UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to
______________
Commission file number 0-16230
STRUCTURAL DYNAMICS RESEARCH CORPORATION
(Exact name of registrant as specified in its
charter)
Ohio 31-0733928
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Eastman Drive, Milford, Ohio 45150 (Address
of principal executive offices)
(Zip Code)
(513) 576-2400
(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 [ ]
As of April 28, 1995 there were 29,734,865 shares of
the Registrant's Common Stock without par value issued and
outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
(in thousands, except per share data)
Three Months Ended
March 31,
1995 1994
Revenue:
Software products
and services $28,624 $23,449
Maintenance 9,866 8,702
Engineering services 5,322 4,644
Net revenue 43,812 36,795
Cost and expenses:
Cost of revenue 10,001 8,010
Research and development
expenses 7,260 8,040
Selling, general and
administrative expenses 24,221 24,072
Total cost and expenses 41,482 40,122
Operating income (loss) 2,330 (3,327)
Equity in losses of affiliates (1,640) (195)
Other income, principally
interest 493 411
Income (loss) before income taxes
and cumulative effect of
accounting changes 1,183 (3,111)
Income tax expense 916 1,203
Income (loss) before cumulative
effect of accounting changes 267 (4,314)
Cumulative effect of accounting
changes -- (3,896)
Net income (loss) $ 267 $(8,210)
<PAGE>
Earnings (loss) per share:
Before cumulative effect of
accounting changes $.01 $(.14)
Cumulative effect of accounting
changes -- (.13)
Net income (loss) per share $.01 $(.27)
Common and common equivalent
shares:
Primary 29,805 30,154
Fully diluted 30,163 30,154
See accompanying notes to consolidated financial
statements.
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited)
(in thousands)
March
December
31, 31,
1995 1994
Assets
Current assets:
Cash and cash equivalents $22,019 $21,885
Short-term investments 7,872 17,296
Trade accounts receivable, net 39,861 35,867
Other accounts receivable 7,022 6,760
Prepaid expenses 6,313 6,110
Total current assets 83,087 87,918
Long-term investments 12,312 7,059
Property and equipment, at cost:
Computer and other equipment 34,614 36,259
Office furniture and equipment 9,351 9,258
Leasehold improvements 3,821 3,799
47,786 49,316
Less accumulated depreciation
and amortization 34,990 35,537
Net property and
equipment 12,796 13,779
Computer software construction
costs, net 30,139 30,854
Other assets 1,862 3,089
Total assets $140,196 $142,699
See accompanying notes to consolidated financial
statements.
STRUCTURAL DYNAMICS RESEARCH CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited)
(in thousands, except per share data)
March 31, December 31,
1995 1994
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 5,449 $ 6,857
Accrued expenses 24,617 29,495
Accrued income taxes 3,992 4,262
Deferred revenues 22,225 19,714
Total current liabilities 56,283 60,328
Post employment benefits and other 4,332 4,336
Cumulative share of losses in
affiliates, net 5,136 5,883
Shareholders' equity:
Common stock, stated value $.0069
per share Authorized 100,000 shares;
outstanding shares - 29,246 and 28,897
net of 1,449 and 1,652 shares
in treasury 203 201
Capital in excess of stated value 48,089 46,482
Retained earnings 26,995 26,728
Foreign currency translation
adjustment (591) (590)
Unrealized holding loss on
investments (251) (669)
Total shareholders' equity 74,445 72,152
Total liabilities and
shareholders' equity $140,196 $142,699
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1995 1994
Net cash (used in) provided by
operating activities $(4,091) $ 294
Cash flows from investing
activities:
Sales (purchases) of
investments, net 4,589 (5,241)
Additions to property
and equipment, net (639) (913)
Additions to computer software
construction costs (1,438) (1,523)
(Increase) decrease in other
assets, net 105 (121)
Net cash (used in) provided by
investing activities 2,617 (7,798)
Cash flows from financing activities:
Stock issued under employee
benefit plans 1,642 863
Purchases of treasury stock (33) (1)
Net cash provided by financing
activities 1,609 862
Effect of exchange rate changes on cash (1) (2)
(Decrease) increase in cash and cash
equivalents 134 (6,644)
Cash and cash equivalents:
Beginning of period 21,885 34,783
End of period $22,019 $28,139
See accompanying notes to consolidated financial statements.
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(in thousands)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange
Commission. As permitted by the rules of the Securities and
Exchange Commission applicable to quarterly reports on Form
10-Q, these notes are condensed and do not contain all
disclosures required by generally accepted accounting
principles. In the opinion of management, these financial
statements contain all adjustments (consisting of only
normal recurring adjustments, unless otherwise noted)
necessary to present fairly the Company's financial
position, results of operations and cash flows as of the
dates and for the periods indicated.
(2) Change in Accounting Principle
In 1994, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 112 "Employers' Accounting for
Postemployment Benefits" for benefits attributable to
employees' service previously rendered and recognized a one-
time charge of $3,896 net of income tax benefits.
(3) Formation of Central European Joint Venture
In March 1994, the Company formed a joint venture with
Siemens Nixdorf Informationssysteme AG (SNI). The Company
and SNI contributed certain assets, cash and loans to the
venture, known as SDRC Software and Services GmbH (SDRC
GmbH), along with the rights to certain software products
owned by SNI. Although the Company received a 50.1% interest
in the venture, it does not exercise sufficient control to
treat SDRC GmbH as a consolidated subsidiary.
(4) Taxes
The provision for income taxes reflects taxes currently
payable. Deferred tax benefits relating to temporary
differences have been offset by a valuation allowance due to
doubt as to their ultimate realization. These factors cause
the effective tax rate to differ from the expected statutory
rate.
