<PAGE> 1
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, 1999
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
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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 7, 2000 was 7,394,857.
<PAGE> 2
INDEX
PAGE NO.
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PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Consolidated Balance Sheets
December 31, 1999 (unaudited)
June 30, 1999 3
Consolidated Statements of Operations (unaudited)
Three Months and Six Months
Ended December 31, 1999 and 1998 5
Consolidated Statements of Cash Flows (unaudited)
Six Months Ended December 31, 1999 and 1998 6
Notes to Consolidated Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
PART II. OTHER INFORMATION 19
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
EXHIBIT INDEX 23
2
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
December 31, June 30,
1999 1999
------------ --------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,651 $ 5,236
Trade accounts receivable, less allowance for
doubtful accounts of $1,554 at December 31, 1999
and $1,500 at June 30, 1999 46,205 46,251
Inventories 801 767
Prepaid expenses 2,406 2,518
Other receivables 1,591 1,346
Deferred income taxes 833 811
------- -------
TOTAL CURRENT ASSETS 56,487 56,929
OTHER ASSETS
Purchased and developed software, net of accumulated
amortization of $12,459 at December 31, 1999
and $10,833 at June 30, 1999 16,398 16,250
Intangibles, net 6,372 7,191
Deposits and other assets 2,227 2,033
------- -------
24,997 25,474
EQUIPMENT AND IMPROVEMENTS
Furniture and fixtures 3,347 3,101
Computer and other equipment 16,703 15,767
Leasehold improvements 1,514 1,472
------- -------
21,564 20,340
Less allowance for depreciation and amortization 14,220 12,143
------- -------
7,344 8,197
------- -------
TOTAL ASSETS $88,828 $90,600
======= =======
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 4
<TABLE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(In thousands)
<CAPTION>
December 31, June 30,
1999 1999
------------ --------
(unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 10,700 $ 16,052
Customer deposits 118 148
Deferred revenue 17,974 17,209
Deferred tax liability 57 --
Income taxes payable 163 470
Current portion of long term obligations 431 1,124
-------- --------
TOTAL CURRENT LIABILITIES 29,443 35,003
LONG-TERM OBLIGATIONS 73 392
BANK CREDIT AGREEMENT 8,101 5,367
DEFERRED INCOME TAXES 5,267 5,417
MINORITY INTEREST 2,151 2,020
SHAREHOLDERS' EQUITY
Common stock, authorized 20,000 shares; issued
7,661 shares at December 31, 1999, and 7,654 at
June 30, 1999; at stated capital amounts of $.01 per share 76 76
Capital in excess of stated value 32,488 32,363
Retained earnings 14,680 13,496
Cumulative translation adjustment (2,131) (2,214)
-------- --------
45,113 43,721
Less: Cost of common shares in treasury,
304 shares at December 31, 1999
and June 30, 1999, at cost (1,320) (1,320)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 43,793 42,401
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 88,828 $ 90,600
======== ========
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
<TABLE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
-------------------- --------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
License fees $15,538 $19,018 $28,930 $33,498
Service, maintenance and support 18,842 14,083 37,521 26,494
------- ------- ------- -------
Net revenue 34,380 33,101 66,451 59,992
License fees 4,791 4,689 9,029 8,554
Service, maintenance and support 10,863 8,030 20,993 14,362
------- ------- ------- -------
Cost of revenue 15,654 12,719 30,022 22,916
------- ------- ------- -------
Gross Margin 18,726 20,382 36,429 37,076
------- ------- ------- -------
Selling, general and administrative 13,268 13,774 24,858 26,380
Research and product development 4,026 2,249 7,637 4,446
Amortization of intangibles from
acquisitions 764 557 1,529 1,043
------- ------- ------- -------
Total operating expenses 18,058 16,580 34,024 31,869
------- ------- ------- -------
Operating income 668 3,802 2,405 5,207
Interest and other income (expense), net (196) 80 (466) 92
------- ------- ------- -------
Income before income taxes 472 3,882 1,939 5,299
Provision for income taxes 184 1,553 756 2,112
------- ------- ------- -------
Net income $ 288 $ 2,329 $ 1,183 $ 3,187
======= ======= ======= =======
Basic EPS:
Net income per share $ 0.04 $ 0.35 $ 0.16 $ 0.48
======= ======= ======= =======
Diluted EPS:
Net income per share $ 0.04 $ 0.32 $ 0.15 $ 0.44
======= ======= ======= =======
Weighted average number of common
shares outstanding 7,357 6,648 7,356 6,635
======= ======= ======= =======
Weighted average number of common
shares outstanding assuming dilution 7,836 7,281 7,778 7,270
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements
5
<PAGE> 6
<TABLE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<CAPTION>
Six Months Ended
December 31,
--------------------
1999 1998
------- -------
Increase (decrease) in cash
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,183 $ 3,187
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 5,157 3,752
Provision for losses on accounts receivable 54 130
Provision for deferred income taxes (68) 542
Changes in operating assets and liabilities:
Trade accounts receivable (41) (6,948)
Prepaid expenses and other receivables (137) (1,046)
Inventory (34) (182)
Deposits (186) 71
Accounts payable and accrued expenses (5,382) (2,947)
Customer deposits (18) (140)
Deferred revenue 768 3,816
Income taxes payable/refundable (298) (646)
------- -------
NET CASH (USED)/PROVIDED BY
OPERATING ACTIVITIES 998 (411)
</TABLE>
See notes to consolidated financial statements
6
<PAGE> 7
<TABLE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(unaudited)
<CAPTION>
Six Months Ended
December 31,
-----------------------
1999 1998
------- -------
Increase (decrease) in cash
<S> <C> <C>
INVESTING ACTIVITIES
Purchase of equipment and improvements (1,279) (1,807)
Additions to purchased and developed software (2,242) (2,415)
Purchase of subsidiaries, net of cash acquired -- (638)
------- -------
NET CASH USED BY
INVESTING ACTIVITIES (3,521) (4,860)
FINANCING ACTIVITIES
Proceeds from issuance of common
stock and exercise of stock options 39 395
Additions to long-term obligations, net of payments 1,853 1,573
------- -------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 1,892 1,968
Effect of exchange rate changes on cash 46 211
------- -------
Net change in cash (585) (3,092)
Cash at beginning of period 5,236 6,115
------- -------
CASH AT END OF PERIOD $ 4,651 $ 3,023
======= =======
</TABLE>
See notes to consolidated financial statements
7
<PAGE> 8
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, 1999 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.
