<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] 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 0-20034
BROADWAY & SEYMOUR, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 41-1522214
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
128 SOUTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28202
------------------------- -----
(Address of principal executive (Zip code)
offices)
</TABLE>
(704) 372-4281
--------------
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 par value
(Title of class)
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 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 .
----- -----
As of July 31, 1996, 8,974,266 shares of Common Stock, $.01 par value,
were outstanding.
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Page 1 of 18
Index to Exhibits on page 19
<PAGE> 2
BROADWAY & SEYMOUR, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
-------
<S> <C>
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheet -
June 30, 1996 and December 31, 1995 3
Consolidated Statement of Operations -
Three and six months ended June 30, 1996 and
June 30, 1995 4
Consolidated Statement of Cash Flows -
Six months ended June 30, 1996 and
June 30, 1995 5
Notes to Consolidated Financial Statements 6 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 13
PART II OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 14 - 17
SIGNATURE 18
</TABLE>
____________________________
PRODUCTS MENTIONED IN THIS REPORT ARE USED FOR IDENTIFICATION PURPOSES ONLY AND
MAY BE TRADE NAMES OR TRADEMARKS OF BROADWAY & SEYMOUR, INC., ITS SUBSIDIARIES
OR THIRD PARTIES.
____________________________
<PAGE> 3
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
BROADWAY & SEYMOUR, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,729 $ 2,053
Receivables 23,770 28,233
Income tax refund receivable - 2,100
Inventories 1,056 417
Deferred income taxes 4,420 4,934
Other current assets 1,453 1,381
------- -------
Total current assets 34,428 39,118
Property and equipment 7,837 9,299
Software costs 7,424 9,865
Intangible assets 20,543 24,578
Other assets 278 385
------- -------
$70,510 $83,245
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 375 $ 6,263
Accounts payable-trade 6,591 6,408
Accrued compensation 1,844 2,796
Estimated liabilities for contract losses 4,004 5,246
Other accrued liabilities 2,972 5,079
Deferred revenue 8,322 12,561
Income taxes payable 2,756 275
------- -------
Total current liabilities 26,864 38,628
------- -------
Long-term debt 372 1,327
------- -------
Deferred income taxes 7,096 7,096
------- -------
Deferred revenue and other liabilities 449 3,757
------- -------
Stockholders' equity:
Common stock, $.01 par value; Authorized 20,000,000 shares;
Issued 8,974,266 shares and 8,801,016 shares, respectively 90 88
Paid-in capital 36,160 34,277
Accumulated deficit (29) (1,436)
------- -------
36,221 32,929
Less treasury stock, at cost, 38,552 shares (492) (492)
------- -------
35,729 32,437
------- -------
$70,510 $83,245
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 4
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
BROADWAY & SEYMOUR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Services $14,785 $22,080 $31,699 $42,825
Products
Software licenses 7,586 10,853 14,968 16,615
Hardware 1,253 2,177 1,690 4,733
Other - 565 - 1,030
------- ------- ------- -------
Total revenue 23,624 35,675 48,357 65,203
------- ------- ------- -------
Cost of revenue:
Services 15,241 18,358 31,350 35,485
Products
Software licenses 2,522 2,554 4,123 4,085
Hardware 1,141 1,641 1,492 3,787
Other - 340 - 593
------- ------- ------- -------
Total cost of revenue 18,904 22,893 36,965 43,950
------- ------- ------- -------
Research and development 1,649 1,683 3,474 2,762
Sales and marketing 3,238 4,652 6,508 8,520
General and administrative 2,362 2,345 4,919 4,596
------- ------- ------- -------
Total expenses 7,249 8,680 14,901 15,878
------- ------- ------- -------
Operating income (loss) (2,529) 4,102 (3,509) 5,375
Gain on sale of assets 8,273 - 8,273 -
Interest income 51 41 61 51
Interest expense (129) (192) (314) (281)
------- ------- ------- -------
Income before provision for income taxes 5,666 3,951 4,511 5,145
Provision for income taxes 3,424 1,804 3,104 2,330
------- ------- ------- -------
Net income $ 2,242 $ 2,147 $ 1,407 $ 2,815
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding 9,036 8,970 9,022 8,926
Income per common and common
equivalent share $0.25 $0.24 $0.16 $0.32
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 4 -
<PAGE> 5
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
BROADWAY & SEYMOUR, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
June 30, June 30,
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,407 $ 2,815
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 5,152 5,189
Deferred income taxes 514 -
(Gain) loss on disposal of assets (8,273) (6)
Change in assets and liabilities excluding effects of
businesses acquired and divestitures:
Receivables 769 (1,922)
Inventories (669) 66
Other assets - (440)
Accounts payable - trade 183 (3,301)
Accrued compensation (773) (1,495)
Estimated liabilities for contract losses (1,242) -
Other liabilities (5,367) (166)
Deferred revenue and customer deposits (1,736) 1,823
Income taxes 4,652 (465)
------- -------
Net cash provided (used) by operating activities (5,383) 2,098
------- -------
Cash flows from investing activities:
Purchase of property and equipment (1,791) (4,226)
Investment in software costs (643) (1,679)
Net proceeds from sale of property and equipment and other
dispositions 16,580 2,000
Cash used in business acquisitions (864) (1,260)
------- -------
Net cash provided (used) by investing activities 13,282 (5,165)
------- -------
Cash flows from financing activities:
Net borrowings (payments) under credit facility (5,217) 400
Proceeds from issuance of notes 976 697
Payments of notes payable and long-term debt (2,602) (868)
Proceeds from issuance of common stock 620 3,087
------- -------
Net cash provided (used) by financing activities (6,223) 3,316
------- -------
Net increase in cash and cash equivalents 1,676 249
Cash and cash equivalents, beginning of period 2,053 1,639
------- -------
Cash and cash equivalents, end of period $ 3,729 $ 1,888
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 6
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
BROADWAY & SEYMOUR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION:
The consolidated financial statements of the Company include all
adjustments of a normal recurring nature which, in the opinion of management,
are necessary for a fair presentation of financial position as of June 30, 1996
and results of operations and cash flows for the interim periods presented.
