UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2000
----- TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period to
-------- --------
Commission file number 1-111898
------------
JETFORM CORPORATION
---------------------
(exact name of registrant as specified in its charter)
Canada N/A
--------------------------- ------------
(state or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
560 Rochester Street
Ottawa, Ontario K1S 5K2, Canada
---------------------------------------
(Address of principal executive offices)
(613) 230-3676
--------- --------------
Registrant's telephone number (including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the issuer was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of the issuer's Common Shares outstanding on December 5, 2000:
24,783,566
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets as at October 31, 2000, and 3
April 30, 2000
Consolidated Statements of Operations for the three and six 4
month periods ended October 31, 2000, and October 31, 1999
Consolidated Statements of Comprehensive Income for the three 5
and six month periods ended October 31, 2000 and October 31, 1999
Consolidated Statements of Cash Flows for the three and six 6
month periods ended October 31, 2000, and October 31, 1999
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 16
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risks 24
PART II OTHER INFORMATION
Item 1. Legal Proceedings 25
Item 4. Submission of Matters to a Vote of Security Holders 25
Item 6. Exhibits and Reports on Form 8-K 25
SIGNATURES 26
This Quarterly Report on Form 10-Q ("Report"), contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933.
Discussions containing such forward-looking statements may be found in Item 2 of
Part I and Item 1 of Part II hereof, as well as within this Report generally. In
addition, when used in the Report, the words "believes", "anticipates",
"expects", and similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and uncertainties.
Actual results in the future could differ materially from those described in the
forward-looking statements as a result of competition, changes in technology,
management of growth, third party dependence, dependence upon key personnel,
international operations and geographic concentration, exchange rate risks,
currency fluctuations, reliance on intellectual property, product defects and
product liability, volatility of stock and other factors set forth in this
Report, and the other companies filing with the Securities and Exchange
Commission. The Company does not undertake any obligation to publicly release
the results of any revisions to these forward-looking statements that may be
made to reflect any future events or circumstances.
<PAGE>
JETFORM CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars except share amounts)
<TABLE>
<CAPTION>
October 31, April 30,
2000 2000
--------------- ------------
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents................................ $ 49,687 $ 42,092
Accounts receivable (Note 2)............................. 27,349 21,416
Term accounts receivable (Note 2)........................ 4,862 5,224
Unbilled receivables..................................... 3,748 4,492
Inventory................................................ 1,041 1,084
Prepaid expenses and deferred charges.................... 2,612 2,956
-------------- ------------
89,299 77,264
Term accounts receivable (Note 2)........................ -- 242
Deferred income tax asset (Note 5)....................... 5,604 5,604
Fixed assets (Note 3).................................... 17,737 16,556
Other assets (Note 3).................................... 20,047 21,670
-------------- ------------
$ 132,687 $ 121,336
============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable......................................... $4,220 $7,423
Accrued liabilities...................................... 10,141 10,685
Term loan (Note 4)....................................... -- 10,000
Unearned revenue......................................... 14,665 15,588
-------------- ------------
29,026 43,696
Term loan (Note 4)...................................... 10,000 --
Accrued liabilities (Note 6) ............................ 1,135 1,338
-------------- ------------
40,161 45,034
-------------- ------------
Shareholders' equity
Capital stock (Issued and outstanding -- 23,633,118
Common Shares and450,448 Preference Shares at October 31,
2000; 19,592,314 Common Sharesand 450,448 Preference Shares at
April 30, 2000) (Note 9)................................. 269,406 248,210
Cumulative translation adjustment........................ (3,557) (2,670)
Deficit.................................................. (173,323) (169,238)
-------------- ------------
92,526 76,302
-------------- ------------
$132,687 $ 121,336
============== ============
</TABLE>
(the accompanying notes are an integral part of these consolidated
financial statements)
<PAGE>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands of Canadian dollars except share and per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
October 31, October 31,
------------------------------ -----------------------------
2000 1999 2000 1999
--------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues
Product $17,259 $14,687 $29,913 $26,625
Service 9,427 10,386 18,828 21,496
--------------- -------------- ------------- --------------
26,686 25,073 48,741 48,121
--------------- -------------- ------------- --------------
Costs and expenses
Cost of product 2,118 2,661 4,132 4,772
Cost of service 2,599 3,101 5,286 6,491
Sales and marketing 12,714 11,078 25,402 22,542
General and administrative 2,258 2,764 4,732 5,334
Research and development 4,059 3,926 8,006 7,668
Depreciation and amortization 2,474 2,562 5,061 5,097
Gain on sale of assets -- -- -- (1,813)
--------------- -------------- ------------- --------------
26,222 26,092 52,619 50,091
--------------- -------------- ------------- --------------
Operating income (loss) 464 (1,019) (3,878) (1,970)
Net investment income 418 340 452 836
--------------- -------------- ------------- --------------
Income (loss) before taxes 882 (679) (3,426) (1,134)
Provision for income taxes (501) (208) (659) (384)
--------------- -------------- ------------- --------------
Net income (loss) $ 381 $ (887) $ (4,085) $ (1,518)
=============== ============== ============= ==============
Basic income (loss) per share
Net income (loss) per share $ 0.02 $ (0.04) $(0.20) $(0.08)
Weighted average number of shares 20,952,065 19,901,248 20,507,927 19,892,394
Fully diluted income (loss) per share
Net income (loss) per share $ 0.02 $ (0.04) $(0.20) $(0.08)
Weighted average number of shares 21,045,122 19,901,248 20,507,927 19,892,394
</TABLE>
(the accompanying notes are an integral part of these consolidated financial
statements)
<PAGE>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION> (in thousands of Canadian dollars)
Three months ended Six months ended
October 31, October 31,
------------------------------ -----------------------------
2000 1999 2000 1999
--------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net income (loss)............................... $ 381 $ (887) $ (4,085) $ (1,518)
Other comprehensive income (loss):
Cumulative translation adjustment.......... (1,411) (1,298) (887) 488
--------------- -------------- ------------- --------------
Comprehensive loss.............................. $ (1,030) $ (2,185) $ (4,972) $ (1,030)
=============== ============== ============= ==============
</TABLE>
(the accompanying notes are an integral part of these consolidated
