U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
FEBRUARY 28, 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 0-23438
Effective Management Systems, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1292200
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12000 West Park Place, Milwaukee, WI 53224
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (414) 359-9800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes __X___
No _______
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date.
Class Outstanding as of February 28, 1998
Common Stock, $0.1 par value 4,079,455
<PAGE>
EFFECTIVE MANAGEMENT SYSTEMS, INC.
Form 10-Q
February 28, 1998
INDEX
PART 1 - FINANCIAL INFORMATION PAGE
Item 1 Financial Statements
Consolidated Balance Sheets at
February 28, 1998 and November 30, 1997 3
Consolidated Statements of Operations - Three
Months Ended February 28, 1998 and
February 28, 1997 5
Consolidated Statements of Cash Flows - Three
Months Ended February 28, 1998 and February 28,
1997 6
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3 Qualitative and Quantitative Disclosures About
Market Risks 14
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
PART I Financial Information
Item 1 Financial Statements
EFFECTIVE MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)(unaudited except for November 30, 1997 amounts)
28-Feb 30-Nov
ASSETS 1998 1997
CURRENT ASSETS
Cash $ 284 $ 14
Accounts Receivable:
Trade, less allowance for
doubtful accounts 11,049 12,370
Related Parties 566 604
Inventories 161 280
Refundable Income Taxes 312 312
Deferred income Taxes 0 0
Prepaid Expenses and Other Current
Assets 355 146
------ ------
TOTAL CURRENT ASSETS 12,727 13,726
LONG TERM ASSETS
Computer Software, net 7,770 7,717
Investments in and Advances to
Unconsolidated Joint Ventures 182 182
Equipment and Leasehold
Improvements, net 3,639 3,917
Intangible Assets, net 2,386 2,444
Other Assets 803 811
------ ------
TOTAL LONG TERM ASSETS 14,780 15,071
------ ------
TOTAL ASSETS $27,507 $28,797
====== ======
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
EFFECTIVE MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)(unaudited except for November 30, 1997
amounts)
28-Feb 30-Nov
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
CURRENT LIABILITIES
Accounts Payable $ 1,967 $ 2,272
Accrued Liabilities 1,455 2,773
Deferred Revenues 6,090 5,887
Customer Deposits 188 63
Current portion of Long-term
Obligations 918 946
------- -------
TOTAL CURRENT LIABILITIES 10,618 11,941
LONG TERM LIABILITIES
Deferred Revenue and Other
Long-term Liabilities 1,074 317
Long-term Obligations 4,265 3,966
Deferred Income Taxes 0 0
------- -------
TOTAL LONG TERM LIABILITIES 5,339 4,283
Commitments and Contingencies - -
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value,
authorized 3,000,000 shares;
none issued or outstanding - -
Common Stock, $.01 par value;
authorized 20,000,000 shares;
issued 4,079,455 and
4,067,310 shares; outstanding
4,066,830 and 4,054,685 shares 41 41
Common Stock Warrants 4 4
Additional Paid-in Capital 11,361 11,328
Retained Earnings 204 1,260
Cost of Common Stock in Treasury
(12,625 shares) (60) (60)
------- -------
TOTAL STOCKHOLDERS' EQUITY 11,550 12,573
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $27,507 $28,797
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
EFFECTIVE MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) (unaudited)
THREE MONTHS ENDED
28-Feb 29-Feb
1998 1997
NET REVENUES:
Software license fees $5,335 $4,211
Services 4,239 4,246
Hardware 672 1,018
------- -------
Total net revenues 10,246 9,475
COST OF PRODUCTS AND SERVICES
Software license fees 1,723 1,177
Services 3,220 3,701
Hardware 527 882
------- -------
Total cost of products and
services 5,470 5,760
Selling and marketing
expenses 3,625 3,381
General and administrative
expenses 1,194 1,065
Product development
expenses 837 704
------- -------
