<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
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 offices)
(Zip Code)
(614)523-7000
-------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former 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
--- ---
The number of common shares, without par value, of the registrant
outstanding as of February 11, 1998 was 6,361,093.
Exhibit Index on Page 19
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INDEX
Consolidated Balance Sheets
December 31, 1997 (unaudited) and
June 30, 1997 Page 3
Consolidated Statements of Operations (unaudited)
Three Months and Six Months Ended December 31, 1997 and 1996 Page 5
Consolidated Statements of Cash Flows (unaudited)
Six Months Ended December 31, 1997 and 1996 Page 6
Notes to Consolidated Financial Statements (unaudited) Page 8
2
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
----------- --------
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $1,450 $2,332
Trade accounts receivable, less allowance for
doubtful accounts of $912 at December 31, 1997
and $702 at June 30, 1997 27,763 21,689
Inventories 531 356
Prepaid expenses 1,017 1,162
Other receivables 406 300
Income tax benefit 177 -
Deferred income taxes 449 311
---------- ----------
TOTAL CURRENT ASSETS 31,793 26,150
OTHER ASSETS
Purchased and developed software, net of accumulated
amortization of $7,156 at December 31, 1997
and $6,106 at June 30, 1997 9,963 6,551
Deferred income taxes 398 171
Intangibles, net 5,589 4,779
Deposits and other assets 1,323 877
---------- ----------
17,273 12,378
EQUIPMENT AND IMPROVEMENTS
Furniture and fixtures 2,586 2,436
Computer and other equipment 11,404 10,423
Leasehold improvements 1,183 1,288
---------- ----------
15,173 14,147
Less allowance for depreciation and amortization 9,373 8,423
---------- ----------
5,800 5,724
---------- ----------
TOTAL ASSETS $54,866 $44,252
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------ --------
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $7,961 $7,423
Customer deposits 166 307
Deferred revenue 11,290 9,685
Income taxes payable - 63
Current portion of long term obligations 691 775
---------- ----------
TOTAL CURRENT LIABILITIES 20,108 18,253
LONG-TERM OBLIGATIONS 305 530
BANK CREDIT AGREEMENT 3,990 -
DEFERRED INCOME TAXES 3,099 2,108
SHAREHOLDERS' EQUITY
Common stock, authorized 20,000 shares; issued
6,162 shares at December 31, 1997, and
6,160 at June 30, 1997; at stated capital
amounts of $.01 per share 66 62
Convertible preferred stock of subsidiary 1,031 1,031
Capital in excess of stated value 22,585 13,291
Retained earnings 6,501 10,853
Cumulative translation adjustment (1,499) (556)
---------- ----------
28,684 24,681
Less: Cost of common shares in treasury,
304 shares at December 31, 1997
and June 30, 1997, at cost (1,320) (1,320)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 27,364 23,361
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $54,866 $44,252
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
--------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
License fees $14,485 $9,474 $24,033 $15,358
Service, maintenance and support 9,532 7,063 17,549 13,869
------- ------- ------- -------
Net revenue 24,017 16,537 41,582 29,227
License fees 3,679 2,427 6,391 4,380
Service, maintenance and support 4,858 3,623 9,037 6,808
------- ------- ------- -------
Cost of revenue 8,537 6,050 15,428 11,188
------- ------- ------- -------
Gross Margin 15,480 10,487 26,154 18,039
------- ------- ------- -------
Selling, general and administrative 11,133 7,444 18,874 13,404
Research and product development 1,709 1,353 3,744 2,453
Acquisition research and development write-off 6,503 - 6,503 -
------- ------- ------- -------
Total operating expenses 19,345 8,797 29,121 15,857
------- ------- ------- -------
Operating income (loss) (3,865) 1,690 (2,967) 2,182
Interest and other income (expense), net (16) 33 (65) 105
------- ------- ------- -------
Income (loss) before income taxes (3,881) 1,723 (3,032) 2,287
Provision for income taxes 1,004 651 1,321 868
------- ------- ------- -------
Net income (loss) ($4,885) $1,072 ($4,353) $1,419
------- ------- ------- -------
------- ------- ------- -------
Basic EPS:
