SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 10-K/A
__________________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number 33-16541
December 31, 1993
STRUCTURAL DYNAMICS RESEARCH CORPORATION
An Ohio Corporation I.R.S. Employer Identification No. 31-0733928
2000 Eastman Drive, Milford, Ohio 45150 Telephone Number (513)
576-2400
__________________
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of class
Common Stock without par value
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is
not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
__________________
As of March 7, 1994 the latest practicable date, 28,787,384
shares of Common Stock were outstanding. The aggregate market
value of Common Stock held by non-affiliates was approximately
$453,107,476 at that date.
__________________
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by
reference and the Part of the Form 10-K into which the document is
incorporated:
Registrant's definitive Proxy Statement dated March 16, 1994 --
Part III.
Registrant's Form 8-K dated November 2, 1994 and Form 8-K/A dated
November 15, 1994 -- Part III
__________________
The Registrant hereby amends the following items and financial
statements of its Annual Report on Form 10-K for the year ended
December 31, 1993, as set forth below. Items not referenced below
are not amended. Items referenced below are amended in their
entirety as set forth below:
PART I
Item 1. Business.
General
Structural Dynamics Research Corporation (the "Company"
or "SDRC") is a leading international supplier of mechanical design
automation software and engineering services used by manufacturers
for the design, analysis, testing and manufacturing of mechanical
products. The Company's products and services significantly reduce
product development time and cost, resulting in superior product
quality by enabling customers to optimize product designs prior to
production.
The Company's strategy is to establish acknowledged
technological leadership by marketing a highly functional set of
mechanical design automation (MDA) software tools, and by providing
related engineering consulting services. The Company operates in
two business segments: software products and services, and
engineering services.
The Company was incorporated under the laws of the State
of Ohio in 1967. During the past five years, it has restructured
certain aspects of its business. In 1992, the Company and Control
Data Systems, Inc. established a joint venture company, Metaphase
Technology, Inc., to market product data management software. In
1989, the Company and Nissan Motor Co., Ltd. established a Japanese
joint venture company, ESTECH Corporation, to provide engineering
services in Japan and the Far East.
Software Products and Services
The Company develops and markets a comprehensive
software system called I-DEAS (Trademark) (Integrated Design
Engineering Analysis Software) which spans a broad range of
applications for mechanical engineering including solid modeling,
finite element modeling and analysis, computer-aided testing,
drafting and manufacturing. I-DEAS software allows all members of
the product development team to evaluate multiple product designs
and manufacturing processes before final production. The latest
release of the I-DEAS software, which began shipment in June 1993
is called the I-DEAS Master Series (Trademark). SDRC also markets
a number of software products for product data management, allowing
manufacturers to track, manage and control product information
throughout the product development cycle.
The Company's software is available on the leading
engineering workstations. This hardware platform independence
allows the Company's customers to operate in a heterogeneous
environment, selecting and adding software modules for a broad
range of hardware systems based upon their unique requirements.
The productivity benefits of highly functional, integrated
mechanical design automation software, when combined with the
significant improvements in hardware price and performance, have
increased the number of potential users who can utilize these
design tools. The Company believes its products and services are
of great value to companies which must accelerate design cycles in
response to increased competition while simultaneously designing
and manufacturing mechanical products in accordance with specific
quality and cost criteria. A broad range of industries are
potential users of these tools, with the highest concentration of
users at aerospace, automotive, electronics and industrial
equipment manufacturers.
The Company's sales channels include a worldwide direct
sales force which sells to end users, distributors, value-added
resellers and hardware suppliers. In certain markets where the
Company does not maintain a direct sales force, it sells its
products through independent representatives.
In 1993, one customer, Information Services International
- - - Dentsu Ltd. ("ISID"), accounted for approximately 11% of the
Company's consolidated revenues. In 1991, another customer,
International Business Machines Corporation ("IBM"), accounted for
approximately 10% of the Company's revenues. ISID is an
independent distributor of the Company's I-DEAS software in the
Japanese market. IBM was an OEM distributor of I-DEAS software
worldwide.
Competition
The market for the Company's software products is highly
competitive and the Company expects competitive pressure to
increase in the future. To maintain its position of technological
leadership, the Company must continually enhance its existing
software products and pursue the development and introduction of
new products.
The Company competes against products in the CAE/CAD/CAM
market including the CADAM and CATIA products marketed by IBM, the
CADDS product marketed by Computervision Corporation, the
UNIGRAPHICS product marketed by EDS, the I/EMS product marketed by
Intergraph Corporation and the Pro/Engineer product marketed by
Parametric Technology Corporation. The Company's future success
will depend in a large part on its ability to further penetrate its
installed customer base as well as the installed customer base of
its competitors.
The principal competitive factors in the mechanical
design market for software are product functionality, product
breadth, product performance, hardware platform independence, ease
of use, price, customer support, technical reputation and size of
installed customer base.
Engineering Services
Building on its extensive knowledge of mechanical design
automation technology and engineering applications, the Company's
engineering services division provides consulting services to
improve the design of its customers' products, as well as to
improve its customers' engineering and manufacturing processes.
The segment also serves as a systems integrator providing advanced
training and technology transfer to customers to enable them to
integrate and optimize their mechanical design automation
investment. The division applies advanced computer simulation
methods and in-depth application expertise for several types of
engineering services including design audits, product design,
troubleshooting and engineering process design.
The markets for the Company's engineering services are
highly competitive and include manufacturers in the aerospace,
automotive, electronics and industrial equipment segments.
Marketing and sales activities for the Company's engineering
services are conducted using a consultative sales strategy on a
targeted key account basis. The Company's senior consultants
maintain continuing contact with their client counterparts and
serve as integral members of the customers' design and engineering
teams.
The principal competitive factors in the market are
technical expertise, applications experience, availability of
computer automation tools, price and responsiveness. The Company
competes against in-house engineering departments, engineering
consulting companies and systems integrators.
Other Information
Segment and geographic information is included in Note 9
to the Company's consolidated financial statements for the year
ended December 31, 1993 - see Item 8.
The Company has entered into various marketing,
reference selling and similar arrangements with a number of
hardware vendors including International Business Machines
Corporation, Digital Equipment Corporation, Hewlett-Packard
Company, Sun Microsystems, Inc. and Silicon Graphics, Inc. Under
these agreements the Company's software products are generally
licensed in conjunction with sales of hardware, either directly by
the hardware manufacturers or by the Company in cooperation with
the hardware vendors.
The Company owns all the standard software products that
it licenses with the exception of I-DEAS Documentation System,
I-DEAS Drafting, I-DEAS View Markup, I-DEAS GNC, I-DEAS Post
Writer, I-DEAS GNC Multi-Axis, I-DEAS Symbols Library, I-DEAS TMG,
I-DEAS Wire EDM, DMCS, EDL, Metaphase 1.0 and portions of I-DEAS
Mechanism Design, which it licenses from third parties. Under
these license agreements, the Company pays a percentage royalty to
the third parties.
