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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Date of Report (Date of earliest event reported)
January 26, 1998
ROSS SYSTEMS, INC.
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(Exact name of registrant as specified in its charger)
CALIFORNIA
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(State or other jurisdiction of incorporation or organization)
0-19092 94-2170198
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Commission File Number (I.R.S. Employer Identification Number)
2 Concourse Parkway, Suite 800
Atlanta, Georgia 30328
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(Address of principal executive offices)
(770) 351-9600
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(Registrant's telephone number, including area code)
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ROSS SYSTEMS, INC.
FORM 8-K
JANUARY 26, 1998
ITEM 5. OTHER EVENTS
On January 26, 1998, the Registrant made the press release on the following
page with regard to the financial results of its second fiscal quarter, ended
December 31, 1997.
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FOR MORE INFORMATION:
Dennis Vohs, Ross Systems, 770/351-9600, Ext. 3058
ROSS SYSTEMS, INC. ANNOUNCES 2ND QUARTER RESULTS
ATLANTA, GEORGIA, January 26, 1998 -- Ross Systems, Inc. (Nasdaq: ROSS), a
leading supplier of business software solutions for the client/server market,
today announced results for its second quarter of Fiscal 1998, ended
December 31, 1997. Revenues for the quarter increased eight percent to
$20.0 million from $18.6 million in the prior year. Operating expenses for the
quarter increased 20 percent to $20.9 million from $17.5 million in the prior
year. The operating loss was $897,000 compared to operating income of
$1.1 million in the prior year. For the quarter, the company reported a net
loss of $1.3 million or $(0.07) per share, compared to net earning of $807,000
or $0.04 per share in the prior year.
For the six-month period ended December 31, 1997, the company reported that
revenues increased nine percent to $39.8 million from $36.6 million in the prior
year. Operating expense for the period increased 15 percent to $39.8 million
from $34.6 million in the prior year. Operating income was $12,000 compared to
$2.0 million in the prior year. The net loss for the period was $935,000 or
$(0.05) per share compared to net income of $1.3 million or $0.07 per share in
the prior year.
Software product license revenues for the quarter increased 15 percent over the
same quarter last year. North American and European software license revenues
increased by 24 percent and 17 percent respectively. Software license revenues
from the Pacific Rim declined 64 percent from the prior year. Seventy-two
percent of the software contract amounts were derived from the process
manufacturing sector, which increased 41 percent over the prior year. Sales in
the healthcare sector represented eight percent of the total and increased
significantly from a very low level in the prior year. Sales in the healthcare
sector have doubled in the past twelve months over the previous year.
The company's deferred revenues increased to $15.7 million, up $326,000 from the
previous quarter and $1.1 million from the same period in the prior year.
Operating expenses increased by 20 percent over the prior year, largely due to a
75 percent increase in subcontractor third party consulting expense and the
inclusion of the expenses of Ross' Spanish operations which were acquired a year
ago. During the quarter, the company added staff to increase its North American
consulting capacity by 10 percent and to reduce its dependency on these
subcontractors. The costs associated with the recruitment and training of this
staff also impacted the quarter's operating expense.
"Though we achieved solid progress in penetrating key markets in the process
manufacturing sector with sales to companies like Nucor Steel, Charter Steel,
Syncrude Canada, Ltd., and Golden Vale, we had a disappointing quarter," said
Dennis V. Vohs, Ross Systems' Chairman and Chief Executive Officer. "At the end
of the quarter, several large orders were delayed because the sales cycle was
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elongated to allow prospective customers to resolve concerns with our balance
sheet. In order to alleviate this buying concern, the company is in the final
stages of negotiating the issuance of $10 million of Convertible Subordinated
Debentures to certain institutional investors. The company anticipates closing
this transaction by January 30, 1998. This would improve the company's balance
sheet, reduce our debt service expense, and we anticipate that it would
accelerate our sales cycles."
Ross Systems, Inc. develops, markets and supports a broad range of client/server
business solutions, including financials, manufacturing, maintenance,
distribution, supply chain management, transportation management, materials
management, and human resources applications, as well as comprehensive
application development products. Ross Systems products are available for the
following open systems environments: Hewlett-Packard's HP-UX; IBM's RS/6000; and
Digital's Alpha architecture, Fujitsu DS-90 UNIX, Siemens Nixdorf, OpenVMS,
Digital UNIX and Microsoft Windows NT support for the Intel and Alpha chips.