Net income (loss) per share ($0.79) $0.19 ($0.72) $0.26
------- ------- ------- -------
------- ------- ------- -------
Diluted EPS:
Net income (loss) per share ($0.79) $0.18 ($0.72) $0.24
------- ------- ------- -------
------- ------- ------- -------
Weighted average number of common
shares outstanding 6,185 5,582 6,084 5,553
------- ------- ------- -------
------- ------- ------- -------
Weighted average number of common
shares outstanding assuming dilution 6,185 5,858 6,084 5,819
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
---------------------------
1997 1996
---- ----
Increase (decrease) in cash
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ($4,353) $1,419
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Acquisition research and development write-off 6,503 -
Depreciation and amortization 2,833 1,814
Provision for losses on accounts receivable 211 (50)
Provision for deferred income taxes 1,171 340
Changes in operating assets and liabilities:
Trade accounts receivable (6,463) (4,513)
Prepaid expenses and other receivables 102 82
Inventory (175) (144)
Deposits (480) (527)
Accounts payable and accrued expenses (648) (750)
Customer deposits (137) 40
Deferred revenue 908 2,590
Income taxes payable/refundable (203) (136)
------ ------
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (731) 165
</TABLE>
See notes to consolidated financial statements
6
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
----------------------
1997 1996
---- ----
Increase (decrease) in cash
<S> <C> <C>
INVESTING ACTIVITIES
Purchase of equipment and improvements (1,160) (1,378)
Additions to purchased and developed software (2,390) (1,524)
Purchase of subsidiaries, net of cash acquired (148) (221)
------ ------
NET CASH USED BY
INVESTING ACTIVITIES (3,698) (3,123)
FINANCING ACTIVITIES
Proceeds from issuance of common
stock and exercise of stock options 105 545
Additions to long-term obligations, net of payments 3,556 (84)
------ ------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 3,661 461
Effect of exchange rate changes on cash (114) (100)
------ ------
Net change in cash (882) (2,597)
Cash at beginning of period 2,332 6,774
------ ------
CASH AT END OF PERIOD $1,450 $4,177
------ ------
------ ------
</TABLE>
See notes to consolidated financial statements
7
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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, 1997 Annual Report to
Shareholders should be read in conjunction with these financial statements.
Certain reclassifications have been made to conform prior quarter amounts to the
current quarter presentation.
Recently, Statement of Position 97-2, "Software Revenue Recognition"
(SOP 97-2) was issued by the Accounting Standards Executive Committee. SOP
97-2 is effective for transactions entered into in fiscal years beginning
after December 15, 1997. Accordingly the Company will adopt SOP 97-2
beginning in fiscal 1999. The Company is studying the provisions of SOP 97-2,
but does not anticipate that it will have a material impact on its operating
results.
Note B - Acquisitions
During the first quarter of fiscal 1997, the Company acquired in two
separate transactions companies in France and Australia for an aggregate of $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.
On January 9, 1997 the Company acquired an Ontario, Canada corporation
called Visual Applications Software, Inc. ("VAS") for $1.0 million (Canadian) in
cash, and 250,000 Class A Preference Shares (the "Class A Shares") and 500,000
Class B Preference Shares (the "Class B Shares") of a subsidiary of the Company.
The Class B Shares are redeemable by the holder for $1.00 (Canadian) per share.
In connection with the acquisition, the Company also entered into a Share
Exchange Agreement with the former stockholders of VAS which provides for a one
for one exchange of the Class A Shares for common shares of the Company. VAS
designs and markets a field service software product. The acquisition was
accounted for using purchase accounting with results included since the date of
acquisition. Acquisition costs exceeded the fair
8
<PAGE>
value of the net assets acquired by approximately $3.2 million which is being
amortized over five years.
