SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ______________________
Commission File Number 0-19024
Symix Systems, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 31-1083175
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2800 Corporate Exchange Drive
Columbus, Ohio 43231
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(Address of principal executive officer, including zip code)
(614) 523-7000
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address fiscal year, if changed since last report)
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 report(s), and (2) has been subject to
such filing requirements for the past 90 days.
YES __X__ NO _____
At November 8, 1996, there were 5,536,390 common shares of the Company with a
stated value per share of $.01.
Page 1
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<TABLE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, June 30,
1996 1996
------------ --------
(unaudited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 4,717 $ 6,774
Trade accounts receivable, less allowance for
doubtful accounts of $400 at September 30, 1996
and $450 at June 30, 1996 12,503 11,429
Inventories 342 312
Prepaid expenses 673 522
Other receivables 619 117
Deferred income taxes 273 230
---------- -------
TOTAL CURRENT ASSETS 19,127 19,384
OTHER ASSETS
Purchased and developed software, net of accumulated
amortization of $4,736 at September 30, 1996
and $4,311 at June 30, 1996 4,974 4,660
Deferred income taxes 1,081 1,004
Intangibles, net 2,127 -
Deposits and other assets 936 472
---------- -------
9,118 6,136
EQUIPMENT AND IMPROVEMENTS
Furniture and fixtures 2,343 2,294
Computer and other equipment 9,035 8,078
Leasehold improvements 1,200 1,187
---------- -------
12,578 11,559
Less allowance for depreciation and amortization 7,160 6,616
---------- -------
5,418 4,943
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TOTAL ASSETS $ 33,663 $30,463
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</TABLE>
See notes to consolidated financial statements
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<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands)
September 30, June 30,
1996 1996
------------- --------
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 5,928 $ 5,300
Customer deposits 226 242
Deferred revenue 7,601 5,786
Income taxes payable 129 518
-------- --------
TOTAL CURRENT LIABILITIES 13,884 11,846
LONG-TERM PAYABLE 640 -
DEFERRED INCOME TAXES 1,646 1,515
SHAREHOLDERS' EQUITY
Common stock, authorized 20,000 shares;
issued 5,841 shares at September 30, 1996,
and 5,826 at June 30, 1996; at stated capital
amounts of $.01 per share 58 58
Capital in excess of stated value 11,043 10,985
Retained earnings 7,712 7,379
-------- --------
18,813 18,422
Less: Cost of common shares in treasury,
304 shares at September 30, 1996
and June 30, 1996, at cost (1,320) (1,320)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 17,493 17,102
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 33,663 $ 30,463
======== ========
See notes to consolidated financial statements
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<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months
Ended September 30,
----------------------
1996 1995
-------- --------
License fees $ 5,884 $ 4,752
Service, maintenance and support 6,806 5,068
------- -------
Net revenue 12,690 9,820
License fees 1,952 1,742
Service, maintenance and support 2,591 2,057
------- -------
Cost of revenue 4,543 3,799
------- -------
Gross Margin 8,147 6,021
------- -------
Selling, general and administrative 6,555 4,730
Research and product development 1,100 858
Restructuring and other unusual charges -- 506
------- -------
Total operating expenses 7,655 6,094
------- -------
Operating income (loss) 492 (73)
Interest and other income, net 72 53
------- -------
Income (loss) before income taxes 564 (20)
Provision (benefit) for income taxes 217 (8)
------- -------
Net income (loss) $ 347 ($ 12)
======= =======
Earnings (loss) per share $ 0.06 $ 0.00
======= =======
Weighted average number of common and
common equivalent shares outstanding 5,989 5,450
======= =======
See notes to consolidated financial statements
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<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Three Months Ended
September 30,
(unaudited)
1996 1995
----------------------------
Increase (decrease) in cash
OPERATING ACTIVITIES
Net income (loss) $ 347 $ (12)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 973 697
Provision for losses on accounts receivable (50) (100)
Provision for deferred income taxes 10 107
Changes in operating assets and liabilities:
Trade accounts receivable 301 1,922
Prepaid expenses and other receivables (278) (17)
Inventory (30) (8)
Deposits (472) (48)
Accounts payable and accrued expenses (1,293) (1,003)
Customer deposits (16) 81
Deferred revenue 1,123 (399)
Income taxes payable/refundable (389) (136)
------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 226 1,084
See notes to consolidated financial statements
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<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
(In thousands)
Three Months Ended
September 30,
(unaudited)
1996 1995
---------------------------
Increase (decrease) in cash
INVESTING ACTIVITIES
Purchase of equipment and improvements (987) (119)
Additions to purchased and developed
software (719) (901)
Purchase of subsidiaries, net of cash acquired (1,028) -
------- -------
NET CASH USED BY
INVESTING ACTIVITIES (2,734) (1,020)
FINANCING ACTIVITIES
Proceeds from issuance of common
stock and exercise of stock options 58 73
Additions to long-term obligations 446 -
------- -------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 504 73
Effect of exchange rate changes on cash (53) 37
------- -------
Net Change in Cash and Cash Equivalents (2,057) 174
Cash and Cash Equivalents at beginning
of period 6,774 4,498
------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 4,717 $ 4,672
======= =======
See notes to consolidated financial statements
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<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A -- Accounting Policies and Presentation
The accompanying consolidated financial statements are unaudited; however, the
information contained herein reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results of
operations for the interim periods. All adjustments made were of a normal
recurring nature. These interim results of operations are not necessarily
indicative of the results to be expected for a full year.
The notes to the consolidated financial statements contained in the Symix
Systems, Inc. and Subsidiaries' (the Company) June 30, 1996 Annual Report to
Shareholders should be read in conjunction with these financial statements.