The results of operations for the three and six months ended June 30, 1996 are
not necessarily indicative of the results to be expected for the entire year.
The accompanying consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all the
information and footnotes required by generally accepted accounting principles.
Management makes estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates. The more significant estimates affecting the Company's financial
statements relate to revenue recognition and loss accruals for long-term
contracts, allowance for uncollectible receivables and useful lives used in
depreciating property and equipment and amortizing capitalized software
products and intangible assets. These interim financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto for the year ended December 31, 1995 as reported by the Company in its
Annual Report on Form 10-K.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of
Long-lived assets and for Long-lived Assets to be Disposed of." This statement
addresses the accounting for the impairment, if any, of the Company's
long-lived assets, identifiable intangibles and goodwill relating to those
assets. SFAS 121 requires that the Company review such assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
of the asset may not be recoverable. In such instances, the Company will
perform a test of impairment which compares the carrying amount of the asset
with the estimated undiscounted future cash flows to be generated from use of
the asset, including its ultimate disposition. If the estimated future cash
flows are less than the carrying amount of the asset, the asset is considered
to be impaired and the carrying amount of the asset will be reduced to its fair
value through the recognition of an impairment loss. The asset, at its new
carrying value, will be depreciated or amortized over its remaining useful
life. Adoption of this standard did not have a material impact on the
consolidated financial statements of the Company.
Certain prior year amounts have been reclassified to conform with
current year presentation.
NOTE 2 - SIGNIFICANT TRANSACTIONS:
Effective May 15, 1996, the Company sold substantially all the
assets, subject to certain related liabilities, of its asset management
business, including the Company's AMtrust and TrustProcessor software products,
to Fidelity Investments Institutional Services Company, Inc. ("Fidelity"),
pursuant to an Asset Purchase Agreement. In connection therewith, the Company
and Fidelity entered into various ancillary agreements which relate to the
Company licensing to Fidelity certain other software, the Company providing to
Fidelity certain software maintenance and transition services and Fidelity
contracting with the Company for certain minimum systems integration work in
the twenty-four months following the closing. The aggregate consideration to
be paid to the Company in connection with these transactions is approximately
$29.0 million, of which approximately $23.5 million was paid at closing for the
net assets and licensing of certain software and approximately $5.5 million is
scheduled to be paid over the twenty-four months following the closing for
certain software maintenance, training, transition services and professional
services. As of July 31, 1996, the Company had received $.3 million of these
future payments.
On June 30, 1995, the Company transferred certain assets, subject to
certain related liabilities, of its community banking business, to a newly
formed subsidiary, Liberty Software, Inc. ("Liberty"), and simultaneously
therewith sold the common stock of Liberty to Jack Henry & Associates, Inc.
("Jack Henry") pursuant to a Stock Purchase Agreement. In
- 6 -
<PAGE> 7
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
connection therewith, the Company and Jack Henry entered into various ancillary
agreements which relate to the Company's licensing to Jack Henry certain
software and the Company's provision to Jack Henry of certain software
maintenance, marketing and transition services. At closing, the Company
received $2.0 million for the stock of Liberty and recognized no gain or loss
on such sale. In addition, during the second and third quarters of 1995, the
Company received approximately $9.1 million related to certain software license
fees and software maintenance and transition services provided to Jack Henry,
against which the Company incurred substantially no expense. The Company
received a final payment of $.5 million in March 1996.
Under the maintenance provisions of a Software License Agreement
executed with Medaphis Corporation ("Medaphis") on December 30, 1994, Medaphis
paid $6.8 million to the Company. The Company recognized $3.0 million and $3.8
million received under this agreement as services revenue for the three months
ended March 31, 1995 and June 30, 1995, respectively. The Company incurred no
significant expenses associated with such maintenance services.
NOTE 3 - RECEIVABLES:
Receivables at June 30, 1996 and December 31, 1995 were as follows:
<TABLE>
<CAPTION>
June 30, Dec. 31,
1996 1995
------- -------
(In thousands)
<S> <C> <C>
Trade $20,156 $24,752
Unbilled 3,630 3,809
Other 700 613
------- -------
24,486 29,174
Less - Allowance for doubtful accounts (716) (941)
------- -------
$23,770 $28,233
======= =======
</TABLE>
NOTE 4 - PROPERTY AND EQUIPMENT:
Property and equipment at June 30, 1996 and December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
June 30, Dec. 31,
1996 1995
------- -------
(In thousands)
<S> <C> <C>
Equipment $14,187 $14,682
Furniture and fixtures 2,092 2,411
Leasehold improvements 1,237 1,235
------- -------
17,516 18,328
Less - Accumulated depreciation and amortization (9,679) (9,029)
------- -------
$ 7,837 $ 9,299
======= =======
</TABLE>
NOTE 5 - SOFTWARE COSTS:
The Company capitalizes the costs of developing software to be sold or
leased, including costs of product enhancements that improve the marketability
of the original product or extend its life. These costs are incurred after
technological feasibility is established and prior to the availability of the
software for general release. During the three months ended June 30, 1996 and
June 30, 1995, approximately $.5 million and $.5 million of software
development costs were capitalized, respectively, and during the six months
ended June 30, 1996 and June 30, 1995, $.6 million and $2.0 million of software
development costs were capitalized, respectively. Software costs in the
accompanying balance sheet also include the cost of purchased software.
Software costs are generally amortized over the estimated economic lives of the
- 7 -
<PAGE> 8
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
products, up to a maximum of six years. Accumulated amortization was
approximately $7.0 million and $8.0 million at June 30, 1996 and December 31,
1995, respectively. Amortization expense was approximately $.6 million and
$1.0 million for the three months ended June 30, 1996 and June 30, 1995,
respectively, and approximately $1.0 million and $2.0 million for the six
months ended June 30, 1996 and June 30, 1995, respectively.