financial statements)
<PAGE>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)
<TABLE>
<CAPTION>
Three months ended Six months ended
October 31, October 31,
---------------------------- -----------------------------
2000 1999 2000 1999
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Cash provided from (used in):
Operating activities
Net income (loss) $ 381 $ (887) $(4,085) $(1,518)
Items not involving cash:
Depreciation and amortization 3,380 3,424 6,867 6,744
Deferred income taxes 58 -- -- --
Other non cash items -- 839 -- --
Net change in operating components of
working capital (253) 4,536 (9,771) 6,012
------------- ------------- ------------- --------------
3,566 7,912 (6,989) 11,238
------------- ------------- ------------- --------------
Investing activities
Purchase of fixed assets (2,360) (1,202) (4,614) (2,083)
Increase in other assets (1,147) (2,636) (1,695) (3,871)
------------- ------------- ------------- --------------
(3,507) (3,838) (6,309) (5,954)
------------- ------------- ------------- --------------
Financing activities
Proceeds from issuance of shares 20,915 38 21,111 178
Repayment of Delrina obligation -- (8,142) -- (14,832)
------------- ------------- ------------- --------------
20,915 (8,104) 21,111 (14,654)
------------- ------------- ------------- --------------
Effect of exchange rate changes on cash (358) (442) (218) 1,086
------------- ------------- ------------- --------------
Increase (decrease) in cash and cash equivalents 20,616 (4,472) 7,595 (8,284)
Cash and cash equivalents, beginning of period 29,071 43,450 42,092 47,262
------------- ------------- ------------- --------------
Cash and cash equivalents, end of period $49,687 $38,978 $ 49,687 $ 38,978
============= ============= ============= ==============
</TABLE>
(the accompanying notes are an integral part of these consolidated financial
statements)
<PAGE>
JETFORM CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
These consolidated financial statements have been prepared by management in
accordance with accounting principles generally accepted in the United States
("U.S. GAAP"), and include all assets, liabilities, revenues and expenses of
JetForm Corporation ("JetForm") and its wholly-owned subsidiaries: JetForm
Corporation (a Delaware corporation), JetForm Pacific Pty Limited ("JetForm
Pacific"), JetForm Scandinavia AB ("JetForm Nordic"), JetForm France SA
("JetForm France"), JetForm UK Limited ("JetForm UK"), JetForm Deutschland GmbH
("JetForm Germany"), JetForm Japan K.K. ("JetForm Japan"), JetForm Technologies
Limited ("JetForm Ireland") and JetForm PTE Ltd ("JetForm Singapore"). JetForm
and its wholly-owned subsidiaries are collectively referred to herein as the
"Company". Investments in businesses that the Company does not control, but over
which it can exert significant influence, are accounted for using the equity
method. Such investments are periodically evaluated for impairment and
appropriate adjustments are recorded, if necessary. The unaudited interim
consolidated financial statements reflect all adjustments which are, in the
opinion of the Company's management, necessary to a fair statement of results
for these interim periods.
2. ACCOUNTS RECEIVABLE
Accounts receivable and term accounts receivable are net of an allowance for
doubtful accounts of $2.8 million at October 31, 2000 and $2.4 million at April
30, 2000.
The Company records revenues from irrevocable commitments to purchase products
which do not conform to the Company's customary trade terms at the amount
receivable less deemed interest ("Term Accounts Receivable"). The Company uses a
discount rate equal to its current net cost of borrowing at the time the revenue
is recorded. For the three months ended October 31, 2000, the average discount
rate used was 6.5%. Under an irrevocable commitment to purchase product the
customer commits to pay a minimum amount over a specified period of time in
return for the right to use or resell up to a specific number of copies of a
delivered product.
The Company records Term Accounts Receivable as non-current to the extent that
management estimates payment will be received more than one year from the
balance sheet date. Payment of these Term Accounts Receivable is generally due
the earlier of: (i) delivery of the Company's products by the customer to its
customers or end users; and (ii) specific dates in the license agreement
("Minimum Payment Dates"). As at October 31, 2000 and April 30, 2000 total Term
Accounts Receivable with Minimum Payment Dates exceeding one year were
approximately NIL and $242,000, respectively.
The Company's customer base consists of large numbers of geographically diverse
customers dispersed across many industries. As a result, concentration of credit
risk with respect to trade receivables is not significant.
JETFORM CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. FIXED ASSETS AND OTHER ASSETS
The Consolidated Balance Sheet includes the following amounts:
<TABLE>
<CAPTION>
October 31, 2000 April 30, 2000
------------------- -------------------
(in thousands of Canadian dollars)
<S> <C> <C>
Accumulated depreciation and
amortization included in fixed assets $ 25,642 $ 22,400
=================== ===================
Accumulated amortization
included in other assets $ 26,226 $ 22,826
=================== ===================
</TABLE>
4. FINANCIAL INSTRUMENTS AND CREDIT FACILITIES
For certain of the Company's financial instruments, including accounts
receivable, unbilled receivables, accounts payable, and short term accrued
liabilities, the carrying amount approximates the fair value due to their short
maturities. The carrying amount of term accounts receivable, after applying an
appropriate discount rate, approximates their fair value. Cash and cash
equivalents, term loan and long term accrued liabilities are carried at cost,
which approximates their fair value.
The Company has entered into receivables purchase agreements with third party
purchasers. Under the agreements, the Company has the option to sell certain
accounts receivable on a recourse basis. The purchasers have recourse in the
event of a trade dispute as defined in the receivables purchase agreements and
upon the occurrence of other specified events. As at October 31, 2000 and April
30, 2000, the outstanding balance of accounts receivable sold under these
agreements were approximately US$3.4 million and US$9.7 million, respectively.
The Company believes that none of the receivables sold are at risk of recourse.
These sales meet all of the requirements of SFAS 125 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," for off
balance sheet reporting.
The Company has a committed $20 million credit facility with the Royal Bank of
Canada. The credit facility is made up of (i) a $10 million term loan facility
which bears interest at a rate of 1.5% over the bankers acceptance rate of the
Bank from time to time and is payable on May 1, 2002; and (ii) a $10 million
revolving line of credit which bears interest at the prime rate of the Bank from
time to time. During the quarter ended October 31, 2000 the Company renegotiated
the payment date of the term loan facility with the Royal Bank of Canada from
February 1, 2001 to May 1, 2002. As at October 31, 2000, the Company had drawn
down the $10 million term loan facility and fixed the interest rate until
January 16, 2001 at 5.86%. The Company had no borrowings against its revolving
line of credit as at October 31, 2000. The Company has granted as collateral for
the $20 million credit facility a general security agreement over JetForm's
assets, including a pledge of the shares of certain subsidiaries.