On November 24, 1997, the Company acquired Pritsker Corporation
("Pritsker"), for $737,000 in cash and 485,000 common shares of the Company.
Pursuant to the acquisition agreement, (i) Pritsker was merged with and into a
wholly-owned subsidiary of the Company incorporated in Ohio, (ii) each share of
Pritsker common stock was converted into the right to receive 0.170108 common
shares of the Company and (iii) each share of Pritsker preferred stock was
converted into the right to receive $5.23 in cash plus accrued and unpaid
dividends. Each unexercised employee stock option and outstanding warrant for
Pritsker common stock was assumed by Symix and converted into the right to
acquire that number of common shares of the Company to which the holder would
have been entitled if such holder exercised the option or warrant immediately
prior to the merger. Pritsker markets advanced planning and scheduling and
simulation software to mid-market manufacturers. The transaction was accounted
for as a purchase and resulted in a one-time, non-recurring charge of
approximately $6.5 million relating to the write-off of acquired in-process
technology of Pritsker.
The following proforma information (in $000) displays revenue and net
income assuming the Company and Pritsker had been combined at the beginning
of the period presented. The one time, non-recurring charge of
approximately $6.5 million is excluded from proforma net income.
<TABLE>
<CAPTION>
Six Months
Ended December 31,
------------------
1997 1996
---- ----
<S> <C> <C>
Revenue $42,746 $31,337
------- -------
------- -------
Net Income $ 1,489 $ 1,506
------- -------
------- -------
</TABLE>
Note C - Earnings per Share
The company adopted the provisions of Statement No. 128, "Earnings Per
Share" (SFAS 128) during the fiscal quarter ended December 31, 1997. In
accordance with the provisions, earnings per share for 1996 have been
restated. The following table sets forth the computation of basic and
diluted earnings per share (in $000's except per share data):
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
-------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
NUMERATOR:
Net income (loss) for both basic and diluted
earnings (loss) per share ($4,885) $1,072 ($4,353) $1,419
------- ------ ------- ------
------- ------ ------- ------
DENOMINATOR:
Weighted-average shares outstanding 6,060 5,582 5,959 5,553
Contingently issuable shares (VAS) 125 - 125 -
------- ------ ------- ------
Denominator for basic earnings (loss)
per share 6,185 5,582 6,084 5,553
Effect of dilutive securities:
Employee stock options - 276 - 266
------- ------ ------- ------
Denominator for diluted earnings (loss)
per share 6,185 5,858 6,084 5,819
------- ------ ------- ------
------- ------ ------- ------
Basic earnings (loss) per share ($0.79) $0.19 ($0.72) $0.26
------- ------ ------- ------
------- ------ ------- ------
Diluted earnings (loss) per share ($0.79) $0.18 ($0.72) $0.24
------- ------ ------- ------
------- ------ ------- ------
</TABLE>
9
<PAGE>
If the effect of the non-recurring charge of $6.5 million were excluded
from the financial results, the effect of dilutive securities should be
factored into the denominator for the diluted earnings per share
calculation. The effect of those dilutive securities for the three month
period ended December 31, 1997 would be 604 and for the six month period 594.
Note D - Recent Development
On January 27, 1998, Symix filed with the Securities and Exchange
Commission an application for withdrawal of its Registration Statement on Form
S-1 which relates to the registration of 1.9 million common shares, including
200,000 shares proposed to be offered by shareholders. Symix decided to
postpone the proposed securities offering and to withdraw the Registration
Statement due to current securities market conditions.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
REVENUE
Net revenue for Symix Systems, Inc. (the "Company" or "Symix") is derived
primarily from (1) licensing Symix software and providing custom programming
services; (2) providing installation, implementation, training, consulting and
systems integration services; and (3) providing maintenance and support on a
subscription basis. Revenue for all periods presented is accounted for in
accordance with AICPA Statement of Position 91-1 on Software Revenue
Recognition.