NOTE 6 - INTANGIBLE ASSETS:
Intangible assets at June 30, 1996 and December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
Useful June 30, Dec. 31,
lives 1996 1995
------- --------- ----------
(Years) (In thousands)
<S> <C> <C> <C>
Excess of cost over fair value of assets acquired 10 $15,108 $18,334
Customer lists and maintenance contracts 9 - 10 9,921 10,170
Assembled workforce 10 3,900 4,400
Non-competition agreements 1.5 - 5 313 313
Trade names and other 5 - 10 200 228
------- -------
29,442 33,445
Less - Accumulated amortization (8,899) (8,867)
------- -------
$20,543 $24,578
======= =======
</TABLE>
Intangible assets are amortized using the straight-line method over
their estimated useful lives. Amortization expense was approximately $1.0
million and $.9 million for the three months ended June 30, 1996 and June 30,
1995, respectively, and approximately $2.0 million and $2.0 million for the six
months ended June 30, 1996 and June 30, 1995, respectively.
NOTE 7 - NOTES PAYABLE AND LONG-TERM DEBT:
Long-Term debt at June 30, 1996 and December 31, 1995 were as follows:
<TABLE>
<CAPTION>
June 30, Dec. 31,
1996 1995
-------- --------
(In thousands)
<S> <C> <C>
Unsecured promissory note due in quarterly installments plus
interest at 7.7% through May 1998 $267 $333
Subordinated promissory note due in quarterly installments plus
interest at the greater of the prime rate plus 2% (as defined in
the agreement) or 10% through June 2000, secured by Corbel
software and support materials 162 183
Unsecured promissory note due January 1997, with interest
at 8.5% payable every three months - 825
Unsecured, non-interest bearing promissory note due in annual
installments of $667,000 through January 1996 - 667
Unsecured promissory notes due through September 1998 and
obligations under capital leases 318 365
---- ------
747 2,373
Less - Portion due within one year (375) (1,046)
---- ------
$372 $1,327
==== ======
</TABLE>
The Company's credit facility was repaid during the second quarter of
1996 and expired May 31, 1996. The Company is currently seeking a bank line of
credit.
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<PAGE> 9
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
NOTE 8 - RESTRUCTURING CHARGES:
During the fourth quarter of 1995, the Company recorded a
restructuring accrual of approximately $1.5 million that consisted of
approximately $1.0 million for the consolidation of certain facilities expected
to be subleased and approximately $.5 million for employee severance costs.
During the first quarter of 1996, the Company revised its estimate of the
remaining costs to complete the restructuring downward by $.2 million. During
the first and second quarter of 1996, the Company utilized cash of
approximately $.3 million and $.2 million, respectively, to satisfy obligations
related to these reserves. The reserve balance was approximately $.8 million
at June 30, 1996.
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<PAGE> 10
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
BROADWAY & SEYMOUR, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
During the second half of 1995, the Company developed a new strategic
plan and operating model called Futures '96, which it began to implement
immediately. As part of Futures '96, the Company made significant changes in
senior management, re-engineered its internal project management and accounting
processes and revamped its compensation program. Operations were reorganized to
integrate independent business units into a competency-based matrix model with
team delivery of both products and services which enables employees at all
skill levels to be rapidly deployed as required to meet client needs and the
Company's internal productivity goals. The Company's strategic direction was
refocused on core operations and internal product development rather than
growth through product acquisitions.
Effective May 15, 1996, the Company sold substantially all the
assets, subject to certain related liabilities, of its asset management
business, including the Company's AMtrust and TrustProcessor software products,
to Fidelity Investments Institutional Services Company, Inc. ("Fidelity"),
pursuant to an Asset Purchase Agreement. In connection therewith, the Company
and Fidelity entered into various ancillary agreements which relate to the
Company licensing to Fidelity certain other software, the Company providing to
Fidelity certain software maintenance and transition services and Fidelity
contracting with the Company for certain minimum systems integration work in
the twenty-four months following the closing. The aggregate consideration to
be paid to the Company in connection with these transactions is approximately
$29.0 million, of which approximately $23.5 million was paid at closing for the
net assets and licensing of certain software and approximately $5.5 million is
scheduled to be paid over the twenty-four months following the closing for
certain software maintenance, training, and transition services and
professional services. As of July 31, 1996, the Company had received $.3
million of these future payments. The Company's asset management business
contributed approximately $1.7 million and $2.8 million in revenue during the
second quarter of 1996 (up to the date of sale) and 1995, respectively. Net
losses from the asset management business were $2.0 million and $2.1 million
for the three months ended June 30, 1996 and 1995, respectively. The gain on
the sale of the business was $8.3 million.
On June 30, 1995, the Company transferred certain assets, subject to
certain related liabilities, of its community banking business, to a newly
formed subsidiary, Liberty Software, Inc. ("Liberty"), and simultaneously
therewith sold the common stock of Liberty to Jack Henry & Associates, Inc.
("Jack Henry"). In the first and second quarter of 1995, Liberty contributed
approximately $5.0 million and $9.1 million in revenue, respectively. Included
in the $9.1 million is $4.0 million in software license revenue as part of the
sale to Jack Henry against which the Company incurred no significant expense.
During the first and second quarters of 1996, the Company recognized
approximately $.2 million and $.3 million, respectively, of revenue related to
ongoing support and maintenance of software licensed to Jack Henry in
conjunction with the sale against which the Company incurred no significant
expense.
On September 1, 1995 the Company transferred a contract for services
provided to International Business Machines Corporation ("IBM") to another
services provider. Services provided under this contract contributed
approximately $.8 million and $.7 million of revenue during the first and
second quarters of 1995, respectively.
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<PAGE> 11
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
QUARTER ENDED JUNE 30, 1996 COMPARED TO
QUARTER ENDED JUNE 30, 1995
The results of operations for the second quarter of 1996 and 1995
include revenue and expenses from operations that were subsequently sold during
1996 and 1995. Certain significant transactions of the Company are discussed
below.