5. INCOME TAXES
As at October 31, 2000, the Company had deferred income tax assets of $58.5
million, the principal components of which were temporary differences associated
with the acquisition of in process research and development and operating loss
carry forwards. The Company has provided for a valuation allowance of $52.9
million.
JETFORM CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. PROVISION FOR RESTRUCTURING COSTS
On March 17, 1999, the Corporation announced a restructuring plan and recorded a
provision for restructuring costs of $30.5 million directed at reducing costs.
The key restructuring actions included:
o Consolidation of management responsibilities and reduction in headcount.
o Closure of redundant facilities.
o Reduction in the carrying value of certain capital assets primarily
related to past acquisitions.
o Cancellation of certain commitments and other costs.
The following table summarizes the activity in the provision for restructuring
costs during the six months ended October 31, 2000:
<TABLE>
<CAPTION> Employee Total
Termination Facilities Other Provision
---------------- ------------ --------- ---------------
<S> <C> <C> <C> <C>
Balance, April 30, 2000........... $ 590 $1,246 $395 $ 2,231
Cash payments...................... (249) (74) -- (323)
---------------- ------------ --------- ---------------
Balance, July 31, 2000............. 341 1,172 395 1,908
Cash payments...................... (89) (50) (79) (218)
---------------- ------------ --------- ---------------
Balance, October 31, 2000....... $ 252 $1,122 $316 $ 1,690
================ ============ ========= ===============
Long term balance.................. $ -- $ 935 $ 200 $ 1,135
================ ============ ========= ===============
</TABLE>
During the three months ended October 31, 2000 the Company made cash payments of
approximately $218,000 relating to the provision for restructuring costs
recorded in fiscal year 1999. This included $89,000 in salary continuance for
terminated employees, $50,000 in rent for the Company's vacant office space in
the United Kingdom, and $79,000 in other miscellaneous costs. The long term
balances primarily relate to facility leases in the United Kingdom.
JETFORM CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. SEGMENTED INFORMATION
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
Company's chief decision-maker in deciding how to allocate resources and
assessing performance. The Company's chief decision-maker is the Chief Executive
Officer.
The Company's Chief Executive Officer primarily evaluates the Company on a
geographic basis. The geographic evaluation is further segmented into Product,
Consulting, and Customer Support components. The Product segment engages in
business activities from which it earns license revenues from the Company's
software products. The Consulting segment earns revenues from assisting
customers in configuring, implementing and integrating the Company's products
and when required, customizing products and designing automated processes to
meet the customers specific business needs as well as providing all necessary
training. The Customer Support segment earns revenues through after sale support
for software products as well as providing software upgrades under the Company's
maintenance and support programs.
The Company evaluates performance based on the contribution of each segment. The
Product segment costs include all costs associated with selling product
licenses, consulting services, and customer support. The costs of the Consulting
segment include all costs associated with the delivery of the service to the
customer. The Customer Support segment includes all costs associated with
providing technical support to the customer. Inter-segment revenues as well as
charges such as depreciation and amortization, interest expense, and overhead
allocations are not included in the calculation of segment profit. The Company
does not use a measure of segment assets to assess performance or allocate
resources. As a result, segment asset information is not presented.
<PAGE>
JETFORM CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The following table sets forth, on a comparative basis for the periods
indicated, the Company's segmented information:
<TABLE>
<CAPTION> Three months ended October 31, 2000
(in thousands of Canadian dollars)
--------------------------------------------------
Product Consulting Customer
Support Total
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
North America
Revenue $9,432 $1,433 $4,812 $15,677
Costs 5,500 859 961 7,320
------------- ------------ ----------- -----------
Margin $3,932 $574 $3,851 $8,357
------------- ------------ ----------- -----------
Europe
Revenue $4,570 $1,252 $1,706 $7,528
Costs 3,096 420 359 3,875
------------- ------------ ----------- -----------
Margin $1,474 $832 $1,347 $3,653
------------- ------------ ----------- -----------
Asia Pacific
Revenue $3,257 $79 $145 $3,481
Costs 1,399 - - 1,399
------------- ------------ ----------- -----------
Margin $1,858 $79 $145 $2,082
------------- ------------ ----------- -----------
Total
Revenue $17,259 $2,764 $6,663 $26,686
Costs 9,995 1,279 1,320 12,594
------------- ------------ ----------- -----------
Margin $7,264 $1,485 $5,343 $14,092
------------- ------------ ----------- -----------
Cost of product 2,118
Corporate marketing 2,719
Research and development 4,059
General and administration 2,258
Depreciation and amortization 2,474
-----------
13,628
-----------
Operating income 464
Net investment income 418
-----------
Income before taxes 882
Provision for income taxes (501)
-----------
Net income $ 381
===========
</TABLE>
<PAGE>
JETFORM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION> Three months ended October 31, 1999
(in thousands of Canadian dollars)
--------------------------------------------------
Product Consulting Customer
Support Total
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
North America
Revenue $10,302 $3,579 $4,794 $18,675
Costs 5,470 1,571 954 7,995
------------- ------------ ----------- -----------
Margin $4,832 $2,008 $3,840 $10,680
------------- ------------ ----------- -----------
Europe
Revenue $3,140 $716 $1,292 $5,148
Costs 2,362 296 280 2,938
------------- ------------ ----------- -----------
Margin $778 $420 $1,012 $2,210
------------- ------------ ----------- -----------
Asia Pacific
Revenue $1,245 $5 - $1,250
Costs 1,081 - - 1,081
------------- ------------ ----------- -----------
Margin $164 $5 - $169
------------- ------------ ----------- -----------
Total
Revenue $14,687 $4,300 $6,086 $25,073
Costs 8,913 1,867 1,234 12,014
------------- ------------ ----------- -----------
Margin $5,774 $2,433 $4,852 $13,059
------------- ------------ ----------- -----------
Cost of product 2,661
Corporate marketing 2,165
Research and development 3,926
General and administration 2,764
Depreciation and amortization 2,562
-----------
14,078
-----------
Operating loss (1,019)
Net investment income 340
-----------
Loss before taxes (679)
Provision for income taxes (208)
-----------
Net loss ($887)
===========
</TABLE>
JETFORM CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION> Six months ended October 31, 2000
(in thousands of Canadian dollars)
--------------------------------------------------
Product Consulting Customer
Support Total
