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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM .
Commission File Number: 0-19024
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SYMIX SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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OHIO 31-1083175
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2800 CORPORATE EXCHANGE DRIVE 43231
COLUMBUS, OHIO (Zip Code)
(Address of principal executive
offices)
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Registrant's telephone number, including area code: (614) 523-7000
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares No-Par Value
Title of Class
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 (Section 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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant at September 24, 1996 was $16,808,572.
The number of common shares outstanding at September 24, 1996 was 5,522,576.
Documents Incorporated by Reference:
(1) Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended June 30, 1996 are incorporated by reference into Part
II of this Annual Report on Form 10-K.
(2) The Registrant's Definitive Proxy Statement for its Annual Meeting of
Shareholders to be held on November 1, 1996 is incorporated by reference
into Part III of this Annual Report on Form 10-K.
Exhibit Index on Page
Page 1 of Pages
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PART I
ITEM 1. BUSINESS
GENERAL
Symix Systems, Inc.("Symix" or the "Company") is a global provider of open,
client server manufacturing software for mid-range discrete manufacturers. Symix
designs, develops, markets and supports a fully integrated manufacturing,
planning and financial software system that addresses the Enterprise Resource
Planning (ERP) requirements of manufacturers. The SYMIX-Registered Trademark-
solutions are developed for manufacturers who must optimize the rigorous demands
of make-to-order and mixed-mode production requirements, including reducing
time-to-market, shortening order cycles and reducing product costs. Among the
key industries which use the Symix applications are industrial equipment,
fabricated metals, electronic equipment and furniture/fixtures.
Symix's primary ERP application product, Symix SyteLine, was released in
March, 1996 and combines the robust functionality of a complex manufacturing
system, including multi-site capabilities, with the speed and ease-of-use of
graphical user interface products. Symix also continues to market, sell and
enhance its heritage host terminal, character based ERP application product,
SYMIX-Registered Trademark- Version 4.0, to customers not readily able to fully
migrate to a client/server environment. The Symix applications are sold through
both a direct sales channel and approximately 40 software and service partners
in 17 countries.
Symix focuses on consulting, implementation and education services as
critical aspects of its business. These services are provided through either
direct Symix consultants, third party software and service partners, system
integrators or consulting/accounting firms.
Symix was organized in 1979, incorporated under the laws of the State of
Ohio in 1984 and became a public company trading on NASDAQ in 1991. As used in
this Annual Report on Form 10-K, the term "Company" refers to Symix Systems,
Inc. and its wholly-owned subsidiaries, unless the context otherwise requires.
INDUSTRY BACKGROUND
Manufacturers are increasingly under pressure to re-engineer their
businesses to address expanding global competition. Today's competitive
environment requires manufacturers to be flexible and responsive as customers
are demanding high quality, low costs and short delivery cycles. Customer-driven
manufacturers are producing smaller lots in less time, and are doing so much
closer to the initiation of the demand for the products. Manufacturers must
increase the efficiency of their operations by increasing the productivity of
personnel and the efficient management of assets throughout the enterprise. In
order to cost effectively achieve this objective, businesses will need to
introduce and embrace new operating technologies and principles which will
enable manufacturers to build the capacity to "informationalize" their
operations. Manufacturers need an integrated information management system which
can provide critical data on a regular basis-and as needed. The solution for
this requirement can be found in open systems, client/server ERP systems which
are quick to implement and do not demand large Information System ("IS") staff.
ERP represents a broad spectrum of functions that encompass many different
business entities. More specifically, ERP coordinates and connects a wide range
of business disciplines across disparate, multiple manufacturing sites;
providing functionality in the areas of customer orders, billing and shipping,
integrated financials, scheduling, materials and capacity planning, bill of
materials, integrated distribution and warehouse management.
Material Requirements Planning ("MRP") systems were initially introduced in
the 1970's by third party developers or internally developed by the
manufacturers themselves. These MRP systems allowed manufacturers to manage the
flow of materials at various stages of the manufacturing process. In the
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1980's, Material Resource Planning ("MRPII") systems emerged into the
manufacturing software marketplace providing manufacturers the ability to
include labor and equipment as part of the materials planning process.
Initially, most MRPII systems were based on proprietary platforms, using third
generation languages (3GL) and hierarchical databases. Through the evolution
over the past decade, MRPII systems have migrated to fourth generation languages
(4GL) and open, non-proprietary systems. This evolution solved several basic
technological problems, but still left manufacturers with many functionality
issues and enterprise-wide technological needs which were not addressed. Today,
the problem posed by most MRPII systems is the inability to support diverse
manufacturing processes and limited flexibility in integrating new technologies.
In response to the enterprise-wide functionality and technology issues,
there has been a significant shift away from MRPII systems in favor of ERP
systems which provide actual enterprise-wide management of resources,
integration of more sophisticated forecasting and reporting, and the capability
to measure quality level and delivery cycle responsiveness. ERP systems based on
open systems, client/server platforms benefit manufacturers by providing access
to information throughout the manufacturing enterprise on a timely basis and by
providing distribution of various software applications, databases and new
technologies.
Manufacturers can generally be divided into two identifiable groups:
discrete (Symix's target market) and process manufacturers. "Process"
manufacturers mix, separate, heat and otherwise control ingredients in order to
create finished products such as chemicals, paints and pharmaceuticals.
"Discrete" manufacturers, which account for approximately 50% of the
manufacturing facilities worldwide, produce products by assembling parts into
finished product such as equipment, appliances and furniture.
Discrete manufacturers can be further subdivided into three groups:
"make-to-order" manufacturers, which engineer and manufacture products to meet
specific customer needs; "make-to-stock" manufacturers, which assemble products
to customer orders based on standard parts; and "repetitive" manufacturers,
which produce standard products in large quantities. These different types of
manufacturers face unique challenges in dealing with resource requirements and
production and planning control issues. Historically, manufacturers exclusively
used one of these manufacturing methods. Plant consolidation, vertical
integration and technology are changing these practices requiring manufacturers
today to produce under a "mixed-mode" environment. The ability to realize cost
advantages gained by repetitive manufacturing and to satisfy customers with
highly configured, customized specifications is becoming a strong competitive
weapon.
MARKETS AND CUSTOMERS
Based on information from Advanced Manufacturing Research, Inc. ("AMR"), the
worldwide ERP marketplace will grow to approximately $5.6 billion in revenue in
1996 from an estimated $4.1 billion in 1995. Market growth rates through the end
of the century will approximate 20% to 40% per year, according to AMR. AMR
estimates that there are over 40,000 discrete manufacturing sites each having
over $20 million in sales in the United States with at least an equal amount of
sites outside of the United States. AMR also has described the mid-range
discrete market as a large untapped market with no clear market leader and has
estimated that most mid-range manufacturers will replace their manufacturing
solution over the next five years.
The Company's target market includes primarily mid-range discrete
manufacturing companies with sites having annual revenue between $10 and $350
million in revenue. The Company primarily focuses its sales and marketing
efforts on four key industries within the mid-range market; industrial
machinery, fabricated metals, electronic equipment and furniture/fixtures. Based
on information internally developed from Dun & Bradstreet data, it appears there
are approximately 14,000 companies in the United States alone that have at least
$20 million in revenue and fall within the target market. Many of these
companies have multiple site locations.
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The ERP system is typically the most important application system for the
mid-range manufacturer since it is the "backbone" of the manufacturer's
operations. However, most mid-range manufacturers have small, if any, IS staff
to plan, implement and manage software application systems. These mid-range
manufacturers require an affordable system that incorporates a wide range and
depth of functionality, is easy to install and maintain, and can be rapidly
deployed. The Company's products and services are developed, marketed and sold
with those needs in mind.
The Company currently has 2,400 customer sites throughout the world, and
although under the Company's standard maintenance and support agreement a
customer can upgrade to the newer versions of the Company's software without any
additional license fee charge, these current customers represent an excellent
opportunity for selling additional software and consulting services.
STRATEGY
The Company underwent significant executive management changes in the early
part of the 1996 fiscal year. Recognizing the strong foundation of the
functionally rich product and strong customer base, the new management team has
introduced these new strategic initiatives to grow the Company and to take
advantage of excellent market opportunities:
* MID-MARKET LEADER IN THE SELECTED VERTICAL MARKETS. The Company will
focus most of its marketing, promotional and development efforts toward the
industrial equipment, fabricated metals, electronic equipment, and
furniture/fixture markets. The Company will strive to be the leader or to have
the ability to become the leader in these vertical markets.
* COMMITMENT TO CUSTOMER SERVICE. Efforts to improve customer service were
initiated during the 1996 fiscal year including expanding coverage of hotline
telephone and emergency level support, implementation of a new customer service
and call tracking system, and introducing a special Web site on the Internet
where customers can directly access support issues.
* PROVIDING TARGET VERTICAL MARKETS WITH EXPANDED FUNCTIONALITY THROUGH
ALLIANCE WITH THIRD PARTY SOFTWARE VENDORS. The Company will attempt to provide
its existing customers and target markets with a broader breadth of
functionality by interfacing with third party vendors. Additional functionality
that could be provided through these type of relationships include field
service, data warehousing, and improved sales order configuration.
* PROFESSIONAL SERVICES CAPABILITY TO SUPPORT RAPID IMPLEMENTATION OF
SYSTEMS. The ability to quickly install a system for a mid-range manufacturer
is critical given the pressures caused by limited financial and technical
resources of the customer. In addition to its existing professional services
group, the Company has developed relationships with both national and regional
accounting and consulting firms to support the customer's migration to Symix.
* EMPHASIZING EASE OF USE THROUGH A COMMITMENT TO OPEN SYSTEMS AND FLEXIBLE
TECHNOLOGY. The Company is committed to supporting state-of-the-art technology
that works today and supports the customer's future growth through open systems,
client/server architecture, graphical user interface ("GUI"), a strong fourth
generation language, integrated databases, and Microsoft Windows compatibility.
PRODUCTS & SERVICES
Symix currently markets and supports Symix SyteLine and
SYMIX-Registered Trademark- Version 4.0 ("Version 4.0"). Released in March,
1996, Symix SyteLine is the Company's robust client/server and GUI product that
was rearchitected and developed from Version 4.0. Version 4.0, which targets
manufacturers still using centrally located and controlled computer systems
operating under UNIX and Windows NT, will continue to be enhanced by the Company
for at least the next two fiscal years for those manufacturers not ready to
embrace the newer client/server environment and international customers in
countries such as China
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where telecommunication networks limit the ability to fully implement
client/server systems. The Company allows Version 4.0 and prior version
customers who are current on maintenance to upgrade at no additional license fee
charge to Symix SyteLine. Symix SyteLine encompasses all of the functionality of
Version 4.0 but also provides the full client/server and GUI features,
multi-site capabilities and enhanced international financial reporting. The
preferred operating platform for Symix SyteLine is Windows NT, although it is
compatible with UNIX and Novell.
The Symix offerings include the above two products, third party products
that interface to the application and provide a broader breadth of
functionality, PROGRESS 4GL tools and Relational Data Base Management System
("RDBMS"), and implementation and education services to ensure successful and
rapid deployment of the SYMIX-Registered Trademark- solutions. Although the
Company's desire is to minimize the amount of customization required for an
implementation, Symix also offers programming services to provide modifications
to the standard product in order to address specific customer requirements.
Symix's objective is to achieve the right mix of technology, functionality
and services to enable its customers to rapidly implement an ERP solution that
addresses the manufacturer's customer requirements while increasing staff
productivity, improving operating efficiencies, minimizing lifetime cost of
ownership and enabling a rapid return on investment.
APPLICATION SOFTWARE
Symix SyteLine and Version 4.0 consists of fully integrated functionality
that comprehensively support a manufacturer's business process. The functional
components of the core application packages include the following:
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CUSTOMER SERVICE PRODUCTION MANAGEMENT
Estimating Work Orders
Order Inquiry Production Scheduling
Order Entry JIT/KANBAN
Inventory Availability Routings
Order Configurator Shop Floor Control
Period Based/Work Order Costing
PLANNING & ENTERPRISE ADMINISTRATION
MATERIALS MANAGEMENT
Inventory Control General Ledger
Purchasing Reporting & Consolidation
Bill of Materials Receivables
Engineering Change Notice Fixed Assets
Material Requirements Planning Payroll
Capacity Planning Human Resources
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CUSTOMER SERVICE enables manufacturers to estimate, configure and accept
orders accurately and rapidly. The estimating capabilities help the manufacturer
standardize all customer quoting activity, access it online and generate reports
for analysis and customer reporting. The Order Configurator automatically
configures the order for manufacturing which reduces engineering time and
enhances the transition from order entry and manufacturing. The Customer Inquiry
module enables manufacturers to handle online most customer inquiries such as
product availability, order status, receivable status, or discounts. The
Customer Service applications also enable the manufacturer to make extensive
pricing and sales analysis.
PLANNING AND MATERIALS MANAGEMENT enable the manufacturer to plan capacity
and material availability for each manufacturing site, including conversion of
customer orders into reliable bill of materials and routings, management of
plant capacity to meet anticipated demand while minimizing expedited orders,
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incorporation of changes from customers and product engineers in a timely
manner, and inventory management to reduce carrying costs while ensuring
material availability for scheduled productions. The components include various
resource capacity planning tools, master production scheduling, multiple site
coordination and integrated purchasing and inventory control modules.
PRODUCTION MANAGEMENT enables manufacturers to select three manufacturing
production control methods to match the level of control and diversity desired;
work orders, production scheduling and JIT/ KANBAN. These three production
environments can be maintained simultaneously providing the manufacturer with
flexibility to mix and match different production methods. For example, a
manufacturer may select production scheduling as the production method for the
final assembly, but JIT/KANBAN for the subassemblies.
ENTERPRISE ADMINISTRATION flows from the manufacturing and production
modules described above. The comprehensive financial tools are tightly
integrated with the operations and capture the required transactions in a form
that supports flexible analysis across all business locations. The system
provides various costing alternatives including work order costing and
period-based costing and allows for actual and standard cost analysis. Through
its enhanced multi-currency capabilities, the financial tools provide flexible
consolidation modeling/analysis for multi-national manufacturers.
THIRD PARTY SOFTWARE
In addition to its core application software products, the Company sells
other products that interface and supplement the functionality of the system.
These additional products include Product Configuration (PRT), Automated Data
Collection, Electronic Data Interchange (EDI), Computer Aided Design Interface
(CAD), and external payroll interfaces.