Net revenue was $24.0 million for the three months ended December 31,
1997, an increase of 45% from the same quarter of the previous year. Both
license fee and service, maintenance and support revenues contributed to the net
revenue increase, but more significantly license fee revenue with a 53%
increase. For the six months ended December 31, 1997 net revenue was $41.6
million, an increase of 42% from the same period of the previous year.
Consistent with the quarter, license fee revenue growth for the six month period
accounted for a significant portion of the overall increase, increasing 56%
compared to the same period last year, with service, maintenance and support
revenues increasing by 27%.
Geographically, the primary contributors to the software license fee
revenue growth continue to be the Company's North American and European markets.
In both of these regions, license fee revenue increased by more than 50% from
the same quarter last year. In North America, the increased number of sales
representatives as well as improving productivity continues to positively impact
results. The Company's Pritsker acquisition also contributed to the quarter's
increase in license fee revenue. In Europe, the Company's United Kingdom
operation recorded the best results in the Company's history. The Company
believes that its employment, at approximately this same time last year, of new
sales management for the United Kingdom operation has increased the productivity
of the sales force. License fee results for the six month period ended
December 31, 1997 are consistent with the current quarter's performance,
increasing as well by more than 50%, most significantly in North America and
Europe.
The impact of the Asian economic difficulties, particularly in Southeast
Asia, affected business during the second quarter. Net revenue in Asia
increased by 7% for the quarter ended December 31, 1997 and 20% for the six
month period ended December 31, 1997, compared to the same periods last year.
Excluding the effects of currency fluctuation, net revenue increased by 19% for
the quarter ended December 31, 1997 and 28% for the six month period ended
December 31, 1997, compared to the same periods last year. In total, revenue
outside North America represented approximately 21% of the total Company
revenue, down slightly from the 25% realized the past few quarters.
10
<PAGE>
Service, maintenance and support revenue increased 35% during the
quarter ended December 31, 1997 to $9.5 million, compared to the same period
last year. Service, maintenance and support revenue continues to grow as a
result of the Company's growing customer base and, with respect to the
current quarter, as a result of the Pritsker acquisition. For the six month
period ended December 31, 1997, service, maintenance and support revenue
increased 27% to $17.5 million compared to the same period last year.
COST OF REVENUE
Total cost of revenue as a percentage of net revenue was 36% for the
quarter ended December 31, 1997, compared to 37% for the same period last
year. The slight improvement is attributable to improved software license fee
gross margins. The service, maintenance and support cost of revenue remained
constant at 51% for the quarter to quarter comparison. Gross margin for the
six month period improved, increasing slightly from 62% at December 31, 1996
to 63% at December 31, 1997. The increase is attributable to the improvement
in license fee costs which decreased from 29% at December 31, 1996 to 27% at
December 31, 1997. The improved software license fee gross margin is
attributable to the increase in the software license fee volume relative to
the rate of amortization on capitalized software. Cost of software license
fee includes royalties, amortization of capitalized software, development
costs and software delivery expenses.
For the current quarter, the cost of service, maintenance and support
of $4.9 million remained constant at 51%. For the year to date comparison,
the cost of service, maintenance and support increased from 49% to 51%. This
increase is attributable to the addition of service and support staff to
handle the expanding product line and customer base. Cost of service,
maintenance and support includes the personnel and related overhead costs for
implementation, training and customer support services, together with fees
paid to third parties for subcontracted services.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense consists of personnel and
related overhead costs including commissions for the sales, marketing, general
and administrative activities of the Company, together with advertising and
promotional costs. Selling, general and administrative expense was $11.1 million
for the quarter ended December 31, 1997 compared to $7.4 million for the same
period last year, a 50% increase. As a percentage of revenue, sales, general
and administrative expense was 46% of net revenue compared to 45% for the same
period last year. The slight increase is primarily attributable to an increase
in the sales force. On a year-to-date comparison basis the trend is favorable.