Each of the comparative amounts discussed below excludes the effect of
nonrecurring revenue and expenses associated with Liberty and the IBM services
contract that were sold during 1995.
Services revenue decreased from $18.5 million to $14.6 million, or
21%, in the second quarter of 1996 compared to the same period last year.
Services revenue for the second quarter of 1995 includes $3.8 million of
nonrecurring software maintenance revenue related to a 1994 contract with
Medaphis Corporation. Excluding the effect of this nonrecurring revenue,
services revenue remained flat at $15.0 million. Services revenue for the
Company's AMtrust products decreased $1.1 million due to the Fidelity
transaction on May 15, 1996. Corbel's services revenue decreased $1.0 million
due to a decline in sales in documentation generation services and NPA service
center licenses. The decline in document generation services is related to
increased revenue in the first half of 1995 as a result of a July 1, 1995 price
increase and spillover from a first quarter 1995 legal deadline for restatement
of certain pension plan documents. Offsetting these decreases is a $1.2
million increase in the Company's call center and Millennium Banking systems
integration services. In the second quarter of 1996, The MiniComputer Company
of Maryland, Inc. ("TMC"), acquired in June 1995, contributed a $.5 million
increase in service revenue.
Product revenue increased from $7.4 million to $8.8 million, or 19%,
in the second quarter of 1996 compared to the same period last year. Of this
increase, $3.0 million is related to a single software license agreement with
Fidelity for Corbel's Quantech pension administration software against which
the Company recorded substantially no expense. In addition, software license
revenue in connection with sales of the Company's Elite legal product suite
decreased $1.7 million resulting from competitive pressures in the marketplace.
Cost of services revenue decreased $.5 million, or 3% in the second
quarter of 1996 compared to the second quarter of 1995. Cost of services
revenue was $15.2 million, or 104% of services revenue, and $15.8 million, or
85% of services revenue, for the second quarter of 1996 and 1995, respectively.
Increased contract-specific installation and implementation requirements at
Elite contributed to a $1.3 million increase in cost of services in 1996. TMC,
acquired in June 1995, contributed a $.6 million in cost of services revenue.
Contract labor, payroll and other operational expenses decreased approximately
$2.0 million in 1996 due to the Fidelity transaction. Cost of services
decreased $.4 million in Corbel's pension document generation operations due to
a decline in services revenue.
Cost of product revenue increased 22%, or $.7 million, to $3.7
million, or 42% of revenue, in the second quarter of 1996 compared to the same
period last year. This increase is mostly due to increased software costs
associated with a single third-party software customer contract and increased
volume in hardware installations for the Company's Elite legal product suite.
Research and development expenses in the second quarter of 1996 and
1995 were net of $.5 million and $.3 million of capitalized software
development costs, respectively. Including capitalized costs, research and
development costs increased to $1.6 million, or 7% of total revenue, in the
second quarter of 1996 compared to $1.5 million, or 6% of total revenue, in the
second quarter of 1995. Research and development expenditures were
attributable to development and enhancement of Millennium Banking, CRISP,
Elite, Quantech, AutoDoc and NPA software. Research and development costs
capitalized in the second quarter of 1996 related to development and
enhancements of Millennium Banking, NPA and Elite software.
General and administrative expenses remained flat at $2.4 million in
the second quarter of 1996 compared to the same period last year. General and
administrative expenses for the second quarter of 1996 were net of $.3 million
of nonrecurring transition fees related to the Fidelity transaction.
During the fourth quarter of 1995, the Company recorded a
restructuring accrual of approximately $1.5 million that consisted of
approximately $1.0 million for consolidation of certain facilities expected to
be subleased and approximately $.5 million for employee severance costs.
During the first quarter of 1996, the Company revised its estimate
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<PAGE> 12
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
of the remaining costs to complete the restructuring downward by $.2 million.
During the first and second quarters of 1996, the Company utilized cash of
approximately $.3 million and $.2 million, respectively, to satisfy obligations
related to these reserves. The reserve balance was approximately $.8 million
at June 30, 1996.
INCOME TAXES
The Company's effective income tax rate for the three months ended
June 30, 1996 was 60% compared to 46% for the three months ended June 30, 1995.
The abnormally high rate for the second quarter of 1996 was due to the
significant difference between book and tax basis for the net assets sold as
part of the Fidelity transaction.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO
SIX MONTHS ENDED JUNE 30, 1995
The Company's operating results reflect a $3.5 million loss from
operations for the six months ended June 30, 1996 compared with operating
income of $5.4 million for the six months ended June 30, 1995.
Each of the comparative amounts discussed below excludes the effect of
nonrecurring revenue and expenses associated with Liberty and the IBM services
contract that were sold during 1995.
Services revenue decreased from $35.5 million to $31.2 million, or
12%, in the first six months of 1996 compared to the same period last year.
Services revenue for the first six months of 1995 includes $6.8 million of
nonrecurring software maintenance revenue related to a 1994 contract with
Medaphis Corporation. Excluding the effect of the Medphis contract, services
revenue increased $2.5 million, or 9%, in the first six months of 1996 compared
to the same period last year. Services revenue related to certain of the
Company's products, including VisualImpact, Millennium Banking and call center,
contributed approximately $1.8 million to the increase. Approximately $1.2
million of the increase was related to the acquisition of The MiniComputer
Company of Maryland, Inc. ("TMC") in June 1995 and $.7 million of the increase
was due to services revenue from transitional services related to the Fidelity
transaction and the Liberty transaction. Also contributing to the increase in
service revenue was $.5 of incremental software maintenance revenue for the
Company's Elite legal product suite, related to an increase in installed client
base. Offsetting these increases was a $1.6 million decrease in Corbel's
pension document generation revenue due to increased revenue in the first half
of 1995 related to an anticipated July 1, 1995 price increase and spillover
from a first quarter 1995 legal deadline for restatement of certain pension
plan documents.
