 2,484
Other assets 689 837
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TOTAL ASSETS $26,212 $27,547
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<CAPTION>
LIABILITIES & STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable $3,386 $2,486
Accounts payable and accrued liabilities 5,356 6,402
Accrued payroll and related benefits 1,010 1,441
Deferred revenue 6,244 6,332
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TOTAL CURRENT LIABILITIES 15,996 16,661
Notes payable - long term 1,500 1,500
Subordinated note payable 0 2,750
Excess lease liability 1,292 1,445
Other liabilities 153 638
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TOTAL LIABILITIES 18,941 22,994
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Commitments and contingent liabilities:
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par value,
2,000,000 shares authorized
Series B, 9,205 shares issued and outstanding 780 780
Series C, 36,268 shares issued and outstanding 3,570 3,570
Series D, 16,356 shares issued and outstanding 3,655 3,655
Series E, 63,426 shares issued and outstanding 3,125 --
Common stock, $.10 par value,
Non-designated, 12,000,000 shares authorized
8,328,453 and 7,979,173 shares issued and
outstanding, respectively 833 798
Additional paid-in capital 18,888 18,507
Accumulated deficit (23,705) (22,894)
Cumulative foreign currency translation adjustment 125 137
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TOTAL STOCKHOLDER'S EQUITY 7,271 4,553
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $26,212 $27,547
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</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------------
1995 1994
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<S> <C> <C>
REVENUES:
Systems $4,464 $5,316
Services 7,557 7,726
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TOTAL REVENUES 12,021 13,042
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COSTS OF REVENUES:
Systems 3,166 3,839
Services 4,499 4,654
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TOTAL COSTS OF REVENUES 7,665 8,493
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GROSS MARGIN 4,356 4,549
OPERATING EXPENSES:
Product development 1,268 1,718
Sales and marketing 1,706 1,808
General and administrative 1,644 2,034
Amortization of goodwill, customer
lists and noncompete agreements 377 398
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TOTAL OPERATING EXPENSES 4,995 5,958
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OPERATING LOSS (639) (1,409)
OTHER EXPENSES:
Interest expense, net 141 208
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LOSS BEFORE INCOME TAXES (780) (1,617)
Income tax provision 31 30
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NET LOSS ($811) ($1,647)
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LOSS PER COMMON SHARE ($0.10) ($0.23)
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Shares used in computing per share data 8,231 7,020
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</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
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DELPHI INFORMATION SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------------
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net loss ($811) ($1,647)
Adjustment to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 387 339
Amortization of capitalized software
development costs 265 378
Amortization of goodwill and acquisition costs 208 398
Amortization of purchased software 149 107
Amortization of noncompete and other intangibles 169 --
Retirement of property and equipment -- 22
Foreign currency translation adjustment (12) --
Excess lease liability (153) (104)
Changes in assets & liabilities:
Accounts receivable, net 97 2,671
Inventories 93 (206)
Prepaid expenses and other assets (79) 125
Accounts payable and accrued liabilities (612) (958)
Accrued payroll and related (431) 33
Other liabilities and deferred liabilities (168) 106
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Net cash (used in) provided by operating activities (898) 1,264
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Cash flows from investing activities:
Capital expenditures (97) (325)
Expenditures for capitalized software development (325) (389)
Purchased software (12) (64)
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Net cash used in investing activities (434) (778)
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Cash flows from financing activities:
Borrowings of note payable 1,200 1,006
Payments of note payable (300) (1,450)
Proceeds from issuance of convertible
promissory notes -- 125
Proceeds from exercise of stock options 10 --
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Net cash (used in) provided by financing activities 910 (319)
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Net (decrease) increase in cash (422) 167
Cash at the beginning of the period $877 $1,657
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Cash at the end of the period $455 $1,824
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</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. BASIS OF PRESENTATION
The financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation of the results of the
interim periods.
These financial statements should be read in conjunction with the financial
statements, and accompanying notes thereto, included in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1995.
The results of operations for current interim periods are not necessarily
indicative of results to be expected for the entire current year.
Certain reclassifications have been made to prior year accounts to be
consistent with current year classifications.
6
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DELPHI INFORMATION SYSTEMS, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited
financial data and the notes thereto included in Item 1 of this Quarterly Report
and the financial statements and notes thereto, and Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1995.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1995 was a negative $5,626,000, an improvement of
$112,000 from the prior year end date of March 31, 1995. The significant
changes in working capital were a decrease of $422,000 in cash; a decrease of
$97,000 in accounts receivable primarily due to a reduction in system sales; an
increase of $900,000 in borrowings; and a decrease of $1,046,000 in accounts
payable and accrued liabilities primarily due to a reduction in accounts payable
for the hardware component of system sales, and a decrease in accrued interest
payable.