As is customary throughout the software industry, the
Company relies both on copyrights and trade secrecy for proprietary
protection of its software products. The duration of such
protection is considered to be quite adequate given the constantly
changing nature of the business. The Company also utilizes a number
of trademarks, both registered and otherwise, with respect to its
software products. The proprietary status of its trademarks lasts
indefinitely, so long as the trademarks remain in use.
Because of the nature of the Company's business, the
Company does not believe that backlog is indicative of revenue for
any succeeding period. The Company's engineering services business
has contracts which vary in length from weeks to multiple years.
Engineering services backlog, consisting of future payments under
these contracts for work not yet performed, was approximately
$4,300,000 at December 31, 1993 compared to approximately
$3,600,000 at December 31, 1992 and $5,500,000 at December 31,
1991. The Company expects to complete a majority of the work
required under the contracts included in the December 31, 1993
backlog figure during 1994. However, these contracts are subject
to delays and/or cancellation by the customer and therefore
engineering services' backlog at any given date is not necessarily
reflective of actual engineering services' revenue for any future
period.
Research and development expense amounted to
approximately $25,937,000, $25,369,000 and $20,966,000 in 1993,
1992 and 1991, respectively.
As of December 31, 1993, the Company had 1,166 full-time
employees, of whom 319 were engaged in research and development,
595 in sales and marketing, 165 in engineering services and 87 in
general management and administration. In addition, the Company
employed 21 part-time employees and cooperative students.
<PAGE>
PART II
Item 6. Selected Financial Data.
Selected financial data for the five-year period ended
has been derived from the Company's consolidated financial
statements. The data has been restated from that previously
published to reflect corrections of errors in the accounting for
(a) revenue recognition and revenue related expenses, (b) non-
recoverable software construction costs, and (c) accrued expenses
and losses. Additionally, the related income tax effects have been
adjusted.
<TABLE>
<CAPTION>
Years ended December 31
(in thousands,
except share
data)
<S> <C> <C> <C> <C> <C>
1993 1992 1991 1990 1989
Statement of
operations data:
Net revenue $147,605 $149,041 $129,932 $114,269 $92,985
Income (loss)
before income
taxes and
cumulative
effect of
accounting change (7,356) 13,907 14,525 16,378 14,711
Net income (loss) (11,732) 9,475 9,279 8,913 9,309
Earnings (loss)
per share:
Before cumulative
effect of
accounting change (.39) .29 .31 .32 .35
Net income (loss) (.39) .31 .31 .32 .35
Common and common
equivalent shares
outstanding 29,876 30,093 29,817 27,618 26,781
Balance sheet data:
Working capital $ 27,474 $48,440 $45,207 $41,483 $32,874
Total assets 134,549 136,130 119,339 99,167 82,956
Long-term
obligations,
excluding current
installments -- -- -- 2,604 2,752
Shareholders'
equity 84,581 92,447 80,359 60,332 48,765
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The Company operates in two segments: software products
and services, and engineering services. Revenue in the software
products and services segment consists primarily of revenue from
software licenses, software maintenance contracts and customer
training. Revenue in the engineering services segment is provided
by consulting activities which are undertaken on either a time and
materials or a fixed fee contract basis.
Software Products and Services
The software products and services segment accounted for
approximately 86%, 85% and 80% of SDRC's consolidated revenue for
the years ended December 31, 1993, 1992 and 1991, respectively, and
approximately (103)%, 99% and 96% of consolidated operating income
(loss) for the same periods.
Software segment revenue in 1993 was level with 1992.
Management's expectation was that 1993 revenue would increase more
than the performance ultimately achieved. The license revenue in
1993 suffered in part from technical problems associated with the
I-DEAS Master Series initial product release in June 1993. As a
result of the technical problems, a number of customers deferred
large purchase decisions until after completion of their benchmark
testing of the I-DEAS Master Series software after the Company had
addressed the unforeseen problems. Additionally, revenue was
impacted by difficult economic conditions in Europe and Japan and
by a 42% decline from an OEM customer (see Note 2). Maintenance
revenue derived from annual software maintenance contracts
increased 9% primarily due to license increases in prior years.
Software segment revenue outside of North America accounted for
61%, 64% and 62% of revenue in 1993, 1992 and 1991, respectively.
The Company expects the international market to continue to account
for a significant portion of total revenue.
The software segment incurred an operating loss of $8,657,000
in 1993 compared to 1992 operating income of $12,084,000 resulting
from certain increases in cost of revenue and selling, general and
administrative expenses as described below.
The 1992 revenue increase of 22% over 1991 in the software
segment resulted from major customers selecting SDRC as their
primary supplier for mechanical design automation software. In
addition, value added resellers contributed to the increased
revenue by targeting smaller customers, particularly in the United
States. Maintenance revenue derived from annual software
maintenance contracts increased 28% primarily due to the Company's
expanding customer base.
Operating income in 1992 of $12,084,000 remained unchanged in
comparison to $11,751,000 in 1991. The revenue growth in 1992 of
$22,956,000 was offset by increased expenses throughout the
Company. The Company continued to invest in incremental resources
in the sales, support and technical operations in anticipation of
the I-DEAS Master Series marketing launch and release anticipated
in the first half of 1993.
Engineering Services
In 1993, 1992 and 1991, the engineering services segment
represented 14%, 15% and 20%, respectively, of the Company's
consolidated revenue and (3%), 1% and 4% of consolidated operating
income for the same periods.
In 1993, 1992 and 1991, the engineering services segment
revenue decreased 11%, 15% and 6%, respectively. The revenue
reduction was due to the overall decline in consulting activities
attributable to customers utilizing in-house engineering resources.
The Company has continued to align the engineering services
overhead cost structure with the anticipated revenue stream.
Cost and Expenses
Cost of Revenue. Cost of revenue consists principally of the
amortization of capitalized costs for the construction of software,
external commissions associated with indirect marketing channels,
the cost of distributing software products and the cost of
providing engineering services. Cost of revenue includes
$9,539,000, $3,667,000 and $3,734,000 for amortization of software
construction costs in 1993, 1992 and 1991, respectively.
Cost of revenue in 1993 increased 13% over 1992 due to the
commencement of amortization of software construction costs for the
I-DEAS Master Series product upon its initial release in June 1993,
and approximately $3,311,000 relating to software construction
costs determined to be non-recoverable upon the release of the
I-DEAS Master Series product. In addition, variable costs directly
associated with software product licensing and distribution
increased.
Cost of revenue for 1992 decreased 4% from 1991 primarily due
to the 15% decrease in engineering services consulting costs,
consistent with the 15% decline in engineering services revenue.
The decrease in the engineering services consulting costs was
partially offset by an increase in the software segment's variable
costs directly associated with the product licensing and
distribution.
Research and Development Expenses. Research and development
expenses consist primarily of expenses for development of software
products that, in accordance with the Statement of Financial
Accounting Standards (SFAS) No. 86, cannot be capitalized.