In the first quarter of fiscal 1999, the Company adopted Statement of
Position ("SOP") 97-2, "Software Revenue Recognition," as amended by SOP 98-4,
which provides guidance on applying generally accepted accounting principles in
recognizing revenue on software transactions. The adoption of the SOPs, in
certain circumstances, has resulted and may in the future result in the deferral
of software license revenues that would have been recognized upon delivery of
the related software under the preceding accounting standard, SOP 91-1.
In December 1998, SOP 98-9 was issued which modified SOP 97-2 with
respect to certain transactions. The Company adopted SOP 98-9 in the first
quarter of fiscal 2000.
Note B - Acquisitions
On February 9, 2000, the Company acquired Profit Solutions,
Incorporated, a Minnesota corporation and a provider of Web-centric customer
relationship management applications with sales, marketing, service and business
intelligence functionality, for approximately $2.0 million in cash paid at
closing and $5.0 million in unsecured, subordinated promissory notes to be paid
off by January 2, 2001. The acquisition will be accounted for using purchase
accounting.
8
<PAGE> 9
On June 10, 1999, the Company acquired Distribution Architects
International, Inc., a provider of supply chain management applications for
distribution organizations ("DAI"), for 619,000 common shares of the Company and
$813,000 in cash. Pursuant to the acquisition agreement, DAI was merged with and
into a wholly-owned subsidiary of the Company, and each share of DAI common
stock was converted into the right to receive .1313 of a common share of the
Company. Each DAI option outstanding immediately prior to the merger was
canceled and terminated. The holder of each option was entitled to receive that
number of Symix shares equal to $2.17 (the per share value of DAI stock as
agreed to by DAI and Symix) less $1.242 (the stock option exercise price),
multiplied by the number of shares of DAI covered by the option, and divided by
$18.50. The transaction was accounted for as a purchase and resulted in a
one-time, non-recurring charge of $835,000 relating to the write off of acquired
in-process technology of DAI.
The following proforma information shows revenue and net income
assuming the Company and DAI had been combined at the beginning of the period
indicated. The one time, non-recurring charge of approximately $835,000 is
excluded from proforma net income.
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
1999 1998 1999 1998
----------------------------------------------------
(In thousands, except
per share data)
<S> <C> <C> <C> <C>
Revenue $34,380 $36,054 $66,451 $66,934
Net Income $ 288 $ 2,194 $ 1,183 $ 3,298
Earnings per Share $ 0.04 $ 0.28 $ 0.15 $ 0.42
</TABLE>
Note C - Business Segment and Geographic Information
The Company has adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 establishes standards for the way
that companies report information about operating segments, geographic areas and
major customers.
The Company designs, develops, markets and supports a fully integrated
manufacturing, planning and financial software system. The software was
developed for mid-market, discrete manufacturers. The Company operates
exclusively in this market and therefore only reports on one primary segment.
9
<PAGE> 10
The amount of net revenue, operating income (loss) and identifiable
assets attributable to each of the Company's geographic areas for the quarter
and six months ended December 31, 1999 and 1998, respectively, were as follows:
<TABLE>
<CAPTION>
NORTH AMERICA ASIA/PACIFIC EUROPE
------------- ------------ ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
QUARTER ENDED DECEMBER 31, 1999
Net Revenue $27,425 80% $2,978 9% $ 3,977 11%
Operating income (loss) $ 1,752 262% $ (227) (34)% $ (857) (128)%
Identifiable assets $68,516 77% $8,831 10% $11,481 13%
QUARTER ENDED DECEMBER 31, 1998
Net Revenue $24,809 75% $3,241 10% $ 5,051 15%
Operating income $ 2,850 75% $ 570 15% $ 382 10%
Identifiable assets $52,023 70% $8,443 11% $13,457 19%
<CAPTION>
NORTH AMERICA ASIA/PACIFIC EUROPE
------------- ------------ ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED DECEMBER 31, 1999
Net Revenue $52,772 79% $6,385 10% $ 7,294 11%
Operating income (loss) $ 3,847 160% $ 69 3% $(1,511) (63%)
Identifiable assets $68,516 77% $8,831 10% $11,481 13%
SIX MONTHS ENDED DECEMBER 31, 1998
Net Revenue $45,367 75% $5,793 10% $ 8,832 15%
Operating income $ 4,013 77% $ 696 13% $ 498 10%
Identifiable assets $52,023 70% $8,443 11% $13,457 19%
</TABLE>
10
<PAGE> 11
Note D - Earnings per Share
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
-------------------- --------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
NUMERATOR:
Net income for both basic and diluted
earnings per share $ 288 $2,329 $1,183 $3,187
====== ====== ====== ======
DENOMINATOR:
Weighted-average shares outstanding 7,357 6,551 7,356 6,524
Contingently issuable shares -- 97 -- 111
------ ------ ------ ------
Denominator for basic earnings
per share 7,357 6,648 7,356 6,635
Effect of dilutive securities:
Employee stock options 479 633 422 635
------ ------ ------ ------
Denominator for diluted earnings
per share 7,836 7,281 7,778 7,270
====== ====== ====== ======
Basic earnings per share $ 0.04 $ 0.35 $ 0.16 $ 0.48
====== ====== ====== ======
Diluted earnings per share $ 0.04 $ 0.32 $ 0.15 $ 0.44
====== ====== ====== ======
</TABLE>
11
<PAGE> 12
Note E - Comprehensive Income
The Company adopted SFAS No. 130, "Reporting Comprehensive Income" as
of July 1, 1998. SFAS No. 130 requires disclosure of total non-stockholder
changes in equity in interim periods and additional disclosures of the
components of non-stockholder changes in equity on an annual basis. Total
non-stockholder changes in equity include all changes in equity during the
period except those resulting from investments by and distributions to
stockholders.