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
North America
Revenue $15,640 $2,776 $9,474 $27,890
Costs 11,848 1,389 2,069 15,306
------------- ------------ ----------- -----------
Margin $3,792 $1,387 $7,405 $12,584
------------- ------------ ----------- -----------
Europe
Revenue $9,378 $2,558 $3,463 $15,399
Costs 6,024 985 843 7,852
------------- ------------ ----------- -----------
Margin $3,354 $1,573 $2,620 $7,547
------------- ------------ ----------- -----------
Asia Pacific
Revenue $4,895 $275 $282 $5,452
Costs 2,446 - - 2,446
------------- ------------ ----------- -----------
Margin $2,449 $275 $282 $3,006
------------- ------------ ----------- -----------
Total
Revenue $29,913 $5,609 $13,219 $48,741
Costs 20,318 2,374 2,912 25,604
------------- ------------ ----------- -----------
Margin $9,595 $3,235 $10,307 $23,137
------------- ------------ ----------- -----------
Cost of product 4,132
Corporate marketing 5,084
Research and development 8,006
General and administration 4,732
Depreciation and amortization 5,061
-----------
27,015
-----------
Operating loss (3,878)
Net investment income 452
-----------
Loss before taxes (3,426)
Provision for income taxes (659)
-----------
Net loss $(4,085)
===========
</TABLE>
<PAGE>
JETFORM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION> Six months ended October 31, 1999
(in thousands of Canadian dollars)
--------------------------------------------------
Product Consulting Customer
Support Total
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
North America
Revenue $16,461 $8,353 $8,406 $33,220
Costs 11,117 2,862 1,983 15,962
------------- ------------ ----------- -----------
Margin $5,344 $5,491 $6,423 $17,258
------------- ------------ ----------- -----------
Europe
Revenue $7,896 $1,711 $2,586 $12,193
Costs 5,116 684 786 6,586
------------- ------------ ----------- -----------
Margin $2,780 $1,027 $1,800 $5,607
------------- ------------ ----------- -----------
Asia Pacific
Revenue $2,268 $11 429 $2,708
Costs 2,057 - 176 2,233
------------- ------------ ----------- -----------
Margin $211 $11 253 $475
------------- ------------ ----------- -----------
Total
Revenue $26,625 $10,075 $11,421 $48,121
Costs 18,290 3,546 2,945 24,781
------------- ------------ ----------- -----------
Margin $8,335 $6,529 $8,476 $23,340
------------- ------------ ----------- -----------
Cost of product 4,772
Corporate marketing 4,252
Research and development 7,668
General and administration 5,334
Depreciation and amortization 5,097
Gain on sale of assets (1,813)
-----------
25,310
-----------
Operating loss (1,970)
Net investment income 836
-----------
Loss before taxes (1,134)
Provision for income taxes (384)
-----------
Net loss ($1,518)
===========
</TABLE>
<PAGE>
JETFORM CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
8. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued the
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). This statement
establishes accounting and reporting standards for derivative instruments and
hedging activities and is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. In June 1999, the FASB issued SFAS No.137 which
delays the effective date of SFAS 133 until fiscal years beginning after June
15, 2000. Currently, as the Company has no derivative instruments, the adoption
of SFAS No. 133 would have no impact on the Company's financial condition or
results of operations. To the extent the Company begins to enter into such
transactions in the future, the Company will adopt the Statement's disclosure
requirements in the quarterly and annual financial statements for the year
ending April 30, 2002.
On March 31, 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44, Accounting for Certain Transactions involving Stock
Compensation - an interpretation of APB Opinion No. 25 (FIN 44), providing new
accounting rules for stock-based Compensation under APB Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25). FIN 44 does not change FASB
Statement No. 123, Accounting for Stock based compensation (FAS 123). The new
rules are significant and will result in compensation expense in several
situations in which no expense is typically recorded under current practice,
including option repricing, purchase business combinations and plans that permit
tax withholdings. FIN 44 is generally effective for transactions occurring after
July 1, 2000, but applies to repricings and some other transactions after
December 15, 1998. The Company does not expect the adoption of this
Interpretation to have a material impact on its results of operations or
financial position.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements,
which was amended in March 2000 by SAB 101A. The SAB summarizes certain of the
SEC staff views in applying generally accepted accounting principles to revenue
recognition in financial statements. On June 26, 2000, the SEC issued SAB 101B
to provide registrants with additional time to implement guidance contained in
SAB 101. SAB 101B delays the implementation date of SAB 101 until no later than
the fourth fiscal quarter of fiscal years beginning after December 15, 1999.
This SAB is effective beginning the Company's fourth quarter of fiscal 2001. The
Company does not expect the adoption of this SAB to have a material impact on
its results of operations or financial position.
9. CAPITAL STOCK
During the quarter ended October 31, 2000 the Company issued 4.0 million common
shares at a price of $5.60 per share to third parties pursuant to an
underwritten public offering. The net proceeds from this offering after
deducting underwriting discounts, fees and expenses were approximately $20.9
million. In addition, subsequent to October 31, 2000 the underwriters exercised
an over-allotment option to purchase an additional 600,000 common shares from
the Company at a price of $5.60 per share, the net proceeds of which after
deducting underwriting discounts, fees and expenses were approximately $3.1
million. Also subsequent to October 31, 2000, Moore Corporation Limited
converted its 450,448 Convertible Preference Shares into an equal number of
Common Shares.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of the Company's results of operations and of its
liquidity and capital resources should be read in conjunction with the
information contained in the accompanying Unaudited Consolidated Financial
Statements and related Notes thereto, together with management's discussion and
analysis of financial condition and results of operations contained in the
Company's Report on Form 10-K for the fiscal year ended April 30, 2000. The
following discussion provides a comparative analysis of material changes for the
three and six month periods ended October 31, 2000 and 1999, in the financial
condition and results of operations of the parent company ("JetForm") and its
wholly-owned subsidiaries: JetForm Corporation (a Delaware corporation), JetForm
Pacific Pty Limited ("JetForm Pacific"), JetForm Scandinavia AB ("JetForm
Nordic"), JetForm France SA ("JetForm France"), JetForm UK Limited ("JetForm
UK"), JetForm Deutschland GmbH ("JetForm Germany"), JetForm Technologies Limited
("JetForm Ireland"), JetForm Japan K.K. ("JetForm Japan") and JetForm PTE Ltd
("JetForm Singapore"). JetForm and its wholly owned subsidiaries are
collectively referred to herein as the "Company".