PRT is a rules-based order configurator that can support the make-to-order
manufacturers who require more complex configuration to ensure rapid order
entry, reduced engineering time and a smoother transition to manufacturing.
Automated Data Collection introduces bar code technology to record movement of
items from the plant floor, track receipt or shipment of items, perform cycle
counting and generate physical inventories. In order to enable manufacturers to
electronically transfer documents, the Company offers an interface with an
integrated EDI solution available from Radley Corporation. To assist
manufacturers using CAD, the Company offers an optional interface to popular
third party CAD software packages, providing bi-directional import and export
capabilities.
PROGRESS
Symix SyteLine and Version 4.0 are written in
PROGRESS-Registered Trademark-, a leading fourth-generation language that
provides manufacturers with reporting and development tools that have
significant flexibility. PROGRESS-Registered Trademark- provides its own
Relational Data Base Management System (RDBMS) as well as the ability to
interface with the ORACLE-Registered Trademark- RDBMS.
PROGRESS-Registered Trademark- is the proprietary product of the Progress
Software Corporation.
The Company has entered into a non-exclusive application partner agreement
with Progress Software Corporation, pursuant to which the Company is authorized
to market and distribute PROGRESS-Registered Trademark- in connection with sales
of the Company's products. Under the terms of the agreement, the Company bears
primary responsibility for assisting customers in developing applications with
PROGRESS-Registered Trademark- and agrees to provide appropriate support to
PROGRESS-Registered Trademark- customers. The initial term of the agreement
expires in February, 1998 and will continue thereafter unless either party gives
ninety (90) days' written notice of its intention to terminate. In addition, the
agreement may be terminated immediately by either party if a material breach of
the agreement by the other party continues after thirty (30) days' written
notice. The Company's customers would then be required to license
PROGRESS-Registered Trademark- directly from Progress Software Corporation or
other resellers. If Progress Software Corporation should cease its product
offerings for any reason, the Company believes that the established user base is
large enough that momentum exists to port
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to another development environment. The Company's move to
PROGRESS-Registered Trademark- in 1984 was such a development effort.
SERVICES AND SUPPORT
The Company offers a full range of services that allow its customers to
maximize the benefits of the Company's software products, including project
management, implementation, product education, technical consulting, programming
services, system integration, and maintenance and support. The Company's
services are priced separately and fees for its services generally are not
included in the price for its software product. Fees for maintenance and support
services generally are billed a year or six months in advance while all
remaining consulting, education and programming services generally are billed
monthly as incurred.
The Company considers its ability to rapidly implement its software solution
a key competitive factor. The Company's professional services organization which
employs approximately 60 consultants and managers uses a structured
implementation methodology known as "FOCUS", which defines a customer's
implementation into six distinct phases: planning and installation, education
and business system simulations, development of operating procedures, conversion
planning, end-user training and cutover and post implementation evaluation. The
Company offers both on-site and classroom training. Classroom training is
available in nine different Company operated facilities throughout the world.
In addition to the consultants employed directly by the Company, customers
can receive consulting services from the Company's 40 business partners
throughout the world. The Company also has been active establishing
relationships with accounting and consulting firms to provide additional support
in project management, implementation and system integration services for
customers. The Company views these relationships as an important source for
future leads for prospective customers.
Although the Company attempts to minimize the amount of customization of its
software products, the Company does provide professional programming services to
modify its software products to address specific customer requirements. These
modifications may include designing and programming complete applications or
integrating its software products with legacy systems.
Maintenance and support services are available to all customers currently on
an active release of the Company's software products. Maintenance and support
services include product enhancements and updates, free upgrades to new
versions, hotline telephone support during extended business hours, 24
hour/seven days a week emergency support and access to the Company's customer
support module on the Company's WEB home page on the Internet
(HTTP://www.symix.com). The price for maintenance and support services is based
on a percentage of the list price of the Company's software product at the time
the license is purchased. Since fees for maintenance and support services are
billed typically a year or six months in advance, the revenue is deferred and
recognized ratably over the term of the maintenance and support agreement.
SALES AND DISTRIBUTION
The Company currently licenses SyteLine and Version 4.0 based on a license
fee for each additional concurrent session or concurrent execution of its
software products. The Company receives additional license fee revenue whenever
a customer increases the number of concurrent sessions, usually as a result of
the growth of the customer's business or expansion to other sites. Both Symix
Syteline and Version 4.0 use an encrypted key that allows the customer to use
only the number of concurrent sessions for which the customer has received a
license.
Sales leads are generated through a combination of in-house telemarketing,
advertising, trade shows, references from professional services and hardware
vendor partners, and direct calling by sales staff. The Company sells its
products and services through both a direct sales force and approximately 40
business
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partners throughout the world. The Company currently maintains 15 sales and
support offices worldwide: 7 in North America, 5 in Asia Pacific and 3 in
Europe. During the fiscal year ended June 30, 1996, the Company's worldwide
sales operation organization decreased from 145 to 139 employees. The Company's
business partners in North America target the lower end of the mid-range market
while its business partners in Asia Pacific and Europe are primarily responsible
for a geographic region or country.
The Company has begun to significantly expand its international operation
during the past several months. The operations of two former business partners
in Australia and the Netherlands, respectively, were recently acquired by the
Company and converted to subsidiary operations, thus increasing the number of
Company employees in each country by 15 and 7, respectively. On August 8, 1996,
the Company completed the purchase of stock of a French company which will serve
as a future sales and distribution operation for the Company. The French company
currently has approximately 200 existing customers and 27 employees. The
existing customers use a French localized version of a MRPII product that is no
longer being enhanced by the software vendor. The French company has full rights
to the localized product and currently realizes approximately $4.0 million
annual revenue from services and support of those customers. It is expected that
the new French subsidiary will market a localized version of Symix SyteLine and
will target existing and new customers.
Symix's relationship with Mitsui Co., Ltd., the Company's exclusive
distributor in Japan, has resulted in a "Mitsui Symix Center" which is being
established in Tokyo. The Center will serve as a training and support facility
for Symix customers in Japan. The Company is optimistic as to future expansion
in Japan with Mitsui in addition to Japanese multinational companies with
subsidiaries throughout the world.
For the fiscal year ended June 30, 1996, sales outside of North America
accounted for approximately 12% of the total Company revenue. With new
subsidiaries in France, Australia and the Netherlands combined with continued
growth in key areas such as Japan, China and Singapore, the Company believes
international sales will account for an increasing percentage of its total sales
over the next several years.
In addition to the business partners and third party consultants, an
important source of leads continue to be hardware vendors. The Company has
relationships with a number of hardware vendors, which include cooperative
marketing programs with International Business Machines, Hewlett-Packard,
Digital Equipment Corporation, Unisys Corporation and Data General Corporation.
The Company bears sole responsibility for providing support for its software to
its customers under each agreement and the various hardware vendors are
ultimately responsible for their products, although the Company may provide some
front line support.
PRODUCT DEVELOPMENT
The Company devotes a significant and growing percentage of its resources to
identifying customer's needs, developing new features and enhancements to
existing products and designing and developing new products. New products,
updates and enhancements are developed by the Company's internal development
staff. The Company's practice is to release updates and major enhancements on a
regular basis. In connection with each release, the Company works closely with
customers and business partners to define improvements and enhancements.
Research and product development expenses, including amounts capitalized
were $5,963,000, $5,163,000 and $3,768,000 for the fiscal years ended June 30,
1996, 1995 and 1994, respectively. Capitalized software expenditures were
$2,290,000, $1,419,000, and $1,179,000 for the same respective periods and were
capitalized in accordance with the Statement of Financial Accounting Standards
No. 86. In addition to the software development costs capitalized this year is
$1.0 million for a purchase of existing technology. Amortization of capitalized
software costs are included in cost of revenue. The Company generally retains
the right to remarket any specific customer modifications prepared by its
programming services group in or with future product releases.
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COMPETITION
The computer software industry is highly competitive and the Company sells
in a highly fragmented market consisting of a few large, multi-national vendors
and a larger number of small, regional competitors. Some of the Company's
existing competitors, as well as a number of potential competitors, have larger
technical staffs, more established and larger marketing and sales organizations,
and greater financial resources. However, no one competitor in the mid-range
market has a significant portion of market share. The Company competes with a
different group of software vendors with respect to each opportunity based upon
size of the customer, specific niche product requirements, technology
requirements, geographical location and anticipated investment by the customer.
The Company believes its installed customer base of open systems and UNIX
operating systems is an important competitive element. The open system segment
of the market has grown significantly and is expected to continue to grow over
the next several years. The Company anticipates that the most significant source
of future competition will be from larger manufacturing software companies who
tailor their products for this market or from software companies that have
developed a product using newer state-of-the-art technology.
The Company believes that the most important considerations for potential
customers for its software products are product vision, open systems and client
server technology, ease of use and graphical interface; Microsoft and desktop
integration; rapid installations; reliability and quality of technical support,
documentation and education; size of installed user base, competitive pricing
and corporate reputation. The Company believes that it competes favorably in
most of these areas.
The Company's future success will depend significantly upon its ability to
increase its share of its target market, to persuade existing customers to
purchase additional concurrent sessions, products and product enhancements, and
to persuade both new and existing customers to purchase additional consulting
and other professional services from the Company.
PRODUCT PROTECTION
The Company regards its products as proprietary trade secrets and
confidential information. The Company relies largely upon its license agreements
with customers, distribution agreements with distributors, and its own security
systems, confidentiality procedures and employee agreements to maintain the
trade secrecy of its products. The Company seeks to protect its programs,
documentation and other written materials under copyright law. There can be no
assurance that these means of protection will be effective against unauthorized
reproduction or "pirating". Policing unauthorized use of computer software is
difficult, and software "piracy" is and can be expected to remain a persistent
problem within the software industry.
The Company believes that, due to the rapid pace of innovation within the
computer industry, factors such as (i) technological and creative skill of
personnel, (ii) knowledge and experience of management, (iii) name recognition,
(iv) maintenance and support of software products, (v) the ability to develop,
enhance, market and acquire software products and services, and (vi) the
establishment of strategic relationships in the industry are more important for
establishing and maintaining a leading position within the industry than are
patent, copyright and other legal protection of its technology.
SYMIX-Registered Trademark- is a registered trademark and Symix SyteLine is
a trademark of the Company. None of the Company's software is patented. The
Company believes that it has all necessary rights to market its products,
although there can be no assurance that third parties will not assert
infringement claims in the future.
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WORKING CAPITAL
The Company maintains low levels of inventories. The Company believes that
other software companies also maintain low levels of inventories. The Company's
trade accounts receivable are a significant component of its working capital.
The Company believes that trade accounts receivable are a significant component
of working capital for other software companies as well. During the 1996 fiscal
year, the Company obtained from Bank One, Columbus N.A., a $6 million unsecured
revolving line of credit that expires in fiscal year 1998. The revolving line of
credit can be converted into a five year term loan by the Company at any time
prior to April, 1998. As of June 30, 1996, no amounts had been drawn on the
revolving line of credit.
PRODUCTION AND BACKLOG
Master software media and duplication thereof is performed by the Company at
its own facilities with the exception of some international distributors, who
perform localizations and reproduction at their facilities in the local
jurisdictions pursuant to an agreement with the Company. Printing of user
manuals and the manufacture of related materials are performed to the Company's
specifications by outside sources (or international distributors), and the
completed packages are assembled by the Company (or its international
distributors). Production can generally be increased rapidly to respond to
increases in demand.
In connection with the sale of software products only, the Company does not
expect to have any significant levels of backlog in the future.
REVENUES
Information regarding total revenues attributable to software, hardware and
services is incorporated herein by reference to page 12 of the Annual Report to
Shareholders for the fiscal year ended June 30, 1996.
SEASONALITY
The Company's results of operations have fluctuated on a quarterly basis.
However, the Company has not experienced significant seasonal fluctuations in
net revenue over the past two years.
EMPLOYEES
As of June 30, 1996, the Company employed 336 persons, including 121 in
North American sales and service operations, 96 in development and support, 58
in international operations and 61 in marketing and administration. None of the
Company's employees are represented by a labor union. The Company has never
experienced a work stoppage and believes that its employee relations are good.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS
FORWARD-LOOKING STATEMENTS 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, THE IMPACT OF COMPETITIVE
PRODUCTS, FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, THE COMPANY'S
ABILITY TO RETAIN KEY TECHNICAL AND MANAGEMENT PERSONNEL, TIMING OF DEVELOPMENT,
PRICING AND OTHER FACTORS DETAILED IN THIS ANNUAL REPORT AND IN OTHER FILINGS
MADE BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.
10
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- -------------------------------------------------------------------
<S> <C> <C>
Lawrence J. Fox........................ 40 Chairman of the Board, Chief Executive Officer and Member, Board of
Directors
Stephen A. Sasser...................... 46 President, Chief Operating Officer and Member, Board of Directors
Stephen A. Yount....................... 41 Vice President America's Sales
Lawrence W. DeLeon..................... 40 Vice President, Chief Financial Officer and Secretary
Otto Offereins......................... 50 Vice President of Development and Support
Robert D. Williams..................... 42 Vice President--Human Resources
</TABLE>
LAWRENCE J. FOX founded the Company in 1979 as a sole proprietorship. He has
held his present offices since the Company was incorporated in 1984. He also
served as Treasurer until 1989.
STEPHEN A. SASSER joined the Company in July, 1995, as President and Chief
Operating Officer and also serves on the Symix Board of Directors. From October,
1994 to June, 1995, Mr. Sasser served as Vice President of International
Operations for Trilogy Development Group, a provider of group client-server
sales and marketing software. From August, 1992 to October 1994, Mr. Sasser was
Group Vice President of the Systems Management Division and Pacific Rim
Operations of Legent Corporation ("Legent"), a provider of systems management
software products and services. From April, 1987 through its acquisition by
Legent in 1992, Mr. Sasser served as President of the Data Center Management
Division of Goal Systems International, Inc. ("Goal Systems"), which designed,
developed, and marketed systems management software products. Mr. Sasser also is
a director of Viaserve, Inc.
STEPHEN A. YOUNT joined the Company in May, 1996 as Vice President of Sales
for the Americas. From 1995 to 1996, he was Vice President of Sales at Tyecin
Systems, a provider of client-server manufacturing software for the
semi-contractor market. From 1993 to 1995, Mr. Yount served as Vice President of
Sales and Services at Neuron Data, a client-server application development
software company. From 1987 to 1993, he served in various senior sales positions
at Legent, including Regional Vice President of Sales, Vice Presidennt of Sales,
and Director of Sales, Western Region.