Product revenue increased 18%, or $2.6 million, in the first six
months of 1996 compared to the same period last year. During the first quarter
of 1996, the Company recorded software license revenue of $4.0 million in
connection with a single contract against which the Company recorded
substantially no associated expense. During the second quarter of 1996, the
Company recorded $3.1 million in product revenue from a software license
agreement with Fidelity for Corbel's Quantech pension administration software,
against which the Company recorded substantially no expense. The Company had a
$2.0 million decrease in product revenue in connection with decreased
installations of Elite legal product suite. Excluding the $4.0 million
software license contract, the Company's product revenue related to its banking
products and third- party software and hardware sales, decreased approximately
$3.7 million, offset by $1.3 million in product revenue related to the
Company's Millennium Banking and VisualImpact products. Of this decrease,
approximately $2.7 million was related to decreased software licenses for the
Company's CRISP and mortgage products, and $1.0 million was related to hardware
sales to customers either in conjunction with a product sale or as a
stand-alone order.
Cost of services revenue increased 15%, or $4.1 million in the first
six months of 1996, compared to the same period last year. Cost of services
revenue was $31.2 million, or 100% of services revenue, and $27.1 million, or
76% of services revenue, for the first half of 1996 and 1995, respectively.
Contributing to this increase is approximately $2.0 million of early product
life-cycle costs related to the Company's Millennium Banking product as well as
costs related to a new distribution channel for its VisualImpact product. In
addition, TMC, acquired in June 1995, contributed $1.2 million of incremental
cost of services revenue during the first half of 1996. Also contributing to
the increase was $2.1 million in costs, including higher contract labor and
payroll costs, related to the Company's Elite legal product suite. This
increase is due to more contract-specific installation and implementation
requirements as well as costs associated with increased staffing levels.
- 12 -
<PAGE> 13
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
Overall, cost of product revenue increased 7%, or $.4 million, to $5.8
million, or 35% of product revenue, in the first six months of 1996 compared to
the same period last year. Software license cost of product revenue increased
$.6 million and hardware cost of product revenue decreased $.2 million in the
first half of 1996 compared to the first half of 1995. Approximately $.7
million of this increase was due to increased software costs associated with a
3rd-party software customer contract offset by a $.3 million decrease in
Elite's product costs as a result of decreased sales.
Research and development expenses in the first half of 1996 and 1995
were net of $.6 million and $1.1 million of capitalized software development
costs, respectively. Including capitalized costs, research and development
costs decreased to $3.5 million for the first six months of 1996 from $4.3
million for the first six months of 1995.
General and administrative expenses increased 11% to $5.1 million for
the first half of 1996. Most of this increase was due to personnel changes in
senior management and related costs.
INCOME TAXES
The Company's effective income tax rate for the first half of 1996 was
69% compared to 45% for the first half of 1995. The abnormally high rate for
the second quarter of 1996 was due to the significant difference between book
and tax basis for the net assets disposed of as part of the Fidelity
transaction. The Company's effective income tax rate for the second quarter of
1996 was 60% compared to 69% for the six months ended June 30, 1996 due to a
net loss in the first quarter of 1996.
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 1996 the Company had cash and cash equivalents of
approximately $3.7 million and working capital of approximately $7.6 million.
The Company currently has invested available cash in various overnight deposits
earning between 5% and 5.5% per annum in interest. The Company used a portion
of the proceeds from the Fidelity transaction to pay off its revolving credit
facility, which expired in May 1996, and certain other debt. . As part of
Futures '96, the Company will continue to focus on core operations and evaluate
opportunities for divesting non-essential lines of business. The Company has
reviewed its liquidity and capital requirements for the remainder of 1996 and
is currently seeking bank and other financing opportunities to meet its
anticipated capital requirements.
The Company believes that the remaining proceeds from the Fidelity
transaction, cash flow from operations and the issuance of stock pursuant to
its employee stock purchase and stock option plans, combined with proceeds of
any financing arrangements and/or divestitures, will be sufficient to fund its
working capital requirements through 1996.
Principal sources of liquidity for the six months ended June 30, 1996
were proceeds from the Fidelity transaction, short-term borrowings and proceeds
from the issuance of stock pursuant to the Company's employee stock purchase
and option plans.
OTHER
The Company's revenues derive primarily from the performance of
consulting services and the sale of related products under specific engagements
with customers. In addition, the Company's historic, acquisition-oriented
growth strategy broadened its product and service offerings and enabled the
Company to successfully compete for large-scale projects. However, such
projects have typically had a longer sales cycle and inherent volatility in the
rate that revenues and related costs were generated and recognized which has
produced significant variations in quarterly and annual results.
The Company continually monitors conditions that may affect the
carrying value of its software costs and intangible assets. Under the
principles of Statement of Financial Accounting Standards No. 86 ("SFAS 86"),
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed" and, effective January 1, 1996, Statement of Financial Accounting
Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-lived
Assets and Long-lived Assets to be Disposed Of", the Company records impairment
losses and/or accelerated amortization of software costs and intangible assets
when analysis indicates that an asset is not recoverable. The Company operates
in markets
- 13 -
<PAGE> 14
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
characterized by innovation and rapid technological advances and no assurance
can be given that future changes in the marketplace would not impair the value
of the Company's software costs and other intangible assets.
