UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 1998
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 July 31, 1998, there were 36,251,779 shares of
the Registrant's Common Stock without par value issued and
outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
(in thousands, except per share data)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenue:
Software licenses $38,028 $42,237 $ 79,429 $ 83,395
Software maintenance and
services 57,114 46,441 106,825 86,147
Total revenue 95,142 88,678 186,254 169,542
Cost of revenue:
Cost of licenses 7,784 6,656 15,284 12,171
Cost of maintenance and
services 31,159 23,515 58,146 45,960
Total cost of
revenue 38,943 30,171 73,430 58,131
Gross profit 56,199 58,507 112,824 111,411
Operating expenses:
Selling and marketing 30,033 25,555 55,503 49,711
Research and development 17,162 14,626 33,216 27,026
General and
administrative 4,610 4,877 8,684 9,064
Purchased in-process
research and
development 20,850
Total operating
expenses 51,805 45,058 97,403 106,651
Operating income 4,394 13,449 15,421 4,760
Other income, net 3,041 1,116 6,687 1,660
Income before income taxes 7,435 14,565 22,108 6,420
Income tax expense 2,322 2,932 6,667 5,954
Net income $ 5,113 $11,633 $ 15,441 $ 466
Net income per share:
Basic $ .14 $ .33 $ .43 $ .01
Diluted .14 .32 .41 .01
Pro forma net income (loss)
Income before income
taxes as reported 14,565 6,420
Pro forma income tax
expense 3,529 6,970
Pro forma net income (loss) $11,036 $ (550)
Pro forma net income
(loss) per share:
Basic $ .31 $ (.02)
Diluted .30 (.02)
Comprehensive income (loss) $ 5,041 $11,519 $ 15,210 $ (1,258)
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(in thousands)
<CAPTION>
June 30, December 31,
1998 1997
Assets (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $110,727 $ 81,056
Marketable securities 12,132 13,030
Trade accounts receivable, net 88,016 88,954
Other accounts receivable 13,019 17,815
Prepaid expenses 15,123 9,082
Total current assets 239,017 209,937
Marketable securities 16,906 14,925
Property and equipment, at cost:
Computer and other equipment 62,756 57,364
Office furniture and equipment 18,265 16,983
Leasehold improvements 7,311 6,685
88,332 81,032
Less accumulated depreciation and
amortization 62,441 56,405
Net property and equipment 25,891 24,627
Computer software construction
costs, net 28,447 31,610
Other assets 13,150 12,097
Total assets $323,411 $293,196
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(in thousands, except per share data)
<CAPTION>
June 30, December 31,
1998 1997
Liabilities and Shareholders' Equity (unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 13,021 $ 12,230
Accrued expenses 36,465 39,590
Accrued income taxes 5,580 9,182
Deferred revenues 58,254 46,606
Total current liabilities 113,320 107,608
Other long-term liabilities 7,018 7,751
Shareholders' equity:
Common stock, stated value
$.0069 per share
Authorized 100,000 shares;
outstanding shares -
36,216 and 35,654 net of 1,481 and
1,500 shares in treasury 252 248
Capital in excess of stated value 124,087 114,132
Retained earnings 82,576 67,135
Foreign currency translation
adjustment (3,831) (3,667)
Unrealized holding loss on
investments (11) (11)
Total shareholders' equity 203,073 177,837
Total liabilities and
shareholders' equity $323,411 $293,196
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
(Unaudited)
(in thousands)
<CAPTION>
Six Months Ended June 30,
1998 1997
<S> <C> <C>
Net cash provided by operating activities $ 38,632 $ 44,366
Cash flows from investing activities:
Sales, (purchases) of marketable securities, net (1,083) 2,883
Additions to property and equipment, net (6,917) (7,154)
Additions to computer software construction costs (5,794) (4,508)
Acquisition of Metaphase Technology, Inc. -- (28,050)
Net cash used in investing activities (13,794) (36,829)
Cash flows from financing activities:
Stock issued under employee benefit plans 5,891 5,519
Repayment of long term debt (894) (91)
Distributions of S corporation -- (35)
Net cash provided by financing activities 4,997 5,393
Effect of exchange rate changes on cash (164) (1,703)
Increase in cash and cash equivalents 29,671 11,227
Cash and cash equivalents:
Beginning of period 81,056 72,026
End of period $110,727 $ 83,253
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
STRUCTURAL DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(in thousands except per share data)
(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. These financial
statements should be read in conjunction with the Consolidated
Financial Statements and related notes included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
(2) Pro Forma Net Income and Pro Forma Net Income Per Share
In 1997, the Company acquired Computer Aided Systems for
Engineering ("CASE") which was an S corporation for income tax
reporting purposes prior to the acquisition. Pro forma net
income and pro forma net income per share reflect the tax expense
that would have been reported if CASE had been a C corporation.