Results of Operations
The Company's revenues and operating results have varied substantially from
period to period. With the exception of its consulting services operation, the
Company has historically operated with little backlog of orders because its
software products are generally shipped as orders are received. The Company
records product revenue from packaged software and irrevocable commitments to
purchase products when persuasive evidence of an arrangement exists, the
software product has been shipped, there are no significant uncertainties
surrounding product acceptance, the fees are fixed and determinable and
collection is considered probable. As a result, product revenue in any period is
substantially dependent on orders booked and shipped in that period and on the
receipt of irrevocable commitment license agreements. Product revenue is
difficult to forecast due to the fact that the Company's sales cycle, from
initial trial to multiple copy licenses, varies substantially from customer to
customer. As a result, variations in the timing of product sales can cause
significant variations in operating results from period to period. Product
revenue represented 65% of total revenue for the quarter ended October 31, 2000.
Service revenue primarily consists of consulting services, training and
technical support. Consulting services include assisting customers to configure,
implement and integrate the Company's products and, when required, customize
products and design automated processes to meet customers' specific business
needs. Service revenue represented 35% of total revenue for the quarter ended
October 31, 2000.
Costs and expenses are comprised of cost of product, cost of service, sales and
marketing, general and administrative, research and development, depreciation
and amortization and other expenses. Cost of product consists of third party
commissions, the cost of disks, manuals, packaging, freight, royalty payments to
vendors whose software is bundled with certain products, amortization of
deferred product development costs and provisions for bad debts. Cost of service
includes all costs of providing technical support, training, consulting, custom
forms development, application development services and provisions for bad
debts. Sales and marketing expenses are principally related to salaries and
commissions paid to sales and marketing personnel and the cost of marketing
programs. Research and development expenses include personnel and occupancy
costs as well as the costs of software development, testing, product management,
quality assurance and documentation. Depreciation and amortization includes
depreciation and amortization of fixed assets and amortization of other assets,
goodwill and distribution rights relating to various acquisitions. The Company
amortizes goodwill and distribution rights over their expected useful lives. The
Company periodically reviews the carrying value of its capital assets. Any
impairments in the carrying value are recognized at that time.
The following table sets forth, on a comparative basis for the periods
indicated, the components of the Company's product margin, service margin, and
product and service margin:
<TABLE>
<CAPTION> Three months ended October 31, Six months ended October 31,
------------------------------------------- -------------------------------------------
2000 1999 2000 1999
--------------------- --------------------- -------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Product revenue $17,259 100% $14,687 100% $29,913 100% $26,625 100%
Cost of product 2,118 12% 2,661 18% 4,132 14% 4,772 18%
---------- ---------- ---------- ---------- ---------- --------- ----------- ----------
Product margin $15,141 88% $12,026 82% $25,781 86% $21,853 82%
========== ========== ========== ========== ========== ========= =========== ==========
Service revenue $ 9,427 100% $10,386 100% $18,828 100% $21,496 100%
Cost of service 2,599 28% 3,101 30% 5,286 28% 6,491 30%
---------- ---------- ---------- ---------- ---------- --------- ----------- ----------
Service margin $6,828 72% $7,285 70% $13,542 72% $15,005 70%
========== ========== ========== ========== ========== ========= =========== ==========
Total revenues $26,686 100% $25,073 100% $48,741 100% $48,121 100%
Cost of product
and service 4,717 18% 5,762 23% 9,418 19% 11,263 23%
---------- ---------- ---------- ---------- ---------- -------- ----------- ----------
Product and service
margin $21,969 82% $19,311 77% $39,323 81% $36,858 77%
========== ========== ========== ========== ========== ========= =========== ==========
</TABLE>
<PAGE>
The following table presents, for the periods indicated, consolidated
statements of operations data expressed as a percentage of total revenues:
<TABLE>
<CAPTION> Three months ended Six months ended
October 31, October 31,
------------------------------ -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Product 65% 59% 61% 55%
Service 35% 41% 39% 45%
------------ ------------- ------------ ------------
100% 100% 100% 100%
------------ ------------- ------------ ------------
Costs and expenses
Cost of product 8% 11% 8% 10%
Cost of service 10% 12% 11% 13%
Sales and marketing 48% 44% 52% 47%
General and administrative 8% 11% 10% 11%
Research and development 15% 16% 16% 16%
Depreciation and amortization 9% 10% 10% 11%
Gain on sale of assets -- -- -- (4%)
------------ ------------- ------------ ------------
98% 104% 108% 104%
------------ ------------- ------------ ------------
Operating income (loss) 2% (4%) (8%) (4%)
Net investment income 1% 1% 1% 2%
------------ ------------- ------------- ------------
Income (loss) before taxes 3% (3%) (7%) (2%)
Provision for income taxes (2%) 1% (1%) 1%
------------ ------------- ----------- ------------
Net income (loss) 1% (4%) (8%) (3%)
============ ============= ============ ============
</TABLE>
The following table provides details of product revenue by geographic
segment and within North America, by distribution channel:
<TABLE>
<CAPTION> Three months ended October 31, Six months ended October 31,
-------------------------------------------- ---------------------------------------------
Increase Increase
2000 1999 (Decrease) 2000 1999 (Decrease)
------------ ----------- ------------- ------------ ----------- --------------
(in thousands of Canadian dollars)
<S> <C> <C> <C> <C> <C> <C>
Product revenue by region
North America $ 9,432 $10,302 (8%) $15,640 $16,461 (5%)
Europe 4,570 3,140 46% 9,378 7,896 19%
Rest of World 3,257 1,245 162% 4,895 2,268 116%
------------ ------------ ----------- -----------
$17,259 $14,687 18% $29,913 $26,625 12%
============ ============ =========== ===========
Product revenue by channel in North America
Reseller and OEM $ 5,868 $ 7,508 (22%) $7,087 $11,078 (36%)
End Users 3,564 2,794 28% 8,553 5,383 58%
------------ ------------ ----------- -----------
$ 9,432 $10,302 (8%) $15,640 $16,461 (5%)
============ ============ =========== ===========
</TABLE>
Three Months Ended October 31, 2000 Compared to Three Months Ended October 31,
1999
Revenues
Total Revenues. Total revenues increased 6% to $26.7 million for the
three months ended October 31, 2000 from $25.1 million for the three months
ended October 31, 1999, due primarily to increased revenues in Europe and Rest
of World. Total revenues consisted of 65% product revenue and 35% service
revenue for the three months ended October 31, 2000.