Total costs and operating
expenses 11,126 10,910
------- -------
LOSS FROM OPERATIONS (880) (1,435)
Other (Income)/ Expense
Equity in (earnings)/loss of
unconsolidated joint ventures 0 2
Interest (income) (10) (15)
Interest expense 153 75
------- -------
143 62
------- -------
LOSS BEFORE INCOME TAXES (1,023) (1,497)
Income tax (benefit)
expense 33 (614)
------- -------
NET LOSS ($1,056) ($883)
======= =======
Loss per share - basic and
diluted ($0.26) ($0.22)
======= =======
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
EFFECTIVE MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
THREE MONTHS ENDED
28-Feb 28-Feb
1998 1997
OPERATING ACTIVITIES
Net Loss ($1,056) ($883)
Adjustments to reconcile net
income(loss) to net cash
provided(used) by operating
activities:
Depreciation and amortization 352 281
Amortization of capitalized computer
software development costs 954 644
Equity in earnings of joint ventures 0 0
Goodwill Amortization 58 58
Deferred income taxes 0 0
Changes in operating assets and
liabilities:
Accounts Receivable 1,270 917
Inventories and other current assets (1) (774)
Accounts payable and other
liabilities (538) (922)
------- -------
Total adjustments 2,095 204
Net cash provided by(used in) in operating
activities 1,039 (679)
INVESTING ACTIVITIES
Additions to equipment and leasehold
improvements (74) (454)
Proceeds from sale of securities 0 250
Software development costs
capitalized (1,008) (938)
Other 8 (2)
------- -------
Net cash used in investing activities (1,074) (1,144)
FINANCING ACTIVITIES
Proceeds on long-term debt and other
notes payable 272 1,016
Additional paid in capital 33 70
------- -------
Net cash provided by financing
activities 305 1,086
------- -------
Net increase(decrease) in cash $270 ($737)
Cash-beginning of period 14 866
Cash-end of period 284 129
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
EFFECTIVE MANAGEMENT SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1998
(Unaudited) (In Thousands)
Note 1 - Basis of Presentation
The accompanying consolidated interim financial statements included
herein have been prepared by Effective Management Systems, Inc. (the
"Company"), without an audit, in accordance with generally accepted
accounting principles for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures
made are adequate to make the information presented not misleading.
In the opinion of management, the information furnished for the
three-month periods ended February 28, 1998 and February 28, 1997 includes
all adjustments, consisting solely of normal recurring accruals, necessary
for a fair presentation of the financial position and results of
operations for the interim periods. The results of operations for the
three months ended February 28, 1998 are not necessarily indicative of the
results of operations to be expected for the entire fiscal year ending
November 30, 1998. It is suggested that the interim financial statements
be read in conjunction with the audited consolidated financial statements
for the year ended November 30, 1997 included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
Note 2 - Additional Financial Disclosure
Equipment and leasehold improvements consisted of the following:
2-28-1998 11-30-1997
Gross $9,433 $9,359
Less: Accumulated Depreciation < 5,794> < 5,442>
------ ------
Net $3,639 $3,917
Allowance for doubtful accounts
consisted of the following:
2-28-1998 11-30-1997
Balance $ 498 $ 462
Provision for doubtful accounts
consisted of the following:
2-28-1998 11-30-1997
$ 36 $ 17
<PAGE>
Note 3 - Net Loss Per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." SFAS No. 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options and warrants. Earnings per share amounts for
all periods have been presented and, where appropriate, restated to
conform to SFAS No. 128 requirements.
The following table sets forth the computation of basic and diluted
earnings per share.