Sales, general and administrative expense increased in total 41%, and as a
percentage of net revenue dropped from 46% last year to 45% this year. The
improvement is due to the improved productivity of the North American sales
channel.
11
<PAGE>
RESEARCH AND DEVELOPMENT
Research and development expenditures, including amounts capitalized, for
the three months ended December 31, 1997, were $2.8 million compared to $2.2
million for the same period last year. For the six months ended December 31,
1997, research and development expenses, including capitalized costs, were $6.1
million compared to $4.0 million for the same period last year. The Company
capitalized research and development costs of $1.1 million for the quarter
ended December 31, 1997 compared to $0.8 million for the comparable period last
year. For the six month period ended December 31, 1997, $2.4 million of
research and development expenses was capitalized compared to $1.5 million for
the same 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. Research and development expense includes personnel and related
overhead costs for product development, enhancements, upgrades, quality
assurance and testing.
ACQUISITION RESEARCH AND DEVELOPMENT WRITE-OFF IMPACT ON NET INCOME AND EPS
During the quarter, the Company realized a non-recurring charge of $6.5
million relating to the write-off of acquired in-process technology in
connection with the Pritsker acquisition. Excluding the one time charge, net
income increased 51% to $1.6 million for the quarter. If consistently adjusted,
earnings per share for the quarter was $0.24 compared to $0.18 per share
reported for the same period in the previous year. On a year-to-date basis, net
income increased 52% to $2.2 million with earnings per share increasing to $0.32
per share compared to $0.24 per share a year ago.
PROVISION FOR INCOME TAXES
As a result of the acquisition of Pritsker, the Company incurred a
one-time charge of $6.5 million relating to the write-off of acquired
in-process technology. The write-off is not deductible for income tax
purposes. The effective tax rate, excluding the nonrecurring write-off of
in-process technology, was 38% for each of the quarters ended December 31,
1997 and 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash used by operations was $0.7 million for the six months ended
December 31, 1997, compared to $0.2 million of cash provided by operations a
year ago. The increase in net income before the acquisition research and
development write-off was offset by the increase in trade accounts
receivable. Trade accounts receivable days sales outstanding was 106 days at
December 31, 1997 compared to 98 days at December 31, 1996. An increase in
installment payments on software license fees from new customers
(particularly on large deals) contributed to the increase in days sales
outstanding. For both periods presented, the Company invested in software
development, computer equipment, and acquisitions. During the quarter ended
December 31, 1997, the Company met its cash needs from cash on hand and
borrowings under its unsecured line
12
<PAGE>
of credit. Cash at December 31, 1997 decreased to $1.5 million from $4.2
million at December 31, 1996.
Working capital of $11.7 million increased $3.8 million over the June
30, 1997 year end level of $7.9 million. The Company has a $6.0 million
unsecured line of credit with a bank that expires in fiscal year 1999,
convertible to a five year term loan at any time on or before October 31,
1999. The Company has accessed $4.0 million on the line as of December 31,
1997. 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 may raise additional capital through debt financing
or the sale of Company securities, during the next twelve months to fund such
expansion. The exact details of such fundraising efforts, however, have not
been determined.
RECENT DEVELOPMENT
On January 27, 1998 Symix filed with the Securities and Exchange Commission
an application for withdrawal of its Registration Statement on Form S-1 which
relates to the registration of 1.9 million common shares, including 200,000
shares proposed to be offered by shareholders. Symix has decided to postpone
the proposed securities offering and to withdraw the Registration Statement due
to current securities market conditions.
YEAR 2000 COMPLIANCE ISSUE
The Company has developed a compliance program over approximately the
past three years that is designed to make the Company's internally developed
software, its relational data base management system, and its information
systems hardware, year 2000 compliant. As a result of the compliance program,
the Company believes that such software, hardware and its relational data
base management system are currently Year 2000 compliant.
