FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended DECEMBER 31, 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.
_________________________________________________________________________
(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
_________________________________________________________________________
(Address of principal executive officer) (Zip Code)
(614) 523-7000
_________________________________________________________________________
(Registrant's telephone number, including area code)
N/A
_________________________________________________________________________
(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 reports), and (2) has been subject to such filing
requirements for the past 90 days. YES __X__ NO _____
At February 12, 1997, there were 5,684,978 common shares of the Company
outstanding with a stated value per share of $.01.
Exhibit Index on page 14.
Page 1 of 15 pages
<PAGE>
SYMIX SYSTEMS, INC.
INDEX
Part I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets
December 31, 1996 (unaudited) and June 30, 1996 3-4
Consolidated Statements of Operations (unaudited) for the
Three and Six Months Ended December 31, 1996 and 1995 5
Consolidated Statements of Cash Flows (unaudited) for the
Six Months Ended December 31, 1996 and 1995 6-7
Notes to Consolidated Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 9-10
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. 11
Item 6. Exhibits 12
SIGNATURE 13
INDEX TO EXHIBITS 14
-2-
<PAGE>
<TABLE>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, June 30,
1996 1996
------------ --------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,177 $ 6,774
Trade accounts receivable, less allowance for
doubtful accounts of $400 at December 31, 1996
and $450 at June 30, 1996 17,389 11,429
Inventories 456 312
Prepaid expenses 610 522
Other receivables 322 117
Deferred income taxes 230 230
-------- --------
TOTAL CURRENT ASSETS 23,184 19,384
OTHER ASSETS
Purchased and developed software, net of accumulated
amortization of $5,183 at December 31, 1996
and $4,311 at June 30, 1996 5,331 4,660
Deferred income taxes 1,106 1,004
Intangibles, net 2,178 --
Deposits and other assets 968 472
-------- --------
9,583 6,136
EQUIPMENT AND IMPROVEMENTS
Furniture and fixtures 2,354 2,294
Computer and other equipment 9,314 8,078
Leasehold improvements 1,298 1,187
-------- --------
12,966 11,559
Less allowance for depreciation and amortization (7,550) (6,616)
-------- --------
5,416 4,943
-------- --------
TOTAL ASSETS $ 38,183 $ 30,463
======== ========
See notes to consolidated financial statements.
</TABLE>
-3-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands)
December 31, June 30,
1996 1996
------------ --------
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 6,777 $ 5,300
Customer deposits 283 242
Deferred revenue 9,068 5,786
Income taxes payable 157 518
-------- --------
TOTAL CURRENT LIABILITIES 16,285 11,846
LONG-TERM PAYABLE 640 --
DEFERRED INCOME TAXES 1,957 1,515
SHAREHOLDERS' EQUITY
Common stock, authorized 20,000 shares;
issued 5,969 shares at December 31,
1996, and 5,826 at June 30, 1996; at
stated capital amounts of $.01 per share 60 58
Capital in excess of stated value 11,753 10,985
Retained earnings 8,808 7,379
-------- --------
20,621 18,422
Less: Cost of common shares in treasury,
304 shares at December 31, 1996
and June 30, 1996, at cost (1,320) (1,320)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 19,301 17,102
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 38,183 $ 30,463
======== ========
See notes to consolidated financial statements
-4-
<PAGE>
<TABLE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Six Months
Ended December 31, Ended December 31,
------------------ ------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
License fees $ 9,474 $ 6,437 $15,358 $11,190
Service, maintenance and support 7,063 5,133 13,869 10,201
------- ------- ------- -------
Net revenue 16,537 11,570 29,227 21,391
License fees 2,427 1,532 4,380 3,274
Service, maintenance and support 2,968 2,035 5,558 4,093
------- ------- ------- -------
Cost of revenue 5,395 3,567 9,938 7,367
------- ------- ------- -------
Gross margin 11,142 8,003 19,289 14,024
------- ------- ------- -------
Selling, general and administrative 8,099 5,757 14,654 10,488
Research and product development 1,353 762 2,453 1,619
Restructuring and other unusual charges -- -- -- 506
------- ------- ------- -------
Total expenses 9,452 6,519 17,107 12,613
------- ------- ------- -------
Operating income 1,690 1,484 2,182 1,411
Interest and other income, net 33 62 105 115
------- ------- ------- -------
Income before provision for income taxes 1,723 1,546 2,287 1,526
Provision for income taxes 651 618 868 610