Research and development expenses exclude capitalized software
development costs of $11,282,000, $9,365,000 and $7,514,000 in
1993, 1992 and 1991, respectively.
Research and development expenses amounted to $25,937,000,
$25,369,000, and $20,966,000, in 1993, 1992 and 1991, respectively.
During 1991 and 1992, research and development expenses increased
significantly in line with the Company's commitment to the
technological advancement of its product line, primarily the
development of the I-DEAS Master Series.
Royalty fees paid to third parties under licensing agreements,
another component of research and development expenses, increased
significantly in each of the last three years. Third party royalty
expenses increased 31% in 1993 over 1992 primarily due to fees
associated with product data management (PDM) software developed by
a joint venture investee.
Selling, General and Administrative Expenses. Selling,
general and administrative expenses consist principally of costs
incurred in the software products and services segment and
corporate staff. Selling, general and administrative expenses
increased 18%, 26% and 25% in 1993, 1992 and 1991, respectively.
During 1993, the Company incurred significant expenses from
increased headcount in the sales and technical support
organizations to promote direct sales and support new and existing
customers. The primary focus was to assist the Company's customers
in their transitioning efforts to the I-DEAS Master Series product
introduced in June 1993. The Company anticipated higher revenue
growth to offset the incremental headcount costs from sales and
support activities.
In 1993, the Company recognized expense of $4,200,000 for the
settlement of a claim by a significant OEM customer. Certain
discretionary employee benefits were reduced in 1993 to offset the
lower than expected revenue growth as a result of technical issues
associated with the initial introduction of I-DEAS Master Series.
Throughout 1991 and 1992, the Company significantly increased
headcount in the field organization to elevate sales and customer
support in the upcoming transitioning efforts to I-DEAS Master
Series and because of anticipated revenue growth which was
ultimately less than had been expected. Continued focus and
resources were placed on licensing its product through indirect
channels aimed at increasing market share.
Income Taxes
During 1993, the Company recorded tax expense of $4,376,000 on
a loss of $7,356,000. Although the Company incurred a loss in
1993, there was a provision for income taxes consisting primarily
of taxes currently payable to foreign jurisdictions.
Effective January 1, 1992, the Company adopted SFAS No. 109,
"Accounting for Income Taxes." The cumulative effect (for periods
prior to January 1, 1992) of applying this statement was to
increase net income by $700,000 or $.02 per share for the year
ended December 31, 1992.
Liquidity and Capital Resources
During 1993, 1992 and 1991, the Company generated cash flows
from operations of $19,467,000, $21,855,000 and $14,968,000,
respectively. The more significant sources of cash flows from
operations for 1993 include amortization and depreciation, decrease
in accounts receivable and increase in accounts payable and accrued
expenses. Cash receipts greater than revenue in the fourth quarter
resulted in the decrease in accounts receivable. The Company has
working capital of $27,474,000 at December 31, 1993. As of
December 31, 1993, the Company's principal sources of liquidity
were $45,503,000 of cash and investments and an unsecured bank line
of credit of $15,000,000. These existing sources of liquidity and
funds anticipated to be generated from operations are expected to
be adequate for the Company's cash requirements in the foreseeable
future. See Note 8 to the consolidated financial statements for
additional commitments and contingencies. The Company paid no
dividends in 1991 through 1993 and intends to continue its policy
of retaining earnings to finance future growth. The Company has no
current commitments for material capital expenditures. The Company
does not expect inflation to have a material impact on its future
operations.
Pending Changes in Accounting Principles
In 1994 the Company will be required to adopt SFAS Nos. 112
and 115. See Notes 2 and 6 to the consolidated financial
statements.
Equity in Losses of Affiliate
During 1992, the Company formed a corporate joint venture,
Metaphase Inc. Metaphase is involved in developing and marketing
PDM software. The Company's equity in the losses of affiliate
represents its share of Metaphase start-up losses in 1992 and 1993.
PART III
Item 8. Financial Statements and Supplementary Data.
Index to financial statements
Financial statements Pages
Report of independent accountants . . . . . . . . . . .13
Consolidated statement of operations
for the three years ended December
31, 1993 . . . . . . . . . . . . . . . . . . . . . 14-15
Consolidated balance sheet at December
31, 1993, 1992 and 1991 . . . . . . . . . . . . . . 16-18
Consolidated statement of shareholders'
equity for the three years ended
December 31, 1993 . . . . . . . . . . . . . . . . . 19-20
Consolidated statement of cash flows for
the three years ended December 31, 1993 . . . . . . 21-22
Notes to the consolidated financial statements . . 23-38
Financial statement schedules
I Marketable securities - other investments . . .39
VIII Valuation and qualifying accounts . . . . . . . 44
X Supplementary income statement information . . 45
All other schedules are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
Financial statements of companies in which the Company owns
equity interests ranging from 30% to 50% have been omitted because
the registrant's proportionate share of the income or losses from
continuing operations before income taxes, and total assets of each
such company is less than 20% of the respective consolidated
amounts, and the investment in and advances to each company is less
than 20% of consolidated total assets.
<PAGE>
Report of Independent Accountants
To The Board of Directors and
Shareholders of Structural Dynamics
Research Corporation
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the
financial position of Structural Dynamics Research Corporation and
its subsidiaries at December 31, 1993, 1992 and 1991, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As described in Note 2(i), in 1992 the Company changed its method
of accounting for income taxes.