LAWRENCE W. DELEON joined Symix in August, 1995 as Vice President, Chief
Financial Officer and Secretary. From 1991 to 1995, Mr. DeLeon served in various
capacities at Legent, including Treasurer for Goal Systems, Europe Vice
President-Finance and Administration and Vice President--Central Europe. From
1988 to 1991, Mr. DeLeon was Chief Financial Officer for Thunderbird Products
Corporation.
OTTO OFFEREINS joined the Company in September, 1995 as Vice President of
Development and Support. He was Vice President and General Manager of Client
Product Server Division of Legent from July, 1994 to August, 1995. From July,
1992 to July, 1994, Mr. Offereins served as Vice President of Support and
Development for the Systems Management Division of Legent. From March, 1991 to
July, 1992, he served as Vice President of Development and Support--Research and
Development Division of Legent. Prior to March, 1991, he was Executive Vice
President of Operations for Syntelligence Corporation.
ROBERT D. WILLIAMS joined the Company in September, 1995 as Vice
President--Human Resources. Prior to that time, he served as Director, Human
Resources/Associate Relations of Legent from August, 1992 to August, 1995. From
March, 1990 to August, 1992 he was Executive Director of Human Resources and
Administrative Services of Goal Systems.
The executive officers of the Company are appointed by the Board of
Directors and serve at the pleasure of the Board of Directors. There are no
arrangements or understandings between any officer and any other person pursuant
to which the officer was so appointed.
11
<PAGE>
ITEM 2. PROPERTIES
The Company's headquarters and principal administrative, product
development, and sales and marketing operations are located in approximately
70,000 square feet of leased office space in Columbus, Ohio. The lease agreement
commenced in July 1991 and will expire on June 30, 2001. The lease agreement
provides for an annual base rental of approximately $1,032,000. Additionally,
the Company has 15 leased sales and support offices throughout the United States
and elsewhere.
ITEM 3. LEGAL PROCEEDINGS
On June 22, 1995, the Company filed an action in the Court of Common Pleas
of Franklin County, Ohio styled as SYMIX SYSTEMS, INC. V. O. KENT LAROQUE III,
ET AL. (Case No. 95CVH06-4279) against the former president and former senior
vice president of the Company. The claims asserted in this litigation arise out
of and relate primarily to the termination of the former president's employment
with, and the resignation of the former senior vice president from, the Company.
The former president has filed counterclaims seeking compensatory damages in
excess of $2.3 million against the Company for, among other things, alleged
breach of his employment agreement, abuse of process and defamation and libel.
The former senior vice president has also filed counterclaims seeking
compensatory damages in excess of $2 million against the Company for similar or
related claims. In April,1996, the former president and former senior vice
president amended their counterclaims to include claims relating to defamation
and libel and to seek punitive damages in excess of $1 million against the
Company. On the same day that the Company filed its action in the Court of
Common Pleas of Franklin County, Ohio, the former president and former senior
vice president filed an action against the Company in the United States District
Court for the Southern District of Ohio, Eastern Division, styled as O. KENT
LAROQUE, III V. SYMIX SYSTEMS, INC. (Case No. 2-95-CV632). The claims asserted
in the district court litigation are similar to those asserted in the common
pleas court case, and the district court litigation has been stayed pending
resolution of the common pleas court case. This matter was first reported by the
Company in a Form 8-K dated April 18, 1996 filed with the Securities and
Exchange Commission. Management of the Company believes the claims and
counterclaims asserted by the former president and former senior vice president
are without merit. The Company is currently not involved in any other legal
proceedings other than ordinary routine litigation incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
A special meeting of shareholders of the Company was held on June 26, 1996
(the "Special Meeting"). The meeting was adjourned until July 8, 1996 prior to
the submission of any matter to shareholders for their vote. At the reconvened
meeting held on July 8, 1996, shareholders voted upon (i) a proposal to adopt an
amendment to the Amended Articles of Incorporation of the Company which would
increase the authorized number of shares of the Company from 6,000,000 to
21,000,000, of which 20,000,000 would be common shares, each without par value,
and 1,000,000 would be preferred shares, each without par value, and (ii) a
proposal to approve the Symix Systems, Inc. Employee Stock Purchase Plan, as
amended and adopted by the Board of Directors of the Company. With respect to
the proposals presented to the shareholders at the aforesaid reconvened meeting,
the results of the voting were as follows:
<TABLE>
<CAPTION>
SHARES VOTED SHARES VOTED BROKER
"FOR" "AGAINST" ABSTENTIONS NON-VOTES
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
Proposal No. 1 Amendment to Amended Articles................. 1,974,753 243,749 2,300 None
Proposal No. 2 Approval of Employee Stock Purchase Plan...... 2,187,012 29,990 3,800 None
</TABLE>
Definitive proxy materials relating to the Special Meeting were filed with
the Securities and Exchange Commission on or about June 7, 1996.
12
<PAGE>
PART II
In accordance with General Instruction G(2), the information required by
Items 5 through 8 are incorporated by reference from the indicated pages of the
Company's Annual Report to Shareholders for the fiscal year ended June 30, 1996:
<TABLE>
<CAPTION>
PAGES
----------------
<S> <C> <C>
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................. 21
ITEM 6. SELECTED FINANCIAL DATA............................................................... 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 12 and 13
OPERATIONS............................................................................
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................................... 14 through 19
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE............................................................................
None.
</TABLE>
PART III
In accordance with general instruction G(3), the information required by
Items 10, 11, 12 and 13 is hereby incorporated herein by reference from the
Registrant's definitive proxy statement for its annual meeting of shareholders
to be held on November 1, 1996, as filed with the Securities and Exchange
Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934,
except that certain information required by Item 10 with respect to executive
officers of the Registrant is set forth in Part I hereof under "Item 1.
Business--Executive Officers of the Registrant".
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) DOCUMENTS FILED AS PART OF THIS REPORT:
1 & 2 Financial Statements and Financial Statement Schedules:
See Index to Financial Statements and Financial Statement Schedules
beginning at page F-1 of this Report.
3 Exhibits:
See Exhibit Index beginning at page E-1 of this Report.
(b) REPORTS ON FORM 8-K:
The Company filed a Report on Form 8-K dated April 18, 1996 reporting the
legal matters discussed in Item 3 of this Report. No financial statements
were filed as part of that report.
(c) EXHIBITS:
See Item 14(a)(3) above.
(d) FINANCIAL STATEMENT SCHEDULES:
See Item 14(a)(2) above.
13
<PAGE>
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, on the 30th day of
September, 1996.
SYMIX SYSTEMS, INC.
By /s/ STEPHEN A. SASSER
-----------------------------------------
Stephen A. Sasser
PRESIDENT AND CHIEF OPERATING 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 indicated, on the 30th day of September, 1996.
SIGNATURE TITLE
- ------------------------------ --------------------------
/s/ LAWRENCE J. FOX* Chairman of the Board,
- ------------------------------ Chief Executive Officer
Lawrence J. Fox and Director
/s/ STEPHEN A. SASSER President and Chief
- ------------------------------ Operating Officer and
Stephen A. Sasser Director
/s/ LAWRENCE W. DELEON* Vice President, Chief
- ------------------------------ Financial Officer and
Lawrence W. DeLeon Secretary
/s/ JOHN T. TAIT*
- ------------------------------ Director
John T. Tait
/s/ DUKE W. THOMAS*
- ------------------------------ Director
Duke W. Thomas
/s/ LARRY L. LIEBERT*
- ------------------------------ Director
Larry L. Liebert
/s/ JAMES A. RUTHERFORD *
- ------------------------------ Director
James A. Rutherford
*By Power of Attorney
/s/ STEPHEN A. SASSER
- ------------------------------
Stephen A. Sasser
(ATTORNEY-IN-FACT)
14
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Symix Systems, Inc. and
Subsidiaries, included in the annual report of the registrant to its
shareholders for the year ended June 30, 1996, are incorporated by reference in
Item 8:
<TABLE>
<CAPTION>
ANNUAL REPORT
PAGE#
----------------
<S> <C>
Consolidated Statements of Operations--Years ended June 30, 1996, 1995, and
1994....................................................................... 14
Consolidated Balance Sheets--June 30, 1996 and 1995......................... 15
Consolidated Statements of Cash Flows--Years ended June 30, 1996, 1995, and
1994....................................................................... 16
Consolidated Statements of Shareholders' Equity--Years ended June 30, 1996,
1995, and 1994............................................................. 17
Notes to Consolidated Financial Statements--June 30, 1996................... 17 through 19
</TABLE>
The following consolidated financial statement schedule of Symix Systems,
Inc. and Subsidiaries is included in Item 14(d):
<TABLE>
<CAPTION>
10-K
PAGE#
----------------
<S> <C>
Schedule II--Valuation and qualifying accounts.............................. F-2
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
F-1
<PAGE>
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
COL. C
----------------------------
COL. B ADDITIONS
------------ ---------------------------- COL. D COL. E
COL. A BALANCE AT CHARGED TO CHARGED TO ------------ -------------
- ---------------------------------------------- BEGINNING OF COSTS AND OTHER ACCOUNTS DEDUCTIONS - BALANCE AT
DESCRIPTION PERIOD EXPENSES -DESCRIBE DESCRIBE(1) END OF PERIOD
- ---------------------------------------------- ------------ ----------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1996
Deducted from asset accounts:
Allowance for doubtful accounts............. $ 550,000 $ 475,000 $ 0 $ 574,600 $ 450,400
--
--
------------ ----------- ------------ -------------
------------ ----------- ------------ -------------
Year ended June 30, 1995
Deducted from asset accounts:
Allowance for doubtful accounts............. $ 500,000 $ 437,000 $ 0 $ 387,000 $ 550,000
--
--
------------ ----------- ------------ -------------
------------ ----------- ------------ -------------
Year ended June 30, 1994
Deducted from asset accounts:
Allowance for doubtful accounts............. $ 622,500 $ 78,000 $ 0 $ 200,500 $ 500,000
--
--
------------ ----------- ------------ -------------
------------ ----------- ------------ -------------
</TABLE>
- ------------------------
(1) Uncollectible Accounts written off and credits issued.
F-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ------------------------------------------------- -------------------------------------------------
<S> <C> <C>
3(a) Amended Articles of Incorporation of Symix Pages 19 through 22
Systems, Inc.
3(b) Amended Regulations of Symix Systems, Inc. Incorporated herein by reference to Exhibit 3(b)
to the Registration Statement on Form S-1 of
Registrant, filed February 12, 1991 (Registration
No. 33-38878)
10(a)* Symix Systems, Inc. Non-Qualified Stock Option Incorporated herein by reference to Exhibit 10(a)
Plan for Key Employees, As Amended to Registrant's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993
10(b)* Form of Employment Agreement Incorporated herein by reference to Exhibit 3(b)
to the Registration Statement on Form S-1 of
Registrant, filed February 12, 1991 (Registration
No. 33-38878)
10(c)* Sasser Employment Agreement Incorporated herein by reference to Exhibit 10(b)
to Registrant's Quarterly Report on Form 10-Q for
fiscal quarter ended March 31, 1996
10(d)* Stock Option Agreement between the Company and Incorporated herein by reference to Exhibit 10(c)
Stephen A. Sasser dated January 17, 1996 to Registrant's Quarterly Report on Form 10-Q for
fiscal quarter ended March 31, 1996
10(e) Third Lease Amendment for office located at 2800 Incorporated herein by reference to Exhibit 10(c)
Corporate Exchange Drive, Columbus, Ohio to Registrant's Annual Report on Form 10-K for
the fiscal year ended June 30, 1994
10(f) Lease Agreement between Symix Computer Systems, Incorporated herein by reference to Exhibit 19 to
Inc. and Society Equipment Leasing Company Registrant's Quarterly Report on Form 10-Q for
the period ended September 30, 1991
10(g) Progress Software Application Partner Agreement Incorporated herein by reference to Exhibit 10(e)
dated February 8, 1995 to Registrant's Quarterly Report on Form 10-Q for
fiscal quarter ended March 31, 1995
10(h) Agreement between Hewlett-Packard and Symix Incorporated herein by reference to Exhibit 10(g)
Computer Systems, Inc. to Registrant's Amendment to Registrant's Annual
Report on Form 10-K for fiscal year ended June
30, 1993
10(i)* Summary of Bonus Plan Page 23
</TABLE>
- ------------------------
*This Exhibit is an executive compensation plan or arrangement required to be
filed as an Exhibit to this Annual Report on Form 10-K.
E-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ------------------------------------------------- -------------------------------------------------
10(j)* Symix Systems, Inc. Stock Option Plan for Outside Incorporated herein by reference to Exhibit 10(i)
Directors of Registrant's Annual Report on Form 10-K for
fiscal year ended June 30, 1993
<S> <C> <C>
10(k)* Symix Systems, Inc. Non-Qualified Stock Option Incorporated herein by reference to Exhibit 10(a)
Plan for Key Executives, Inc. to Registrant's Quarterly Report on Form 10-Q for
fiscal quarter ended March 31, 1996
13 Annual Report to Security Holders Pages 24 through 48
22 Subsidiaries of the Registrant Pages 49 and 50
23 Consent of Independent Auditors Page 51
24 Powers of Attorney Pages 52 through 58
27 Financial Data Schedule Page 59
</TABLE>
- ------------------------
* This Exhibit is an executive compensation plan or arrangement required to be
filed as an Exhibit to this Annual Report on Form 10-K.
E-2
<PAGE>
EXHIBIT 3(a)
CERTIFICATE OF AMENDMENT
TO THE
AMENDED ARTICLES OF INCORPORATION
OF
SYMIX SYSTEMS, INC.
THE UNDERSIGNED, being the President and Secretary, respectively, of
Symix Systems, Inc., an Ohio corporation (the "Company"), do hereby certify
that at a meeting of the shareholders of the Company duly called for such
purpose, held on July 8, 1996, at which a quorum of the shareholders of the
Company was represented in person or by proxy, the following resolution was
adopted to amend the Amended Articles of Incorporation of the Company by the
affirmative vote of the holders of shares of the Company entitling them to
exercise at least two-thirds of the voting power of the Company at such
meeting.