(3) Comprehensive Income
In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 130
("SFAS" No. 130), "Reporting Comprehensive Income," which
establishes standards for reporting and display of comprehensive
income and its components in the consolidated financial
statements. Comprehensive income includes net income as well as
other changes in shareholder equity, except changes resulting
from shareholders' investments in the Company and distributions
to shareholders. SFAS No. 130 is effective for the Company's
reporting periods beginning in 1998 with comparative amounts for
prior years. Comprehensive income, net of tax, is reported on
the consolidated statement of operations.
(4) Earnings Per Share
Basic earnings per common share and dilutive earnings per share
are computed using the weighted average number of common and
dilutive common equivalent shares outstanding during the period,
respectively. Dilutive common equivalent shares are calculated
using the treasury stock method and consist of stock option
grants.
The reconciliations of amounts used for the basic and diluted
earnings per share calculations are as follows:
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
Net income (numerator) $ 5,113 $11,633 $15,441 $ 466
Weighted average
outstanding:
Common shares (basic
denominator) 36,171 35,114 36,006 34,988
Dilutive employee stock
options 1,446 1,403 1,493 1,200
Common stock and dilutive
common stock equivalents
(diluted denominator) 37,617 36,517 37,499 36,188
Earnings per share:
Basic $ .14 $ .33 $ .43 $ .01
Diluted $ .14 $ .32 $ .41 $ .01
(4) Earnings Per Share - Continued
Options to purchase 1,613 shares of common stock for the three
and six month periods ended at June 30, 1998 and 1,466 shares of
common stock for the three and six month periods ended June 30,
1997 respectively, were not included in the computation of
dilutive earnings per share because the options' exercise price
was greater than the average market price of common shares for
the periods.
(5) Taxes
The provision for income taxes primarily reflects taxes currently
payable. Based on the Company's historical tax position, as well
as the Company's current and anticipated mix of domestic and
foreign pre-tax accounting income, tax credits and deductions
from non-qualified stock option exercises over the next four
years, a valuation allowance is provided against deferred tax
assets when the Company believes it is more likely than not that
the deferred tax assets will not be realized. These factors
cause the effective tax rate to differ from the expected
statutory rate. Additionally, in the first quarter of 1998, the
Company and the Internal Revenue Service settled the existing
audit of the Company for the years 1987 through 1994, and agreed
that the Company was due a refund of $1,751 in tax relating to
the (previously disclosed) restatement of its 1994 and prior
financial statements. This refund was received and recorded as a
benefit to tax expense during the period ending March 31, 1998.
(6) New Accounting Pronouncements
Revenue Recognition
In August 1997, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position ("SOP") 97-2,
"Software Revenue Recognition," which is effective for
transactions occurring in the Company's fiscal year beginning
January 1, 1998. In March 1998, the AICPA issued SOP 98-4,
"Deferral of the effective date of a provision of SOP 97-2". SOP
98-4 allows companies to defer adoption of certain provisions of
SOP 97-2 related to vendor-specific objective evidence. The
adoption of SOP 97-2 in the quarter ended March 31, 1998 did not
have a significant impact on the Company's financial condition or
results of operations.
Segments of an Enterprise
In June 1997, FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," which
establishes standards for the way that public companies report
selected information about operating segments. It also includes
standards for related disclosures about products and services,
geographic areas, and major customers. SFAS No. 131 applies to
the Company's annual reporting for 1998 and quarterly reports
thereafter. The Company is evaluating the effects of this
standard on its reporting of financial information.
Derivatives and Hedging Activities
In June 1998, FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments,
including forward foreign exchange contracts, and for hedging
activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The
accounting for gain and losses from changes in the fair value of
a particular derivative will depend on the intended use of the
derivative. SFAS No. 133 is effective for the Company's financial
reporting beginning in 2000 and cannot be applied retroactively
to financial statements of prior periods. The Company enters
into forward foreign exchange contracts to hedge certain foreign
currency denominated receivables. The Company has not determined
the impact that SFAS No. 133 will have on the results of its
operations or financial position.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(in thousands)
Structural Dynamics Research Corporation is a leading supplier of
CAD/CAM/CAE software for Mechanical Design Automation ("MDA"),
Product Data Management ("PDM") software and related services.
The Company provides software tools and related services to
manufacturers worldwide to optimize the entire product
development process, reducing cost while streamlining the
development process and managing product information. The
Company markets its MDA software under the brand name I-DEAS"
and its PDM software under the brand name Metaphase".