Price Waterhouse LLP
Cincinnati, Ohio
January 13, 1995
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
Structural Dynamics Research Corporation
<CAPTION>
Year ended December 31
(in thousands,
except share data)
1993 1992 1991
__________________________________________________
<S> <C> <C> <C>
Revenue:
Software products
and services $ 93,591 $ 95,494 $79,297
Maintenance 33,882 31,023 24,264
Engineering services 20,132 22,524 26,371
Net revenue 147,605 149,041 129,932
Cost and expenses:
Cost of revenue 37,503 33,141 34,570
Research and
development expenses 25,937 25,369 20,966
Selling, general and
administrative
expenses 92,549 78,318 62,179
Total cost and
expenses 155,989 136,828 117,715
Operating income
(loss) (8,384) 12,213 12,217
Equity in losses of
affiliate (614) (410) ---
Other income,
principally interest 1,642 2,104 2,308
Income (loss) before
income taxes and
cumulative effect
of accounting change (7,356) 13,907 14,525
Income tax expense 4,376 5,132 5,246
Net income (loss)
before cumulative
effect of accounting
change (11,732) 8,775 9,279
Cumulative effect
of accounting change --- 700 ---
Net income (loss) $(11,732) $9,475 $9,279
Earnings (loss)
per share:
Primary
Before cumulative
effect of
accounting change $ (.39) $ .29 $ .33
Cumulative effect
of accounting
change --- .02 ---
Net income (loss) $ (.39) $ .31 $ .33
Fully diluted
Before cumulative
effect of
accounting change $ (.39) $ .29 $ .31
Cumulative effect
of accounting
change --- .02 ---
Net income (loss) $ (.39) $ .31 $ .31
Common and common
equivalent shares:
Primary 29,876 30,093 28,424
Fully diluted 30,091 30,093 29,817
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEET
Structural Dynamics Research Corporation
<CAPTION>
December 31
(in thousands,
except share data)
1993 1992 1991
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents $ 34,783 $ 31,661 $ 31,319
Investments 10,720 20,752 16,490
Trade accounts
receivable, net 20,567 26,944 22,713
Other accounts
receivable 5,902 7,993 4,235
Prepaid expenses 5,144 4,427 4,335
Total current assets 77,116 91,777 79,092
Long-term investments 10,547 --- ---
Property and equipment,
at cost:
Computer and
other equipment 36,055 32,248 29,515
Office furniture
and equipment 9,079 8,217 6,958
Leasehold improvements 3,594 3,449 3,294
48,728 43,914 39,767
Less accumulated
depreciation
and amortization 32,897 27,243 24,853
Net property
and equipment 15,831 16,671 14,914
Computer software
construction costs, net 28,457 26,420 20,462
Other assets 2,598 1,262 4,871
Total assets $134,549 $136,130 $119,339
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
December 31
(in thousands,
except share data)
1993 1992 1991
<S> <C> <C> <C>
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable $ 6,512 $ 4,037 $ 6,386
Accrued expenses 24,699 20,741 16,621
Accrued income taxes 5,371 5,358 438
Deferred revenue 13,060 13,201 10,440
Total current
liabilities 49,642 43,337 33,885
Deferred income
taxes and other 326 346 5,095
Commitments and
contingencies (Note 8)
Shareholders' equity:
Common stock, stated
value $.0069 per share.
Authorized 100,000
shares in 1993 and
1992 and 50,000 shares
in 1991; outstanding
shares - 28,709,
28,136 and 27,081 net
of 1,612, 1,762 and
2,036 shares
in treasury 199 195 188
Capital in excess
of stated value 45,376 41,474 38,440
Retained earnings 39,625 51,357 41,882
Foreign currency
translation adjustment (619) (579) (151)
Total shareholders'
equity 84,581 92,447 80,359
Total liabilities
and shareholders'
equity $134,549 $136,130 $119,339
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Structural Dynamics Research Corporation
<CAPTION> Foreign Total
Common stock Capital in currency share-
outstanding excess of Retained translation holders'
(in thousands) Shares Stated value stated value earnings adjustment equity
<S> <C> <C> <C> <C> <C> <C>
Balances December
31, 1990 25,670 $ 178 $27,427 $32,603 $124 $ 60,332
Transactions
involving
employee stock
plans 1,444 10 11,702 11,712
Purchases of
treasury stock (33) (689) (689)
Net income 9,279 9,279
Foreign currency
translation
adjustment (275) (275)
Balances December
31, 1991 27,081 188 38,440 41,882 (151) 80,359
Transactions
involving
employee stock
plans 1,178 8 4,621 4,629
Purchases of
treasury stock (123) (1) (1,587) (1,588)
Net income 9,475 9,475
Foreign currency
translation
adjustment (428) (428)
Balances December
31, 1992 28,136 195 41,474 51,357 (579) 92,447
Transactions
involving
employee stock
plans 582 4 4,067 4,071
Purchases of
treasury stock (9) (165) (165)
Net loss (11,732) (11,732)
Foreign currency
translation
adjustment (40) (40)
Balances December
31, 1993 28,709 $199 $45,376 $39,625 $(619) $ 84,581
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Structural Dynamics Research Corporation
<CAPTION>
Year ended December 31
(in thousands) 1993 1992 1991
<S> <C> <C> <C>
_____________________________________________________
Cash flows from
operating activities:
Net income (loss) $(11,732) $ 9,475 $ 9,279
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation and
amortization 6,990 7,009 6,885
Amortization of
computer software
construction
costs 9,539 3,667 3,734
Provision for
deferred income
taxes --- (77) (5,929)
Equity in losses
of affiliate 614 410 ---
Changes in assets
and liabilities:
(Increase) decrease
in accounts
receivable, net 8,468 (7,989) (1,497)
Increase in
prepaid expenses (717) (92) (1,254)
Increase in
accounts payable
and accrued expenses 6,433 1,771 3,825
Increase (decrease)
in accrued income
taxes 13 4,920 (325)
(Decrease) increase
in deferred revenue (141) 2,761 250
_________________________
Net cash provided
by operating
activities 19,467 21,855 14,968
Cash flows from
investing activities:
Purchases of
investments, net (515) (4,262) (16,490)
Additions to
property and
equipment, net (6,150) (8,764) (10,940)
Disposition of
facilities --- --- 3,224
Additions to
computer software
construction costs (11,282) (9,365) (7,514)
Additions to
purchased computer
software (296) (260) (3,540)
Investment in
joint venture (1,500) (1,477) ---
Other, net (468) 2 404
____________________________
Net cash used
in investing
activities (20,211) (24,126) (34,856)
Cash flows from
financing activities:
Stock issued under
employee benefit plans 4,071 4,629 11,712
Purchases of
treasury stock (165) (1,588) (689)
Decrease in
long-term obligations --- --- (2,716)
Net cash provided
by financing activities 3,906 3,041 8,307
Effect of exchange
rate changes on cash (40) (428) (275)
Increase (decrease)
in cash and cash
equivalents 3,122 342 (11,856)
Cash and
cash equivalents:
Beginning of period 31,661 31,319 43,175
End of period $34,783 $31,661 $31,319
Cash paid during
the year for:
Income taxes $ 4,450 $ 3,957 $ 3,915
</TABLE>
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Structural Dynamics Research Corporation
(1) Introduction
The financial statements included herein have been restated
from those previously published to reflect corrections of errors in
the accounting for (a) revenue recognition and revenue related
expenses, (b) the write off of non-recoverable software
construction costs, and (c) accrued expenses and losses.
Additionally, the related income tax effects have been adjusted.
(2) Summary of Significant Accounting Policies
(a) Basis of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. Investments in
which the Company has significant influence, but not control, are
accounted for under the equity method. All significant
intercompany balances and transactions have been eliminated.
(b) Revenue Recognition
The use of software programs is licensed through the Company's
direct sales force and by specific arrangements with certain
hardware vendors and distributors. Revenue generated from licenses
is recognized when the following criteria have been met: (a) a
written order for the unconditional purchase of software has been
received, (b) the Company has delivered the products and performed
substantially all services for which it was committed, (c) the
customer is obligated to pay and (d) realization of the amounts due
is probable. When customers have the right to return products,
revenue recognition is deferred until the right to return expires.