A major component of the Company's negative net working capital position
consists of deferred revenues of $6,244,000 at June 30, 1995, primarily
representing prepaid maintenance fees from customers which are recognized
ratably over the maintenance agreement terms. This liability is satisfied
through normal ongoing operations of the Company's service organization and
generally does not require a payment to a third party.
As of June 30, 1995, borrowings under the Company's bank line of credit totaled
$3,386,000 or 89% of total available borrowings.
Effective as of April 1, 1995, the Company delivered 63,426 shares of Series E
Preferred Stock in order to fulfill its obligations under the $5,000,000 face
value, $2,750,000 discounted carrying value, of subordinated convertible debt
plus accrued interest.
THREE MONTH PERIODS ENDED JUNE 30, 1995 AND 1994
Revenues for the first quarter ended June 30, 1995 were $12,021,000,
representing an 8% decrease compared to the first quarter of the prior year. The
Company recorded a net loss of $811,000 or $0.10 per share in the first quarter,
compared to a net loss of $1,647,000, or $0.23 per share in the first quarter of
the prior year.
Systems revenues of $4,464,000 for the first quarter of the current year reflect
a decrease of 16% compared to the first quarter of the prior year. This
decrease was primarily the result of decreased sales of system upgrades to
existing customers. Service revenues in the first quarter of the current year
decreased $169,000 or approximately 2%, compared to the first quarter of the
prior year.
7
<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Costs of revenues as a percentage of revenues were 64% in the current quarter,
comparable to the 65% in the first quarter of the prior year.
Product development expenses for the three months ended June 30, 1995, decreased
$450,000 or 26% compared to the comparable period in the prior fiscal year. The
decreased expense is due to decreased spending in the current quarter.
Sales and marketing expenses for the quarter ended June 30, 1995 decreased
$102,000, or approximately 6%, from the comparable quarter in the prior year.
The decrease is due to a marginal reduction in spending compared to the prior
year due to the curtailment of various marketing programs.
General and administrative expenses for the quarter ended June 30, 1995
decreased $390,000, or 19%, from the first quarter of the prior year. The
decrease is due to lower head count and overall spending reductions compared to
the prior year.
Interest expense in the quarter ended June 30, 1995 decreased $67,000, or 32%,
compared to the first quarter of the prior year due to the conversion of the
subordinated note payable into Series E Preferred Stock.
8
<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE
(a.) EXHIBITS
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
Primary earnings (loss) per share:
Net loss for
calculation of primary
earnings per share ($811) ($1,647)
Weighted average number of
shares outstanding (1) 8,231 7,020
Primary loss
per share (2) ($0.10) ($0.23)
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<FN>
(1) Common stock equivalent shares have not been considered in the
calculations because they would be anti-dilutive.
(2) Primary and fully diluted earnings per share are the same for all
periods presented.
</TABLE>
(b.) REPORTS
None.
9
<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
SIGNATURE
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.
DELPHI INFORMATION SYSTEMS, INC.
Date: August 10, 1995 By /s/ John R. Sprieser
------------------------------ --------------------------------------
John R. Sprieser
Senior Vice President,
Chief Financial Officer
(Duly authorized officer and
principal financial and chief
accounting officer)
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1995
<CASH> 455
<SECURITIES> 0
<RECEIVABLES> 8,234
<ALLOWANCES> (692)
<INVENTORY> 890
<CURRENT-ASSETS> 10,370
<PP&E> 14,108
<DEPRECIATION> (10,766)
<TOTAL-ASSETS> 26,212
<CURRENT-LIABILITIES> 15,996
<BONDS> 1,500
<COMMON> 833
3,905
7,225
<OTHER-SE> (4,692)
<TOTAL-LIABILITY-AND-EQUITY> 26,212
<SALES> 12,021
<TOTAL-REVENUES> 12,021
<CGS> 7,665
<TOTAL-COSTS> 7,665
<OTHER-EXPENSES> 4,965
<LOSS-PROVISION> 30
<INTEREST-EXPENSE> 141
<INCOME-PRETAX> (780)
<INCOME-TAX> 31
<INCOME-CONTINUING> (811)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (811)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