Product Revenue. Product revenue increased 18% to $17.3 million for the
three months ended October 31, 2000 from $14.7 million for the three months
ended October 31, 1999, due primarily to increased product revenue in Europe and
Rest of World. Product revenue derived from North America, Europe and Rest of
World represented 55%, 26%, and 19%, respectively, of product revenue for the
three months ended October 31, 2000, as compared to 70%, 21% and 9%,
respectively, of product revenue for the three months ended October 31, 1999.
Product revenue derived from North America decreased 8% to $9.4 million
for the three months ended October 31, 2000 from $10.3 million for the three
months ended October 31, 1999, due primarily to lower government, reseller and
OEM sales. Reseller and OEM sales, which represented 62% of North American
product revenue, decreased 22% to $5.9 million for the three months ended
October 31, 2000 from $7.5 million for the three months ended October 31, 1999.
Government resellers represented $1.1 million of this decrease. Product revenue
from end users, which represented 38% of North American product revenue,
increased 28% to $3.6 million for the three months ended October 31, 2000 from
$2.8 million for the three months ended October 31, 1999.
Product revenue derived from Europe increased 46% to $4.6 million for
the three months ended October 31, 2000 from $3.1 million for the three months
ended October 31, 1999, due primarily to increased product sales in Germany.
Product revenue derived from Rest of World increased 162% to $3.3
million for the three months ended October 31, 2000 from $1.2 million for the
three months ended October 31, 1999, due primarily to higher sales in Japan and
Australia.
Service Revenue. Service revenue decreased 9% to $9.4 million for the
three months ended October 31, 2000 from $10.4 million for the three months
ended October 31, 1999. For the three months ended October 31, 2000 maintenance
and support revenue increased 10% to $6.7 million from $6.1 million for the
three months ended October 31, 1999. The Company's consulting revenue decreased
35% to $2.8 million for the three months ended October 31, 2000 from $4.3
million for the three months ended October 31, 1999. The decrease in consulting
revenue was in North America.
Costs and Expenses
Total Costs and Expenses. Total costs and expenses increased 1% to
$26.2 million for the three months ended October 31, 2000 from $26.1 million for
the three months ended October 31, 1999.
Cost of Product. Cost of product decreased 22% to $2.1 million for the
three months ended October 31, 2000 from $2.7 million for the three months ended
October 31, 1999, due to lower third party royalty costs. For the three months
ended October 31, 2000, total deferred cost charged to cost of product increased
to $906,000 from $846,000 for the three months ended October 31, 1999. The
product margin increased to 88% for the three months ended October 31, 2000 from
82% for the three months ended October 31, 1999.
<PAGE>
Cost of Service. Cost of service decreased 16% to $2.6 million for the
three months ended October 31, 2000 from $3.1 million for the three months ended
October 31, 1999, due primarily to decreased consulting revenue and reduced
numbers of employees in this area. The service margin increased to 72% for the
three months ended October 31, 2000 from 70% for the three months ended October
31, 1999.
Costs of Product and Service. Costs of product and service decreased
19% to $4.7 million for the three months ended October 31, 2000 from $5.8
million for the three months ended October 31, 1999. Product and service margin
increased to 82% for the three months ended October 31, 2000 from 77% for the
three months ended October 31, 1999.
Sales and Marketing. Sales and marketing expenses increased 15% to
$12.7 million for the three months ended October 31, 2000 from $11.1 million for
the three months ended October 31, 1999, due to an initiative to increase the
direct and indirect sales force.
General and Administrative. General and administrative expenses
decreased 18% to $2.3 million for the three months ended October 31, 2000 from
$2.8 million for the three months ended October 31, 1999. As a percentage of
total revenues, general and administrative expenses decreased to 8% from 11% for
the three months ended October 31, 2000 and 1999, respectively.
Research and Development. Research and development expenses increased
5% to $4.1 million for the three months ended October 31, 2000 from $3.9 million
for the three months ended October 31, 1999. For the three months ended October
31, 2000 the Company capitalized approximately $797,000 of software development
costs as compared to $900,000 for the three months ended October 31, 1999.
Research and development expenses were 15% and 16% of product revenue for the
three months ended October 31, 2000 and 1999, respectively.
Depreciation and Amortization. Depreciation and amortization decreased
3% to $2.5 million for the three months ended October 31, 2000 from $2.6 million
for the three months ended October 31, 1999.
Operating Income. Operating income was $0.5 million for the three
months ended October 31, 2000 compared to an operating loss of $1.0 million for
the three months ended October 31, 1999.
Net Investment Income. Interest and other income increased 23% to
$418,000 for the three months ended October 31, 2000, from $340,000 for the
three months ended October 31, 1999 primarily due to increased cash and cash
equivalents available for investment.
Provision for Income Taxes. The Company recorded a provision for income
taxes of $501,000 for the three months ended October 31, 2000, compared to
$208,000 for the three months ended October 31, 1999. As at October 31, 2000,
the Company had a net deferred tax asset of approximately $58.5 million. The
Company believes sufficient uncertainty exists regarding the realizability of
this net deferred tax asset that a valuation allowance of $52.9 million has been
provided.
<PAGE>
Six Months Ended October 31, 2000 Compared to Six Months Ended October 31, 1999
Revenues
Total Revenues. Total revenues increased 1% to $48.7 million for the
six months ended October 31, 2000 from $48.1 million for the six months ended
October 31, 1999 primarily due to increased sales in Europe and Rest of World.
Total revenues consisted of 61% product revenue and 39% service revenue for the
six months ended October 31, 2000.