Under the terms of a licensing agreement with an OEM customer,
the Company was unable to determine the amount of revenue earned
until cash was received from the customer. Amounts recorded as
revenue on the cash basis were $7,877,000, $13,599,000 and
$13,544,000 in 1993, 1992 and 1991, respectively. This licensing
agreement was terminated subsequent to 1993.
Maintenance revenue is recognized ratably over the term of the
agreement and represents the substantial component of deferred
revenue.
The Company recognizes revenue and expense on engineering
consulting contracts based on the percentage of completion method
of accounting. When losses are estimated to occur on these
contracts, the entire estimated loss is recognized at that time.
(c) Earnings (Loss) Per Share
Primary earnings (loss) per common and common equivalent share
is computed using the weighted average number of common and
dilutive common equivalent shares outstanding during the period.
Dilutive common equivalent shares consist of stock option grants
using the treasury stock method. Fully diluted earnings per share
includes the additional dilutive effect of stock option grants
using end of period market values, if that value is more dilutive.
(d) Cash Equivalents
The Company considers investments in certificates of deposit,
commercial paper, overnight repurchase agreements with banks and
interest bearing accounts with maturities of less than 90 days to
be cash equivalents. Repurchase agreements totalled $15,566,000
$20,248,000 and $24,820,000 at December 31, 1993, 1992 and 1991,
respectively. The Company takes possession of the securities
underlying repurchase agreements and monitors the underlying market
values to assure that sufficient collateral exists to cover the
Company's initial investment and accrued interest.
(e) Investments
The Company invests in securities comprised of marketable
securities and certificates of deposit which are carried at cost,
approximating market value.
Effective January 1, 1994, the Company will adopt Statement of
Financial Accounting Standards (SFAS) No. 115. SFAS No. 115 will
require the Company to distinguish between those securities held
for sale and those for which the ability and intent to hold to
maturity exist; the effect of adopting SFAS No. 115 is not
material.
(f) Property and Equipment
Depreciation is primarily computed on the straight-line
method. Leasehold improvements are amortized on the straight-line
method over the lesser of the life of the lease or the estimated
useful life of the improvement. The general ranges of years used
in calculating depreciation and amortization are: computer and
other equipment, 2-5 years; office furniture and equipment, 7
years; leasehold improvements, 1-10 years.
(g) Computer Software Construction Costs
The Company designs, develops and markets computer software
products. Costs related to the construction of software are
capitalized and are amortized over the useful lives of such
software, which are estimated to be no more than five years.
Computer software construction costs are shown net of accumulated
amortization of approximately $27,357,000, $17,816,000 and
$14,149,000 at December 31, 1993, 1992 and 1991, respectively. At
December 31, 1993, computer software construction costs, net,
include only those costs related to current software products.
Amortization is the greater of the amount computed using (a) the
ratio that current gross revenue bears to the total of current and
anticipated future years' revenue, or (b) the straight-line method
over the remaining estimated economic lives of the software
products. The Company included in amortization expense
approximately $3,311,000, $68,000 and $95,000 for the years ended
December 31, 1993, 1992 and 1991, respectively, related to software
construction costs determined to be non-recoverable.
(h) Foreign Currency Translation and Hedging Contracts
The functional currency of the engineering services foreign
operations is their local currency and their assets and liabilities
are translated at year-end exchange rates. Translation gains and
losses are not included in determining net income but are
accumulated in a separate component of shareholders' equity. For
foreign software products and services operations, the U.S. dollar
is the functional currency and foreign currency gains and losses,
which are not material, are included in determining net income.
In 1993, the Company began hedging certain portions of its
exposure to foreign currency fluctuations by utilizing forward
foreign exchange contracts. At December 31, 1993, the Company had
contracts maturing in January, 1994 to exchange foreign currencies
for $12,100,000. Gains and losses associated with these financial
instruments are recorded currently in income to offset the foreign
exchange gains and losses on the assets and liabilities being
hedged. The interest element of the foreign currency instruments
is recognized over the life of the contract. Should the
counterparty to these contracts fail to meet its obligations, the
Company would be exposed to foreign currency fluctuations, along
with the cost, if any, to extinguish the contracts.
(i) Income Taxes
The Financial Accounting Standards Board has issued SFAS No.
109, "Accounting for Income Taxes." SFAS No. 109 requires a change
from the deferred method of accounting for income taxes to the
asset and liability method of accounting for income taxes. Under
SFAS No. 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. The standard requires
that a valuation allowance be provided against a deferred tax asset
when the Company believes it is more likely than not that the
deferred tax amount will not be realized.
Effective January 1, 1992, the Company adopted SFAS No. 109.
The cumulative effect of applying this statement was to increase
net income by $700,000 or $.02 per share in 1992. Previously,
income taxes were accounted for under the deferred method.
The Company does not accrue Federal income taxes on
undistributed earnings of its foreign subsidiaries that have been,
or are intended to be, permanently reinvested. Undistributed
earnings amounted to approximately $2,986,000 at December 31, 1993.
(j) Concentration of Credit Risk
The Company's revenue is generated from customers in
diversified industries, primarily in North America, Europe and the
Far East. In 1993 and 1991 the Company generated revenue from a
significant customer aggregating 11% and 10%, respectively. The
Company performs ongoing credit evaluations of its customers and
generally does not require collateral. The Company maintains
allowances for potential credit losses which management believes to
be adequate in the circumstances.
The Company invests its excess cash with major financial
institutions with strong credit ratings and, by policy, limits the
amount of credit exposure in any one such institution.
(k) Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents,
investments, accounts receivable, accounts payable, accrued
expenses and forward foreign exchange contracts approximate fair
value.
<TABLE>
(3) Supplemental Consolidated Balance Sheet Data
(in thousands)
<CAPTION>
December 31
Trade accounts
receivable, net,
consists of: 1993 1992 1991
<S> <C> <C> <C>
Trade accounts receivable $22,918 $28,641 $23,453
Allowance for doubtful
accounts and reserve
for returns and allowances (2,351) (1,697) (740)
$20,567 $26,944 $22,713
Accrued expenses consist of:
Accrued compensation $9,470 $10,009 $9,284
Accrued taxes other than
income taxes 2,036 1,406 1,289
Accrued marketing costs 3,936 223 --
Accrued royalties 102 1,548 1,277
Other 9,155 7,555 4,771
$24,699 $20,741 $16,621
</TABLE>
(4) Leases
Future minimum lease payments under noncancellable operating
leases for the five years ending December 31, 1998 approximate
$9,967,000, $6,678,000, $4,918,000, $3,877,000 and $3,505,000,
respectively, and thereafter $58,198,000. Total rental expense
under operating leases for the years ended December 31, 1993, 1992
and 1991 approximated $10,673,000, $9,673,000 and $8,226,000,
respectively.
(5) Shareholders' Rights Plan
On July 19, 1988, the Board of Directors adopted a
Shareholders' Rights Plan to protect shareholders' interests in the
event of an unsolicited attempt to gain control of the Company.
