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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 AND EXCHANGE ACT OF 1934
Date of report (Date of Earliest Event Reported) January 27, 1998
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STATE OF THE ART, INC.
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation or organization)
0-19155 95-3664592
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(Commission File No.) (I.R.S. Employer Identification No.)
56 Technology Drive, Irvine, California 92618
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(Address of principal executive offices) (Zip Code)
714-753-1222
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On January 27, 1998, State of the Art, Inc., released the press release
attached to this report and labelled Exhibit 99, which is incorporated herein by
this reference.
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 hereunto duly authorized.
STATE OF THE ART, INC.
February 2, 1998 By: /s/ James R. Eckstaedt
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James R. Eckstaedt
Vice President, Finance,
Chief Financial Officer & Secretary
EXHIBIT INDEX
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Exhibit
Number Description
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99 Press release dated January 27, 1998, filed "State of the Art
Reports Record Revenues in Fourth Quarter and Fiscal Year 1997."
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EXHIBIT 99
COMPANY CONTACT:
----------------
James R. Eckstaedt
Chief Financial Officer
714/753-1222 x3805
FOR IMMEDIATE RELEASE
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STATE OF THE ART REPORTS RECORD REVENUES IN FOURTH QUARTER
AND FISCAL YEAR 1997
IRVINE, CALIF., - JANUARY 27, 1998 - State Of The Art, Inc. (Nasdaq:
SOTA), a leading mid-range accounting software provider, today reported record
revenues of $21.0 million for the fourth quarter of 1997, and $64.0 million for
the fiscal year ended December 31, 1997. Revenue for the fourth quarter of 1997
represents an increase of 35% over the same quarter last fiscal year, which was
$15.6 million. For the 1997 fiscal year, State Of The Art realized an increase
of 23% over the 1996 fiscal year, which was $52.0 million in revenues.
Net income for the quarter ended December 31, 1997 was $3.9 million, an
increase of 144% over net income for the same quarter last fiscal year, which
was $1.6 million. Diluted earnings per share for the quarter were $0.33
compared to $0.14 for the same quarter in the prior year. Net income for the
fiscal year ended December 31, 1997 was $6.5 million, an increase of 126% over
the 1996 fiscal year net income of $2.9 million. Diluted earnings per share for
fiscal year 1997 were $0.56, compared to diluted earnings per share of $0.25 for
fiscal year 1996.
Continued strong demand for SOTA's MAS 90 product line during the fourth
quarter, highlighted by popular client/server version MAS 90(R) Client/Server
for Windows NT(R), resulted in a 21% increase in sales to $12.3 million over the
same period of the prior year. Acuity Financials(TM) enjoyed tremendous growth
in the fourth quarter, with revenues of $1.7 million, an increase of 107% over
the same period of the prior year. Service revenue was $3.2 million, an increase
of 118% over the same period of the prior year.
"We are delighted with our performance this quarter," said David W. Hanna,
president and chief executive officer of State Of The Art. "This has been a
record quarter, in our best year ever. We are seeing continued demand across
all product lines. In addition, our
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business continues to migrate towards more of a service-based model, an
important source of recurring revenues."
QUARTERLY HIGHLIGHTS
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The following highlights were announced or occurred since SOTA's last earnings
release:
. Acuity Projects began shipping during the fourth quarter. This is the
first line of business complement to Acuity's core financial applications
and addresses the services sector with a project accounting and time and
billing suite.
. MAS 90 Client/Server for SCO/UNIX began shipping late in the quarter,
adding an additional server platform option to this high-performance
version of MAS 90(R)
. Continued strength in BusinessWorks revenue stream following the release
of Version 12 in the third quarter.
. Growth in software maintenance plan participation significantly expanded
the percentage of SOTA's customer base receiving support services.
Software maintenance plans are now included in every new MAS 90 and
Acuity system, and end-users automatically receive maintenance releases
to the software, plus access to comprehensive technical support and
training services. Deferred revenues for software maintenance have
increased to $6.6 million.
During the quarter, no shares of common stock were purchased under the
company's stock repurchase program. The company adopted Statement of Financial
Accounting Standards No. 128, which requires the disclosure of basic and diluted
earnings per share. The number of outstanding shares and earnings per share in
prior periods have been restated.
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ABOUT STATE OF THE ART
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State Of The Art is a leader in providing accounting software for small to
medium-sized businesses. The company develops and markets Acuity Financials(TM)
accounting software, a client/server solution optimized for Microsoft(R) Windows
NT(R)/SQL Server(TM) platforms; MAS 90(R) accounting software, which offers a
broad range of applications for virtually any type of business; and
BusinessWorks(R) accounting software for small and growing businesses.
Some of the statements above are "forward looking" as defined in the
Securities Act of 1933. Some important factors that could cause actual results
to differ materially from these statements include individual performance,
market demand, product availability, and seasonal buying patterns, and other
risk factors detailed in the company's latest SEC Form 10-K and 10-Q.
###
State of the Art, Acuity Financials, MAS 90, and BusinessWorks are trademarks
and registered trademarks of State of the Art, Inc. Microsoft, Windows NT and
Microsoft SQL Server are either trademarks or registered trademarks of Microsoft
Corporation in the U.S. and/or other countries. All other trademarks and
registered trademarks are the property of their respective owners.
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STATE OF THE ART, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31, December 31,
1977 1996
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ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents................... $35,407 $22,029
Short-term investments...................... 9,642 15,064
Accounts receivable, net.................... 11,746 5,407
Inventories................................. 777 1,494
Prepaid expenses and other current assets... 854 1,289
Deferred income taxes....................... 471 84
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Total current assets................... 58,897 45,367
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Property and equipment, net...................... 5,106 5,334
Capitalized software development costs, net...... 936 1,441
Other assets..................................... 2,685 189
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$67,624 $52,331
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................ $ 1,707 $ 2,485
Accrued expenses............................ 3,247 1,544
Deferred revenue............................ 6,568 1,046
Income taxes payable........................ 1,607 --
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Total current liabilities.............. 13,129 5,075
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Accrued rent..................................... 217 244
Deferred income taxes............................ 326 --
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Total liabilities...................... 13,672 5,319
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Shareholders' equity:
Common Stock................................ 18,727 18,330
Retained earnings........................... 35,225 28,682
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Total shareholders' equity........ 53,952 47,012
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$67,624 $52,331
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</TABLE>
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STATE OF THE ART, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
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December 31, December 31, December 31, December 31,
------------ ------------ ------------ ------------
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Net revenues............................ $21,008 $15,607 $63,956 $52,046
Cost of revenues........................ 4,110 2,731 12,637 10,377
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Gross profit............................ 16,898 12,876 51,319 41,669
Operating expenses:
Sales and marketing................ 6,865 7,120 24,902 22,246
Research and development........... 3,406 2,496 12,605 11,610
General and administrative......... 1,335 1,290 5,996 4,896
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Total operating expenses................ 11,606 10,906 43,303 38,752
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Operating income........................ 5,292 1,970 7,816 2,917
Interest income......................... 524 336 1,844 1,381
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Income before income taxes.............. 5,816 2,306 9,660 4,298
Provision for income taxes.............. 1,922 709 3,117 1,406
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Net income.............................. $ 3,894 $ 1,597 $ 6,543 $ 2,892
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Basic earnings per share................ $0.35 $0.14 $0.59 $0.26
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Diluted earnings per share.............. $0.33 $0.14 $0.56 $0.25
======= ======= ======= =======
Basic shares............................ 11,137 11,143 11,158 11,053
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Diluted shares.......................... 11,778 11,620 11,621 11,674
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</TABLE>