- 14 -
<PAGE> 15
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
(A)(3) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation of Broadway & Seymour, Inc., date June 16, 1992
(Incorporated by reference to Exhibit 3.1 to the Registrants Annual Report on Form 10-K for
the Fiscal Year Ended January 31, 1993)
3.2 Restated By-laws of the Company (Incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, SEC File No. 33-46672)
4.1 Specimen share certificate (Incorporated by reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form S-1, SEC File No. 33-46672)
4.2 Articles 4 and 5 of Broadway & Seymour, Inc.'s Restated Certificate of Incorporation
(Incorporated by reference to Exhibit 4.2 to the Registrant's Registration Statement on
Form S-1, SEC File No. 33-46672)
4.3 Article II, Section 2.2 of the Company's Restated By-laws (Incorporated by reference to
Exhibit 4.3 to the Registrant's Registration Statement on Form S-1, SEC File No. 33-46672)
10.1# Restated 1985 Incentive Stock Option Plan of Broadway & Seymour, Inc. dated June 12, 1985
(Incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form
S-1, SEC File No. 33-46672)
10.2# Amendment No. 1 to Restated 1985 Incentive Stock Option Plan of Broadway & Seymour, Inc. dated
February 25, 1993 (Incorporated by reference to Exhibit 10.2 to the Registrant's Annual Report
on Form 10-K for the Fiscal Year Ended January 31, 1993)
10.3# Amendment No. 2 to Restated 1985 Incentive Stock Option Plan of Broadway & Seymour, Inc. dated
February 17, 1994 (Incorporated by reference to Exhibit 10.16 to the Registrant's Transition
Report on Form 10-K for the Eleven Months Ended December 31, 1993)
10.4# Amendment No. 3 to Restated 1985 Incentive Stock Option Plan of Broadway & Seymour, Inc. dated
May 15, 1995 (Incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report
on Form 10-Q for the Quarter Ended June 30, 1995)
10.5# Broadway & Seymour, Inc. 1995 Stock Option Plan dated September 1, 1995 (Incorporated by
reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended September 30, 1995)
10.6 Limited Partnership Agreement of National Pension Alliance dated April 8, 1994 by and among
Corbel/NPA Inc., Stuart Hack Corp. and Michael E. Callahan, Inc. (Incorporated by reference to
Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1995)
10.7 Stock Purchase Agreement dated January 10, 1994 by and among Broadway & Seymour, Inc., certain
shareholders of Elite Data Processing, Inc. and Harvey Rich (Incorporated by reference to
Exhibit 2.1 to the Registrant's Current Report on Form 8-K dated February 1, 1994)
10.8 Stock Pledge Agreement dated as of February 1, 1994 by and among Broadway & Seymour, Inc.,
Alan Richeimer (a/k/a Alan Rich) and Harvey Rich and Eva Rich, as trustees of the Harvey and
Eva Rich Family Trust created by that Trust Agreement dated September 19,1988 (Incorporated by
reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated February 1,
1994)
</TABLE>
- 15 -
<PAGE> 16
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.9 Consent and Assignment Agreement dated January 28, 1994 among Trust Systems, Broadway &
Seymour, Inc., and First Fidelity Bank, N.A., NationsBank of North Carolina, First Tennessee
Bank National Association and PNC Bank National Association providing assignment of all right,
title and interest in AMtrust to Trust Systems (Incorporated by reference to Exhibit 10.14 to
the Registrant's Transition Report on Form 10-K for the Eleven Months Ended December 31, 1993)
10.10 Agreement and Plan of Merger dated January 23, 1995 of EBG & Associates, Inc. into Broadway
& Seymour, Inc. (Incorporated by reference to Exhibit 10.13 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended March 31, 1995)
10.11 Agreement and Plan of Merger dated January 27, 1995 of BancCorp Systems, Inc. with and into
BCS Acquisition, Inc. (Incorporated by reference to Exhibit 10.14 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1995)
10.12 Asset Purchase Agreement dated as of June 9, 1995 by and among Broadway & Seymour Inc.,
The MiniComputer Company of Maryland, Inc., Robert W. Johnson, Michael W. Matthai and
Robert A. Erich, Jr. (Incorporated by reference to Exhibit 10.18 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1995)
10.13 Asset Purchase Agreement, dated as of April 10, 1996 by and between Fidelity Investments
Institutional Services Company Inc. and Broadway & Seymour, Inc., BancCorp Systems, Inc.,
Heebink Group, Inc., and National Systems Group, Inc. (Incorporated by reference to Exhibit
2.1 to the Registrant's Current Report on Form 8-K dated May 15, 1996)
10.14 Amendment No. 1 to Asset Purchase Agreement dated May 15, 1996 by and between Fidelity
Investments Institutional Services Company Inc. and Broadway & Seymour, Inc., BancCorp
Systems, Inc., Heebink Group, Inc., and National Systems Group, Inc. (Incorporated by
reference to Exhibit 2.1a to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.15 Quantech License and Services Agreement, dated April 10, 1996, by and between Fidelity
Investments Institutional Services Company, Inc. and Corbel & Company. (Incorporated by
reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.16 Licenses and Services Agreement, dated April 10, 1996, by and between Fidelity Investments
Institutional Services Company, Inc. and BancCorp Systems, Inc. (Incorporated by reference
to Exhibit 2.3 to the Registrant's Current Report on Form 8-K dated May 15, 1996)
10.17 Temporary Professional Services Agreement, dated May 15, 1996, by and between Fidelity
Investments Institutional Services Company, Inc. and Broadway & Seymour, Inc. (Incorporated
by reference to Exhibit 2.4 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.18 Guaranty and Indemnity Agreement, dated April 10, 1996, by and between Fidelity Investments
Institutional Services Company, Inc. and Broadway & Seymour, Inc. (Incorporated by
reference to Exhibit 2.5 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.19 Amendment No. 1 to the Guaranty and Indemnity Agreement, dated May 15, 1996 by and between
Fidelity Investments Institutional Services Company, Inc. and Broadway & Seymour, Inc.