The Rights become exercisable if a person acquires 20% or more of
the Company's outstanding common stock (Common Stock) or announces
a tender offer which would result in a person or group acquiring
20% or more of the Common Stock (Distribution Date). If, at any
time following the Distribution Date, and the Company has not
redeemed the Rights, the Company becomes the surviving corporation
in a merger or a person becomes the beneficial owner of 20% or more
of the Common Stock (Triggering Date), each holder of a Right will
have the right to purchase shares of Common Stock having a value
equal to two times the Right's exercise price of $110. If, at any
time following the Triggering Date, the Company is acquired in a
merger or other business combination transaction in which the
Company is not the surviving corporation, each holder of a Right
shall have the right to purchase shares of Common Stock of the
acquiring company having a value equal to two times the exercise
price of the Right. The Rights expire on August 10, 1998, and may
be redeemed by the Company for $.01 per Right. As a result of two
stock splits, each outstanding share of Common Stock is now
entitled to one fourth (1/4) of a Right.
(6) Common Stock and Employee Benefit Plans
On April 16, 1991, the shareholders adopted the 1991 Employee
Stock Option Plan. Under the 1991 plan, the Company has reserved
5,300,000 shares of previously unissued common stock. Options to
purchase such shares may be granted to key employees and executive
officers at the fair market value at the date of grant.
Also, on April 16, 1991, the shareholders adopted the
Director's Non-Discretionary Stock Option Plan which converted the
Amended and Restated 1986 Stock Option Plan into a non-
discretionary plan allowing future grants to outside directors at
the fair market value at the date of grant. Under the original
1986 plan, the Company had reserved 7,000,000 shares of previously
unissued common stock. The status of all outstanding options
previously granted to employees remained unchanged.
Under the plans, employee options expire ten years from the
date of grant and are exercisable as follows: 33% on the first
anniversary of the grant date; 67% on the second anniversary; and
all or any remaining options on the third anniversary until
expiration. Director options expire five years from the date of
grant and are exercisable 50% upon expiration of six months from
the grant date and all or any remaining options on the first
anniversary of the grant date until expiration. As of December 31,
1993 there were approximately 4,287,000 shares on which options
were exercisable.
(6) Common Stock and Employee Benefit Plans cont.
Transactions with respect to the Company's
stock options for the years ended December 31, 1991,
1992 and 1993 were as follows:
Option Price
Shares Per Share
Shares under option
December 31, 1990 5,491,000 $ 1.25-11.75
Granted 1,893,000 $13.09-24.44
Exercised 1,373,000 $ 1.25-11.75
Cancelled 71,000 $ 1.38-20.13
Shares under option
December 31, 1991 5,940,000 $ 1.25-24.44
Granted 1,684,000 $10.59-28.75
Exercised 1,103,000 $ 1.25-20.13
Cancelled 135,000 $ 9.88-23.75
Shares under option
December 31, 1992 6,386,000 $ 1.25-28.75
Granted 1,627,000 $13.06-20.18
Exercised 439,000 $ 1.25-16.25
Cancelled 164,000 $ 9.88-28.75
Shares under option
December 31, 1993 7,410,000 $ 1.38-28.75
On December 12, 1990 the Company's Board of Directors
established a Stock Purchase Plan. Under the plan all domestic
full-time employees who are non-executive officers are entitled to
purchase the Company's common stock at 90% of fair market value.
Employees electing to participate must contribute at least one
percent with a maximum of ten percent of the participants' base
salary and commissions each month. All incidental expenses related
to the issuance of these shares including the 10% discount have
been charged to income. The plan has no fixed expiration date, may
be terminated by the Company at any time and has no limitation on
the number of shares that may be issued.
The Company provides retirement benefits to employees
principally through contributory defined contribution retirement
plans. Expenses related to these plans totaled $943,000,
$1,686,000, and $1,237,000 in 1993, 1992 and 1991, respectively.
In 1993 the Financial Accounting Standards Board adopted SFAS
No. 112, which requires that employers accrue for post-employment
benefits other than pensions when certain criteria are met. The
Company provides such benefits to certain employees pursuant to
statutorily mandated programs and Company policy. The Company will
adopt SFAS No. 112 in 1994. The cumulative impact of the adoption
will be to reduce income by $3,896,000 in the first quarter of
1994.
(7) Income Taxes (in thousands)
The provision for
income taxes consists
of the following: Year ended December 31
1993 1992 1991
Federal:
Current $ -- $ 387 $7,130
Deferred -- (77) (5,929)
___________________________________
-- 310 1,201
State 500 979 1,384
Foreign 3,876 3,843 2,661
_____________________________________
$4,376 $5,132 $5,246
Deferred state and foreign
taxes are not material.<PAGE>
The provision for income
taxes differs from
the amounts computed by
using the statutory U.S.
Federal income tax rate.
The reasons for the
differences are as follows:
Computed expected income
tax expense (benefit) ($2,575) $4,728 $4,938
Increase (reduction)
resulting from:
Losses without tax benefit 2,575 -- --
State taxes, net of
federal benefit 500 646 914
Research and experimentation
credit -- (354) (579)
Foreign taxes, without
current benefit 3,876 -- --
Other, net -- 112 (27)
_________________________________
$4,376 $5,132 $5,246<PAGE>
The tax effects of temporary
differences that gave rise to
the deferred tax assets and deferred
tax liabilities were as follows:
Year ended December 31
1993 1992
Deferred tax assets:
Revenue recognition and
accounts receivable $18,276 $9,363
Property and equipment 959 895
Other liabilities and reserves 998 45
Tax credit carryforwards 2,661 2,823
Other 802 938
Total deferred tax assets 23,696 14,064
Valuation Allowance (14,628) (6,095)
Net deferred tax assets 9,068 7,969
Deferred tax liabilities:
Computer software construction
costs, net of amortization (9,068) (7,969)
Total net deferred taxes $ 0 $ 0
For the year ended December 31, 1991, the sources of deferred taxes
were primarily the expensing of computer software construction
costs, timing of revenue recognition and depreciation differences
between financial statement and tax purposes.
Of the $2,661 in credit carryforwards available at December 31,
1993, $360 of foreign tax credits expire in 1997, $750 and $800 of
research and experimentation credits expire in 2007 and 2008,
respectively, and $751 of alternative minimum taxes never expire.
The net change in the valuation allowance for deferred tax assets
was an increase of $8,533 in 1993 and $6,095 in 1992. Of these
amounts, $1,692 and $6,057 respectively, are attributable to stock
option deductions, the benefit of which will be credited to capital
in excess of stated value when realized.
(8) Commitments and Contingencies
The Company had an unsecured $15,000,000 bank line of credit
that may be used from time to time to facilitate short-term cash
flow. The line of credit expired in December 1994.
In September 1994, the Company announced that in the course of
an internal examination, it had discovered that a number of
purported sales to or through third-party distribution channels
apparently did not reflect actual sales and that, as a result, it
would be necessary to restate the Company's financial results (see
Note 1). The Company also announced that it had terminated its
Vice President and General Manager of Far East Operations.