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
(In thousands) (In thousands)
1999 1998 1999 1998
--------------------- --------------------
<S> <C> <C> <C> <C>
Net income $ 288 $2,329 $1,183 $3,187
Foreign currency translation adjustment (118) (188) 82 223
----- ------ ------ ------
Total comprehensive income $ 170 $2,141 $1,265 $3,410
===== ====== ====== ======
</TABLE>
12
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
REVENUE
Symix's net revenue 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 97-2 on Software Revenue Recognition.
Net revenue was $34.4 million for the three months ended December 31,
1999, an increase of 4% from the same quarter of the previous year. The overall
increase is attributable to the growth of service, maintenance and support
revenue for the quarter to $18.8 million, an increase of 34% from the same
period last year; offset by an 18% decline in license fee revenue for the
quarter. For the six months ended December 31, 1999, net revenue was $66.5
million, an increase of 11% from the same period of the previous year. The
increase is attributable to the growth of service, maintenance and support
revenue for the six months ended to $37.5 million, an increase of 42% from the
same period last year; offset by a 14% decline in license fee revenue for the
six months ended December 31, 1999.
Symix continued to be impacted by the industry-wide trend of delays in
new business system purchases due to the Year 2000 market dynamics. As a result
of this trend, license fee revenue for the quarter declined 18%, from $19.0
million at December 31, 1998 to $15.5 million at December 31, 1999. The trend is
similar for the six month comparison. License fee revenue for the six month
period declined 14%, from $33.5 million at December 31, 1998 to $28.9 million at
December 31, 1999.
Service, maintenance and support revenue increased to $18.8 million, a
34% increase for the quarter-to-quarter comparison and to $37.5 million, a 42%
increase, for the six month comparison. The significant increases in service,
maintenance and support revenue for both the three and six month periods are the
result of expansion of the services infrastructure to meet the increase in new
software license customers which occurred during prior quarters, as well as the
expanding product line. Additionally, the acquisition of Distribution Architects
International, Inc. ("DAI"), which occurred late in the fourth quarter of last
year, contributed to the increase in service, maintenance and support revenue
for the current quarter.
COST OF REVENUE
Total cost of revenue as a percentage of net revenue was 46% for the
quarter ended December 31, 1999, compared to 38% for the quarter ended December
31, 1998. The six month comparison was similar to the three month, with cost of
revenue as a percentage of net revenue of 45% at December 31, 1999 compared to
38% at December 31, 1998. The increase is due to the higher mix of service,
maintenance and support revenue as a percentage of total revenue. Higher costs
are associated with producing service, maintenance and support revenue. During
the quarter ended
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<PAGE> 14
December 31, 1999, service, maintenance and support revenue accounted for 55% of
net revenue, compared to 43% for the quarter ended December 31, 1998. The
composition of the service, maintenance and support revenue for the six month
period is similar as well (56% versus 44%).
Cost of license fees includes royalties, amortization of capitalized
software development costs and software delivery expenses. Cost of license fees
increased to 31% of license fee revenue for the quarter ended December 31, 1999
from 25% for the same period last year. The percentage increase is attributable
to the increase in the rate of amortization on capitalized software expenses
relative to license fee revenue. Symix began amortizing capitalized software
costs related to the new product initiative, SyteCentre, during the end of the
1999 fiscal year. The six month comparisons are consistent with the three month
comparisons for the quarters ended December 31, 1999 and 1998, respectively.
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.
Cost of service, maintenance and support increased slightly to 58% of service,
maintenance and support revenue from 57% for the same period last year. The
increase in costs is due to the increase in use of subcontractors to supplement
the work performed by Symix employees during the quarter ended December 31, 1999
compared to the same quarter last year. In general, the use of subcontractors
results in lower margins than the use of employees but provides to Symix
increased flexibility in meeting customer demands. The six month comparisons are
consistent with the three month comparisons for the quarters ended December 31,
1999 and 1998, respectively.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses consist of personnel and
related overhead costs, including commissions for the sales, marketing, general
and administrative activities of Symix, together with advertising and
promotional costs. Selling, general and administrative expenses decreased 4% for
the quarter ended December 31, 1999 compared to the same period last year and,
as a percentage of net revenue, decreased from 42% at December 31, 1998 to 39%
at December 31, 1999. The decrease in selling, general and administrative
expenses is related to the increase in percentage of service, maintenance and
support revenue versus license fees revenue in the net revenue mix as well as a
reduction of expenses in the sales distribution channels in response to
difficult market conditions. The six month comparisons are consistent with the
three month comparisons for the quarters ended December 31, 1999 and 1998,
respectively.