Product Revenue. Product revenue increased 12% to $29.9 million for the
six months ended October 31, 2000 from $26.7 million for the six months ended
October 31, 1999, primarily due to increased sales in Europe and Rest of World.
Product revenue derived from North America, Europe and Rest of World represented
52%, 31%, and 17%, respectively, of product revenue for the six months ended
October 31, 2000, as compared to 62%, 30% and 8%, respectively, of product
revenue for the six months ended October 31, 1999.
Product revenue derived from North America decreased 5% to $15.6
million for the six months ended October 31, 2000 from $16.5 million for the six
months ended October 31, 1999, due to lower reseller and OEM sales. Product
revenue from end users, which represented 55% of North American product revenue,
increased 58% to $8.6 million for the six months ended October 31, 2000 from
$5.4 million for the six months ended October 31, 1999. Reseller and OEM sales,
which represented 45% of North American product revenue, decreased 36% to $7.1
million for the six months ended October 31, 2000 from $11.1 million for the six
months ended October 31, 1999.
Product revenue derived from Europe increased 19% to $9.4 million for
the six months ended October 31, 2000 from $7.9 million for the six months ended
October 31, 1999 due primarily to increased sales in the UK.
Product revenue derived from Rest of World increased 116% to $4.9
million for the six months ended October 31, 2000 from $2.3 million for the six
months ended October 31, 1999, due primarily to increased sales in Japan and
Australia.
Service Revenue. Service revenue decreased 12% to $18.8 million for the
six months ended October 31, 2000 from $21.5 million for the six months ended
October 31, 1999. For the six months ended October 31, 2000 maintenance and
support revenue increased 16% to $13.2 million from $11.4 million for the six
months ended October 31, 1999. The Company's consulting revenue decreased 44% to
$5.6 million for the six months ended October 31, 2000 from $10.0 million for
the six months ended October 31, 1999. The decrease in consulting revenue was in
North America.
Costs and Expenses
Total Costs and Expenses. Total costs and expenses were $52.6 million
for the six months ended October 31, 2000, a increase of 5% from $50.1 million
for the six months ended October 31, 1999.
Cost of Product. Cost of product decreased 15% to $4.1 million for the
six months ended October 31, 2000 from $4.8 million for the six months ended
October 31, 1999, due primarily to reduced bad debt and third party royalty
costs. For the six months ended October 31, 2000, total deferred cost charged to
cost of product increased to $1.8 million from $1.6 million for the six months
ended October 31, 1999. The product margin increased to 86% for the six months
ended October 31, 2000 from 82% for the six months ended October 31, 1999.
Cost of Service. Cost of service decreased 18% to $5.3 million for the
six months ended October 31, 2000 from $6.5 million for the six months ended
October 31, 1999. The service margin increased to 72% for the six months ended
October 31, 2000 from 70% for the six months ended October 31, 1999, due
primarily to lower consulting revenues.
Costs of Product and Service. Costs of product and service decreased
17% to $9.4 million for the six months ended October 31, 2000 from $11.3 million
for the six months ended October 31, 1999. Product and service margin increased
to 81% for the six months ended October 31, 2000 from 77% for the six months
ended October 31, 1999.
Sales and Marketing. Sales and marketing expenses increased 13% to
$25.4 million for the six months ended October 31, 2000 from $22.5 million for
the six months ended October 31, 1999 due to an initiative to increase the
direct and indirect sales force.
General and Administrative. General and administrative expenses
decreased 11% to $4.7 million for the six months ended October 31, 2000 from
$5.3 million for the six months ended October 31, 1999. As a percentage of total
revenues, general and administrative expenses decreased to 10% from 11% for the
six months ended October 31, 2000 and 1999, respectively.
Research and Development. Research and development expenses increased
4% to $8.0 million for the six months ended October 31, 2000 from $7.7 million
for the six months ended October 31, 1999. For the six months ended October 31,
2000 the Company capitalized approximately $1.7 million of software development
costs as compared to $1.8 million for the six months ended October 31, 1999.
Depreciation and Amortization. Depreciation and amortization expense
decreased 2% to $5.0 million for the six months ended October 31, 2000 from $5.1
million for the six months ended October 31, 1999.
Operating Income. Operating loss was $3.9 million for the six months
ended October 31, 2000 compared to operating loss of $2.0 million for the six
months ended October 31, 1999.
Net Investment Income. Interest and other income decreased 46% to
$452,000 for the six months ended October 31, 2000 from $836,000 for the six
months ended October 31, 1999. During the 6 months ended October 30, 1999 the
Company recorded Interest income of approximately $362,000 resulting from
imputed interest on the refinancing of the Delrina obligation. The Delrina
obligation was fully satisfied in the quarter ended April 30, 2000.
Provisions for Income Taxes. The Company recorded a provision for taxes
of $659,000 for the six months ended October 31, 2000, compared to $384,000 for
the six months ended October 31, 1999.
Liquidity and Capital Resources
As at October 31, 2000 and April 30, 2000, the Company had $49.7
million and $42.1 million of cash and cash equivalents respectively. During the
six months ended October 31, 2000, the Company's cash and cash equivalents
increased by $7.6 million.
Operations
The Company increased its investment in the non-cash operating
components of working capital during the six months ended October 31, 2000, by
approximately $9.8 million, primarily due to increases in accounts receivables
and decreases in accounts payable and accrued liabilities.
The Company purchased approximately $4.6 million of fixed assets in the
six months ended October 31, 2000. The purchases of fixed assets included
computer hardware and software, office equipment and furniture, and leasehold
improvements. During the six months ended October 31, 2000, the Company
increased its investment in other assets by $1.7 million related primarily to
capitalized development costs and purchases of other assets.
Public Share Offering
During the quarter ended October 31, 2000, the Company issued 4.0
million common shares to investors at a price of $5.60 per share. The net
proceeds from the offering after deducting underwriting discount fees and
expenses were approximately $20.9 million. In addition, subsequent to October
31, 2000 the underwriters exercised an over-allotment option to purchase an
additional 600,000 common shares from the Company at a price of $5.60 per share,
the net proceeds of which after deducting underwriting discount fees and
expenses were approximately $3.1 million. On October 5, 2000, the Company filed
a final prospectus with Canadian securities regulators to qualify for
distribution the 4.6 million Common Shares. A registration statement relating to
these securities has also been filed with the United States Securities and
Exchange Commission.