------- ------- ------- -------
Net income $ 1,072 $ 928 $ 1,419 $ 916
======= ======= ======= =======
Earnings per share $ 0.18 $ 0.17 $ 0.24 $ 0.17
======= ======= ======= =======
Weighted average number of common and
common equivalent shares outstanding 6,066 5,555 6,027 5,502
======= ======= ======= =======
See notes to consolidated financial statements
</TABLE>
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<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
December 31,
(unaudited)
1996 1995
----------------------
Increase (decrease) in
cash
OPERATING ACTIVITIES
Net income $ 1,419 $ 916
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,814 1,374
Provision for losses on accounts receivable (50) (51)
Provision for deferred income taxes 340 319
Changes in operating assets and liabilities:
Trade accounts receivable (4,513) 1,888
Prepaid expenses and other receivables 82 (1)
Inventor ies (144) (5)
Deposits (527) 110
Accounts payable and accrued expenses (750) (983)
Customer deposits 41 (67)
Deferred revenue 2,590 (467)
Income taxes payable/refundable (136) 275
------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES (165) 3,308
See notes to consolidated financial statements
-6-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
Six Months Ended
December 31,
(unaudited)
1996 1995
----------------------
Increase (decrease) in
cash
INVESTING ACTIVITIES
Purchase of equipment and improvements (1,378) (396)
Additions to purchased and developed software (1,524) (1,340)
Purchase of subsidiaries, net of cash acquired (221) --
------- -------
NET CASH USED BY
INVESTING ACTIVITIES (3,123) (1,736)
FINANCING ACTIVITIES
Proceeds from issuance of common
stock and exercise of stock options 545 78
Payments on long-term obligations (84) --
------- -------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 461 78
Effect of exchange rate changes on cash (100) 71
------- -------
Net Change in Cash and Cash Equivalents (2,597) 1,721
Cash and Cash Equivalents at beginning of period 6,774 4,498
------- -------
CASH AND CASH EQUILAVENTS AT END
OF PERIOD $ 4,177 $ 6,219
======= =======
See notes to consolidated financial statements
-7-
<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 six
months ended December 31, 1995 relate primarily to severance payments and
reorganizing loss associated with the European sales channel.
Note C -- Acquisition
During the first quarter, the Company acquired in two separate transactions
companies in France and Australia for $2.0 million. The cash paid for the
acquisitions was $940,000, with the remaining balance of $1.06 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 date of acquisition. Acquisition
costs exceeded the fair value of the net assets acquired by approximately $2.3
million which is being amortized over five years.
-8-
<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(R) 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(R) 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 $16,537,000 for the three months ended December 31, 1996, an
increase of 43% from the same quarter of the previous year. License revenues
increased 47% from $6,437,000 for the same quarter last year to $9,474,000 at
December 31, 1996. Service and support revenues increased 38% for the respective
quarters' performance; $7,063,000 for December 31, 1996, and $5,133,000 for
December 31, 1995. These increases are primarily attributable to strong new
license and maintenance revenue in North America due to the Company's expanded
product line, as well as continued growth in the international European and Asia
Pacific markets. Net revenue outside of North America accounted for 24% of the
total revenue for the current quarter, compared to 15% for the same quarter last
year.
For the six months ended December 31, 1996, net revenue increased 37% to
$29,227,000 from $21,391,000 for the same period last year. Again, the increase
is primarily attributable to the Company's expanded product line and net revenue
outside of North America being at its highest level in the Company's history;
more than 25% of total revenue for the six month period.
The cost of license fees increased for the quarter ended December 31, 1996 and
for the six months ended December 31, 1996 from the corresponding periods last
year as a direct result of the increase in license fee revenue, and because
software amortization increased following the general commercial release of the
SyteLine product for which costs had previously been capitalized. The cost of
license fees as a percentage of license fee revenue increased slightly in the
quarter ended December 31, 1996 from the quarter ended December 31, 1995, but
remained constant at 29% for the respective six month periods.