14
<PAGE> 15
RESEARCH AND DEVELOPMENT
Research and product development expenses include personnel and related
overhead costs for product development, enhancement, upgrades, quality assurance
and testing. Research and product development expenditures, including amounts
capitalized, were $5.0 million for the three months ended December 31, 1999,
compared to $3.4 million for the same period last year. For the six months ended
December 31, 1999, research and product development expenditures, including
amounts capitalized, were $9.8 million compared to $6.8 million for the same
period last year. Capitalization of software development costs was $1.0 million
for the quarter ended December 31, 1999, compared to $1.2 million for the
comparable period last year. For the six month period ended December 31, 1999,
$2.1 million was capitalized compared to $2.3 million for the same period last
year. As a percentage of net revenue, net of software capitalized, research and
product development expense increased to 12% for the quarter ended December 31,
1999 from 7% for the quarter ended December 31, 1998. In terms of actual
dollars, research and product development expense increased 79% for the quarter
ended December 31, 1999 compared to the same period last year. For the six month
comparison, as a percentage of net revenue, net of software capitalized,
research and development expense increased to 11% for the period ended December
31, 1999 from 7% for the period ended December 31, 1998. In terms of actual
dollars, research and product development expense increased 72% from the same
six month period in the prior year. The increase in research and product
development expenditures is the result of investments in the Company's expanding
product offerings, including new ecommerce products and the integration of
DAI's product line into the Symix product suite.
PROVISION FOR INCOME TAXES
The effective tax rate for the quarter as well as the six months ended
December 31, 1999 was 39%, compared to 40%, for the quarter as well as the six
months ended December 31, 1998. Historically, the increase in the effective tax
rate has been due to the amount of foreign taxable earnings in countries with
higher effective rates and the non-deductibility of the amortization of
intangibles, resulting in an increase of Symix's overall tax rate. Symix
recently has implemented a tax restructuring plan to lower state income tax
rates which has slightly lowered the overall effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
Symix's operating activities provided net cash of $998,000 during the
six month period ended December 31, 1999, compared to net cash used of $412,000
during the same period in 1998. In both periods, cash provided by operating
activities was due principally to earnings and increases in deferred revenues
and non-cash charges, offset by the decrease in trade and tax payables related
to year end. The accounts receivable days sales outstanding was 106 days at
December 31, 1998 compared to 116 days at December 31, 1999. 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, cash provided by financing activities was used to fund
software development costs and to purchase computer equipment.
15
<PAGE> 16
As of December 31, 1999, the Company had $27.0 million in working
capital, including $4.7 million in cash and cash equivalents. The Company had
accessed its $15.0 million unsecured revolving line of credit for $8.1 million
as of December 31, 1999. It is expected that the continued expansion of the
Company's operations and product line will result in additional requirements for
cash in the future, which will be met through operations and the existing line
of credit.
YEAR 2000 COMPLIANCE
Prior to and during the quarter ended December 31, 1999, the Company
devoted efforts to ensure that its products are Year 2000 ready and its
operations will not be adversely affected by Year 2000 system failures. Year
2000 compliance issues typically arise with respect to computer software systems
and programs that use only two digits, rather than four digits, to represent a
particular year. Consequently, these systems and programs may not process dates
beyond the year 1999 and may result in miscalculations or system failures. Year
2000 compliance problems also may arise in embedded systems, such as
environmental system controls, elevators and other products that use
microprocessors or computer chips.
The Company has not encountered any Year 2000 compliance problems
relating to its current product and service offerings, including those products
developed and supported by third party software vendors, or with its internal
computer information system and non-computer systems. The Company's current
product and service offerings have been designed to be Year 2000 compliant.
However, Year 2000 compliance issues have many elements and consequences, some
of which are not readily detectable or foreseeable. The Company will continue to
monitor its operations for Year 2000 problems. Any failure of the Company's
software product and service offerings, including those developed and supported
by third party vendors, or the Company's internal computer information system or
non-computer systems, to properly process dates beyond the Year 2000 could have
a material adverse effect on the Company's business, operating results and
financial condition.
The Company has not incurred any material costs related to Year 2000
compliance issues, and all costs related to Year 2000 compliance issues are
being expensed as incurred by the Company.
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. IN
SOME CASES, INFORMATION REGARDING CERTAIN IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM A FORWARD-LOOKING STATEMENT APPEAR
TOGETHER WITH SUCH STATEMENT. OTHER UNCERTAINTIES AND RISKS INCLUDE, BUT ARE NOT
LIMITED TO, DEMAND FOR AND MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS; THE
16
<PAGE> 17
IMPACT OF COMPETITIVE PRODUCTS; THE COMPANY'S ABILITY TO MAINTAIN EFFICIENT
MARKETING AND DISTRIBUTION OPERATIONS DOMESTICALLY AND INTERNATIONALLY; FUTURE
WORLDWIDE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS; THE COMPANY'S ABILITY TO
ATTRACT AND RETAIN HIGHLY SKILLED TECHNICAL, MANAGERIAL, SALES, MARKETING,
SERVICE AND SUPPORT STAFF AND TO RETAIN KEY TECHNICAL AND MANAGEMENT PERSONNEL;
TIMING OF PRODUCT DEVELOPMENT AND GENERAL RELEASE; THE COMPANY'S ABILITY TO
SUCCESSFULLY RESOLVE ANY YEAR 2000 ISSUES; 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. THE COMPANY IS NOT
OBLIGATED TO UPDATE OR REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT NEW
EVENTS OR CIRCUMSTANCES.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The following discussion and analysis of foreign exchange risks
relating to the Company is provided as of the fiscal year ended June 30, 1999.
No material changes in the information provided have occurred since that time.
The Company's revenue originating outside the United States was 22% and
21% of total revenues in fiscal 1999 and fiscal 1998, respectively. In fiscal
1999, international revenues from each geographic region were: Europe 13% of
total revenues and Asia Pacific 9% of total revenues. In fiscal 1998, the
respective percentages were 12% and 9%. International sales are made mostly from
the Company's foreign sales subsidiaries in the local countries and are
typically denominated in the local currency of each country. These subsidiaries
also incur most of their expenses in the local currency. Accordingly, all
foreign subsidiaries use the local currency as their functional currency.