RESOLVED, that the first paragraph of Article FOURTH of the
Amended Articles of Incorporation of the Company be amended to read in
its entirety as follows:
FOURTH: the authorized number of shares of the Corporation shall
be 21,000,000, of which 20,000,000 shares shall be common shares, each
without par value, and 1,000,000 shares shall be preferred shares,
each without par value.
IN WITNESS WHEREOF, the undersigned, being the President and
Secretary, respectively, of Symix Systems, Inc., acting for and on behalf of
said Company, have hereunto subscribed their names this 8th day of July, 1996.
By: /s/ Stephen A. Sasser By: /s/ Lawrence W. DeLeon
------------------------------- ------------------------------------
Stephen A. Sasser Lawrence W. DeLeon
President Secretary
<PAGE>
AMENDED ARTICLES OF INCORPORATION
OF
SYMIX SYSTEMS, INC.
FIRST: The name of the corporation shall be Symix Systems, Inc.
SECOND: The place in Ohio where the principal office of the
corporation is to be located is in the City of Columbus, County of Franklin.
THIRD: The purpose for which the corporation is formed is to engage
in any lawful act or activity for which corporations may be formed under
Sections 1701.01 to 1701.98 of the Ohio Revised Code.
FOURTH: The authorized number of shares of the corporation shall be
6,000,000, of which 5,000,000 shares shall be common shares, each without par
value, and 1,000,000 shares shall be preferred shares, each without par value.
Each outstanding common share and each outstanding preferred share
shall entitle the holder thereof to one vote on each matter properly submitted
to the shareholders for their vote, consent, waiver, release or other action.
No shareholder of the corporation shall have, as a matter of right, the right to
cumulate his voting power.
The directors of the corporation may adopt an amendment to the
articles in respect of any unissued or treasury shares of any class and thereby
fix or change: the division of such shares into series and the designation and
authorized number of shares of each series; the dividend or distribution rate;
the dates of payment of dividends or distributions and the dates from which they
are cumulative; liquidation price; redemption rights and price; sinking fund
requirements; conversion rights; and restrictions on the issuance of shares of
any class or series.
FIFTH: The directors of the corporation shall have the power to
cause the corporation from time to time and at any time to purchase, hold, sell,
transfer or otherwise deal with (A) shares of any class or series issued by it,
(B) any security or other obligation of the corporation which may confer upon
the holder thereof the right to convert the same into shares of any class or
series authorized by the articles of incorporation, and (C) any security or
other
<PAGE>
obligation which may confer upon the holder thereof the right to purchase shares
of any class or series authorized by the articles of incorporation. The
corporation shall have the right to repurchase, if and when any shareholder
desires to sell, or on the happening of any event is required to sell, shares of
any class or series issued by the corporation. The authority granted in this
Article Fifth of these articles shall not limit the plenary authority of the
directors to purchase, hold, sell, transfer or otherwise deal with shares of any
class or series, securities, or other obligations issued by the corporation or
authorized by its articles.
SIXTH: A director or officer of the corporation shall not be
disqualified by his office from dealing or contracting with the corporation as
vendor, purchaser, employee, agent or otherwise. No contract or transaction
shall be void or voidable with respect to the corporation for the reason that it
is between the corporation and one or more of its directors or officers, or
between the corporation and any other person in which one or more of its
directors or officers are directors, trustees or officers, or have a financial
or personal interest, or for the reason that one or more interested directors or
officers participated in or voted at the meeting of the directors or a committee
thereof which authorized such contract or transaction, if in any such case (A)
the material facts as to the relationship or interest of such director, officer
or other person and as to the contract or transaction are disclosed or are known
to the directors or the committee, or such members thereof as shall be present
at any meeting at which action upon any such contract or transaction shall be
taken, and the directors or committee, in good faith reasonably justified by
such facts, authorized the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested directors
constitute less than a quorum; or (B) the material facts as to the relationship
or interest of such director, officer or other person and as to the contract or
transaction are disclosed or known to the shareholders entitled to vote thereon
and the contract or transaction is specifically approved at a meeting of the
shareholders held for such purpose by the affirmative vote of the holders of
shares entitling them to exercise a majority of the voting power of the
corporation held by persons not interested in the contract or transaction; or
(C) the contract or transaction is fair as to the corporation as of the time it
is authorized or approved by the directors, a committee thereof, or the
shareholders. Common or
<PAGE>
interested directors may be counted in determining the presence of a quorum at
any meeting of the directors, or of a committee thereof, which authorizes the
contract or transaction.
SEVENTH: No shareholder of the corporation shall have, as a matter or
right, the pre-emptive right to purchase or subscribe for shares of any class,
now or hereafter authorized, or to purchase or subscribe for securities or other
obligations convertible into or exchangeable for such shares or which by
warrants or otherwise entitle the holders thereof to subscribe for or purchase
any such share.
EIGHTH: Section 1701.831 of the Ohio Revised Code does not apply to
control share acquisitions of the corporation.
NINTH: Chapter 1704. of the Ohio Revised Code does not apply to the
corporation.
TENTH: These Amended Articles supersede the Second Amended Articles
of Micro Manufacturing Systems, Inc. existing at the effective date of these
Amended Articles.
<PAGE>
EXHIBIT 10 (i)
SUMMARY OF BONUS PLAN
The executive officers named in the Symix Systems, Inc. ("Symix" or the
"Company") Annual Report on Form 10-K for its fiscal year ended June 30, 1996
and other management employees of Symix ("Participants") participate in
compensation plans based upon the performance of Symix. Annual target
bonuses are established by the Symix Compensation Committee for executive
officers and by executive officers for all other Participants. Total
targeted compensation is determined based on average compensation (base
compensation plus bonus) levels for the industry. Under the Company's fiscal
year 1997 plan (the "Plan"), a Participant can earn a bonus based upon the
performance of Symix as reflected by Symix's earnings per share and revenue
achievements in relation to its targeted performance. Bonuses for revenue
achievement are paid quarterly based upon year-to-date performance. Quarterly
eligible components are pro -rated against targeted annual objectives.
Bonuses are based on formulas which provide larger bonuses for higher
earnings per share and/or revenue achievement. The revenues for a quarter
and the annual earnings per share must be at least ninety percent (90%) of
target before any bonuses are earned. Variable components of the
compensation plan are self-correcting to reflect over or under achievement on
a quarterly bonus. A maximum of 200% of the targeted bonus based on earnings
per share and revenue objectives is payable under the compensation plans in
the event actual performance of the Company exceeds 150% of targeted
performance. In addition, individual bonus plans may contain other variable
components related to management objectives, operating margins, and market or
geographic revenue targets. The Company's Chief Executive Officer is not a
participant in the Plan.
<PAGE>
1996 Annual Report
SYMIX
SOFTWARE YOU CAN RUN WITH
[photo: laptop computer]
This 1996 ANNUAL REPORT OF SYMIX SYSTEMS, INC. (NASDAQ:SYMX) is formatted as
an audio-visual presentation. It echoes the presentation we are making to
members of the INVESTMENT COMMUNITY, telling them our GROWTH STORY. This
non-traditional approach to our annual report reflects the non-traditional
thinking that is the engine of our future. Inside is a fast-paced look at our
NEW MANAGEMENT GROUP, products, services and marketing. It also tells about
record sales, record profits and a return to profitability.
PRESENTATION AGENDA: shareholders' letter, page 1; review of operations,
page 4; selected financial data, page 11; management's discussion and
analysis, page 12; audited financial statements and notes, page 14.
[photo: notepad]
PROFILE
SYMIX
POSITIONING
- SYMIX is the world's leading provider of OPEN, client/server
manufacturing software solutions in the MID-RANGE DISCRETE
CONFIGURABLE market.
- SYMIX solutions are designed and developed to optimize the
ENTERPRISE RESOURCE PLANNING (ERP) requirements of discrete
mixed-mode manufacturing companies.
NOTES GREAT TO SEE SYMIX ON THE ROAD SPEAKING TO THE FINANCIAL
COMMUNITY!
<PAGE>
PROFILE
SYMIX
POSITIONING
- SYMIX is the world's leading provider of OPEN, client/server
manufacturing software solutions in the MID-RANGE DISCRETE
CONFIGURABLE market.
- SYMIX solutions are designed and developed to optimize the
ENTERPRISE RESOURCE PLANNING (ERP) requirements of discrete
mixed-mode manufacturing companies.
POSITIONED TO GROW--WORLDWIDE SALES AND SERVICE CAPABILITY AND STRATEGIC
RELATIONSHIPS WITH THIRD PARTY SUPPORT PROVIDERS.
corp96.ppt - 5/96 - 2
THE SYMIX ENTERPRISE RESOURCE PLANNING SOFTWARE SOLUTIONS are
developed for manufacturers who must optimize the rigorous demands of
make-to-order and mixed-mode production requirements. With more than
2,400 installations worldwide, Symix focuses on mid-size manufacturers
operating in four key markets -- industrial equipment, fabricated metals,
electronics and furniture/fixtures. Founded in 1979, Symix is headquartered
in Columbus, Ohio employing more than 350 people, with direct sales and
support offices in the AMERICAS, EUROPE and ASIA PACIFIC.
Symix software encompasses both comprehensive functionality and leading
technology. We support it with a full range of services provided through
either direct Symix consultants, third party software and services partners,
system integrators, or consulting/accounting firms.
[photo: globe]
GLOSSARY of key terms. MID-RANGE DISCRETE MANUFACTURING: Manufacturers
with annual revenue between $10 and $350 million per manufacturing location
that produce individual (discrete) items in lots or batches. ENTERPRISE
RESOURCE PLANNING (ERP): Solutions for the effective planning and execution
of all resources of a manufacturing company. MIXED MODE: A combination of
manufacturing styles in a single enterprise -- engineer-to-order,
make-to-order, make-to-stock and/or repetitive.
<PAGE>
FINANCIAL HIGHLIGHTS
SYMIX
YEAR ENDED JUNE 30
($ IN MILLIONS EXCEPT PER SHARE DATA) 1996 1995 1994
----------------------------------------------------------------------
- Total Revenues $45.8 $42.8 $35.5
- Operating Expenses 42.3 44.2 34.7
- Net Income (Loss) 2.3 (.6) .6
- Earnings (Loss)
Per Share* 0.40 (0.12) 0.10
- Total Assets $30.5 $26.1 $24.5
- Shareholders' Equity 17.1 14.5 15.6
*REFLECTS ADJUSTMENT FOR 2:1 SHARE SPLIT APPROVED ON AUGUST 27, 1996
corp96.ppt - 5/96 - 2
IN ITS FIRST FULL YEAR, SYMIX'S NEW MANAGEMENT TEAM AND EMPLOYEES DELIVERED
RECORD PROFITS.
DEAR SHAREHOLDERS: Fiscal 1996 was, by every measure, a turnaround year,
- - and A RECORD YEAR FOR PROFITS. Net income for the year improved to
$2.3 million, or $0.40 per share from a prior year net loss of $638,000, or
$(0.12) per share.
Our new management team led Symix to profitability through accelerated
revenue growth. Although total revenue improved only 7% in this transitional
year, our emphasis on selling more profitable software licenses resulted in a
33% INCREASE IN LICENSE FEES in the second half (excluding third party
software and customization services).
It was also a year of IMPROVED PRODUCTIVITY, which reflects on the
dedicated support of our employees. Without that support, the turnaround
would not have been possible. We wish to express our appreciation to them, a
number of whom are also shareholders.
In March, 1996, we INTRODUCED SYMIX SYTELINE-TM-, our new client/server,
graphical user interface ERP product. Building on previous versions of Symix,
Symix SyteLineTM combines the robust functionality of a proven manufacturing
system, including multi-site capabilities and enhanced international
financial reporting, with the speed and ease-of-use of graphical user
interface products. Symix SyteLine-TM- incorporates Microsoft-centric
standards, supports Windows 95, Windows NT and UNIX and easily interfaces
with desktop applications. This new product represented approximately 70% of
Symix software sales for the Company in the fourth quarter.
1
<PAGE>
CRITICAL ISSUES
SYMIX
FISCAL YEAR 1996 OVERVIEW
- Record profits, improved productivity
- New management team/renewed focus
- New product, Symix SyteLine-TM-, well received
- Increased investment in development and marketing
- Expansion to 2,400 customer sites
- Momentum
corp96.ppt - 5/96 - 2
AMONG OUR FY 1996 CUSTOMER SERVICE INITIATIVES WAS OUR WEB SITE. VISIT IT AT
http://www.Symix.Com
Through the development of our professional services organization and
ALLIANCES with national and regional consulting firms, we are able to address
the key requirements of the mid-range manufacturer; rapid deployment of an easy-
to-use, flexible, highly integrated manufacturing system. We launched SEVERAL
NEW CUSTOMER SERVICE INITIATIVES including expanding hotline telephone and
emergency support capabilities and implemented a new customer service and call
tracking system. We also introduced OUR INNOVATIVE WEB SITE on the Internet.
We are particularly excited about our prospects in the international
markets. Our RELATIONSHIP WITH MITSUI & CO., LTD. is developing where we now
have a "Mitsui Symix Center" in Tokyo providing local training and support for
our customers. Our operations continue to expand in China, the Pacific Rim, and
Europe. We recently converted two distributors in Australia and The Netherlands
to subsidiary operations; and on August 8, 1996, we acquired the French
manufacturing software specialist, GSI Industrie, which will provide a full
sales, service and support operation for Symix SyteLineTM in France. We
anticipate that revenue outside of North America will increase to 25% of total
revenue, approximately double this year's percentage.
[photo: Larry Fox]
2
<PAGE>
CURRENT OOUTLOOK
SYMIX
KEY OBJECTIVES
- Mid-market leader in selected vertical markets
- Commitment to open systems/flexible technology
- Focus on customer service initiatives
- Expansion of third party software & services alliances
- Continued expansion of international presence
corp96.ppt - 5/96 - 2
EUROPE, AUSTRALIA AND THE PACIFIC RIM WILL ACCOUNT FOR ROUGHLY 25% OF SYMIX
REVENUE IN THE YEAR TO COME.
Our strategy for 1997 is to FOCUS on our target market, and initiate new
alliances that will increase the functionality of our product. We will continue
to invest in people and technologies to BETTER SERVICE OUR CUSTOMERS.