The Company has not assessed fully the impact of the year 2000 compliance
issue on the entities with whom the Company interacts. The Company also has not
verified that its non-information systems equipment is year 2000 compliant. The
Company, however, does not anticipate that these issues will materially affect
the Company's business, operations or financial condition.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: IN ADDITION TO HISTORICAL INFORMATION, THIS QUARTERLY REPORT ON FORM 10-Q
CONTAINS "FORWARD-LOOKING STATEMENTS", INCLUDING INFORMATION REGARDING FUTURE
ECONOMIC PERFORMANCE AND PLANS AND OBJECTIVES OF MANAGEMENT, WHICH ARE SUBJECT
TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS. SUCH
UNCERTAINTIES AND RISKS INCLUDE, BUT ARE NOT LIMITED TO, PRODUCT DEMAND AND
MARKET ACCEPTANCE; THE IMPACT OF COMPETITIVE PRODUCTS; THE COMPANY'S ABILITY TO
MAINTAIN EFFICIENT MARKETING AND DISTRIBUTION OPERATIONS WITH RESPECT TO NEW
PRODUCTS; THE COMPANY'S ABILITY TO INTEGRATE PRITSKER INTO ITS CURRENT BUSINESS
IN A TIMELY MANNER OR TO PROFITABLY MARKET AND DISTRIBUTE PRITSKER'S PRODUCT
LINES; THE YEAR 2000 COMPLIANCE ISSUE; FUTURE ECONOMIC, COMPETITIVE AND MARKET
CONDITIONS; THE COMPANY'S ABILITY TO RETAIN KEY TECHNICAL AND MANAGEMENT
PERSONNEL; TIMING OF PRODUCT
13
<PAGE>
DEVELOPMENT; PRODUCT PRICING AND OTHER FACTORS DETAILED IN THIS QUARTERLY REPORT
ON FORM 10-Q AND IN OTHER FILINGS MADE BY THE COMPANY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The disclosures required under this Part I, Item 3 are omitted pursuant to
the General Instructions to Item 305 of Regulation S-K, because this Quarterly
Report on Form 10-Q, for the quarter ended December 31, 1997, does not contain
financial statements for fiscal years ended after June 15, 1998.
14
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is subject to legal proceedings and claims which arise in
the normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe that the outcome of any of
these legal matters will have a material adverse effect on the Company's
business, financial condition or results of operation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
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
4, 1997 (the "Meeting").
(b) No response required.
(c) The only matter voted on at the Meeting, other than approval of the
minutes of the last Annual Meeting of Shareholders, was 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 Company. There were 5,394,610 common shares of
the Company represented in person or by proxy at the Meeting. The
manner in which the votes were cast with respect to the election of
directors was as follows:
<TABLE>
<CAPTION>
NOMINEE SHARES VOTED "FOR" SHARES VOTED "AGAINST" SHARES WITHHELD
------- ------------------ ---------------------- ---------------
<S> <C> <C> <C>
Lawrence J. Fox 5,377,677 0 16,933
Stephen A. Sasser 5,377,777 0 16,833
Duke W. Thomas 5,376,359 0 18,251
Larry L. Liebert 5,377,777 0 16,833
John T. Tait 5,377,259 0 17,351
James A. Rutherford 5,377,777 0 16,833
</TABLE>
(d) Not applicable.
15
<PAGE>
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) See Index to Exhibits on page 19.
b) Reports on Form 8-K.