Certain statements in this Form 10-Q are forward looking and
involve risks and uncertainties, including the economic stability
of the Asia-Pacific region, the impact of competitive products
and pricing, the management of growth, and the other risks
detailed from time to time in the Company's Securities and
Exchange Commission reports. The Company's results could differ
from those results described herein. Forward looking information
should be evaluated in the context of these and other factors
some of which are described in more detail in "Factors That May
Affect Future Results".
Revenue
The Company's consolidated net revenue increased 7% and 10% for
the three and six months ended June 30, 1998, compared to the
corresponding periods of 1997. Revenue growth was led by strong
sales of licenses, software maintenance and services in Europe
and Asia-Pacific, while license revenues from North America
declined for both periods when compared to 1997. For the three
month period ended June 30, 1998 and 1997, revenue in North
America accounted for 46% and 54%, Europe 36% and 29%, and Asia-
Pacific 18% and 17%, respectively, of consolidated revenues. For
the six month period ended June 30, 1998 and 1997, revenue in
North America accounted for 45% and 53%, Europe 34% and 28% and
Asia-Pacific 21% and 19%, respectively. The Company expects the
international market to continue to account for a significant
portion of revenue in future periods.
Software license revenue decreased 10% and 5% for the three and
six months ended June 30, 1998, compared to the corresponding
periods of 1997. I-DEAS license sales declined 17% and 4% for
the three and six months periods ended June 30, 1998, compared to
the corresponding periods of 1997. The decline was concentrated
in North America, while I-DEAS sales continued to grow in the
other regions. I-DEAS revenue from Asia-Pacific during 1998
included a significant license order from the Company's major
Japanese distributor. Metaphase license sales increased 44% for
the three months period ended June 30, 1998 due to strong sales
in Europe. For the six month period, Metaphase license sales
declined 10% compared to last year. The comparison of Metaphase
license revenue to last year is impacted by a large order of
$7,200 from Ford Motor Company, which occurred in the first
quarter of 1997.
Software maintenance and service revenue increased 23% to $57,114
for the three months ended June 30, 1998, and 24% to $106,825 for
the six months ended June 30, 1998, compared to the corresponding
periods of last year. The growth was due to more maintenance
contracts and implementation engagements being generated from a
larger, worldwide customer base. Services revenue growth was the
strongest in Europe, due to large implementation projects for I-
DEAS and Metaphase license customers.
Expenses
Cost of revenue consists principally of the staff and related
costs associated with the generation and support of software
service revenue, amortization of capitalized software
construction costs, royalty fees paid to third parties under
licensing agreements and the cost of distributing software
products. Cost of revenue increased 29% to $38,943 for the three
months ended June 30, 1998, compared to $30,171 for the three
months ended June 30, 1997. Cost of revenue increased 26% to
$73,430 for the six months ended June 30, 1998, compared to
$58,131 for the six months ended June 30, 1997. Cost of revenue
represented 41% and 39% of revenue for the three and six months
ended June 30, 1998, compared to 34% for the corresponding 1997
periods.
The cost of licenses increased 17% and 26% for the three and six
months ended June 30, 1998, compared to the previous year periods
as a result of more amortization and royalty fees. The cost of
licenses as a percentage of license revenue increased to 20% and
19% for the three and six months ended June 30, 1998, compared to
16% and 15% of license revenue for the corresponding 1997 periods
due to certain fixed components of license cost and the lower
level of license revenues. The cost of services and maintenance
represented 55% and 54% of the associated revenue for the three
and six months ended June 30, 1998, compared to 51% and 53% for
the corresponding 1997 periods. Cost of services and maintenance
increased, particularly in Europe, due to the hiring, training,
labor and third party consulting expenses associated with
expanding resources to meet the growing demand for software
implementation, training services and post license sales support.
Selling and marketing expenses consist of the costs associated
with the worldwide sales and marketing staff, advertising and
product localization. Selling and marketing expenses increased
18% and 12% for the three and six months ended June 30, 1998 from
the corresponding 1997 periods. Selling and marketing expenses
represented 32% and 30% of revenue for the three and six months
ended June 30, 1998 compared to 29% for the corresponding periods
in 1997. The higher expense level was primarily a result of
increased headcount in the direct sales force and incremental
expenditures for new advertising and marketing campaigns.
Selling and marketing expenses are expected to increase during
the remaining months of 1998 because of continued spending for
the new advertising and marketing campaigns and an increased
level of sales staff.