We entered the past fiscal year with our primary objective to return the
Company to acceptable levels of PROFITABILITY and to position ourselves for
future growth. With record profits and ACCELERATING REVENUE GROWTH, we believe
we met those goals. We enter the new fiscal year well-positioned as the leading
supplier to the rapidly expanding mid-range Enterprise Resource Planning (ERP)
marketplace. Our ability to GROW OUR BUSINESS at a rate that reflects the
rapidly expanding ERP market will determine our success. We are enthusiastic
about our prospects.
[photo: Steve Sasser]
/s/Lawrence J. Fox /s/Stephen A. Sasser
- ------------------------- ---------------------------
Lawrence J. Fox Stephen A. Sasser
CHAIRMAN OF THE BOARD PRESIDENT AND
AND CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER
3
<PAGE>
MARKETS & PRODUCTS
SYMIX
ENTERPRISE RESOURCE PLANNING MARKETPLACE
($ IN BILLIONS)
15 $15.1
10
5 $2.8 $4.1 $5.6
0 1994 1995 1996 2001
ERP MARKET EXPECTED TO EXCEED $15 BILLION IN FIVE YEARS
SOURCE: ADVANCED MANUFACTURING RESEARCH, INC.
corp96.ppt - 5/96 - 2
OUR CUSTOMERS DO NOT HAVE LARGE INFORMATION SERVICES STAFFS OR BUDGETS. OUR
INTEGRATED AND OPEN SYSTEM IS A PERFECT FIT.
TODAY'S COMPETITIVE ENVIRONMENT requires manufacturers to be FLEXIBLE AND
RESPONSIVE as customers are demanding high quality, low costs and short delivery
cycles. Customer-driven manufacturers must increase the efficiency of their
operations by increasing the productivity of personnel and the efficient
management of assets throughout the enterprise. Manufacturers need an INTEGRATED
INFORMATION MANAGEMENT SYSTEM which can provide critical data as needed. Our
OPEN SYSTEMS, CLIENT/SERVER ERP systems solutions provide the market with the
right combination of technology and functionality.
ERP solutions help manufacturers manage the flow of product information
through all phases of the business cycle from quotation and order entry through
materials procurement, capacity and production management to distribution and
financial reporting. According to Advanced Manufacturing Research, Inc., a
market analysis and consulting firm servicing the manufacturing industry, the
worldwide ERP MARKETPLACE will reach approximately $5.6 BILLION in revenue in
1996 and will grow 20% to 40% per year over the next five years as manufacturers
look to technology to increase competitive advantage.
[photo: discrete manufacturing environment]
4
<PAGE>
MARKETS & PRODUCTS
SYMIX
THE MARKET
- ERP software is "mission critical"
- New technology is enabling manufacturers to realize faster delivery
times, lower costs, and increase revenues
- Mid-range manufacturers want proven solutions in their industries and
markets - expertise is critical
corp96.ppt - 5/96 - 2
THE COMPANY'S TARGET MARKET is mid-range discrete manufacturing sites with
annual revenue between $10 and $350 million. The ERP system is typically the
most important application system for the mid-range manu-facturer since it is
the "BACKBONE" OF THE MANUFACTURER'S OPERATION. However, most mid-range
manufacturers have a small, but important, information systems staff to plan,
implement and manage software application systems. The system must be
affordable, but incorporate a wide range and depth of functionality, be easy
to install and maintain, and be rapidly deployed.
Our customers are realizing the benefits of successful, fast
implementations as evidenced by numerous customer testimonials reflecting
improved sales and profits after implementing Symix within six to nine
months. Symix continues to support its customers after implementation through
on-going education classes, technical support and upgrades.
AN ERP SYSTEM GOES RIGHT TO THE HEART OF THE MID-RANGE MANUFACTURER. THEY NEED
SPEED OF INSTALLATION AND EASE OF OPERATION -- WE DELIVER IT!
[photo: desk chair]
5
<PAGE>
MARKETS & PRODUCTS
SYMIX
SYMIX SYTELINE-TM- INTRODUCED MARCH, 1996
"IN THIS NEW PRODUCT, SYMIX HAS DONE A PARTICULARLY GOOD JOB
SUPPORTING DISTRIBUTED MANUFACTURING COMPANIES. SYMIX SYTELINE-TM-
OFFERS AN EXCELLENT SCHEME FOR CENTRALIZED ORDER ENTRY WITH
DISTRIBUTED MANUFACTURING AND DISTRIBUTION," SAID JAMES C.
SHEPARD, VICE PRESIDENT OF RESEARCH OF ADVANCED MANUFACTURING
RESEARCH.
corp96.ppt - 5/96 - 2
[photo: computer disk]
SYMIX SYTELINE-TM- HAS BEEN ACCEPTED WITH ENTHUSIASM, ALLOWING CUSTOMERS TO
MANAGE THEIR ENTIRE ENTERPRISE AND MAXIMIZE ROI.
Marking A SIGNIFICANT MILESTONE in its history, Symix released a major ERP
application, Symix SyteLineTM, in March, 1996. Symix SyteLineTM was developed
from previous versions of Symix applications and features multi-site and
distributed manufacturing capabilities, a substantially improved customer
service interface and expanded international financial reporting features. The
enhanced multi-site capabilities allow both centralized and decentralized
organizations to manage manufacturing and financial operations. Order entry
functions allow full visibility into inventory at multiple plants and real-time
financial accountability across the company.
Symix SyteLine-TM- is written in PROGRESS, an EXTREMELY SCALABLE and
powerful FOURTH-GENERATION LANGUAGE. As a Microsoft Solution Provider, Symix
incorporated Microsoft-centric standards in Symix SyteLineTM, which supports
both Windows 95 and Windows NT. Because of its open, client/server architecture,
Symix SyteLineTM also supports multiple platforms including UNIX servers and
PROGRESS or ORACLE relational databases.
6
<PAGE>
MARKETS & PRODUCTS
SYMIX
SYMIX SYTELINE-TM- OVERVIEW
Manufaacturing
Planning & Production Enterprise
Project Materials Capacity Administration
Control Management Requirements
Planning Cash
Management
Customer Purchasing Accounts Payable
Service Scheduling
ORDER
CONFIGUR-
ATION Order Inventory Shop Floor Accounts
Entry Control Receivable
ESTIMATING Order MRP Work Orders/Jobs Payroll
Inquiry
Pricing Distribution Production Human
Schedules Resources
Inventory Just-In-Time/
Availability Engineering Kanban
Product Fixed Assets
Configuration
Marketing/ Costing Multinational
Sales Quality Manage- Business
ment
RMA
General Ledger
Financial Statements Management Reports
corp96.ppt - 5/96 - 2
"WE EXPECT TO CAPITALIZE ON SIGNIFICANT PRODUCTIVITY GAINS WHILE OUR CUSTOMERS
REAP THE BENEFITS OF FASTER AND MORE RESPONSIVE SERVICE"
SYMIX SYTELINE-TM- CUSTOMER
SYMIX SYTELINE-TM- consists of FULLY INTEGRATED FUNCTIONALITY that comprehen-
sively supports a manufacturer's business process including key areas such as
customer service, manufacturing and materials planning, production
management, and finance and administration.
Symix SyteLine-TM- SUPPORTS THIRD-PARTY SOFTWARE PRODUCT INTEGRATIONS that
further expand the functionality of Symix SyteLineTM. These include Order and
Product Configuration, Automated Data Collection, Electronic Data Interchange,
Computer Aided Design Interface and external payroll interfaces. Several new
product integrations are planned for 1997.
Our industry leading order and product configurator allows manufacturers
to capture customer requirements at order time, automatically transfer the
specifications to planning and production, and monitor order status through
the entire process. This tight integration increases order accuracy, reduces
time-to-delivery and reduces costs. The results are increased revenues and
customer satisfaction.
[photo: computer monitor]
7
<PAGE>
COMPETITIVE ADVANTAGES
SYMIX
TARGETED FOR MID-RANGE MANUFACTURERS
- INTEGRATED, ROBUST FUNCTIONALITY
- FAST TIME-TO-BENEFIT, INSTALLATIONS IN 6 TO 9 MONTHS
- ADVANCED OPEN TECHNOLOGY - GRAPHICAL, CLIENT SERVER
- SUPERIOR SUPPORT AND SERVICES - SYMIX TAKES RESPONSIBILITY
- TOP-TIER PARTNERS - THIRD PARTY PRODUCTS, BIG SIX, MAJOR
REGIONAL CONSULTANTS, HARDWARE
corp96.ppt - 5/96 - 2
COMPETITIVE ADVANTAGE is created when an organization understands its market,
focuses on delivering market requirements and is maniacal about execution. Symix
is FOCUSING ON WHAT MATTERS to mid-range manufacturers and using innovation and
technology to deliver the right solutions to our customers. With more than 16
years of experience with mid-range manufacturing, Symix is uniquely qualified to
deliver what matters, ROBUST FUNCTIONALITY ON CURRENT, YET PROVEN TECHNOLOGY.
The ability to quickly install a system is critical given the pressures of
limited financial and technical resources of the mid-range manufacturer. In
addition to its significant internal consulting and services capabilities, Symix
continues to develop ALLIANCES WITH SYSTEM INTEGRATORS, CONSULTING AND
ACCOUNTING FIRMS to support the customer's migration to Symix. Symix can also
support multi-national companies with local sales and support operations
throughout the world including Asia Pacific and Europe.
[photo: Human Resources person]
AS WELL AS LOCAL SALES, SUPPORT AND SERVICES ORGANIZATIONS INTERNATIONALLY,
SYMIX FORMS ALLIANCES WITH SYSTEM INTEGRATORS, CONSULTING AND ACCOUNTING FIRMS.
8
<PAGE>
CUSTORMER RESULTS
SYMIX
SPEED!
- This year our customers have been able to:
- realize 90% return on system investment in nine months
- compress order processing time by 75%
- cut lead time on raw materials by 50%
- improve inventory turns by 20%
- cut missed shipments by 50%
corp96.ppt - 5/96 - 2
SYMIX, WITH ITS PARTNERS, DELIVERS THE TOTAL ERP PACKAGE.
RESULTS are what it is all about. Our customers have realized the benefits of
increased productivity of personnel, shortened order cycles, reduced
production costs, and improved margins. The opportunities for savings and
improved RESPONSIVENESS TO THE CUSTOMER can be achieved in a number of ways;
whether by managing the plant's capacity to meet anticipated demand while
minimizing expediting, ensuring that changes from customers and engineering
get incorporated in a timely manner, or reducing carrying costs while
ensuring material availability for scheduled productions.
Customers want a vendor who can deliver NOT JUST SOFTWARE, BUT ALSO
SERVICES AND SUPPORT for a reasonable price. Now more than ever,
manufacturers must respond to changing customer requirements and SPEED IS
CRITICAL. SYMIX DELIVERS functionality, technology, expertise, partners and
confidence to manufacturers -- FAST. This recipe will lead to success for
both customers and Symix.
[photo: foot race]
9
<PAGE>
FINANCIAL RESULTS
SYMIX
IMPROVED PRODUCTIVITY
- REVENUE PER EMPLOYEE
$150,000
$120,000
$106,300 $109,100 $109,900 $119,600 $144,400
$90,000
1992 1993 1994 1995 1996
corp96.ppt-5/96-10
Cost Control and improved productivity-played a major role in the record
profitability in 1996.
Our RECORD EARNINGS and significant financial improvement from the prior
year have been the result of FOCUSING ON MORE PROFITABLE, LESS CUSTOMIZED
SOFTWARE SALES, improving productivity and ensuring investment only in
areas that are critical to the future success of the Company. Although we
have opportunities for further improvement, average REVENUE PER EMPLOYEE
IMPROVED 21% from the previous year to $145,000. We also reduced recur-
ring operating expenses, excluding cost of revenue, by 11% from the
previous year despite increasing spending for product development,
customer support and promotional programs.
Our CASH POSITION REMAINS STRONG and we currently have no bank debt
outstanding. During the fiscal year, we were pleased to sign with Bank One,
Columbus, N.A. a two year $6.0 million unsecured revolving line of credit to
further ensure access to capital if the need arises. Based on our accelerating
revenue growth, improved margins and solid balance sheet, we are posi-
tioned to ensure current and future shareholder value.
/s/ Lawrence W. DeLeon
Lawrence W. DeLeon
Vice President and Chief Financial Officer
10
<PAGE>
SELECTED FINANCIAL DATA
The following table summarizes certain consolidated financial data for each of
the five years presented. The selected consolidated data
presented below have been derived from, and should be read in conjunction with,
the Company's audited consolidated financial statements, and the notes thereto.
<TABLE>
<CAPTION>
Year Ended June 30,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Net revenue $45,759 $42,828 $35,486 $30,006 $26,686
Cost of revenue 15,678 14,882 12,600 11,560 10,258
- --------------------------------------------------------------------------------------------------------------
Gross margin 30,081 27,946 22,886 18,446 16,428
Operating expenses
Selling, general, and administrative 22,411 25,564 19,505 15,779 13,356
Research and product development 3,673 3,744 2,589 1,562 1,004
Restructuring and other unusual charges 506 -- -- -- --
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 26,590 29,308 22,094 17,341 14,360
- --------------------------------------------------------------------------------------------------------------
Operating income (loss) 3,491 (1,362) 792 1,105 2,068
Other income, net 221 314 122 56 125
- --------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 3,712 (1,048) 914 1,161 2,193
Provision (benefit) for income taxes 1,404 (410) 330 448 856
- --------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 2,308 $ (638) $ 584 $ 713 $ 1,337
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Earnings (loss) per share $ 0.40 $ (0.12) $ 0.10 $ 0.12 $ 0.23
Weighted average common and common share
equivalents outstanding 5,706 5,424 5,742 5,802 5,782
BALANCE SHEET DATA:
Working capital $ 7,538 $ 6,363 $ 9,466 $11,458 $10,921
Total assets 30,463 26,069 24,473 21,743 19,331
Total long-term debt and lease obligations - 138 335 559 767
Total shareholders' equity 17,102 14,508 15,641 15,615 14,186
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*Note: Where appropriate, all share data and references in this report have been
adjusted for the 2:1 share split, effected in the form of a share distribution
of one share for each share outstanding, approved by the Board of Directors on
August 27, 1996.