Accounts Receivable and Term Accounts Receivable
Total accounts receivable increased to $32.2 million at October 31,
2000, from $26.9 million at April 30, 2000. The Company did not sell any
receivables during the quarter ended October 31, 2000. During the quarter ended
April 30, 2000 the company sold accounts receivable of $6.7 million. Term
accounts receivable, which are accounts receivable with payment dates exceeding
the Company's customary trade terms, decreased to $4.9 million, for the three
months ended October 31, 2000 from $5.5 million on April 30, 2000. Term accounts
receivable primarily arise from the recording of revenue from irrevocable
commitments to purchase licenses ("Irrevocable Commitment Licenses"). As of
October 31, 2000 all term accounts receivable are less than one year in length.
Financial Instruments and Credit Facility
The Company has entered into receivables purchase agreements with third
party purchasers. Under the agreements, the Company has the option to sell
certain accounts receivable on a recourse basis. The purchasers have recourse in
the event of a trade dispute as defined in the receivables purchase agreements
and upon the occurrence of other specified events. As at October 31, 2000 and
April 30, 2000, the outstanding balances of accounts receivable sold under these
agreements were approximately US$3.4 million and US$9.7 million, respectively.
The Company believes that none of the receivables sold are at risk of recourse.
These sales meet all of the requirements of SFAS 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," for off
balance sheet reporting. The Company did not sell any receivables during the
period ended October 31, 2000.
The Company has a committed $20 million credit facility with the Royal
Bank of Canada. The credit facility is made up of (i) a $10 million term loan
facility which bears interest at a rate of 1.5% over the bankers acceptance rate
of the Bank from time to time and is payable on May 1, 2002; and (ii) a $10
million revolving line of credit which bears interest at the prime rate of the
Bank from time to time. As at October 31, 2000, the Company had drawn down the
$10 million term loan facility and fixed the interest rate until January 16,
2001 at 5.86%. The Company had no borrowings against its revolving line of
credit as at October 31, 1999. The Company has granted as collateral for the $20
million credit facility a general security agreement over JetForm's assets,
including a pledge of the shares of certain subsidiaries.
The Company believes that its existing cash and cash equivalents will
provide sufficient liquidity to meet the Company's business requirements in the
foreseeable future. However, should the Company incur operating losses, its
ability to meet its liquidity requirements and to raise additional capital
through debt or equity financing may be compromised.
Provision for Restructuring Costs
On March 17, 1999, the Corporation announced a restructuring plan and
recorded a provision for restructuring costs of $30.5 million directed at
reducing costs. The key restructuring actions included:
o Consolidation of management responsibilities and reduction in headcount.
o Closure of redundant facilities.
o Reduction in the carrying value of certain capital assets primarily
related to past acquisitions.
o Cancellation of certain commitments and other costs.
The following table summarizes the activity in the provision for
restructuring costs during the six months ended October 31, 2000:
<TABLE>
<CAPTION> Employee Total
Termination Facilities Other Provision
---------------- ------------ --------- ---------------
<S> <C> <C> <C> <C>
Balance, April 30, 2000............. $ 590 $1,246 $395 $ 2,231
Cash payments........................ (249) (74) -- (323)
---------------- ------------ --------- ---------------
Balance, July 31, 2000.............. 341 1,172 395 1,908
Cash payments....................... (89) (50) (79) (218)
---------------- ------------ --------- ---------------
Balance, October 31, 2000........ $ 252 $1,122 $316 $ 1,690
================ ============ ========= ===============
Long term balance.................. $ -- $ 935 $ 200 $ 1,135
================ ============ ========= ===============
</TABLE>
During the three months ended October 31, 2000 the Company made cash payments of
approximately $218,000 relating to the provision for restructuring costs
recorded in fiscal year 1999. This included $89,000 in salary continuance for
terminated employees, $50,000 in rent for the Company's vacant office space in
the United Kingdom, and $79,000 in other miscellaneous costs. The long term
balances primarily relate to facility leases in the United Kingdom.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company is primarily exposed to market risks associated with
fluctuations in interest rates and foreign currency exchange rates.
Interest rate risks
The Company's exposure to interest rate fluctuations relates primarily to
its investment portfolio and its credit facility with its bank. The Company
primarily invests its cash in short-term high-quality securities with reputable
financial institutions. The interest income from these investments is subject to
interest rate fluctuations which management believes would not have a material
impact on the financial position of the Company.
Foreign Currency Risk
The Company has net monetary asset and liability balances in foreign
currencies other than the Canadian Dollar, including the U.S. Dollar ("US$"),
the Pound Sterling ("GBP"), the Australian dollar ("AUD"), the Swedish Krona
("SEK"), the German Mark ("DEM"), the French Franc ("FRF"), the Irish Punt
("IEP"), the Euro ("EUR"), and the Japanese Yen ("JPY").
The Company's cash and cash equivalents are primarily held in Canadian and
U.S. dollars. As a result, fluctuations in the exchange rate of the U.S. dollar
will have an impact on the Company's reported cash position.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Each year, the Company's shareholders elect the directors of the Company for the
ensuing year. At the Company's annual meeting of shareholders held on September
6, 2000 (the "Annual Meeting"), the following individuals were elected to the
board of directors:
John Gleed, Abraham E. Ostrovsky, Stephen A. Holinski, Paul Bates, Patrick
Martin, A. Kevin Francis, Michael Rousseau.
The following proposals, as more particularly described in the Company's
Management Proxy Circular dated July 21, 2000, were approved at the Company's
Annual Meeting.
<TABLE>
<CAPTION>
Votes For Votes Against or
Withheld
<S> <C> <C>
1. Election of directors 6,296,534 58,113
2. Appointment of PricewaterhouseCoopers LLP as 6,350,003 11,471
independent auditors for the fiscal year
ending April 30, 2001.
3. Amendment to the Corporation's 1995 Stock 5,374,620 972,300
Option Plan
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
During the three months ended October 31, 2000, the Company did not file any
reports on Form 8-K.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JetForm Corporation
December 11, 2000 By: /s/ A. Kevin Francis
------------------------------- ---------------------------
Date A. Kevin Francis
Chief Executive Officer and Director
December 11, 2000 By: /s/ Jeffrey McMullen
------------------------------- ----------------------------
Date Jeffrey McMullen
Vice President, Finance and Chief Financial
Officer