None
16
<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 17, 1998 /s/ Lawrence W. DeLeon
----------------------------------
Lawrence W. DeLeon,
Duly Authorized Officer and
Principal Financial Officer
17
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page
----------- ----------- ----
<S> <C> <C>
2 Agreement of Merger dated as of October 2, 1997, among Incorporated herein by reference to Appendix I to
Pritsker Corporation, Symix Systems, Inc. and SSI the Proxy Statement/Prospectus in Part I of the
Acquisition Corp. Registration Statement on Form S-4 filed October
27, 1997 (Registration No. 333-38809)*
3(a)(1) Amended Articles of Incorporation of Symix Systems, Incorporated herein by reference to Exhibit 3(a)(1)
Inc. (as filed with the Ohio Secretary of State on to the Annual Report on Form 10-K for the fiscal
February 8, 1991) year ended June 30, 1997
3(a)(2) Certificate of Amendment to the Amended Articles of Incorporated herein by reference to Exhibit 3(a)(2)
Incorporation of Symix Systems, Inc. (as filed with to the Annual Report on Form 10-K for the fiscal
the Ohio Secretary of State on July 16, 1996) year ended June 30, 1997
3(a)(3) Amended Articles of Incorporation of Symix Systems, Incorporated herein by reference to Exhibit 3(a)(3)
Inc. (reflecting amendments through July 16, 1996, for to the Annual Report on Form 10-K for the fiscal
purposes of SEC reporting compliance only) year ended June 30, 1997
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 on February 12, 1991
(Registration No. 33-38878)
4(a)(1) Amended Articles of Incorporation of Symix Systems, Incorporated herein by reference to Exhibit 3(a)(1)
Inc. (as filed with the Ohio Secretary of State on to the Annual Report on Form 10-K for the fiscal
February 8, 1991) year ended June 30, 1997
4(a)(2) Certificate of Amendment to the Amended Articles of Incorporated herein by reference to Exhibit 3(a)(2)
Incorporation of Symix Systems, Inc. (as filed with to the Annual Report on Form 10-K for the fiscal
the Ohio Secretary of State on July 16, 1996) year ended June 30, 1997
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description Page
----------- ----------- ----
<S> <C> <C>
4(a)(3) Amended Articles of Incorporation of Symix Systems, Incorporated herein by reference to Exhibit 3(a)(3)
Inc. (reflecting amendments through July 16, 1996, for to the Annual Report on Form 10-K for the fiscal
purposes of SEC reporting compliance only) year ended June 30, 1997
4(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) Agreement of Merger dated as of October 2, 1997, among Incorporated herein by reference to Appendix I to
Pritsker Corporation, Symix Systems, Inc. and SSI the Proxy Statement/Prospectus in Part I of the
Acquisition Corp. Registration Statement on Form S-4 filed October
27, 1997 (Registration No. 333-38809)*
27 Financial Data Schedule Page 21
</TABLE>
*The Registrant has omitted all schedules from the Agreement of Merger, as filed
with the SEC and incorporated into this Quarterly Report on Form 10-Q. The
schedules are identified in the "List of Schedules" of the Agreement of Merger.
The registrant will provide the SEC with a copy of any schedule upon request.
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS IN THE
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1997 FOR SYMIX
SYSTEMS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY>U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,450
<SECURITIES> 0
<RECEIVABLES> 28,675
<ALLOWANCES> 912
<INVENTORY> 531
<CURRENT-ASSETS> 31,793
<PP&E> 15,173
<DEPRECIATION> 9,373
<TOTAL-ASSETS> 54,866
<CURRENT-LIABILITIES> 20,108
<BONDS> 0
0
1,031
<COMMON> 66
<OTHER-SE> 26,267
<TOTAL-LIABILITY-AND-EQUITY> 54,866
<SALES> 24,033
<TOTAL-REVENUES> 41,582
<CGS> 6,391
<TOTAL-COSTS> 15,428
<OTHER-EXPENSES> 29,121
<LOSS-PROVISION> 210
<INTEREST-EXPENSE> 189
<INCOME-PRETAX> (3,032)
<INCOME-TAX> 1,321
<INCOME-CONTINUING> (4,353)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,353)
<EPS-PRIMARY> (0.72)
<EPS-DILUTED> (0.72)
</TABLE>