Note B -- Restructuring and Other Non-Recurring Charges
The restructuring and other non-recurring charges of $506,000 shown for the
quarter ended September 30, 1995 relate primarily to severance payments and
reorganizing loss associated with the European sales channel.
Note C -- Litigation
The litigation involving the former president and former senior vice president
of the Company has been settled. The settlement will not have a material
adverse affect on the Company's financial condition or results of operations.
Note D -- Acquisition
During the first quarter, the Company acquired in two separate transactions
companies in France and Australia for $1.86 million. $820,000 was paid in cash
at closing with the remaining balance of $1.04 million being payable over
three years. Both companies are manufacturing software specialists that will
serve as sales, service and support operations for the Company in France and
Australia. The acquisitions were accounted for using purchase accounting with
results included since the beginning of the period. The price of the purchases
exceeded the fair value of the net assets acquired by approximately $2.2
million which is being amortized over five years.
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company's revenues are derived from (i) licensing SYMIX software and (ii)
providing product support and related services. Product support is provided
pursuant to agreements that are generally renewed annually. Related services
consist of installation, implementation, training, consulting, programming and
systems integration services for SYMIX users.
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.
Results of Operations
Net revenue was $12,690,000 for the three months ended September 30, 1996, an
increase of 29% from the same quarter of the previous year. License revenue
increased 24% from $4,752,000 for the same quarter last year to $5,884,000
this year. Service and support revenue increased 34%; $6,806,000 for the
quarter ended September 30, 1996, compared to $5,068,000 for the quarter ended
September 30, 1995. These increases are primarily attributable to the
Company's expansion in the international European and Asia Pacific markets.
Net revenue outside of North America accounted for more than 25% of total
revenue, the highest percentage in the Company's history.
The cost of license fees increased in the quarter ended September 30, 1996
from the quarter ended September 30, 1995 because software amortization
increased following the general commercial release of the Symix SyteLine
product for which costs had previously been capitalized. The cost of license
fees decreased as a percentage of license fee revenue in the quarter ended
September 30, 1996 compared to the quarter ended September 30, 1995 largely
because license fee revenue increased more rapidly than the cost of the
license fees sold.
The cost of service, maintenance and support increased to $2,591,000 for the
quarter ended September 30, 1996 from $2,057,000 for the same quarter last
year primarily because the Company added personnel to provide the services
that generated the corresponding increase in revenue from service, maintenance
and support. The cost of service, maintenance and support, as a percentage of
service, maintenance and support revenue, decreased for the quarter ended
September 30, 1996 as compared to the quarter ended September 30, 1995 because
a large portion of the increase in the corresponding revenue was generated by
maintenance and product support, which can be provided more efficiently by
serving a larger client base.
Selling, general and administrative (SG&A) expense was $6,555,000 for the
quarter ended September 30, 1996, compared to $4,730,000 for the same period
last year, a 39% increase. For the current quarter, SG&A expense stated as a
percentage of revenue was 52% compared to 48% for the same period last year.
The increase is due to planned spending increases in marketing and promotional
materials.
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<PAGE>
Research and product development (R&D) expenditures, including amounts
capitalized for the three months ended September 30, 1996, were $1,819,000
compared to $1,758,000 for the same period last year. Capitalization of
software development costs was $719,000 for the quarter ended September 30,
1996, compared to $901,000 for the comparable period last year. The increase
in research and development expenditures is expected to continue as the
Company devotes a significant percentage of its resources to developing and
enhancing existing and new products.
Liquidity and Capital Resources
At September 30, 1996, the Company had working capital of $5,243,000,
including cash and cash equivalents of $4,717,000, compared to $7,538,000,
including cash and cash equivalents of $6,774,000, at June 30, 1996. Net
accounts receivable increased from $11,429,000 at June 30, 1996, to
$12,503,000 at September 30, 1996. At September 30, 1996, the accounts
receivable days sales outstanding was 93 days compared to 76 days at June 30,
1996. The decrease in working capital is due to international expansion and
first quarter capital expenditures.
In addition to its present working capital, the Company has, with a bank, a
$6.0 million unsecured revolving line of credit. 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.
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<PAGE>
PART II--OTHER INFORMATION
ITEM 1. Legal Proceedings
The litigation involving the former president and the former senior vice
president of the Company styled as Symix Systems, Inc. v. O. Kent LaRoque III,
et al. (Case No. CP-95CVH06-4279) in the Court of Common Pleas of Franklin
County, Ohio and O. Kent LaRoque, III, et al. v. Symix Systems, Inc. (Case No.
2:95-CV-632) in the United States District Court for the Southern District of
Ohio, Eastern Division, has been settled. The settlement agreement between the
parties requires that certain terms of the settlement be kept confidential.
The settlement will not have a material adverse affect on the Company's
financial condition or results of operations. This matter was first reported
by the Company in a Form 8-K dated April 18, 1996 filed with the Securities
and Exchange Commission.
ITEM 2. Changes in Securities None
ITEM 3. Defaults Upon Senior Securities None
ITEM 4. Submission of Matters to a Vote of Security Holders None
ITEM 5. Other Information None
ITEM 6. Exhibits and Reports on Form 8-K None
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Symix Systems, Inc.
Date: November 14, 1996 Lawrence W. DeLeon
_______________________________________
Lawrence W. DeLeon
Vice President, Chief Financial Officer
and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Symix Systems, Inc. Form 10-Q for the period ended September 30, 1996
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
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<S> <C>
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<PERIOD-END> SEP-30-1996
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<PP&E> 12,578
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<CURRENT-LIABILITIES> 13,884
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0
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<COMMON> 58
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<SALES> 5,884
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</TABLE>