<TABLE>
<CAPTION>
NET REVENUE NET INCOME (LOSS) TOTAL SHAREHOLDERS' EQUITY
(IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$45,759 $2,308 $17,102
$42,828 $15,615 $15,641
$14,186 $14,508
$35,486
$30,006 $1,337
$26,686
$713
$584
$(638)
1992 1993 1994 1995 1996 1992 1993 1994 1995 1996 1992 1993 1994 1995 1996
</TABLE>
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994. The Company's revenue is
derived primarily from (i) licensing Symix software and providing custom
programming services, and (ii) providing installation, implementation, training,
consulting and systems integration services along with providing software
product support and maintenance on a subscription basis. Historically, the
Company has resold other manufacturer's computer hardware but has transitioned
from reselling, because of low margins, to establishing cooperative marketing
programs with hardware vendors. Revenue for all periods presented is accounted
for in accordance with AICPA Statement of Position 91-1 on Software Revenue
Recognition.
REVENUE
Net revenue increased 7% to $45.8 million in fiscal 1996, compared to increases
of 21% and 18% for the years ended June 30, 1995 and 1994, respectively.
Increased service and support revenue was the primary contributor to the overall
net revenue increase. Service revenue increased $2,926,000, $7,401,000 and
$4,156,000 in 1996, 1995, and 1994, respectively. The revenue mix since 1994 is
shown in the table below:
REVENUE MIX:
Year Ended June 30,
(IN THOUSANDS, EXCEPT PERCENTAGES) 1996 1995 1994
- --------------------------------------------------------------------------------
Software $24,682 54% $24,583 58% $22,917 65%
Hardware -- -- 94 -- 1,819 5%
Service and Support 21,077 46% 18,151 42% 10,750 30%
- --------------------------------------------------------------------------------
Total $45,759 100% $42,828 100% $35,486 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Software license fees and related revenue remained flat in 1996 compared to
increases of 7% and 11% in 1995 and 1994, respectively. License fees decreased
as a percentage of total revenue from 58% and 65% in 1995 and 1994,
respectively, to 54% of total revenue in 1996. Management anticipates software
license fee growth to improve and, therefore, no longer decrease as a percentage
of total revenue. Fourth quarter software and license fee revenue in 1996
increased 24% and was 57% of total revenue. International revenue accounted for
approximately 18% of net revenue in fiscal 1996 in comparison to 11% and 10% in
1995 and 1994, respectively. Development of international markets has taken
longer than the Company originally anticipated. However, with the recent
conversion of distributors to subsidiary operations in Australia and the
Netherlands and the acquisition of a French sales and distribution operation in
August, 1996, management continues to believe international markets represent
significant growth opportunities for the Company and remains committed to the
continued development of its international sales distribution channels.
Service and support revenue increased 16% in 1996 to $21.1 million from $18.2
million in 1995 and $10.8 million in 1994. Service and support revenue is
comprised of installation, implementation, training, consulting, systems
integration and software product maintenance and support. The continued
increase in service and support revenue is primarily attributable to the growth
in licensed Symix installations worldwide and the Company's expanding service
organization. Service revenue made up 46% of total revenue in 1996, compared to
42% and 30% in 1995 and 1994, respectively. Deferred revenue on the Company's
balance sheet relating to support and maintenance contracts, increased from
$5,571,000 at June 30, 1995 to $5,786,000 at June 30, 1996.
Revenue on these contracts is recognized ratably over the contract period. With
management's emphasis on growing future software license fee revenue, the
Company does not expect the service revenue to continue to increase as a
percentage of total revenue.
The Company has continued to de-emphasize its hardware sales in 1996 due to low
margins on hardware. The Company, however, continues to participate in joint
marketing activities with UNIX hardware manufacturers. This shift from hardware
selling has not had a significant impact on the Company's ability to market
Symix software and services.
COST OF REVENUE
Total cost of revenue as a percentage of net revenue decreased to 34% for the
year ended June 30, 1996 from 35% and 36% for the years ended June 30, 1995 and
1994, respectively. License fee and turnkey systems cost of revenue was 28% of
license fee and turnkey revenue in 1996 compared to 28% in 1995 and 30% in 1994,
while service, support and maintenance costs of revenue decreased to 42% of
service, support and maintenance revenue in 1996 compared to 44% in 1995 and 47%
in 1994. The decrease in license fee cost of revenue is primarily due to a
shift of field programming resources from specific customer needs development to
the Company's overall development program.
The decrease in service cost of revenue as a percentage of related revenue in
1996 compared to prior years is primarily due to the increase in Symix
installations and corresponding customer service renewals, from which the
Company was able to realize increased benefit on primarily fixed costs of
providing these services.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses decreased 12% in 1996 compared to
increases of 31% and 24% in 1995 and 1994, respectively. Selling, general, and
administrative expenses as a percent of net revenue were 49%, 60% and 55% for
the same respective periods. The decrease in selling, general, and
administrative expenses in 1996 was the result of general expense controls,
improved productivity of the North American sales force and improved margins on
international operations as the Company continues to expand in newer markets,
particularly in Asia Pacific.
In the first quarter of fiscal year 1996, the Company recognized restructuring
and other non-recurring charges of $506,000 which consisted of primarily
severance payments related to operational changes and costs associated with
reorganizing the European sales channel.
RESEARCH AND DEVELOPMENT
Total research and product development expenses, including amounts capitalized,
were $5,963,000 and 13% of net revenue for the year ended June 30, 1996 in
comparison to $5,163,000 and 12% of net revenue in 1995 and $3,768,000 and 11%
of net revenue in 1994. The Company capitalized $2,290,000, $1,419,000, and
$1,179,000 for the years ended June 30, 1996, 1995 and 1994, respectively.
Software development costs capitalized in a given period are dependent upon the
nature and stage of the development process and are capitalized in accordance
with Statement of Financial Accounting Standards No. 86. In addition to the
software development costs capitalized in fiscal 1996 is $1.0 million for a
purchase of existing technology. The increase in overall research and
development expenditures is due to planned staff expansion and re-allocation of
programming resources relating directly to the Company's development of Symix
SyteLineTM (a new client/server, graphical user interface product developed from
previous versions of the Company's core product and introduced in March, 1996),
and the increased development focus on interfacing with third party software
products.
PROVISION FOR INCOME TAXES
The effective tax rates for the years ended June 30, 1996, 1995 and 1994 were
38%, (39%) and 36%, respectively. The reduced effective tax rate in 1994
compared to the other years was primarily due to the amount of foreign taxable
earnings in countries with considerably lower effective rates, thereby reducing
the Company's overall tax rate.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position remains strong. Cash provided by operations
increased to $6.9 million in 1996 from $3.0 million in 1995 and $3.5 million in
1994. The increase in cash from operations in 1996 resulted primarily from the
substantial improvement in earnings over the previous year. Trade accounts
receivable days sales outstanding were 76 days at June 30, 1996 in comparison to
97 days at June 30, 1995. The increase in cash provided by operations in 1996
was partially offset by increased additions to purchased and capitalized
software, resulting in an increase in cash from $4.5 million at June 30, 1995 to
$6.8 million at June 30, 1996.
Working capital was $7.5 million at June 30, 1996 compared to $6.4 million and
$9.5 million at June 30, 1995 and 1994, respectively. The increase in working
capital in 1996 is primarily attributable to the positive cash flow for the
year. The decrease in working capital in 1995 was the result of an increase in
deferred revenue due to the increased Symix customer base and renewed service
contracts.
In addition to its present working capital, the Company has, with a bank, a $6.0
million unsecured revolving line of credit that expires in fiscal year 1998. To
date, no amounts have been drawn under the line. It is expected that the
Company's continued expansion of its operations and products will result in
additional requirements for cash in the future. The Company, however,
anticipates that existing sources of liquidity, cash flow from operations, and
the bank credit line will be sufficient to satisfy anticipated cash needs for
the next twelve months.
QUARTERLY RESULTS
<TABLE>
<CAPTION>
Three months ended
June 30, Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1996 1995 1995 1995 1995 1994 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET REVENUE $13,204 $11,165 $11,571 $9,819 $11,207 $10,613 $12,819 $(8,189
Cost of revenue 4,553 3,758 3,568 3,799 3,441 4,037 4,122 3,282
- ----------------------------------------------------------------------------------------------------------------------------------
Gross margin 8,651 7,407 8,003 6,020 7,766 6,576 8,697 4,907
Operating Expenses
Selling, general,
and administrative 6,514 5,410 5,757 4,730 6,526 6,101 6,714 6,223
Research and
product development 1,086 968 762 857 1,066 945 1,035 698
Restructuring and other
unusual charges -- -- -- 506 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 7,600 6,378 6,519 6,093 7,592 7,046 7,749 6,921
- ----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 1,051 1,029 1,484 (73) 174 (470) 948 (2,014)
Other income net 60 46 62 53 81 148 55 30
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before
income taxes 1,111 1,075 1,546 (20) 255 (322) 1,003 (1,984)
- ----------------------------------------------------------------------------------------------------------------------------------
Provision (benefit) for
income taxes 363 430 618 (8) 99 (123) 411 (797)
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 748 $ 645 $ 928 $ (12) $ 156 $ (199) $ 592 $(1,187)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE $ 0.12 $ 0.11 $ 0.17 $ 0.00 $ 0.03 $ (0.04) $ 0.11 $ (0.21)
Weighted average common
and common share equivalents
outstanding 6,008 5,714 5,556 5,450 5,480 5,392 5,536 5,698
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company believes that inflation has not had a material effect on its
operations. The Company's sales are primarily denominated in U.S. dollars and
other foreign currency risk is considered minimal.
QUARTERLY RESULTS
The following table sets forth certain unaudited operating results for each of
the eight quarters ended June 30, 1996. This information has been prepared by
the Company on the same basis as the audited, consolidated financial statements,
and includes all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly this information when read in conjunction with the
Company's audited, consolidated financial statements and the notes thereto.
The Company's results of operations have fluctuated on a quarterly basis. The
Company's expenses, with the principal exception of sales commissions and
certain components of cost of revenue, are generally fixed and do not vary with
revenue. As a result, because the Company plans and commits its resources in
advance of its planned revenue level, any shortfall of actual revenue in a given
quarter would adversely affect net earnings for that quarter by a significant
portion of the shortfall.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
The statements in this Annual Report to Shareholders which are not historical
fact are forward looking statements that involve important assumptions, risks,
uncertainties and other factors which could cause the Company's actual results
for fiscal year 1997 and beyond to differ materially from those expressed in
such forward looking statements. These important factors include, without
limitation, product demand and market acceptance, the effect of economic
conditions, the impact of competitive products, foreign currency fluctuations,
pricing and other assumptions, risks, uncertainties and factors disclosed in the
Company's filings with the Securities and Exchange Commission.
13
<PAGE>
REPORT OF MANAGEMENT
The integrity of the consolidated financial statements and other financial
information contained in this Annual Report is the responsibility of the
management of the Company. The accompanying financial statements have been
prepared in accordance with generally accepted accounting principles, and
reflect the effects of certain estimates and judgments made by management.
The Company maintains an effective system of internal accounting controls that
is designed to provide reasonable assurance that transactions are properly
recorded and executed in accordance with management's authorization, and that
the assets of the Company are safeguarded. The system is continuously monitored
by management, and includes segregation of duties, appropriate selection and
training of personnel, and communication of policies and procedures consistent
with the highest principles of business ethics and conduct. The Audit Committee
of the Board of Directors, which includes two outside directors, meets
periodically with management and the independent auditors to review accounting,
reporting, and auditing matters. The Committee approves the selection of the
independent auditors.
The Company's consolidated financial statements have been
audited by Ernst & Young LLP, independent auditors.
/s/ Lawrence J. Fox /s/ Stephen A. Sasser
Lawrence J. Fox Stephen A. Sasser
CHAIRMAN OF THE BOARD AND PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Symix Systems, Inc.