The Company's international business is subject to risks typical of an
international business, including, but not limited to:
o differing economic conditions;
o changes in political climate;
o differing tax structures;
o other regulations and restrictions; and
o foreign exchange rate volatility.
Accordingly, the Company's future results could be materially adversely impacted
by changes in these or other factors.
The Company's exposure to foreign exchange rate fluctuations arises in
part from intercompany accounts in which cost of software, including certain
development costs, incurred
17
<PAGE> 18
in the United States is charged to the Company's foreign sales subsidiaries.
These intercompany accounts are typically denominated in the functional currency
of the foreign subsidiary in order to centralize foreign exchange risk with the
parent company in the United States. The Company is also exposed to foreign
exchange rate fluctuations as the financial results of foreign subsidiaries are
translated into U.S. dollars in consolidation. As exchange rates vary, these
results, when translated, may vary from expectations and adversely impact
overall profitability.
To date, the Company has not realized material fluctuations due to
foreign exchange rates. However, due to the growth of the international
business, management is reviewing a foreign exchange hedge program in order to
minimize this particular exposure.
18
<PAGE> 19
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 the outcome of any of
these legal matters will have a material adverse effect on the Company's
business, financial condition or results of operations.
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 17, 1999 (the "Meeting").
(b) No response required.
(c) The only matters voted on at the Meeting were (i) the
uncontested election of Lawrence J. Fox, Stephen A. Sasser,
Duke W. Thomas, Larry L. Liebert, John T. Tait and James A.
Rutherford as directors of the Company; and (ii) the adoption
of the Symix Systems, Inc. 1999 Non-Qualified Stock Option
Plan for Key Employees. There were 5,780,319 common shares of
the Company represented in person or by proxy at the Meeting.
19
<PAGE> 20
The manner in which the votes were cast with respect to the
election of directors was as follows:
NOMINEE SHARES VOTED "FOR" SHARES WITHHELD
------- ------------------ ---------------
Lawrence J. Fox 5,760,643 19,676
Stephen A. Sasser 5,760,643 19,676
Duke W. Thomas 5,763,143 17,176
Larry L. Leibert 5,762,014 18,305
John T. Tait 5,757,243 23,076
James A. Rutherford 5,763,914 16,405
The manner in which the votes were cast with respect to the
adoption of the Symix Systems, Inc. 1999 Non-Qualified Stock
Option Plan for Key Employees was as follows:
SHARES VOTED "FOR" SHARES VOTED "AGAINST" ABSTENTIONS BROKER NONVOTES
3,193,896 353,085 17,252 2,216,086
(d) Not applicable
ITEM 5. OTHER INFORMATION.
On February 9, 2000, the Company acquired Profit Solutions,
Incorporated, a Minnesota corporation and a provider of Web-centric customer
relationship management applications with sales, marketing, service and business
intelligence functionality ("PSI"), for approximately $2.0 million in cash paid
at closing and $5.0 million in unsecured, subordinated promissory notes to be
paid off by January 2, 2001. Pursuant to the acquisition agreement, a subsidiary
of the Company was merged into PSI, each share of PSI was canceled and each
share of the Company's subsidiary was converted into a share of the surviving
corporation. All of the outstanding shares of the surviving corporation are held
by the Company. Each PSI option and warrant outstanding immediately prior to the
merger was cancelled and terminated. As a result of the merger, each holder of a
PSI option or warrant immediately prior to the merger received cash equal to the
net value of each option or warrant held. In addition, the name of the surviving
corporation was changed to "Front Step, Inc." As a result of the acquisition,
all of the business of PSI was acquired by the Company. The acquisition will be
accounted for using purchase accounting.
The acquisition was announced publicly in press releases issued by the
Company on January 20, 2000 and February 10, 2000, copies of which are included
as exhibits to this report.
20
<PAGE> 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) See Index to Exhibits filed with this Quarterly Report on Form
10-Q following the Signature Page.
b) Reports on Form 8-K: None.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYMIX SYSTEMS, INC.
Date: February 14, 2000 /s/ Lawrence W. DeLeon
----------------------------
Lawrence W. DeLeon
(Duly Authorized Officer and
Principal Financial Officer)
22
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<C> <S> <C>
3(a)(1) Amended Articles of Incorporation of Incorporated herein by reference to
Symix Systems, Inc. (as filed with the Exhibit 3(a)(1) to the Annual Report on
Ohio Secretary of State on February 8, Form 10-K for the fiscal year ended June
1991) 30, 1997
3(a)(2) Certificate of Amendment to the Amended Incorporated herein by reference to
Articles of Incorporation of Symix Exhibit 3(a)(2) to the Annual Report on
Systems, Inc. (as filed with the Ohio Form 10-K for the fiscal year ended June
Secretary of State on July 16, 1996) 30, 1997
3(a)(3) Amended Articles of Incorporation of Incorporated herein by reference to
Symix Systems, Inc. (reflecting Exhibit 3(a)(3) to the Annual Report on
amendments through July 16, 1996, for Form 10-K for the fiscal year ended June
purposes of SEC reporting compliance 30, 1997
only)
3(b) Amended Regulations of Symix Systems, Incorporated herein by reference to
Inc. 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 Incorporated herein by reference to
Symix Systems, Inc. (as filed with the Exhibit 3(a)(1) to the Annual Report on
Ohio Secretary of State on February 8, Form 10-K for the fiscal year ended June
1991) 30, 1997
4(a)(2) Certificate of Amendment to the Amended Incorporated herein by reference to
Articles of Incorporation of Symix Exhibit 3(a)(2) to the Annual Report on
Systems, Inc. (as filed with the Ohio Form 10-K for the fiscal year ended June
Secretary of State on July 16, 1996) 30, 1997
</TABLE>
23
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<C> <S> <C>
4(a)(3) Amended Articles of Incorporation of Incorporated herein by reference to
Symix Systems, Inc. (reflecting Exhibit 3(a)(3) to the Annual Report on
amendments through July 16, 1996, for Form 10-K for the fiscal year ended June
purposes of SEC reporting compliance 30, 1997
only)
4(b) Amended Regulations of Symix Systems, Incorporated herein by reference to
Inc. Exhibit 3(b) to the Registration Statement
on Form S-1 of Registrant filed
February 12, 1991 (Registration No.