On September 15, 1994, the first of a total of 12 class action
lawsuits and two derivative lawsuits was filed. All of these suits
were filed in the United States District Court, Southern District
of Ohio and alleged a variety of causes of action under the federal
securities laws and Ohio corporate law. Two of the class action
lawsuits were later voluntarily dismissed. The remaining cases
were then consolidated into one proceeding entitled In Re:
Structural Dynamics Research Corporation Securities Litigation,
Consolidated Master File No. C-1-94-630. The complaint demands
money damages in an unspecified amount.
The plaintiffs in this case presently consist of 22
individuals who allegedly purchased shares of the Company's Common
Stock between February 3, 1992 and September 14, 1994. The
consolidated complaint contains allegations intended to support the
certification of a class of plaintiffs.
The defendants include the Company, certain directors and
former officers.
The Securities and Exchange Commission has commenced a formal
private investigation of the Company arising out of the same facts
which gave rise to the above-described litigation.
The Company intends to defend itself vigorously in this
litigation but is unable, at this time, to determine the amount of
loss, if any, that may result from these matters. Management does
not believe the ultimate outcome of these matters will have a
material adverse impact on the Company's financial position.
The Company is involved in other legal proceedings arising
from the normal course of business, none of which, in management's
opinion, is expected to have a material adverse impact on the
Company's financial position.
Pursuant to certain contractual obligations, the Company has
agreed to indemnify its directors and officers under certain
circumstances against claims arising from lawsuits. The Company may
be obligated to indemnify certain of its directors and officers for
the costs they may incur as a result of the lawsuits.
(9) Segment and Geographic Information (in thousands)
<TABLE>
<CAPTION>
Year ended December 31, 1993
<S> <C> <C> <C> <C> <C>
Depreciation
and
Financial data Operating Identifiable Amortization Capital
by segment Revenue Income (loss) Assets Expense Expenditures
Software products and services $127,473 $(8,657) $ 67,922 $4,521 $ 4,340
Engineering services 20,132 273 8,455 1,316 1,323
Corporate -- -- 58,172 1,153 487
Consolidated $147,605 $(8,384) $134,549 $6,990 $ 6,150
<CAPTION>
Year ended December 31, 1992
<S> <C> <C> <C> <C> <C>
Software products and services $126,517 12,084 $ 63,562 $4,270 $ 7,101
Engineering services 22,524 129 9,721 1,453 750
Corporate -- -- 62,847 1,285 913
Consolidated $149,041 $12,213 $136,130 $7,008 $ 8,764
<CAPTION>
Year ended December 31, 1991
<S> <C> <C> <C> <C> <C>
Software products and services $103,561 $11,751 $ 52,774 $3,743 $ 2,628
Engineering services 26,371 466 12,409 2,314 1,957
Corporate -- -- 54,156 828 6,355
Consolidated $129,932 $12,217 $119,339 $6,885 $10,940
</TABLE>
Financial data by
geographic area
(Corporate general
expenses are not allocated
to operating income by
geographic area): Year ended December 31, 1993
Operating Identifiable
Revenue Income (loss) Assets
North America $ 57,760 $ 1,407 $ 41,821
Europe 47,497 (8,142) 30,352
Far East 42,348 4,209 4,204
Corporate -- (5,858) 58,172
Consolidated $147,605 $(8,384) $134,549
Year ended December 31, 1992
North America $ 54,188 $ 3,875 $ 40,550
Europe 49,266 783 24,200
Far East 45,587 14,447 8,533
Corporate -- (6,892) 62,847
Consolidated $149,041 $12,213 $136,130
Year ended December 31, 1991
North America $ 49,975 $ 2,762 $ 35,345
Europe 44,451 4,965 18,869
Far East 35,506 10,932 10,969
Corporate -- (6,442) 54,156
Consolidated $129,932 $ 12,217 $119,339
(10) Quarterly Results of Operations (Unaudited)
The following table sets forth selected unaudited quarterly
financial information (in thousands, except per share data) for
1993 and 1992. The Company believes that all necessary adjustments
have been included to present fairly the selected quarterly
information.
Three months ended Year ended
March, June September December December
31, 1993 30, 1993 30, 1993 31, 1993 31, 1993
Net revenue $ 33,506 40,428 35,057 38,614 $147,605
Operating results $ (47) (2,456) (4,117) (1,764) $ (8,384)
Net income (loss) $ (636) (3,657) (4,991) (2,448) $(11,732)
Earnings (loss) per
share:
Primary $ (.02) (.12) (.16) (.08) $ (.39)
Fully diluted $ (.02) (.12) (.16) (.08) $ (.39)
Three months ended Year ended
March June September December December
31, 1992 30, 1992 30, 1992 31, 1992 31, 1992
Net revenue $ 34,369 39,160 32,686 42,826 $149,041
Operating results $ 3,459 5,624 692 2,438 $ 12,213
Net income $ 3,285 4,089 734 1,367 $ 9,475
Earnings per share:
Primary $ .11 .14 .02 .05 $ .31*
Fully diluted $ .11 .14 .02 .05 $ .31*
* Per share amounts are not additive.
SCHEDULE I
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
DECEMBER 31, 1993, 1992 AND 1991
(in thousands)
Cost, Market and Carrying Value
1993 1992 1991
Repurchase Agreements with
The Fifth Third Bank of
Cincinnati, OH secured by
U.S. Government securities $15,566 $20,248 $24,820
Repurchase Agreements with
Wells Fargo Bank
San Francisco, CA secured
by U.S. Government and
corporate securities 1,046 -- --
Repurchase Agreements with
Gabelli O'Connor
Greenwich, CT secured
by U.S. Government and
corporate securities 3,131 -- --
Repurchase Agreements with
Smith Barney Shearson
Chicago, IL secured
by U.S. Government securities 3,030 -- --
Repurchase Agreements with
Merrill Lynch and The Bank
of New York, NY secured
by U.S. Government securities -- -- 500
Certificates of Deposit in
institutions insured by the
U.S. Government 10,233 20,752 16,490
U.S. Treasury Obligations with
Gabelli O'Connor
Greenwich, CT 487 -- --
U.S. Treasury Obligations with
Wells Fargo Bank
San Francisco, CA 6,563 -- --
Government/Agency Variable Rate
with Gabelli O'Connor
Greenwich, CT 3,984 -- --
Total $44,040 $41,000 $41,810
Above amounts are included in the balance sheet captions of
"cash and cash equivalents", "investments" and "long-term
investments".