We have audited the accompanying consolidated balance sheets of Symix Systems,
Inc. and Subsidiaries as of June 30, 1996 and 1995, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended June 30, 1996. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Symix Systems,
Inc. and Subsidiaries at June 30, 1996 and 1995, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended June 30, 1996, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Columbus, Ohio
July 30, 1996,
except for Note C and Note J, as to which the date is
August 27, 1996
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended June 30,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1994
- --------------------------------------------------------------------------------
License fees and turnkey systems $24,682 $24,677 $24,736
Service, maintenance and support 21,077 18,151 10,750
- --------------------------------------------------------------------------------
Net revenue 45,759 42,828 35,486
License fees and turnkey systems 6,840 6,845 7,525
Service, maintenance and support 8,838 8,037 5,075
- --------------------------------------------------------------------------------
Cost of revenue 15,678 14,882 12,600
- --------------------------------------------------------------------------------
Gross margin 30,081 27,946 22,886
Selling, general, and administrative 22,411 25,564 19,505
Research and product development 3,673 3,744 2,589
Restructuring and other unusual
charges - Note G 506 -- --
- --------------------------------------------------------------------------------
Total operating expenses 26,590 29,308 22,094
- --------------------------------------------------------------------------------
Operating income (loss) 3,491 (1,362) 792
Other income, net 221 314 122
- --------------------------------------------------------------------------------
Income (loss) before income taxes 3,712 (1,048) 914
Provision (benefit) for income
taxes - Note F 1,404 (410) 330
- --------------------------------------------------------------------------------
Net Income (loss) $ 2,308 $ (638) $ 584
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Earnings (loss) per share $ 0.40 $ (0.12) $ 0.10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Weighted average number of common and
common equivalent shares outstanding 5,706 5,424 5,742
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
14
<PAGE>
CONSOLIDATED BALANCE SHEETS
June 30, June 30,
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 6,774 $ 4,498
Trade accounts receivable, less allowance for
doubtful accounts of $450 in 1996 and $550
in 1995 11,429 10,917
Inventories 312 272
Prepaid expenses 522 296
Other receivables 117 153
Refundable income taxes -- 237
Deferred income taxes 230 337
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 19,384 16,710
- --------------------------------------------------------------------------------
OTHER ASSETS:
Capitalized software, net of accumulated
amortization of $4,311 in 1996 and
$3,150 in 1995 4,660 2,531
Deferred income taxes 1,004 892
Deposits and other assets 472 552
- --------------------------------------------------------------------------------
6,136 3,975
- --------------------------------------------------------------------------------
EQUIPMENT AND IMPROVEMENTS:
Furniture and fixtures 2,294 2,235
Computer and other equipment 8,078 6,713
Leasehold improvements 1,187 1,190
- --------------------------------------------------------------------------------
11,559 10,138
Less allowance for depreciation and amortization 6,616 4,754
- --------------------------------------------------------------------------------
4,943 5,384
- --------------------------------------------------------------------------------
TOTAL ASSETS $30,463 $26,069
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses - Note H $ 5,163 $ 3,908
Customer deposits 242 670
Deferred revenue 5,786 5,571
Income-tax payable 518 --
Current portion of lease obligations 137 198
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 11,846 10,347
LEASE OBLIGATIONS, less current portion - Note B -- 137
DEFERRED INCOME TAXES 1,515 1,077
SHAREHOLDERS' EQUITY - NOTE C
Common stock, authorized 20,000 shares; issued
5,826 shares at June 30, 1996, and 5,750
shares at June 30, 1995, respectively; at
stated capital amounts of $.01 per share 58 58
Preferred stock, authorized 1,000 shares; none
issued and outstanding
Capital in excess of stated value 10,985 10,614
Retained earnings 7,379 5,156
- --------------------------------------------------------------------------------
18,422 15,828
Less: Common stock in treasury: 304 shares in
1996 and 1995, at cost 1,320 1,320
- --------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 17,102 14,508
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $30,463 $26,069
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
15
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30,
(IN THOUSANDS) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in cash
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 2,308 $ (638) $ 584
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation, amortization and write down of
intangible assets 3,064 2,755 1,811
Provision for losses (recoveries) on accounts receivable (100) 50 (122)
Provision for deferred income taxes 433 (390) 148
Changes in operating assets and liabilities:
Trade accounts receivable (467) (1,986) (1,172)
Prepaid expenses and other receivables (190) 97 (122)
Inventories (40) 40 (69)
Deposits and other assets 80 (112) (319)
Accounts payable and accrued expenses 1,255 865 518
Customer deposits (428) 70 294
Deferred revenues 215 1,810 1,875
Income taxes payable/refundable 755 406 37
- ----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,885 2,967 3,463
INVESTING ACTIVITIES
Net purchases of equipment and improvements (1,463) (2,519) (2,180)
Additions to purchased and capitalized software (3,290) (1,573) (1,178)
- ----------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (4,753) (4,092) (3,358)
FINANCING ACTIVITIES
Proceeds from issuance of shares on exercise of stock options 371 89 21
Principal payments on long-term obligations (197) (224) (208)
Purchases of treasury stock -- (767) (553)
- ----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES 174 (902) (740)
Effect of exchange rate changes on cash (30) (5) (36)
Net increase (decrease) in cash 2,276 (2,032) (671)
Cash and cash equivalents at beginning of period 4,498 6,530 7,201
- ----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,774 $4,498 $ 6,530
- ----------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid (received) during the period for:
Interest $ 49 $ 49 $ 62
Income taxes (net of refunds) 189 (499) 78
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
16
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Cumulative
Common Stock Capital in Excess Retained Translation Treasury
(IN THOUSANDS) Shares Amount of Stated Value Earnings Adjustment Stock
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JULY 1, 1993 5,604 $56 $10,327 $5,336 $(104)
Issuance of shares on exercise of stock options 26 21
Tax benefit on stock options exercised 36
Purchase of treasury stock $ (553)
Equity adjustment from foreign currency
translation (62)
Net income 584
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES AT JUNE 30, 1994 5,630 56 10,384 5,920 (166) (553)
Issuance of shares on exercise of stock options 120 2 88
Tax benefit on stock options exercised 142
Purchase of treasury stock (767)
Equity adjustment from foreign currency
translation 40
Net (loss) (638)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES AT JUNE 30, 1995 5,750 58 10,614 5,282 (126) (1,320)
Issuance of shares on exercise of stock options 76 306
Tax benefit on stock options exercised 65
Equity adjustment from foreign currency
translation (85)
Net income 2,308
- ----------------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1996 5,826 $58 $10,985 $7,590 $(211) $(1,320)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The accompanying financial statements include the
accounts of Symix Systems, Inc., and its wholly owned subsidiaries and its
proportionate share of a joint venture, after elimination of intercompany
accounts and transactions.
ORGANIZATION: Symix Systems, Inc. designs, develops, markets and supports a
fully integrated manufacturing, planning and financial software system. The
software was developed for make-to-order and mixed-mode production
manufacturers. Among the key industries which use the Symix applications are
industrial equipment, fabricated metals, electronics and furniture/fixtures.
Founded in 1979, Symix is headquartered in Columbus, Ohio, employing more than
350 people, with direct sales and support offices in the Americas, Europe, and
Asia Pacific. Refer to the back cover for a complete listing of Symix corporate
and regional headquarter locations.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
REVENUE RECOGNITION: Revenue for all periods presented are accounted for in
accordance with AICPA Statement of Position 91-1, "Software Revenue
Recognition." Revenue is derived principally from the sale of internally
produced software products and short-term maintenance and support agreements
from software sales. Revenue from software license fees and turnkey systems is
generally recognized upon shipment of product to the customer. Revenue from
maintenance and support agreements is billed periodically, deferred, and
recognized ratably over the life of the agreements. Revenue from consulting,
education, and other services is recognized as the services are provided.
The Company establishes allowances to provide for uncollectible trade
receivables and anticipated adjustments to amounts previously billed.
CAPITALIZED SOFTWARE: Capitalized software is stated at the lower of cost or
net realizable value. The Company capitalizes the cost of purchased software
and the qualifying internal cost of developing its software products in
accordance with Statement of Financial Accounting Standards No. 86, "Accounting
for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed."
Capitalized software costs are amortized by the straight-line method using
estimated useful lives of three years. Amortization expense was $1,161,000,
$874,000, and $629,000 for the years ended June 30, 1996, 1995 and 1994,
respectively.
INVENTORIES: Inventories consist primarily of software products that are held
for resale. The Company values inventory at the lower of cost or market. Cost
is determined using the specific identification method.
EQUIPMENT AND IMPROVEMENTS: Equipment and improvements are stated on the basis
of cost. Provisions for depreciation and amortization are computed by the
straight-line method over the estimated lives of the related assets.
Depreciation expense was $1,895,000, $1,600,000, and $1,176,000 for the years
ended June 30, 1996, 1995 and 1994, respectively.
FOREIGN OPERATIONS: The Company's international operations constitute 18% and
11% of consolidated net revenue, and 14% and 13% of consolidated identifiable
assets as of and for the years ended June 30, 1996 and 1995, respectively.
FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign
subsidiaries are translated into U.S. dollars at year-end rates of exchange.
Revenues and expenses are translated at the average exchange rates for the
periods and capital accounts have been translated using historic rates. The
resulting translation adjustments are recorded as an adjustment to shareholders'
equity.
INCOME TAXES: The Company accounts for income taxes under the liability method
pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS 109). Under the liability method, deferred tax assets and
liabilities are determined based on differences between the financial reporting
and tax basis of assets and liabilities using the enacted tax rates and laws
that will be in effect when the differences are expected
to reverse.
EARNINGS PER SHARE: Earnings per share is computed using the weighted average
number of common shares outstanding during each period plus dilutive common
stock equivalents (stock options) using the treasury stock method. Fully
diluted earnings per share have not been presented as the differences are
insignificant.
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
STOCK-BASED COMPENSATION: During 1995 the Financial Accounting Standards Board
issued Statement 123, "Accounting for Stock-based Compensation". This Statement
sets forth standards for accounting for stock-based compensation or allows
companies to continue using Accounting Principles Board Opinion APB No. 25 with
additional disclosures in the notes to the consolidated financial statements. It
is the Company's intention to continue using APB No. 25 with additional
disclosures in the notes beginning in fiscal 1997.
PREFERRED STOCK: The Company's Articles of Incorporation authorize 1,000,000
shares of preferred stock at no par value. The Board of Directors will
determine the rights and preferences of these shares. Presently, no preferred
shares are issued and outstanding.
CASH AND CASH EQUIVALENTS: The Company considers all demand deposits and
highly liquid investments with a maturity of three months or less as cash
equivalents.
Reclassification: Certain reclassifications have been made to
conform to the 1996 presentation.
NOTE B - LEASES
The Company has entered into certain operating lease agreements for the rental
of office facilities and computer equipment. The facility leases provide for
annual rentals which are subject to escalation for increased operating costs.
Amounts expensed under all operating lease agreements were: $1,884,000,
$1,735,000, and $1,707,000 for the years ended June 30, 1996, 1995 and 1994,
respectively.
The Company has several capital lease agreements for certain office furniture
and equipment with an aggregate cost of $1,082,000. Related accumulated
amortization on these assets aggregated $1,050,000 and $859,000 at June 30, 1996
and 1995, respectively. Amortization on these assets is included in the
Company's depreciation expense.
The following is a schedule of future minimum lease payments required under
these capital and operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of June 30, 1996:
(IN THOUSANDS) Capital Operating
Fiscal Years Leases Leases
- --------------------------------------------------------------------------------
1997 $140 $1,725
1998 1,758
1999 1,565
2000 1,338
2001 1,178
- --------------------------------------------------------------------------------
Total minimum payments $140 $7,564
Less amount representing interest 3
- ------------------------------------------------------------
Present value of future minimum
lease payments $137
- ------------------------------------------------------------
- ------------------------------------------------------------
NOTE C - COMMON STOCK AND STOCK OPTIONS
On July 8, 1996, shareholder approval was obtained to amend the Company's
Amended Articles of Incorporation to increase its authorized shares from
6,000,000 to 21,000,000, of which 20,000,000 will be common shares and 1,000,000
will be preferred shares.
On August 27, 1996 the Board of Directors approved a 2-for-1 share split,
effected in the form of a share distribution of one share for each share
outstanding, effective on a September 10, 1996 record date. All share data and
references to Symix common stock have been retroactively restated to reflect the
increased number of Symix common shares outstanding.
The Company has a non-qualified stock option plan ("the Plan") that provides for
the granting of options to officers and other key employees for shares of common
stock at purchase prices of not less than the fair market value on the date of
the grant as determined by the Board of Directors. The maximum number of common
shares which may be optioned under the Plan was 2,653,070 as of June 30, 1996.
Options under the Plan generally vest over periods of up to four years and must
be exercised within ten years of the date of grant.
The Company also has a non-qualified stock option plan for Key Executives ("Key
Executives Plan"). A total of 400,000 shares of common stock are designated for
issuance under the Key Executives Plan. The Compensation Committee of the Board
of Directors is authorized to set the price and terms and conditions of the
options granted under the Key Executives Plan. Options under the Key Executives
Plan must be exercised within ten years of the date of the grant.
The Company also has a Stock Option Plan for Outside Directors ("Outside
Directors Plan"). The Outside Directors Plan provides for the issuance of
options for 20,000 shares of stock to each Outside Director upon his/her
election to the Board of Directors. A total of 200,000 shares of common stock
may be issued under the Outside Directors Plan. Options under the Outside
Directors Plan vest immediately and must be exercised within ten years of the
date of grant.
Information with respect to options granted under the three Plans is as follows:
Exercise
Number of Price
Shares Per Share
- --------------------------------------------------------------------------------
Outstanding at July 1, 1993 653,464 $0.25 - 7.50
Granted 352,000 4.13 - 4.88
Cancelled (173,798) 1.78 - 6.50
Exercised (25,730) .53 - 1.78
- --------------------------------------------------------------------------------
Outstanding at June 30, 1994 805,936 .25 - 7.50
Granted 262,000 3.63 - 5.13
Cancelled (285,004) 3.38 - 6.50
Exercised (119,844) .25 - 3.38
- --------------------------------------------------------------------------------
Outstanding at June 30, 1995 663,088 1.16 - 7.50
Granted 813,000 3.82 - 7.22
Cancelled (188,938) 3.63 - 7.50
Exercised (77,648) 1.78 - 5.63
- --------------------------------------------------------------------------------
OUTSTANDING AT JUNE 30, 1996 1,209,502 $1.16 - 7.22
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
At June 30, 1996, options for 301,750 shares were exercisable, and 712,396
shares remained available for grant.
NOTE D - EMPLOYEE BENEFITS PLAN
The Company has a 401 (k) plan that covers substantially all employees over 21
years of age. The Company contributes to the plan based upon employee
contributions and may make additional contributions at the discretion of the
Board of Directors. The Company made contributions to this plan of
approximately $196,000, $118,000 and $88,000 for the years ended June 30, 1996,
1995 and 1994, respectively.
NOTE E - LINE OF CREDIT
In May 1996, the Company negotiated a $6.0 million unsecured revolving line of
credit with a bank that expires in fiscal year 1998, convertible to a five year
term loan at any time on or before April 30, 1998. As of June 30, 1996, there
were no borrowings on the line of credit.
18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE F - INCOME TAXES
SFAS 109 requires recognition of deferred tax liabilities and assets for the
expected future consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
and tax basis of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
For the years ended June 30, 1996, 1995 and 1994, domestic operations
contributed approximately $4.0 million, $184,000 and $1.5 million to pre-tax
earnings, respectively, while foreign affiliates generated losses of $348,000,
$1.2 million, and $549,000 for the same periods.
Income taxes are summarized as follows:
Year Ended June 30,
(IN THOUSANDS) 1996 1995 1994
- --------------------------------------------------------------------------------
Current:
Federal $1,772 $(136) $232
State and local 149 4 40
Foreign 242 73 (71)
- --------------------------------------------------------------------------------
1,163 (59) 201
Deferred:
Federal, state and local 546 141 277
Foreign (305) (492) (148)
- --------------------------------------------------------------------------------
241 (351) 129
- --------------------------------------------------------------------------------
$1,404 $(410) $330
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
During the years ended June 30, 1996, 1995, and 1994 the Company recorded a tax
benefit of approximately $65,000, $142,000, and $36,000, respectively, in
connection with the exercise of stock options. The benefit, which was due to
the difference in the fair market value and the exercise price of the options at
the date of exercise, was recorded as an increase in capital in excess of stated
value.