(Incorporated by reference to Exhibit 2.5a to the Registrant's Current Report on Form 8-K
dated May 15, 1996)
</TABLE>
- 16 -
<PAGE> 17
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.20 Transition Services and Support Agreement, dated May 15, 1996, by and between Fidelity
Investments Institutional Services Company, Inc. and Broadway & Seymour, Inc. (Incorporated
by reference to Exhibit 2.6 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.21 Agreement and Mutual Release, dated April 10, 1996, by and between Broadway & Seymour,
Inc., BancCorp Systems, Inc., Phillip E. Sorrell and Martha Sorrell. (Incorporated by
reference to Exhibit 2.7 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.22# Employment Agreement dated as of September 1, 1995 by and between Broadway & Seymour, Inc.
and Alan C. Stanford (Incorporated by reference to Exhibit 10.28 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1995)
10.23# Employment Agreement dated as of January 19, 1995 by and between Broadway & Seymour, Inc.
and David A. Finley (Incorporated by reference to Exhibit 10.26 to the Registrant's Annual
Report on Form 10-K for the Year Ended December 31, 1995)
10.24# Termination Agreement dated as of March 1, 1996 by and between Broadway & Seymour, Inc. and
David Durham (Incorporated by reference to Exhibit 10.26 to the Registrant's Annual Report
on Form 10-K for the Year Ended December 31, 1995)
11* Computation of earnings per share
27 Financial Data Schedule, which is submitted electronically to the Securities and Exchange
Commission for information only and not filed.
- --------------------
</TABLE>
* Filed herewith.
# Management contract or compensatory plan or arrangement
required to be filed as an exhibit.
- 17 -
<PAGE> 18
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BROADWAY & SEYMOUR, INC.
Date: August 14, 1996 By: /s/ David A. Finley
------------------- -------------------------------------
David A. Finley, Executive Vice
President and Chief Financial Officer
- 18 -
<PAGE> 19
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
INDEX TO EXHIBITS
(A)(3) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit No. Description PAGE NUMBER
- ----------- ----------- -----------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of Broadway & Seymour, Inc., date June 16, 1992
(Incorporated by reference to Exhibit 3.1 to the Registrants Annual Report on Form 10-K for
the Fiscal Year Ended January 31, 1993)
3.2 Restated By-laws of the Company (Incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, SEC File No. 33-46672)
4.1 Specimen share certificate (Incorporated by reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form S-1, SEC File No. 33-46672)
4.2 Articles 4 and 5 of Broadway & Seymour, Inc.'s Restated Certificate of Incorporation
(Incorporated by reference to Exhibit 4.2 to the Registrant's Registration Statement on Form
S-1, SEC File No. 33-46672)
4.3 Article II, Section 2.2 of the Company's Restated By-laws (Incorporated by reference to
Exhibit 4.3 to the Registrant's Registration Statement on Form S-1, SEC File No. 33-46672)
10.1# Restated 1985 Incentive Stock Option Plan of Broadway & Seymour, Inc. dated June 12, 1985
(Incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form
S-1, SEC File No. 33-46672)
10.2# Amendment No. 1 to Restated 1985 Incentive Stock Option Plan of Broadway & Seymour, Inc. dated
February 25, 1993 (Incorporated by reference to Exhibit 10.2 to the Registrant's Annual Report
on Form 10-K for the Fiscal Year Ended January 31, 1993)
10.3# Amendment No. 2 to Restated 1985 Incentive Stock Option Plan of Broadway & Seymour, Inc. dated
February 17, 1994 (Incorporated by reference to Exhibit 10.16 to the Registrant's Transition
Report on Form 10-K for the Eleven Months Ended December 31, 1993)
10.4# Amendment No. 3 to Restated 1985 Incentive Stock Option Plan of Broadway & Seymour, Inc. dated
May 15, 1995 (Incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report
on Form 10-Q for the Quarter Ended June 30, 1995)
10.5# Broadway & Seymour, Inc. 1995 Stock Option Plan dated September 1, 1995 (Incorporated by
reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended September 30, 1995)
10.6 Limited Partnership Agreement of National Pension Alliance dated April 8, 1994 by and among
Corbel/NPA Inc., Stuart Hack Corp. and Michael E. Callahan, Inc. (Incorporated by reference to
Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1995)
10.7 Stock Purchase Agreement dated January 10, 1994 by and among Broadway & Seymour, Inc., certain
shareholders of Elite Data Processing, Inc. and Harvey Rich (Incorporated by reference to
Exhibit 2.1 to the Registrant's Current Report on Form 8-K dated February 1, 1994)
10.8 Stock Pledge Agreement dated as of February 1, 1994 by and among Broadway & Seymour, Inc.,
Alan Richeimer (a/k/a Alan Rich) and Harvey Rich and Eva Rich, as trustees of the Harvey and
Eva Rich Family Trust created by that Trust Agreement dated September 19,1988 (Incorporated by
reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated February 1,
1994)
</TABLE>
- 19 -
<PAGE> 20
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
<TABLE>
<CAPTION>
Exhibit No. Description PAGE NUMBER
- ----------- ----------- -----------
<S> <C> <C>
10.9 Consent and Assignment Agreement dated January 28, 1994 among Trust Systems, Broadway &
Seymour, Inc., and First Fidelity Bank, N.A., NationsBank of North Carolina, First Tennessee
Bank National Association and PNC Bank National Association providing assignment of all right,
title and interest in AMtrust to Trust Systems (Incorporated by reference to Exhibit 10.14 to
the Registrant's Transition Report on Form 10-K for the Eleven Months Ended December 31, 1993)
10.10 Agreement and Plan of Merger dated January 23, 1995 of EBG & Associates, Inc. into Broadway
& Seymour, Inc. (Incorporated by reference to Exhibit 10.13 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended March 31, 1995)
10.11 Agreement and Plan of Merger dated January 27, 1995 of BancCorp Systems, Inc. with and into
BCS Acquisition, Inc. (Incorporated by reference to Exhibit 10.14 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1995)
10.12 Asset Purchase Agreement dated as of June 9, 1995 by and among Broadway & Seymour Inc.,
The MiniComputer Company of Maryland, Inc., Robert W. Johnson, Michael W. Matthai and
Robert A. Erich, Jr. (Incorporated by reference to Exhibit 10.18 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1995)
10.13 Asset Purchase Agreement, dated as of April 10,1996 by and between Fidelity Investments
Institutional Services Company Inc. and Broadway & Seymour, Inc., BancCorp Systems, Inc.,
Heebink Group, Inc., and National Systems Group, Inc. (Incorporated by reference to Exhibit
2.1 to the Registrant's Current Report on Form 8-K dated May 15, 1996)
10.14 Amendment No. 1 to Asset Purchase Agreement dated May 15, 1996 by and between Fidelity
Investments Institutional Services Company Inc. and Broadway & Seymour, Inc., BancCorp
Systems, Inc., Heebink Group, Inc., and National Systems Group, Inc. (Incorporated by
reference to Exhibit 2.1a to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.15 Quantech License and Services Agreement, dated April 10, 1996, by and between Fidelity
Investments Institutional Services Company, Inc. and Corbel & Company. (Incorporated by
reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.16 Licenses and Services Agreement, dated April 10, 1996, by and between Fidelity Investments
Institutional Services Company, Inc. and BancCorp Systems, Inc. (Incorporated by reference
to Exhibit 2.3 to the Registrant's Current Report on Form 8-K dated May 15, 1996)
10.17 Temporary Professional Services Agreement, dated May 15, 1996, by and between Fidelity
Investments Institutional Services Company, Inc. and Broadway & Seymour, Inc. (Incorporated
by reference to Exhibit 2.4 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.18 Guaranty and Indemnity Agreement, dated April 10, 1996, by and between Fidelity Investments
Institutional Services Company, Inc. and Broadway & Seymour, Inc. (Incorporated by
reference to Exhibit 2.5 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.19 Amendment No. 1 to the Guaranty and Indemnity Agreement, dated May 15, 1996 by and between
Fidelity Investments Institutional Services Company, Inc. and Broadway & Seymour, Inc.