(5) Reclassification
Certain amounts have been reclassified in the 1994
financial statements to conform with the current year
presentation.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Results of Operations
(in thousands)
Revenue
Consolidated revenue increased by $7,017 (or 19%) for the
three months ended March 31, 1995 as compared to the
corresponding 1994 period. Software segment's revenue
increased $6,339 (or 20%) over the corresponding quarter in
1994 due in part to the growing continued worldwide acceptance
of I-DEAS Master Series. For the period ended March 31, 1995
and 1994, software revenue in North America accounted for 36%
and 33%, Asia-Pacific 38% and 34% and Europe 26% and 33%,
respectively. Maintenance revenue increased $1,164 (or 13%)
over the prior year's quarter, primarily as a result of the
Company's expanding customer base. Engineering services
segment revenue growth of $678 (or 7%) was primarily
attributable to the increased level of I-DEAS
and Product Data Management implementation projects.
Expenses
Cost of revenue in 1995 increased $1,991 (or 25%) as compared
to the prior year quarter primarily due to increased
amortization of capitalized software and other variable cost
increases directly associated with software revenue.
With the January, 1995 release of I-DEAS Master Series
2.0, amortization of software development costs increased
$484 (or 29%) over the prior year's quarter. External
commissions accrued under third party distribution
agreements increased $699 (or 62%) due to the revenue
growth in the Asia-Pacific region specifically those
countries where independent representatives are
utilized. Engineering Services' cost increased 4% over the
prior year's quarter consistent with the revenue growth.
Research and development expense decreased by 10% as compared
to prior year's level. The decrease in labor and
associated expenses was partially offset by an increase in
third party author fees of $417 (or 19%). The level of
capitalized software construction costs decreased slightly
from the prior year comparable quarter. The Company
continues to commit significant resources to the
technological advancement of its software product line.
Selling, general and administrative expenses were
approximately equal to 1994 due to the impact of the cost
containment program instituted by management in the fourth
quarter of 1994. The improvements from the cost containment
program were offset by the $1,750 accrual of severance costs
recorded in the first quarter of 1995 related to a workforce
reduction of 85 people.
Other
Other income (principally interest income) has increased
slightly due to increased interest earned from higher
interest rates on cash and short-term investments.
In 1994, the Company adopted SFAS 112 "Employers' Accounting
for Postemployment Benefits" for benefits attributable to
employees' service previously rendered and recognized a one-
time charge of $3,896 net of income tax benefits.
Taxes
The provision for income taxes reflects taxes currently
payable. Deferred tax benefits relating to temporary
differences have been offset by a valuation allowance due to
doubt as to their ultimate realization. These factors cause
the effective tax rate to differ from the expected
statutory rate.
Quarterly Results
Future quarterly results could be impacted by factors such
as order deferrals, a slower growth rate in the market,
increased competition or adverse changes in general economic
conditions in any of the countries in which the Company
does business. Any shortfall in revenue or earnings could
have an immediate and significant adverse effect on the
trading price of the Company's stock in any given period.
<PAGE>
Liquidity and Capital Resources
At March 31, 1995, the Company had cash and investments
of $42,203. The Company's working capital was $26,804.
In addition, the Company has an unsecured bank line of credit
of $15,000. The Company has no current commitments for
material capital expenditures. These existing sources of
liquidity and funds anticipated to be generated from
operations are expected to provide adequate cash to fund the
Company's projected needs for the foreseeable future.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits filed as part of this report:
11(a) Calculation of Primary Earnings (Loss) Per
Common Share
11(b) Calculation of Fully Diluted Earnings (Loss)
Per Common Share
(B) No report on Form 8-K has been filed during the first
quarter of 1995.
The information furnished in this report has not been
audited. It reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the
results for the interim periods reported. The results are
not necessarily indicative of results of operations to be
expected for the full fiscal year.
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.
STRUCTURAL DYNAMICS RESEARCH
CORPORATION
Date: May 12, 1995 By: /s/ Jeffrey J. Vorholt
Jeffrey J. Vorholt,
Vice President,
Chief Financial Officer and
Treasurer
* Pursuant to the
last sentence of General
Instruction G to Form 10-Q,
Mr. Jeffrey J. Vorholt has
executed this Quarterly Report
on Form 10-Q both on behalf of
the registrant and in his
capacity as its principal
financial and accounting
officer.
EXHIBIT 11(a)
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Calculation of Primary Earnings (Loss) Per Common Share
(in thousands, except per share data)
Three Months Ended
March 31,
1995 1994
PRIMARY
Average shares outstanding 29,185 28,766
Net effect of dilutive stock options
after application of the treasury
stock method 620 1,388
Total 29,805 30,154
Income (loss) before cumulative effect
of accounting change $ 267 $(4,314)
Cumulative effect of accounting change (3,896) --
Net income (loss) $ 267 $(8,210)
Primary per share amount:
Before cumulative effect of
accounting change $ .01 $ (.14)
Cumulative effect of accounting change -- (.13)
Net income (loss) per share $ .01 $ (.27)
Exhibit 11(b)
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Calculation of Fully Diluted Earning (Loss) Per Common Share
(in thousands, except per share data)
Three Months Ended
March 31,
1995 1994
FULLY DILUTED
Average shares outstanding 29,185 28,766
Net effect of dilutive stock options
after application of the treasury
stock method 978 1,388
Total 30,163 30,154
Income (loss) before cumulative effect
of accounting change $ 267 $ (4,314)
Cumulative effect of accounting change -- (3,896)
Net income (loss) $ 267 $ (8,210)
Fully diluted per share amount:
Before cumulative effect of accounting
change $ .01 $ (.14)
Cumulative effect of accounting change -- (.13)
Net income (loss) per share $ .01 $ (.27)
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0
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