February 28,
1998 1997
Denominator
Denominator for basic earnings per share -
weighted average common shares 4,075 4,025
Effect of dilutive securities - stock options
and warrants
------ -------
Denominator for diluted earnings per share -
adjusted weighted average common shares 4,075 4,025
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company recorded an increase in net revenues (8.1%) and a net loss of
$1,056,000 for the first quarter of fiscal 1998 compared with a net loss
of $883,000 for the first quarter of fiscal 1997. The first quarter of
fiscal 1998 does not reflect a tax benefit relating to the loss since for
book purposes the Company is in a loss carryforward position. On an
operating income basis, the Company recorded a net loss of $880,000 for
the first quarter of fiscal 1998 compared with a net loss of $1,435,000
for the first quarter of fiscal 1997. Software revenues were up
significantly (26.7%) in the first quarter of fiscal 1998 compared to the
same period in the prior year. Management believes this increase in
software revenues to be mainly from increased sales of the Company's
latest version of its software introduced in November 1997. The new
version of the product basically completed two major development projects,
namely the inclusion of a Microsoft Windows user interface, and the
development of an integrated manufacturing execution system (MES). As a
result of disappointing financial results, the Company is currently
reviewing strategic alternatives as well as restructuring options in an
attempt to enhance its recent financial performance. No assurance can be
given that these various measures will enable the Company to return to
profitability.
On April 13, 1998, the Company announced a material restructuring of the
corporation which will incude a reduction of staff, internal
reorganization, the write-off of some assets and the closing of some field
offices. Although the Company has not finalized the details of the
restructuring, it currently estimates that the restructuring will result
in a one time charge against earnings of approximately $6 million during the
fiscal second quarter. In an additional announcement on April 13, 1998,
the Company announced a strategic alliance with Baan Company under which
the Company will package the Baan Enterprise Resource Planning (ERP)
software with its Manufacturing Execution System (MES) technology to
mid-market manufacturers. The alliance also includes the KeyLink Systems
Division of Pioneer-Standard Electronics, Inc., which will provide bundled
hardware along with pre-installed software to the Company for installation
at customer sites. Management of the Company believes that this move
represents a significant enhancement of its product line-up for the heart
of its market-the mid-range discrete manufacturer.
Results of Operations
Total Revenues
Net revenues increased to $10,246,000 for the three months ended February
28, 1998, which was an increase of 8.1% from the $9,475,000 for the same
quarter in the previous year. The mix of revenues comparing software,
services, and hardware revenues as a percentage of net revenues improved
to 52.0%, 41.4%, and 6.6%, respectively, in the first quarter of fiscal
1998, from 44.4%, 44.8%, and 10.8% , respectively, in the first quarter of
fiscal 1997. The overall increase in revenues for the three months ended
February 28, 1998 was attributable, in part, to a $1,124,000 increase in
the level of relatively high margin software revenues, offset in part by a
$346,000 decrease in relatively low margin hardware revenues.
International revenues represented less than 10% of net revenues for all
periods presented.
The Company's operating revenues can vary substantially from quarter to
quarter based on the size and timing of customer orders and market
acceptance of new products. The Company has historically operated with
little backlog because software orders are generally shipped as orders are
received. As a result, product revenue in any quarter is substantially
dependent on orders booked and shipped during that quarter.
Software License Fees
Software license fees are customer charges for the right to use the
Company's software products. Software license fees increased 26.7% to
$5,335,000 in the first quarter of fiscal 1998 from $4,211,000 in the
first quarter of fiscal 1997. The increase in software license fees was
mainly attributable to the introduction of a new version of the Company's
software product which resulted in increased sales, particularly in the
eastern domestic region ($819,000). The new version of the product
basically completed two major development projects, namely the inclusion
of a Microsoft Windows user interface, and the development of an
integrated manufacturing execution system (MES). Management believes that
the completion of these projects will enhance the Company's competitive
advantage and provide significant customer benefit.
Service Revenues
The Company offers a number of optional services to its customers,
including such services as a telephone support program, systems
integration, custom software development, implementation consulting, and
formal classroom and on-site training. Service revenues remained
substantially unchanged at $4,239,000 for the three months ended February
28, 1998, as compared with $4,246,000 for the same period of the prior
year. The Company has reduced the level of service personnel through
attrition which, in turn, has resulted in a reduction in growth of
associated revenues.