Research and development expenses consist primarily of salaries,
benefits, computer equipment costs and facilities associated with
the product development staff, and excludes costs which are
capitalized in accordance with Statement of Financial Accounting
Standards No. 86. Research and development expenses increased
17% and 23% for the three and six month periods ended June 30,
1998, compared to the corresponding periods in 1997. The
increase in research and development expense for 1998 as compared
to 1997 is primarily a result of increased headcount of product
developers. The expiration of certain customer funded research
and development projects also resulted in higher expense for 1998
periods. Research and development expense excluded capitalized
internal software costs of $2,745 and $5,669 for the three and
six months ended June 30, 1998, compared to $1,132 and $4,458 for
the corresponding periods in 1997. The amount of capitalized
software development cost may vary among periods depending on the
stage of development being performed on future product releases.
The Company expects to continue to devote a substantial level of
resources to product development.
Expenses (continued)
General and administrative expenses consist of costs associated
with the corporate, finance, legal, human resource and
administrative staffs. General and administrative expenses
decreased 6% to $4,610 for the three months ended June 30, 1998,
compared to $4,877 for the three months ended June 30, 1997.
These expenses decreased 4% to $8,684 for the six months ended
June 30, 1998, compared to $9,064 for the six months ended June
30, 1997. General and administrative expenses were higher in the
previous year's periods due to recruiting and relocation cost
associated with changes in executive management and higher
performance compensation accruals in 1997. General and
administrative expenses represent 5% of revenue for the three and
six months ended June 30, 1997 and 1998.
During the three months ended March 31, 1997, a one-time charge
of $20,850 was recorded to write off in-process research and
development acquired in the acquisition of Metaphase Technology,
Inc. ("MTI") that did not have an alternative future use and had
not reached technological feasibility. The Company had acquired
the remaining stock of MTI, and certain assets of Control Data
Systems, Inc.'s global PDM software sales and support business in
January 1997. The purchase price of approximately $33,000
included cash and a stock warrant. The acquisition was accounted
for as a purchase.
Other income, net
For the three and six month periods ended June 30, 1998, other
income increased $1,925 and $5,027 as compared to the
corresponding period in 1997. Other income included $1,200 and
$2,590 received from insurance settlements during the three and
six month periods ended June 30, 1998, respectively.
Additionally, $670 of interest income received on a federal
income tax refund was recorded during the period ended March 31,
1998. Other income also increased due to more interest earned on
increased balances in interest-bearing accounts since last year,
and favorable movement of currency exchange rates compared to the
same periods last year. Other income also included $205 and $80
in 1998 and 1997, respectively, for equity in earnings of ESTECH,
a joint venture.
Taxes
The provision for income taxes primarily reflected taxes
currently payable. A substantial portion of deferred tax
benefits relating to temporary differences was offset by a
valuation allowance because of doubt regarding the ultimate
realization of the benefits. These factors caused the effective
tax rate to differ from the expected statutory rate.
Comprehensive Income
The differences between net income and comprehensive income
(loss) were primarily due to unrealized losses from the
translation of foreign subsidiaries' balance sheets into U.S.
dollars. Net foreign currency translation losses occurred
because the U.S. dollar strengthened against the foreign
currencies of the subsidiaries.
Liquidity and Capital Resources
The Company generated $38,632 of cash from operating activities
during the six months ended June 30, 1998. At June 30, 1998, the
Company had cash and investments of $139,765 as compared to
$109,011 at December 31, 1997. The Company's working capital was
$125,697 at June 30, 1998. In addition, the Company has an
unused unsecured bank line of credit of $15,000. During 1998,
the Company paid $894 to completely extinguish a long-term note,
which it assumed in the acquisition of CASE. The Company does
not have any long-term debt or current commitments for material
capital expenditures. The 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.
Factors That May Affect Future Results
The historical results of operations and financial position of
the Company are not necessarily indicative of future financial
performance. The Company's results and forward-looking
statements are subject to certain risks and uncertainties,
including but not limited to those discussed below, that could
cause future results to differ materially from those projected.
Product Distribution
Besides its own sales force, the Company relies on distributors,
representatives and value-added resellers to market a significant
portion of its products. The loss of a major customer or a
reduction in orders from a major customer, distributor,
representative or value-added reseller, could have a significant
impact to the results of operations in any particular quarter.
Also, future results could be impacted by a slower growth rate in
the market than anticipated. Historically, a significant portion
of the Company's revenue is generated from shipments in the last
month of a quarter. In addition, higher volumes of orders have
been experienced in the fourth quarter. The concentration of
orders makes projections of quarterly financial results
difficult. If customers delay their orders or a disruption in
the Company's distribution occurs, quarterly results of
operations in any particular quarter may be negatively impacted.