(Incorporated by reference to Exhibit 2.5a to the Registrant's Current Report on Form 8-K
dated May 15, 1996)
</TABLE>
- 20 -
<PAGE> 21
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
<TABLE>
<CAPTION>
Exhibit No. Description PAGE NUMBER
- ----------- ----------- -----------
<S> <C> <C>
10.20 Transition Services and Support Agreement, dated May 15, 1996, by and between Fidelity
Investments Institutional Services Company, Inc. and Broadway & Seymour, Inc. (Incorporated
by reference to Exhibit 2.6 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.21 Agreement and Mutual Release, dated April 10, 1996, by and between Broadway & Seymour,
Inc., BancCorp Systems, Inc., Phillip E. Sorrell and Martha Sorrell. (Incorporated by
reference to Exhibit 2.7 to the Registrant's Current Report on Form 8-K dated May 15,
1996)
10.22# Employment Agreement dated as of September 1, 1995 by and between Broadway & Seymour, Inc.
and Alan C. Stanford (Incorporated by reference to Exhibit 10.28 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1995)
10.23# Employment Agreement dated as of January 19, 1995 by and between Broadway & Seymour, Inc.
and David A. Finley (Incorporated by reference to Exhibit 10.26 to the Registrant's Annual
Report on Form 10-K for the Year Ended December 31, 1995)
10.24# Termination Agreement dated as of March 1, 1996 by and between Broadway & Seymour, Inc. and
David Durham (Incorporated by reference to Exhibit 10.26 to the Registrant's Annual Report
on Form 10-K for the Year Ended December 31, 1995)
11* Computation of earnings per share 22
27 Financial Data Schedule, which is submitted electronically to the Securities and Exchange
Commission for information only and not filed.
- --------------------
</TABLE>
* Filed herewith.
# Management contract or compensatory plan or arrangement
required to be filed as an exhibit.
- 21 -
<PAGE> 1
Broadway & Seymour, Inc.
Form 10-Q for the Quarterly Period Ended June 30, 1996
Exhibit 11
BROADWAY & SEYMOUR, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net income (loss) $2,242 $2,147 $1,407 $2,815
------ ------ ------ ------
Primary earnings per share:
Weighted average common shares outstanding 8,956 8,629 8,926 8,529
Reduction from effect of treasury stock (39) (39) (39) (39)
Addition from assumed exercise of stock options 114 380 130 431
Addition from assumed stock bonus award - - - 5
Addition from assumed participation in employee
stock purchase plan 5 - 5 -
------ ----- ------ ------
Weighted average common and common equivalent
shares outstanding 9,036 8,970 9,022 8,926
====== ====== ====== ======
Net income (loss) per common and common
equivalent share $0.25 $0.24 $0.16 $0.32
====== ====== ====== ======
Fully diluted earnings per share:
Weighted average common shares outstanding 8,956 8,629 8,926 8,529
Reduction from effect of treasury stock (39) (39) (39) (39)
Addition from assumed exercise of stock options 121 439 132 461
Addition from assumed stock bonus award - - - 5
Addition from assumed participation in employee
stock purchase plan 5 - 5 2
------ ------ ------ ------
Weighted average common and common equivalent
shares outstanding 9,043 9,029 9,024 8,958
====== ====== ====== ======
Net income (loss) per common and common
equivalent share $0.25 $0.24 $0.16 $0.31
====== ====== ====== ======
</TABLE>
- 22 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATON EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS FILED AS
PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,729,000
<SECURITIES> 0
<RECEIVABLES> 23,770,000
<ALLOWANCES> 0
<INVENTORY> 1,056,000
<CURRENT-ASSETS> 5,873,000
<PP&E> 7,837,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 70,510,000
<CURRENT-LIABILITIES> 26,864,000
<BONDS> 0
0
0
<COMMON> 90,000
<OTHER-SE> 35,639,000
<TOTAL-LIABILITY-AND-EQUITY> 70,510,000
<SALES> 48,357,000
<TOTAL-REVENUES> 48,357,000
<CGS> 36,965,000
<TOTAL-COSTS> 36,965,000
<OTHER-EXPENSES> 14,901,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 314,000
<INCOME-PRETAX> 4,511,000
<INCOME-TAX> 3,104,000
<INCOME-CONTINUING> 1,407,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,407,000
<EPS-PRIMARY> .16
<EPS-DILUTED> 0
</TABLE>