Hardware Revenues
Hardware revenues decreased 34.0% to $672,000 in the first quarter of
fiscal 1998 compared with $1,018,000 for the corresponding period of
1997. The decrease was mainly due to increased sales of software on
platforms for which the Company does not supply hardware and the
discontinuation of hardware sales to an affiliate of the Company, EMS
Solutions, Inc. ($174,000)(See General and Administrative Expenses below).
Management expects the trend of declining hardware sales to continue due
to the increasing sales of software licenses operating on the Microsoft
Windows NT platform. Hardware used with the Microsoft Windows NT platform
is either generally already in place at the customer site or readily
available from local suppliers who can also provide local support.
Cost of Software License Fees
The cost of software license fees as a percentage of related revenue was
32.3% for the first quarter of fiscal 1998, an increase from 28.0% for the
corresponding period of 1997. Cost of software license fees is composed
of both amortization of past investment in software development and the
third party costs associated with the software revenues. Software
amortization is related to past investment in software development and
does not vary consistently with variations in software revenues.
Software amortization accounted for an increase of 2.7% in the cost of
software license fees as a percentage of software license fee revenues for
the first quarter of fiscal 1998 as compared to the first quarter of
fiscal 1997. Software amortization will increase in future fiscal periods
based on the past increases of investment in capitalized product
development. The cost of software license fees is also dependent on the
level of third party costs associated with certain software revenues and
includes such items as purchased licenses and other components. The
remaining increases in the cost of software license fees as a percentage
of related revenue was due to these third party costs.
Cost of Services
The cost of services as a percentage of related revenue decreased to 76.0%
for the three months ended February 28, 1998, as compared with 87.2% for
the same quarter in the previous year. The decrease was mainly due to
increased levels of billing generated by existing personnel. The Company
is restructuring its service organization on an ongoing basis to match
its costs more closely with its current revenue levels. Accordingly, the
Company is currently slowly reducing personnel levels through normal
attrition. The Company is also refocusing its service staff to reduce
the level of internal non-billable projects and increase the level of
billable customer work.
Cost of Hardware
The cost of hardware as a percentage of related revenue decreased to 78.4%
in the first quarter of fiscal 1998 from 86.6% in the first quarter of
fiscal 1997. The cost of hardware as a percentage of related revenue
varies with the size of the system, the margin mix of items comprising the
system being sold, and the competitive pressure of the customer sale. The
cost of hardware as a percentage of related revenue also varies with the
amount of low margin hardware sales to affiliates. Hardware sales to
affiliates declined in the first quarter of fiscal 1998 compared to the
first quarter of fiscal 1997.
Selling and Marketing Expenses
Selling and marketing expenses increased $244,000, or 7.2%, from
$3,381,000 in the first quarter of fiscal 1997 to $3,625,000 in the first
quarter of fiscal 1998. This growth in selling and marketing expense was
mainly due to increased levels of performance compensation related to the
corresponding growth in software revenues. As a percentage of total
revenues, selling and marketing expense was 35.4% in the first quarter of
fiscal 1998 compared to 35.7% in the corresponding period of 1997.
General and Administrative Expenses
General and administrative expenses increased $129,000, or 12.1%, from
$1,065,000 in the first quarter of fiscal 1997 to $1,194,000 in the first
quarter of fiscal 1998. The increase in general and administrative
expenses was mainly due to rising expenses for professional and consulting
fees ($79,000). As a percentage of net revenues, general and
administrative expenses were 11.7% and 11.2% in the first quarter of
fiscal 1998 and 1997, respectively. During the third quarter of fiscal
1997, the Company discontinued the practice of providing office space,
accounting and administrative services, computer processing time, and
other miscellaneous services to EMS Solutions, Inc., an affiliated entity.
EMS Solutions, Inc. now operates as a stand-alone entity with no material
ongoing relationship with the Company.
Product Development Expense
Product development expense increased 18.9% from $704,000 in the first
quarter of fiscal 1997 to $837,000 in the first quarter of fiscal 1998.