SCHEDULE VIII
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(in thousands)
Balance at Balance
Beginning Charged to at End
Description of Period Income Deductions of Period
Accounts Receivable:
Year ended December
31, 1991 $409 414 83 $ 740
Year ended December
31, 1992 $740 1,625 668 $1,697
Year ended December
31, 1993 $1,697 1,790 1,136 $2,351
SCHEDULE X
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(in thousands)
1993 1992 1991
Maintenance and repairs $ 3,245 $2,990 $2,920
Royalties $ 8,411 $6,422 $5,145
Advertising $ 4,297 $3,111 $2,763
Other items have been omitted in each year since they are less than
1% of total revenue or are disclosed elsewhere in the financial
statements.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Reporting Matters
Subsequent to the filing of the Company's Annual Report on
Form 10-K for the year ended December 31, 1993, KPMG Peat Marwick
LLP withdrew its opinion with respect to the Company's financial
statements for the years ended December 31, 1993, 1992 and 1991 and
resigned as the Company's auditors under circumstances which may be
deemed to have involved a disagreement. Such matters are described
in the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on November 2, 1994, as amended
by a Form 8-K/A filed with the Securities and Exchange Commission
on November 15, 1994, each of which is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.
A.1. and 2. Financial statements and financial statement
schedules:
See Part III, Item 8 for index to financial statements
and
related financial statement schedules, which is hereby
incorporated herein by reference.
A.3. Exhibits:
Exhibit Reference
3(a) Amended Articles of Incorporation of
Registrant, including subsequent
updates Note (h)
3(b) Amended Code of Regulations of
Registrant Note (a)
4 Shareholder Rights Plan Note (b)
10(a) Structural Dynamics Research
Corporation Tax Deferred Capital
Accumulation Plan dated January 1,
1989 Note (f)
10(b) Executive Employment Agreement
between Registrant and Ronald J.
Friedsam dated February 15, 1993 Note (h)
10(d) Form of Structural Dynamics
Research Corporation Director
Class A Common Stock Option
Agreement Note (a)
10(e) Structural Dynamics Research
Corporation 1991 Employee Stock
Option Plan Note (e)
10(f) Structural Dynamics Research
Corporation Directors' Non-
Discretionary Stock Option Plan Note (e)
10(g) Joint Venture Agreement between
Structural Dynamics Research
Corporation and Nissan Motor Co.,
Ltd. Note (c)
10(h) Joint Venture Agreement between
Structural Dynamics Research
Corporation and Vickers, Inc.,
a Trinova Company Note (d)
10(i) Lease agreement (including
amendments #1 and #2) between
Park 50 Development Company Limited
Partnership and Structural Dynamics
Research Corporation Note (f)
10(j) Joint Venture Formation Agreement
between Structural Dynamics Research
Corporation and Control Data
Systems, Inc. Note (g)
11 Statement regarding computation
of per share earnings
22 Subsidiaries of the Registrant Note (h)
24 Consent of Independent Accountants
NOTE REFERENCE:
(a) Incorporated by reference to the Company's
Registration Statement No. 33-16541,which was
originally filed on August 17, 1987 and became
effective on September 29, 1987.
(b) Incorporated by reference to the Company's
report on Form 8-K filed on August 3, 1988.
(c) Incorporated by reference to the Company's
report on Form 10-Q dated May 12, 1989.
(d) Incorporated by reference to an exhibit filed
in the Company's Annual Report on Form 10-K for the
year ended December 31, 1989.
(e) Incorporated by reference to the Company's
definitive Proxy Statement dated March 11, 1991.
(f) Incorporated by reference to an exhibit filed
in the Company's Annual Report on Form 10-K for the
year ended December 31, 1990.
(g) Incorporated by reference to an exhibit filed
in the Company's Annual Report on Form 10-K for the
year ended December 31, 1992.
(h) Incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31,
1993 as originally filed on March 11, 1994.
b. Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
January 13, 1995 By /s/ Albert F. Peter
Date (Albert F. Peter, Acting Chief Executive
Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
/s/ Albert F. Peter Acting Chief Executive January 13, 1995
(Albert F. Peter) Officer and Director (Date)
(Principal Executive Officer)
/s/ Jeffrey J. Vorholt Vice President January 13, 1995
(Jeffrey J. Vorholt) and Controller (Principal (Date)
Financial and Accounting
Officer)
/s/ William P. Conlin Director January 13, 1995
(William P. Conlin) (Date)
/s/ Ronald J. Friedsam Director January 13, 1995
(Ronald J. Friedsam) (Date)
/s/ Robert P. Henderson Director January 13, 1995
(Robert P. Henderson) (Date)
/s/ Ted H. McCourtney Director January 13, 1995
(Ted H. McCourtney) (Date)
/s/ John E. McDowell Director January 13, 1995
(John E. McDowell) (Date)
/s/ Gilbert R. Whitaker, Jr. Director January 13, 1995
(Gilbert R. Whitaker, Jr.) (Date)<PAGE>
EXHIBIT 11
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(in thousands, except share data)
1993 1992 1991
PRIMARY
Average shares outstanding 28,491 27,899 26,364
Net effect of dilutive stock
options -- based on the
treasury stock method using
average market price 1,385 2,194 2,060
Total 29,876 30,093 28,424
Net income (loss) before
cumulative effect of
accounting change $(11,732) $ 8,775 $ 9,279
Cumulative effect of
accounting change -- 700 --
Net income (loss) $(11,732) $ 9,475 $ 9,279
Primary per share amount:
Before cumulative effect
of accounting change $ (.39) $ .29 $ .33
Cumulative effect of
accounting change -- .02 --
Net income (loss) $ (.39) $ .31 $ .33
FULLY DILUTED
Average shares outstanding 28,491 27,899 26,364
Net effect of dilutive stock
options -- based on the
treasury stock method using
the year-end market price,
if higher than average
market price 1,600 2,194 3,453
Total 30,091 30,093 29,817
Net income (loss) before
cumulative effect of
accounting change $(11,732) $ 8,775 $ 9,279
Cumulative effect of
accounting change -- 700 --
Net income (loss) $(11,732) $ 9,475 $ 9,279
Fully diluted per share
amount:
Before cumulative effect
of accounting change $ (.39) $ .29 $ .31
Cumulative effect of
accounting change --- .02 ---
Net income (loss) $ (.39) $ .31 $ .31
This computation is required by Regulation S-K Item 601 and is
filed as an exhibit under Item 14a(3) of Form 10-K.
SEC Release No. 33-5133 requires ". . . when per share earnings are
disclosed, . . . the information with respect to the computation
of per share earnings on both primary and fully diluted bases,
presented by exhibit or otherwise, must be furnished even though
the amounts of per share earnings on the fully diluted basis are
not required to be stated under the provisions of Accounting
Principles Board Opinion No. 15."
EXHIBIT 24
Consent of Independent Accountants
The Board of Directors
Structural Dynamics Research Corporation:
We hereby consent to incorporation by reference in Registration
Statement Nos. 33-20774, 33-22136, 33-40561, 33-41671 and 33-46011
on Form S-8 of Structural Dynamics Research Corporation of our
report dated January 13, 1995, appearing Item 8 of this Form 10-
K/A.
Price Waterhouse LLP
Cincinnati, Ohio
January 13, 1995