More than 3,000 companies around the world use business solutions from Ross
Systems to run their operations.
Ross Systems employs 550 professionals in offices around the world to serve its
customers. Corporate headquarters are located at Two Concourse Parkway,
Suite 800, Atlanta, Georgia 30328. Please visit Ross Systems World Wide Web
site at HTTP://WWW.ROSSINC.COM.
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ROSS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenues:
Software product licenses $ 7,065 $ 6,162 $15,530 $12,959
Consulting and other services 6,721 5,967 11,949 10,962
Maintenance 6,239 6,426 12,365 12,704
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Total revenues 20,025 18,555 39,844 36,625
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Operating expenses:
Costs of software product licenses 726 855 1,185 1,329
Costs of consulting, maintenance and
other services 8,666 6,927 16,065 13,326
Sales and marketing 6,453 4,611 12,483 9,020
Product development 2,689 2,937 5,543 6,103
General and administrative 2,015 1,598 3,694 3,499
Provision for uncollectible accounts 158 367 806 1,021
Litigation settlement -- -- (381) --
Amortization of other assets 215 160 437 320
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Total operating expenses 20,922 17,455 39,832 34,618
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Operating earnings (loss) (897) 1,100 12 2,007
Other expenses, net (314) (201) (620) (390)
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Earnings (loss) before income taxes (1,211) 899 (608) 1,617
Income tax expense 72 92 327 314
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Net earnings (loss) $(1,283) $ 807 $(935) $ 1,303
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Net earnings (loss) per share -
basic & diluted $(0.07) $ 0.04 $(0.05) $ 0.07
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Shares used in per share computation 19,252 19,384 19,246 19,044
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</TABLE>
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ROSS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
December June 30,
31, 1997 1997
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,051 $ 4,010
Accounts receivable, less allowance for doubtful
accounts and returns 28,739 31,700
Prepaids and other current assets 1,815 2,225
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Total current assets 32,605 37,935
Property and equipment 4,170 4,540
Computer software costs 23,044 21,666
Other assets 4,868 5,574
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Total assets $64,687 $69,715
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of debt $11,965 $12,310
Accounts payable 8,335 9,188
Accrued expenses 5,766 8,393
Income taxes payable 561 199
Deferred revenues 15,734 16,118
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Total current liabilities 42,361 46,208
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Long-term debt, less current installments 443 394
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Redeemable preferred stock 1,053 1,053
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Shareholders' equity:
Common stock 73,879 73,756
Accumulated deficit (51,275) (50,340)
Cumulative translation adjustment (1,774) (1,356)
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Total shareholders' equity 20,830 22,060
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Total liabilities and shareholders' equity $64,687 $69,715
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</TABLE>
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ROSS SYSTEMS, INC. AND SUBSIDIARIES
SELECTED UNAUDITED QUARTERLY INFORMATION
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
Quarter Ended
Rolling 12 ------------------------------------------------------------
Month Total Dec. 31, 1997 Sept. 30, 1997 June 30, 1997 March 31, 1997
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<S> <C> <C> <C> <C> <C>
Total revenues $ 81,992 $ 20,025 $ 19,819 $ 23,132 $ 19,016
Total operating expenses 84,609 20,922 18,910 25,133 19,644
Operating earnings (loss) (2,617) (897) 909 (2,001) (628)
Net earnings (loss) $ (4,591) $ (1,283) $ 348 $ (2,667) $ (989)
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Net earnings (loss) per common share $(0.24) $(0.07) $ 0.02 $(0.14) $(0.05)
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Common and common equivalent shares used in computing
earnings per share 19,164 19,252 19,658 18,933 18,815
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</TABLE>
SOURCE: Ross Systems, Inc.
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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 hereunder duly authorized.
ROSS SYSTEMS, INC.
Date: January 28, 1998 /s/ Stan F. Stoudenmire
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Stan F. Stoudenmire
Vice President and Chief Financial Officer
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