The Company usually ships software licenses within one to two
weeks after receipt of a customer order. Typically, orders exist
at the end of a quarter which have not been shipped; however, the
value of such orders is not indicative of revenue results for any
future period.
Competition
The software industry is highly competitive. The entire industry
may experience pricing and margin pressure which could adversely
affect the Company's operating results and financial position.
The Company's success is dependent on its ability to continue to
develop, enhance and market new products to meet its customers'
sophisticated needs within competitive pricing structures and in
a timely manner. As product development cycles become shorter,
product quality, performance, reliability, ease of use,
functionality, breadth and integration may be impacted.
Therefore, customer preference for the Company's new products
cannot be assured. The Company's success also depends in part on
its ability to attract and retain technical and other key
employees who are in great demand, to protect the intellectual
property rights of its products and to continue key relationships
with product development partners.
International Business
A significant portion of the Company's revenues are from
international markets. As a result, the Company's financial
results could be impacted by weakened general economic
conditions, differing technological advances or preferences,
volatile foreign exchange rates and government trade restrictions
in any country in which the Company does business. The Company
has invested sizable resources in the Asia Pacific region,
particularly in Japan and South Korea. Economic instability in
this region could lead to an adverse impact on the Company's
operation results and financial position.
Expense Management
The Company's operating expense levels are planned, in part, on
its future revenue opportunities. The Company's expense levels
are generally committed in advance and, in the near term,
relatively small portions of the Company's expenses vary with
revenue. Accordingly, future operating results will be impacted
by the Company's ability to convert operating outlays into
expected revenue growth at profitable margins. If future
revenues are less than expected, net income may be
disproportionately affected since expenses are relatively fixed.
In the recent months, the Company has taken initiatives to
expand, train and reorganize its sales infrastructure. Future
results could be affected by the ability of the expanded sales
infrastructure to generate revenue growth.
Year 2000
The year 2000 causes concern about whether computer systems will
appropriately recognize dates beyond the year 1999. The Company
is reviewing all of its significant internal-use computer systems
and, at this time, does not expect any significant expenditures
associated with the year 2000 consequences. The Company's
management information system software is Year 2000 Compliant.
The Company's primary software offerings are also Year 2000
Compliant.
Stock Market Volatility
The trading price of the Company's stock, like other software and
technology stocks, is subject to significant volatility. If
revenues or earnings fail to meet securities analysts'
expectations, there could be an immediate and significant adverse
impact on the trading price of the Company's stock. In addition,
the Company's stock price may be affected by broader market
factors that may be unrelated to the Company's performance.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the April 29, 1998 Annual Meeting of Shareholders, the
Company's shareholders voted to:
-- Elect three Class I directors to serve until the
2000 Annual Meeting as follows:
William P. Conlin -- 32,773,276 shares in favor;
460,356 shares withheld or against.
Bannus B. Hudson -- 32,766,058 shares in favor;
467,574 shares withheld or against.
Arthur B. Sims -- 32,785,286 shares in favor; 448,346
shares withheld or against.
There were no broker non-votes.
-- Reject the adoption of the Structural Dynamics
Research Corporation 1998 Long-Term Stock Incentive Plan.
Shares totalling 15,718,653 voted against, 13,637,971
voted in favor, and 73,458 abstained with no broker non-
votes.
-- Ratify the appointment of PricewaterhouseCoopers LLP
as the independent auditors of the Company for 1998.
Shares totalling 33,170,476 voted in favor, 20,166 voted
against and 42,990 abstained with no broker non-votes.
Item 5. Other Information.
The Securities and Exchange Commission has recently
amended Rule 14a-4 to provide that with respect to a
shareholder proposal to be presented at an annual
shareholders' meeting other than pursuant to Rule 14a-8
(i.e., which is not to be included in the registrant's
proxy statement), the registrant's management may
exercise discretionary voting authority under proxies
solicited by it for the meeting if it receives notice of
the proposed non-Rule 14a-8 shareholder action less than
45 days prior to the calendar date its proxy materials
were mailed for the prior year's annual meeting.
As this new provision applies to the Company, in the
event notice of a non-Rule 14a-8 shareholder proposal to
be presented at the Company's 1999 Annual Meeting of
Shareholders is received by the Company after February
15, 1999, the Company will be permitted to exercise
discretionary voting authority under proxies solicited by
it with respect to the 1999 Annual Meeting.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27 Financial data schedule for the period ended June 30,
1998, filed herewith.
(b) No report on Form 8-K was filed during the second quarter of
1998.
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: August 13, 1998 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.
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 110727
<SECURITIES> 29038
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