The sources of significant timing differences which give rise to deferred taxes
are as follows:
Year Ended June 30,
(IN THOUSANDS) 1996 1995 1994
- --------------------------------------------------------------------------------
Depreciation/amortization $338 $105 $151
Allowance for doubtful accounts 39 (20) 40
Adjustments for accruals 74 (29) 4
Leases 77 88 82
Losses related to investment in
foreign affiliates (305) (492) (148)
Other, net 18 (3) --
- --------------------------------------------------------------------------------
$241 $(351) $129
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Significant components of the Company's deferred tax assets and liabilities as
of June 30, 1996 and 1995 are as follows:
June 30,
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
Current deferred tax assets:
Allowance for doubtful accounts $ 177 $ 216
Customer deposits 3
Accrued liabilities 50 121
- --------------------------------------------------------------------------------
Total current deferred tax assets $ 230 $ 337
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Long-term deferred tax assets:
Foreign losses $1,004 $ 892
- --------------------------------------------------------------------------------
Total $1,004 $ 892
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Long-term deferred tax liabilities:
Capitalized software $1,347 $ 903
Capitalized leases 371 294
- --------------------------------------------------------------------------------
Total long-term deferred liabilities 1,718 1,197
Long-term deferred tax assets:
Book over tax depreciation 201 98
Accrued liabilities 2 22
- --------------------------------------------------------------------------------
Total long-term deferred assets 203 120
- --------------------------------------------------------------------------------
Net long-term deferred liabilities $1,515 $1,077
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The long-term deferred tax assets pertaining to foreign losses are net operating
loss carryforwards for certain foreign subsidiaries which the Company believes
will be utilized in future tax periods.
The Company's effective tax rate differs from the statutory U.S. federal income
tax rate as follows:
Year Ended June 30,
(IN THOUSANDS) 1996 1995 1994
- --------------------------------------------------------------------------------
Federal income tax
statutory rate 34% (34%) 34%
State and local income taxes
net of federal tax benefit 4 1 5
Foreign operations taxed at
rates different from U.S.
federal statutory rate 1 (4) (2)
Other (1) (2) (1)
- --------------------------------------------------------------------------------
38% (39%) 36%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE G - RESTRUCTURING AND OTHER UNUSUAL CHARGES
During the first quarter of fiscal 1996, the Company incurred restructuring and
other non-recurring charges of $506,000 consisting primarily of severance
payments related to operational changes and costs associated with reorganizing
the European sales channel.
NOTE H - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses are summarized as follows:
June 30,
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
Accounts payable $2,065 $1,254
Accrued commissions & bonus 1,455 834
Third party payables 525 856
Other 1,118 964
- --------------------------------------------------------------------------------
$5,163 $3,908
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE I - LITIGATION
On June 22, 1995, the Company filed an action in the Court of Common Pleas of
Franklin County, Ohio against the former president and former senior vice
president of the Company. The claims asserted in this litigation arise out of
and relate primarily to the termination of the former president's employment
with, and the resignation of the former senior vice president from, the Company.
These individuals have filed counterclaims against the Company seeking total
damages in excess of $5.3 million. Management of the Company believes the
claims and counterclaims asserted by the former president and former senior vice
president are without merit. The Company believes it has valid defenses against
the claims and counterclaims and intends to vigorously defend its position. No
liability has been recorded in connection with this contingency. The Company
does not believe that the ultimate resolution of the matter will have a material
adverse effect on its financial condition or results of operations. The Company
is currently not involved in any other legal proceedings.
NOTE J - SUBSEQUENT EVENT
On August 8, 1996, the Company acquired a French company, GSI Industrie, for
$1.64 million of which $820,000 was paid in cash at closing with the remaining
balance being payable in three equal annual installments beginning August 1997.
GSI Industrie is a manufacturing software specialist which will serve as a
sales, service and support operation for the Company in France. Total assets
acquired were $2.8 million with annual revenues approximating $4.0 million.
19
<PAGE>
BOARD OF DIRECTORS
LAWRENCE J. FOX
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Symix Systems, Inc.
STEPHEN A. SASSER
PRESIDENT AND CHIEF OPERATING OFFICER
Symix Systems, Inc.
LARRY L. LIEBERT
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
L Corporation
JAMES RUTHERFORD
PRESIDENT
Wingset, Inc.
JOHN T. TAIT
MANAGING GENERAL PARTNER
B.P.A. Consultants
DUKE W. THOMAS
PARTNER
Vorys, Sater, Seymour and Pease
[PHOTO]
Standing (left to right): Lawrence W. DeLeon, Otto Offereins, Robert J.
McLaughlin and Robert D. Williams. Seated: Stephen A. Yount and Catherine K.
DeRosa. Inset Photos (left to right): Simon Gainsford and Trevor Smith.
COMPANY OFFICERS
LAWRENCE J. FOX
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
STEPHEN A. SASSER
PRESIDENT AND CHIEF OPERATING OFFICER
LAWRENCE W. DELEON
VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
CATHERINE K. DEROSA
VICE PRESIDENT OF MARKETING
ROBERT J. MCLAUGHLIN
VICE PRESIDENT OF PROFESSIONAL SERVICES
OTTO OFFEREINS
VICE PRESIDENT OF DEVELOPMENT AND SUPPORT
ROBERT D. WILLIAMS
VICE PRESIDENT - HUMAN RESOURCES
STEPHEN A. YOUNT
VICE PRESIDENT AMERICAS SALES
SIMON GAINSFORD
VICE PRESIDENT - ASIA/PACIFIC
TREVOR SMITH
VICE PRESIDENT EUROPE REGION
20
<PAGE>
STOCK INFORMATION
MARKET PRICE INFORMATION
The table below presents the high and low prices for Symix Systems, Inc., common
shares as reported by NASDAQ for fiscal 1996 and 1995.
1996 High Low
- --------------------------------------------------------------------------------
FIRST QUARTER 6-5/16 3-13/16
SECOND QUARTER 5-3/4 5
THIRD QUARTER 7-7/16 5
FOURTH QUARTER 8-5/8 7
1995 High Low
- --------------------------------------------------------------------------------
First Quarter 5-3/8 4-5/8
Second Quarter 5 3-3/8
Third Quarter 4-3/8 3-7/16
Fourth Quarter 4-3/8 3-3/4
The closing price on June 30, 1996 was 7-7/8. As of June 30, 1996, there were
approximately 94 shareholders of record, and the Company believes there are more
than 1,700 beneficial shareholders. The Company has not declared or paid cash
dividends on its capital stock. The Company currently intends to retain any
earnings for its use in its business and, therefore, does not anticipate paying
any cash dividends in the foreseeable future.
ANNUAL MEETING
The 1996 Annual Meeting of Shareholders will be held at
9:00 a.m., local time, on November 1, 1996, at Corporate Headquarters, 2800
Corporate Exchange Drive, Columbus, Ohio.
NASDAQ SYMBOL
The Company's common stock is traded on the NASDAQ National Market System under
the symbol "SYMX".
TRANSFER AGENT AND REGISTRAR
The Huntington National Bank
Huntington Center
41 South High Street
Columbus, OH 43287
INVESTOR CONTACT
Analysts and investment professionals seeking financial information about the
Company should contact:
Lawrence DeLeon
Vice President
Chief Financial Officer and Secretary
Symix Systems, Inc.
2800 Corporate Exchange Drive
Columbus, Ohio 43231
614-523-7379
fax: 614-895-2972
email: lardel(AT)symix.com
MEDIA AND OTHER INQUIRIES
Media representatives, and persons seeking general information about the Company
should contact the Marketing Communications Manager or access the Company's home
web page on the Internet.
Mark Wallinger
Marketing Communications Manager
Symix Systems, Inc.
2800 Corporate Exchange Drive
Columbus, Ohio 43231
614-523-7243
fax: 614-895-2504
http://www.symix.com
REQUESTS FOR FORM 10-K INFORMATION AND INDIVIDUAL SHAREOWNER QUESTIONS REGARDING
STOCK OWNERSHIP
Copies of the Company's Form 10-K, filed with the Securities and Exchange
Commission for the most recent fiscal year, provide additional information and
are available to shareholders at no charge, upon written request to:
Symix Systems, Inc.
Attention: Cathy Smith
2800 Corporate Exchange Drive
Columbus, Ohio 43231
614-523-7178
fax: 614-895-2972
email: catsmi(AT)symix.com
21
<PAGE>
SYMIX -REGISTERED TRADEMARK-
SYSTEMS, INC.
SYMIX CORPORATE AND REGIONAL HEADQUARTERS
CORPORATE HEADQUARTERS
Symix Systems, Inc.
2800 Corporate Exchange Drive
Columbus, Ohio 43231
614-523-7000
Fax: 614-895-2504
http://www.symix.com
ASIA/PACIFIC
Symix Computer Systems (Singapore) Pte. Ltd.
24 Raffles Place #26-05
Clifford Centre
Singapore 048621
011-75-737-4680
Fax: 011-75-736-4596
CANADA
Symix Computer Systems, Inc.
2700 Matheson Boulevard East
Suite 201, East Tower
Mississauga, Ontario L4W 4V9
EUROPE
Symix Computer Systems, Inc.
25 Amber Business Village
Amington, Tamworth
Staffordshire B77 4RP
England
011-44-1827-310960
Fax: 011-44-1827-310961
[photo: laptop computer and coffee cup]
<PAGE>
EXHIBIT 22
SUBSIDIARIES OF REGISTRANT
NAME JURISDICTION % OWNERSHIP
Symix Computer Systems, Inc. Ohio 100
Symix Systems, B.V. The Netherlands 100
RDD, SA France 100*
SUBSIDIARIES OF SYMIX COMPUTER SYSTEMS, INC.
Symix Computer Systems Canada 100
(Canada) Inc.
Symix Computer Systems The United Kingdom 100
(UK) Ltd.
Symix Asia Company Ltd. Thailand 100*
Symix Computer Systems Hong Kong 100*
(Hong Kong) Ltd.
Symix Computer Systems Singapore 100
(Singapore) Pte. Ltd.
Symix Computer Systems Australia 100*
(Australia) Pty. Ltd.
Symix Computer Systems Mexico 100*
(Mexico) S. De R.L. De C.V.
SUBSIDIARIES OF SYMIX SYSTEMS, B.V.
Symix (U.K.) Ltd. The United Kingdom 100
SUBSIDIARIES OF RDD, SA
GSI Industrie, SA France 100*
- ------------------------
* Less than 1% of outstanding shares held by Symix Systems, Inc. or employees of
Symix Systems, Inc. or its subsidiary on behalf of Symix Systems, Inc.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Symix Systems, Inc. of our report dated July 30, 1996 (except for
Notes C and J, as to which the date is August 27, 1996) included in the 1996
Annual Report to Shareholders of Symix Systems, Inc.
Our audits also included the financial statement schedule of Symix Systems, Inc.
listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements (Forms S-8 No. 33-40546, No. 33-45416, No. 33-73014, No. 33-73016,
No. 333-660, No. 333-10631 and No. 333-10633) of Symix Systems, Inc. dated
June 25, 1991, January 30, 1992, December 16, 1993, December 16, 1993,
January 29, 1996, August 22, 1996 and August 22, 1996, respectively, of our
report dated July 30, 1996 (except for Notes C and J, as to which the date is
August 27, 1996), with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the preceding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of Symix Systems, Inc.
ERNST & YOUNG LLP
Columbus, Ohio
September 24,1996
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file with
the Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, hereby constitutes and appoints Stephen A. Sasser and
Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution and resubstitution, for him and in his
name, place and stead in any and all capacities, to sign such Annual Report on
Form 10-K, and to file the same with all exhibits and financial statements and
schedules thereto, and other documents in connection therewith, including any
amendment thereto, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 16th
day of September, 1996.
Lawrence J. Fox
--------------------
Lawrence J. Fox
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file with
the Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox and
Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution and resubstitution, for him and in his
name, place and stead in any and all capacities, to sign such Annual Report on
Form 10-K, and to file the same with all exhibits and financial statements and
schedules thereto, and other documents in connection therewith, including any
amendment thereto, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 11th
day of September, 1996.
Stephen A. Sasser
--------------------
Stephen A. Sasser
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file with
the Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox and
Stephen A. Sasser, and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution and resubstitution, for him and in his
name, place and stead in any and all capacities, to sign such Annual Report on
Form 10-K, and to file the same with all exhibits and financial statements and
schedules thereto, and other documents in connection therewith, including any
amendment thereto, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 16th
day of September, 1996.
Lawrence W. DeLeon
--------------------
Lawrence W. DeLeon
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file with
the Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox,
Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead in any and all capacities, to sign such
Annual Report on Form 10-K, and to file the same with all exhibits and financial
statements and schedules thereto, and other documents in connection therewith,
including any amendment thereto, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them or their or his substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 16th
day of September, 1996.
Larry L. Liebert
--------------------
Larry L. Liebert
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file with
the Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as emended, an Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox,
Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead in any and all capacities, to sign such
Annual Report on Form 10-K, and to file the same with all exhibits and financial
statements and schedules thereto, and other documents in connection therewith,
including any amendment thereto, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them or their or his substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 16th
day of September, 1996.
James A. Rutherford
--------------------
James A. Rutherford
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file with
the Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox,
Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead in any and all capacities, to sign such
Annual Report on Form 10-K, and to file the same with all exhibits and financial
statements and schedules thereto, and other documents in connection therewith,
including any amendment thereto, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them or their or his substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 13th
day of September, 1996.
John T. Tait
--------------------
John T. Tait
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Symix Systems, Inc., an Ohio corporation which is about to file with
the Securities and Exchange Commission, under the provisions of the Securities
Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox,
Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead in any and all capacities, to sign such
Annual Report on Form 10-K, and to file the same with all exhibits and financial
statements and schedules thereto, and other documents in connection therewith,
including any amendment thereto, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them or their or his substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 11th
day of September, 1996.
Duke W. Thomas
--------------------
Duke W. Thomas
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SYMIX SYSTEMS, INC. IN ITS ANNUAL REPORT
(FORM 10-K) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 6,774
<SECURITIES> 0
<RECEIVABLES> 11,879
<ALLOWANCES> 450
<INVENTORY> 312
<CURRENT-ASSETS> 19,384
<PP&E> 11,559
<DEPRECIATION> 6,616
<TOTAL-ASSETS> 30,463
<CURRENT-LIABILITIES> 11,846
<BONDS> 0
0
0
<COMMON> 58
<OTHER-SE> 17,044
<TOTAL-LIABILITY-AND-EQUITY> 30,463
<SALES> 24,682
<TOTAL-REVENUES> 45,759
<CGS> 6,840
<TOTAL-COSTS> 15,678
<OTHER-EXPENSES> 26,590
<LOSS-PROVISION> (100)
<INTEREST-EXPENSE> 49
<INCOME-PRETAX> 3,712
<INCOME-TAX> 1,404
<INCOME-CONTINUING> 2,308
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,308
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0
</TABLE>