This increase was primarily related to the incorporation of various new
technologies into the Company's software products. The Company
capitalizes costs in accordance with Statement of Financial Accounting
Standard (SFAS) No. 86. The Company capitalized $1,008,000 of product
development costs in the first quarter of fiscal 1998 compared to $938,000
in the first quarter of fiscal 1997. As a percentage of software license
fees, the total amount invested in software development was 34.7% and
39.0% in the first quarter of fiscal 1998 and fiscal 1997, respectively.
With the completion of two major development projects and with the
Company's plan to control its overall costs, the Company expects to
reduce the level of investment in product development in the near future.
Other Income\Expense-Net
Other income\expense-net was $62,000 of expense for the first quarter of
fiscal 1997 compared to $143,000 of expense for the first quarter of
fiscal 1998. The increase in the level of expense was mainly the result
of an increase in interest expense as a result of increased borrowings
under the Company's borrowing facilities.
Income Tax
A small income tax expense ($33,000 for state and local taxes) and no
income tax benefit was recorded for the first quarter of fiscal 1998
compared to a benefit of 41.0% for the first quarter of fiscal 1997. At
February 28, 1998, the Company, for book purposes, is in a tax loss
carryforward position. Generally accepted accounting principles prohibit
the Company from recording a tax benefit under the circumstances.
Liquidity and Capital Resources
At February 28, 1998, the Company had cash and marketable securities
aggregating $284,000. During the first quarter of fiscal 1998, the
Company's operating activities provided $1,039,000 of cash compared to
using $679,000 of cash for the same period of the prior year. This
decrease in the use of cash was mainly attributable to the Company's
reduced operating losses and increased non-cash software amortization.
Investing activities used cash of $1,074,000 in the first quarter of
fiscal 1998 compared to $1,144,000 of cash in the first quarter of fiscal
1997. The principal use of the cash in the first quarter of fiscal 1998
was $1,008,000 for capitalized product development. The principal uses of
cash in the first quarter of fiscal 1997 included $938,000 for capitalized
product development and $454,000 for purchases of equipment and furniture.
Financing activities provided $305,000 of cash in the first quarter of
fiscal 1998 compared with $1,086,000 in the first quarter of fiscal 1997.
The cash provided in fiscal 1998 mainly reflected borrowings under the
Company's borrowing facilities. As of February 28, 1998, the Company had
$4,088,000 of availability under its $6,000,000 line of credit, which is
based on the level of eligible accounts receivable.
On December 31, 1997, the Company entered into a loan and security
agreement with Foothill Capital Corporation, that includes a revolving
line of credit providing for maximum borrowings of $6,000,000 and a three-
year term note for $3,112,000. Borrowings under the agreement are secured
by substantially all assets of the Company, with the revolving line of
credit secured mainly by the Company's accounts receivable. The new
agreement contains certain restrictive covenants relating to income
(EBITDA), tangible net worth, and level of capital expenditures. In the
first quarter of 1998, the Company required and obtained a waiver from the
lender as a result of its failure to meet the tangible net worth and
EBITDA covenants. In order to meet covenants in the future, the Company
will need positive operational results in the short term. In the event
that the Company's performance does not improve in the short term, the
Company will need to secure additional waivers and/or alternative sources
of financing. The Company is reviewing both strategic alternatives and/or
a business restructuring to deal with its current financial status.
Although management believes that waivers and/or additional financing can
be obtained, if needed, no assurance can be given that waivers or such
additional financing will be available to the Company on acceptable
terms. In the event that the Company is unable to secure additional
financing, it would likely have a material adverse effect on the Company's
liquidity, Including its ability to fund continuing operations at current
levels.
Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995
IN ADDITION TO HISTORICAL INFORMATION, THIS QUARTERLY REPORT ON FORM 10-Q
CONTAINS "FORWARD-LOOKING STATEMENTS", INCLUDING INFORMATION REGARDING
FUTURE ECONOMIC PERFORMANCE AND PLANS AND OBJECTIVES OF MANAGEMENT, WHICH
ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING
STATEMENTS. SUCH UNCERTAINTIES, AND RISKS INCLUDE, BUT ARE NOT LIMITED
TO, PRODUCT DEMAND AND MARKET ACCEPTANCE FOR THE COMPANY'S PRODUCTS; THE
IMPACT OF COMPETITIVE PRODUCTS; THE COMPANY'S ABILITY TO MAINTAIN
EFFICIENT MARKETING AND DISTRIBUTION OPERATIONS WITH RESPECT TO NEW
PRODUCTS; FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS; THE
COMPANY'S ABILITY TO RETAIN KEY TECHNICAL AND MANAGEMENT PERSONNEL; THE
COMPANY'S SUCCESS IN IMPROVING ITS FINANCIAL PERFORMANCE; TIMING OF
PRODUCT DEVELOPMENT; PRODUCT PRICING AND OTHER FACTORS DETAILED IN THIS
QUARTERLY REPORT ON FORM 10-Q AND IN OTHER FILINGS MADE BY THE COMPANY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Not Applicable
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 Loan and Security Agreement by and between Foothill
Capital Corporation and Effective Management Systems, Inc.,
EMS-East, Inc. and Effective Management Systems of Illinois,
Inc., dated December 31, 1997. [Incorporated by reference
to Exhibit 4.14 to Effective Management Systems, Inc.'s
Form 10-K for the year ended November 30, 1997]
10.1 Relationship Agreement by and between CIMX, an Ohio
Limited Liability Company, and Effective Management
Systems, Inc., dated December 31, 1997 [Incorporated by
reference to Exhibit 10.20 to Effective Management Systems,
Inc.'s Form 10-K for the year ended November 30, 1997]
27 Financial Data Schedule [EDGAR version only]
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EFFECTIVE MANAGEMENT SYSTEMS, INC.
April 14, 1998 By: /s/ MICHAEL D. DUNHAM
Michael D. Dunham
President (principal
executive officer)
By: /s/JEFFREY J. FOSSUM
Jeffrey J. Fossum
Chief Financial Officer and
Assistant Treasurer
(principal financial and
accounting officer)
<PAGE>
Exhibit Index
Exhibit
Number
4.1 Loan and Security Agreement by and between Foothill Capital
Corporation and Effective Management Systems, Inc., EMS-East, Inc.
and Effective Management Systems of Illinois, Inc., dated December
31, 1997. [Incorporated by reference to Exhibit 4.14 to Effective
Management Systems, Inc.'s Form 10-K for the year ended November 30,
1997]
10.1 Relationship Agreement by and between CIMX, an Ohio Limited
Liability Company, and Effective Management Systems, Inc., dated
December 31, 1997 [Incorporated by reference to Exhibit 10.20 to
Effective Management Systems, Inc.'s Form 10-K for the year ended
November 30, 1997]
27 Financial Data Schedule [EDGAR version only]
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 284
<SECURITIES> 0
<RECEIVABLES> 12,113
<ALLOWANCES> 498
<INVENTORY> 161
<CURRENT-ASSETS> 12,727
<PP&E> 9,433
<DEPRECIATION> (5,794)
<TOTAL-ASSETS> 27,507
<CURRENT-LIABILITIES> 10,618
<BONDS> 0
0
0
<COMMON> 41
<OTHER-SE> 11,361
<TOTAL-LIABILITY-AND-EQUITY> 27,507
<SALES> 672
<TOTAL-REVENUES> 10,246
<CGS> 527
<TOTAL-COSTS> 11,126
<OTHER-EXPENSES> 143
<LOSS-PROVISION> 36
<INTEREST-EXPENSE> 143
<INCOME-PRETAX> (1,023)
<INCOME-TAX> 33
<INCOME-CONTINUING> (1,056)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,056)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> 0<F1>
<FN>
<F1>Not required to be calculated in accordance with generally accepted accounting
principles.
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