33-38878)
10(a) Sixth Amendment to Loan Agreement Among Filed herein
Symix Systems, Inc. and Symix Computer
Systems, Inc. and Bank One, NA
10(b) Symix Systems, Inc. 1999 Non-Qualified Incorporated herein by reference to
Stock Option Plan for Key Employees Exhibit 10(n) to the Annual Report on
Form 10-K for the fiscal year ended June
30, 1999
27 Financial Data Schedule Filed herein
99(a) Press Release: Symix and Front Step Filed herein
Announce Agreement to Acquire "eCRM"
Applications Vendor Profit Solutions,
Inc.
99(b) Press Release: Symix and Front Step Complete Filed herein
Acquisition of eCRM Vendor Profit Solutions,
Inc.
</TABLE>
24
<PAGE> 1
EXHIBIT 10
SIXTH AMENDMENT TO LOAN AGREEMENT AMONG
SYMIX SYSTEMS, INC. and SYMIX COMPUTER SYSTEMS, INC.
AND
BANK ONE, NA
THIS SIXTH AMENDMENT ("Sixth Amendment") is executed November 19 ,
1999, effective as of June 29, 1999, between SYMIX SYSTEMS, INC., an Ohio
corporation ("SSI") and SYMIX COMPUTER SYSTEMS, INC., an Ohio corporation
("SCSI" and, collectively with SSI, the "Companies") and BANK ONE, NA, a
national association ("Bank One").
WITNESSETH:
WHEREAS, the Companies and Bank One, parties to that certain Loan
Agreement dated as of May 20, 1996, amended by First Amendment dated as of
August 13, 1997, Second Amendment dated as of March 4, 1998, Third Amendment
dated as of June 1, 1998, further amended by Fourth Amendment dated as of
December 24, 1998 and further amended by Fifth Amendment dated as of June 10,
1999 (the "Agreement"), have agreed to amend the Agreement on the terms and
conditions hereinafter set forth. Terms not otherwise defined herein are used as
defined in the Agreement as amended hereby;
WHEREAS, the Companies desire to create a new subsidiary, Symix
Computer Systems Delaware, Inc.
NOW, THEREFORE, the Companies and Bank One hereby agree as follows:
SECTION 1. AMENDMENT OF THE AGREEMENT. The Agreement is, effective the
date hereof, hereby amended as follows:
1.1. Section 5.10 shall be amended and restated in its
entirety as follows:
5.10. Leverage Ratio. Companies shall not permit
the Consolidated Leverage Ratio to exceed the ratio of:
(a) 3.00 to 1.00 from the date of the Third
Amendment to June 29, 1998;
(b) 2.50 to 1.00 from June 30, 1998 until June
29, 2000; and
(c) 2.00 to 1.00 from June 30, 2000 and
thereafter.
1.2. The definition of "Guarantors" in Section 8 shall be
amended and restated in its entirety as follows:
<PAGE> 2
"Guarantors" shall mean Pritsker Corporation, Symix
distribution.com, Inc., Symix Computer Systems (Canada), Inc.,
Symix (UK) Ltd., Symix Computer Systems (UK) Ltd., Symix
Systems B.V., Symix Computer Systems Delaware, Inc.,
e-Mongoose, Inc. and Symix Computer Systems (Mexico) S. De
R.L. De C.V.
SECTION 2. GOVERNING LAW. This Sixth Amendment shall be governed by and
construed in accordance with the laws of the State of Ohio.
SECTION 3. COSTS AND EXPENSES. All fees, costs or expenses, including
reasonable fees and expenses of outside legal counsel, incurred by Bank One in
connection with either the preparation, administration, amendment, modification
or enforcement of this Sixth Amendment shall be paid by the Companies on
request.
SECTION 4. COUNTERPARTS. This Sixth Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement.
SECTION 5. CONFESSION OF JUDGMENT. Each Company hereby authorizes any
attorney at law to appear for the Company, in an action on this Sixth Amendment,
at any time after the same becomes due, as herein provided, in any court of
record in or of the State of Ohio, or elsewhere, to waive the issuing and
service of process against the Company and to confess judgment in favor of the
holder of this Sixth Amendment or the party entitled to the benefits of this
Sixth Amendment against the Company for the amount that may be due, with
interest at the rate herein mentioned and costs of suit, and to waive and
release all errors in said proceedings and judgment, and all petitions in error,
and right of appeal from the judgment rendered. No judgment against one Company
shall preclude Bank One from taking a confessed judgment against the other
Company.
SECTION 6. CONDITIONS PRECEDENT. Simultaneously with the execution
hereof, Bank One shall receive all of the following, each dated the date hereof,
in form and substance satisfactory to Bank One:
6.1. Certified copies of (a) the resolutions of the board of
directors of each Company evidencing authorization of the execution, delivery,
and performance of this Sixth Amendment and such other instruments and
agreements contemplated thereby; and (b) all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Sixth Amendment or the transactions contemplated hereby.
6.2. Unconditional Continuing Guaranty of (a) Symix Computer
Systems Delaware, Inc., a Delaware corporation; (b) e-Mongoose, Inc., an Ohio
corporation; and (c) Symix distribution.com, Inc., an Ohio corporation, each
accompanied by (i) certified copies of the resolutions of such corporation's
board of directors evidencing the authorization of the execution, delivery and
performance of such guaranty, (ii) certified articles (or certificate) of
2
<PAGE> 3
incorporation of such corporation from the state of its organization, (iii) good
standing certificates from Ohio and (if different) the state of such
corporation's organization and (iv) an incumbency certificate of such
corporation.