The cost of service, maintenance and support increased to $2,968,000 for the
quarter ended December 31, 1996 from $2,035,000 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. As a percentage of service, maintenance and support revenue, the cost
of service, maintenance and support increased slightly in the quarter ended
December 31, 1996 from the quarter ended December 31, 1995, but remained
constant at 40% for the respective six month periods.
-9-
<PAGE>
Selling, general and administrative (SG&A) expense was $8,099,000 for the
quarter ended December 31, 1996, compared to $5,757,000 for the same time last
year, a 41% increase. For the respective six month periods, SG&A expense was
$14,654,000 compared to $10,488,000, an increase of 40%. The increase is due to
the Company's revenue growth planned spending increases in marketing and
promotional materials as well as the growth in both the international and
domestic sales channels. SG&A expense stated as a percentage of revenue, for
both the three month and six month periods, has remained fairly constant,
ranging from 49% to 50%.
Research and product development (R&D) expenditures, including amounts
capitalized for the three months ended December 31, 1996, were $2,155,000
compared to $1,201,000 for the same period last year. For the six months ended
December 31, 1996, R&D expenses were $3,974,000 compared to $2,959,000 for the
same period last year. Capitalization of software development costs was $802,000
and $1,521,000 for the three and six month periods respectively, ended December
31, 1996, compared to $440,000 and $1,340,000 for the comparable periods 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 December 31, 1996, the Company had working capital of $6,899,000 including
cash and cash equivalents of $4,177,000, compared to $7,538,000 including cash
and cash equivalents of $6,774,000 at June 30, 1996. The decrease in working
capital is due to the international expansion and current year capital
expenditures. Net accounts receivable increased from $11,429,000 at June 30,
1996, to $17,389,000 at December 31, 1996. At December 31, 1996, the accounts
receivable days sales outstanding was 98 days compared to 76 days at June 30,
1996. The increase in days is due to international expansion, as the
international receivables tend to have a longer collection period.
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.
-10-
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote
of Security Holders.
(a) The Annual Meeting of Shareholders of Registrant was held on
November 1, 1996 (the "Meeting").
(b) No response required.
(c) The only matters voted on at the Meeting were (i) the
uncontested election of Lawrence J. Fox, Larry L. Liebert,
James A. Rutherford, John T. Tait, Duke W. Thomas and
Stephen A. Sasser as directors of the Registrant. There were
4,602,636 common shares of Registrant represented in person
or by proxy at the Meeting.
(1) The manner in which the votes were cast with respect to
the election of directors was as follows:
NOMINEE SHARES VOTED "FOR" SHARES VOTED "AGAINST" SHARES WITHHELD
Lawrence J. Fox 4,587,736 0 14,900
Larry L. Liebert 4,590,236 0 14,400
James A. Rutherford 4,580,376 0 22,260
John T. Tait 4,589,636 0 13,000
Duke W. Thomas 4,590,236 0 12,400
Stephen A. Sasser 4,588,236 0 14,000
(d) Not applicable.
Item 5. Other Information None
-11-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27---Financial Data Schedule for the six months ended
December 31, 1996, submitted to the Securities and
Exchange Commission in electronic format.
(b) Reports on Form 8-K. None
-12-
<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: February 14, 1997 /s/ Lawrence W. Deleon
______________________________________________
Lawrence W. DeLeon
Vice President, Chief Financial Officer
and Secretary
-13-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION PAGE NO.
- -------------- ----------- --------
27 Financial Data Schedule for the six months ended
December 31, 1996, submitted to the Securities and
Exchange Commission in electronic format 15
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheets and statements of income of Symix Systems,
Inc., and is qualified in its entirety by reference to such Form 10-Q for the
period ended December 31, 1996.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 6-MOS
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<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,177
<SECURITIES> 0
<RECEIVABLES> 17,789
<ALLOWANCES> 400
<INVENTORY> 456
<CURRENT-ASSETS> 23,184
<PP&E> 12,966
<DEPRECIATION> 7,550
<TOTAL-ASSETS> 38,183
<CURRENT-LIABILITIES> 16,285
<BONDS> 640
0
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<COMMON> 60
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<SALES> 15,358
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</TABLE>