6.3. Such other documents as Bank One may, in its reasonable
discretion, so require.
SECTION 7. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES; NO
DEFAULTS. The Companies hereby expressly acknowledge and confirm that the
representations and warranties of the Company set forth in Section 3 of the
Agreement are true and accurate on this date with the same effect as if made on
and as of this date; that no financial condition or circumstance exists which
would inevitably result in the occurrence of an Event of Default under Section 6
of the Agreement; and that no event has occurred or no condition exists which
constitutes, or with the running of time or the giving of notice would
constitute an Event of Default under Section 6 of the Agreement.
SECTION 8. REAFFIRMATION OF DOCUMENTS. Except as herein expressly
modified, the parties hereto ratify and confirm all of the terms, conditions,
warranties and covenants of the Agreement, and all security agreements, pledge
agreements, mortgage deeds, assignments, subordination agreements, or other
instruments or documents executed in connection with the Agreement, including
provisions for the payment of the Notes pursuant to the terms of the Agreement.
This Sixth Amendment does not constitute the extinguishment of any obligation or
indebtedness previously incurred, nor does it in any manner affect or impair any
security interest granted to Bank One, all of such security interests to be
continued in full force and effect until the indebtedness described herein is
fully satisfied.
The Companies have executed this Sixth Amendment as of the date first
above written.
SYMIX SYSTEMS, INC. SYMIX COMPUTER SYSTEMS, INC.
By: /s/ Lawrence W. DeLeon By: /s/ Lawrence W. DeLeon
--------------------------- ---------------------------
Name: Lawrence W. DeLeon Name: Lawrence W. DeLeon
Its: Vice President, Chief Financial Its: Vice President, Chief Financial
Officer and Secretary Officer and Secretary
- --------------------------------------------------------------------------------
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS FAULTY GOOD FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR
ANY OTHER CAUSE.
- --------------------------------------------------------------------------------
BANK ONE, NA
By: /s/ Michael R. Zaksheske
---------------------------
Name: Michael R. Zaksheske
Its: Vice President
3
<TABLE> <S> <C>
<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, 1999 FOR SYMIX
SYSTEMS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,651
<SECURITIES> 0
<RECEIVABLES> 47,759
<ALLOWANCES> 1,554
<INVENTORY> 801
<CURRENT-ASSETS> 56,487
<PP&E> 21,564
<DEPRECIATION> 14,220
<TOTAL-ASSETS> 88,828
<CURRENT-LIABILITIES> 29,443
<BONDS> 0
0
0
<COMMON> 76
<OTHER-SE> 43,717
<TOTAL-LIABILITY-AND-EQUITY> 88,828
<SALES> 28,930
<TOTAL-REVENUES> 66,451
<CGS> 9,029
<TOTAL-COSTS> 30,022
<OTHER-EXPENSES> 34,024
<LOSS-PROVISION> 54
<INTEREST-EXPENSE> 269
<INCOME-PRETAX> 1,939
<INCOME-TAX> 756
<INCOME-CONTINUING> 1,183
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,183
<EPS-BASIC> 0.16
<EPS-DILUTED> 0.15
</TABLE>
<PAGE> 1
EXHIBIT 99(a)
SYMIX AND FRONT STEP ANNOUNCE AGREEMENT TO ACQUIRE "ECRM" APPLICATIONS
VENDOR PROFIT SOLUTIONS, INC.
- FRONT STEP TO GAIN PURE WEB-BASED CRM SOLUTION -
COLUMBUS, OHIO, January 20, 2000 - Symix Systems, Inc. (Nasdaq: SYMX),
today announced that it has entered into a definitive agreement to acquire
Profit Solutions, Inc. ("PSI"), a provider of Web-centric customer relationship
management (CRM) applications. PSI and its eCRM products will be an important
component of Front Step, Symix's newly announced eBusiness subsidiary.
PSI delivered one of the industry's first completely Web-based CRM
solution, e-CRM Front Office(TM). PSI's e-CRM applications enable its customers
to closely incorporate customer service, marketing and sales functions into
their overall eBusiness strategy, delivering Web-based marketing automation,
sales management, service management and business intelligence. The PSI product
suite is built entirely upon Microsoft Web-technology standards.
"The online world demands different interaction processes, most
emphatically in the areas of sales and marketing," said Stephen A. Sasser, Symix
President and Chief Executive Officer. "To successfully capitalize on eBusiness
opportunities, businesses must change their traditional channel models and sales
processes to meet the new expectations of the Internet economy. As a part of
Front Step, PSI's eCRM solutions will help accelerate the selling process by
automating and personalizing the exchange of information between buyer and
seller. With the pending acquisition of PSI, Front Step will deliver a complete
Internet-driven customer management system, supported by a comprehensive
eBusiness service and deployment offering. Our customers will have the
capabilities to market to their customers' specific preferences."
"The Internet has fueled a customer revolution requiring sellers to
provide instantaneous access to accurate and up-to-date information," said Susan
Woelfel, PSI President. "As a result, companies are investing heavily in
technology that enables them to integrate the Internet into their business model
in order to embrace eCustomers. Front Step offers PSI a unique opportunity
<PAGE> 2
to help companies evolve their business model from one that embraces eCustomers
into a comprehensive eBusiness strategy."
PSI will maintain its offices in Minneapolis, Minn., and will operate
as a business unit within Symix's Front Step eBusiness subsidiary. Symix intends
to purchase all of the outstanding common stock of PSI in exchange for cash and
promissory notes through a merger of Front Step and PSI. The acquisition,
expected to close within 45 days, is subject to PSI stockholders' approval and
other conditions of closing. Other terms of the agreement have not been
disclosed.
ABOUT PROFIT SOLUTIONS
Headquartered in Minneapolis, Minn., Profit Solutions, Inc. is the
leading developer of award-winning Microsoft-based customer relationship
management (CRM) solutions for the midmarket. PSI's eCRM Front Office product
provides 100 percent Web-based sales, marketing, service and business
intelligence functionality. For more information about the company and its
products visit http://www.profitsolutions.com.
ABOUT FRONT STEP
Front Step, Inc. offers companies the products, expertise and access to
eBusiness communities to rapidly create new eBusiness opportunities. Front Step,
a subsidiary of Symix Systems, Inc., delivers the eBusiness applications, design
and deployment services and ASP offerings required by companies to strategically
plan, build, launch and advance an eBusiness strategy.
ABOUT SYMIX
Symix Systems, Inc. and its subsidiaries develop and market software
and services that enable companies worldwide to quickly identify and deploy
eBusiness opportunities, and build the supporting business and technology
infrastructure. Symix's comprehensive suite of products include the eSyte suite
of eBusiness applications and deployment services, the SyteLine, SyteCentre and
SyteDistribution ERP and supply chain application suites. Symix is helping its
2
<PAGE> 3
customers take their talents and services to the Internet, today's "digital
marketplace." Headquartered in Columbus, Ohio, Symix has helped over 3,900
customers build their business systems and better serve their customers. Symix
markets its products through sales and service offices worldwide, as well as
through independent business partners. Symix company and product information is
available at http://www.symix.com.
###
The statements made in this press release which are not historical fact are
"forward looking statements" that involve risks and uncertainties, including,
but not limited to, product demand and market acceptance, customer-specific
enterprise software requirements, the effect of economic conditions, new product
development, the impact of Year 2000 issues, the impact of competitive products
and other factors detailed in Symix's filings with the Securities and Exchange
Commission.
SyteLine is a registered trademark and SyteCentre, SyteDistribution and eSyte
are trademarks of Symix Systems, Inc. All other products mentioned are
trademarks or registered trademarks of their respective companies.
3
<PAGE> 1
EXHIBIT 99(b)
SYMIX AND FRONT STEP COMPLETE ACQUISITION OF ECRM VENDOR
PROFIT SOLUTIONS, INC.
COLUMBUS, OHIO, February 10, 2000 - Symix Systems, Inc. (Nasdaq: SYMX)
today announced that it has completed the acquisition of Profit Solutions, Inc.
("PSI"), a provider of Web-based customer relationship management (CRM)
software. PSI will merge with Front Step Inc., Symix's eBusiness subsidiary. The
proposed acquisition was first publicly announced January 20, 2000.
PSI's eCRM Front Office(TM) is one of the industry's first completely
Web-based CRM solutions, delivering marketing automation, sales management,
service management and business intelligence. The eCRM Front Office applications
will be integrated with Front Step's eBusiness software suite to provide a
complete, Internet-based customer service, customer intelligence and customer
relationship and response solution. As an eCRM business unit within Front Step,
PSI will independently market to midsize companies in the manufacturing,
hospitality/service, financial service and healthcare industries. The new Front
Step eCRM business unit will be led by PSI President Susan Woelfel, and will
maintain its headquarters in Minneapolis, Minn.
"The Internet has delivered true one-to-one marketing capabilities,"
said Stephen A. Sasser, Symix President and Chief Executive Officer. "Today's
eCustomer, be it consumer or business, has grown to expect these Internet-driven
levels of personalization. With the acquisition of PSI, Front Step will enable
its customers to build and automate new sales and marketing processes as a part
of their overall eBusiness strategy. Front Step will immediately
<PAGE> 2
market and deliver PSI's innovative approach to managing eBusiness-critical
marketing, sales and customer service functions."
Symix has purchased all of the outstanding common stock of PSI in
exchange for cash and promissory notes through a merger of Front Step and PSI.
Other terms of the agreement have not been disclosed.
ABOUT FRONT STEP
Front Step, Inc. offers companies the products, expertise and access to
eBusiness communities to rapidly create new eBusiness opportunities. Front Step,
a subsidiary of Symix Systems, Inc., delivers the eBusiness applications, design
and deployment services and ASP offerings required by companies to strategically
plan, build, launch and advance an eBusiness strategy.
ABOUT SYMIX
Symix Systems, Inc. and its subsidiaries develop and market software
and services that enable companies worldwide to quickly identify and deploy
eBusiness opportunities, and build the supporting business and technology
infrastructure. Symix's comprehensive suite of products include the eSyte suite
of eBusiness applications and deployment services, the SyteLine, SyteCentre and
SyteDistribution ERP and supply chain application suites. Through its eBusiness
subsidiary, Front Step, Inc., Symix is helping its customers take their talents
and services to the Internet, today's "digital marketplace." Headquartered in
Columbus, Ohio, Symix has helped over 3,900 customers build their business
systems and better serve their customers. Symix markets its products through
sales and service offices worldwide, as well as through independent business
partners. Symix company and product information is available at
http://www.symix.com.
2
<PAGE> 3
###
The statements made in this press release which are not historical fact are
"forward looking statements" that involve risks and uncertainties, including,
but not limited to, product demand and market acceptance, customer-specific
enterprise software requirements, the effect of economic conditions, new product
development, the impact of competitive products, and other factors detailed in
Symix's filings with the Securities and Exchange Commission.
SyteLine is a registered trademark and SyteCentre, SyteDistribution and eSyte
are trademarks of Symix Systems, Inc. and/or its subsidiaries. All other
products mentioned are trademarks or registered trademarks of their respective
companies.
3
