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 January 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 March 10, 2000: 19,498,289
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE NO.
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as at January 31, 2000, and 3
April 30, 1999
Consolidated Statements of Operations for the
three and nine month periods ended January 31, 2000,
and January 31, 1999 4
Consolidated Statements of Comprehensive Income for
the three and nine month periods ended
January 31, 2000 and January 31, 1999 5
Consolidated Statements of Cash Flows for the
three and nine month periods ended January 31, 2000,
and January 31, 1999 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 21
SIGNATURES 22
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 changes in technology, changes in
industry standards, new product introduction by competitors, increased
participation in the enterprise software market by major corporations and other
matters set forth in this Report. 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)
JANUARY 31, APRIL 30,
2000 1999
------------ -----------
CURRENT ASSETS
Cash and cash equivalents...................... $ 36,029 $ 47,262
Accounts receivable (Note 2)................... 23,819 29,274
Term accounts receivable (Note 2).............. 9,521 13,486
Unbilled receivables........................... 3,449 3,455
Inventory...................................... 976 1,139
Deferred tax assets............................ 1,310 1,310
Prepaid expenses and deferred charges.......... 2,660 3,727
Asset held for sale ........................... -- 3,417
----------- -----------
77,764 103,070
TERM ACCOUNTS RECEIVABLE (NOTE 2).............. 1,382 6,090
DEFERRED TAX ASSETS............................ 4,014 3,218
FIXED ASSETS (NOTE 3).......................... 17,336 18,620
OTHER ASSETS (NOTE 3).......................... 24,165 25,871
=========== ===========
$ 124,661 $ 156,869
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................... $ 5,613 $ 7,874
Accrued liabilities............................ 14,418 15,656
Unearned revenue............................... 13,828 12,463
Current portion of Delrina obligation (Note 5). 2,962 22,023
----------- -----------
36,821 58,016
DEFERRED INCOME TAXES (NOTE 6)................. 164 164
ACCRUED LIABILITIES (NOTE 7) .................. 2,099 3,225
TERM LOAN (NOTE 4)............................. 10,000 9,998
DELRINA OBLIGATION (NOTE 5).................... -- 536
----------- -----------
49,084 71,939
----------- -----------
SHAREHOLDERS' EQUITY
Capital stock (Issued and outstanding -- 19,480,573
Common Shares and 450,448 Preference
Shares at January 31, 2000; 19,421,428
Common Shares and 450,448 Preference
Shares at April 30, 1999) .................... 247,452 247,119
Cumulative translation adjustment.............. (2,173) (1,052)
Deficit........................................ (169,702) (161,137)
----------- -----------
75,577 84,930
----------- -----------
$124,661 $ 156,869
=========== ===========
(the accompanying notes are an integral part of these consolidated financial
statements)
<PAGE>
<TABLE>
<CAPTION>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
------------------------- ------------------------
2000 1999 2000 1999
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
REVENUES
Product $ 10,630 $11,260 $37,255 $53,289
Service 10,489 12,462 31,985 34,726
------------ ------------ ----------- ------------
21,119 23,722 69,240 88,015
------------ ------------ ----------- ------------
COSTS AND EXPENSES
Cost of product 2,828 2,485 7,600 6,776
Cost of service 3,037 5,184 9,694 13,995
Sales and marketing 10,700 13,973 33,242 38,493
General and administrative 4,843 2,732 10,011 7,939
Research and development 4,305 3,958 11,973 11,055
Depreciation and amortization 2,544 3,158 7,641 8,965
Gain on sale of assets -- -- (1,813) --
------------ ------------ ----------- ------------
28,257 31,490 78,348 87,223
------------ ------------ ----------- ------------
OPERATING INCOME (LOSS) (7,138) (7,768) (9,108) 792
Other income 311 812 1,148 2,898
------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE TAXES (6,827) (6,956) (7,960) 3,690
Provision for income taxes (Note 6) (221) (210) (605) (1,832)
------------ ------------ ----------- ------------
NET INCOME (LOSS) $(7,048) $ (7,166) $(8,565) $ 1,858
============ ============ =========== ============
BASIC INCOME (LOSS) PER SHARE
Net income (loss) per share $ (0.35) $ (0.36) $ (0.43) $ 0.09
Weighted average number of shares 19,908,264 19,779,343 19,897,414 19,811,282
FULLY DILUTED INCOME (LOSS) PER SHARE
Net income (loss) per share $ (0.35) $ (0.36) $ (0.43) $ 0.09
Weighted average number of shares 19,908,264 19,779,343 19,897,414 20,355,358
</TABLE>
(the accompanying notes are an integral part of these consolidated financial
statements)
<PAGE>
<TABLE>
<CAPTION>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS)
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
------------------------- ------------------------
2000 1999 2000 1999
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net income (loss)....................... $ (7,048) $ (7,166) $ (8,565) $1,858
Cumulative translation adjustment..... (1,609) -- (1,121) --
------------ ------------ ----------- ------------
Comprehensive income (loss)............. $ (8,657) $ (7,166) $ (9,686) $1,858
============ ============ =========== ============
</TABLE>
(the accompanying notes are an integral part of these consolidated financial
statements)
<PAGE>
<TABLE>
<CAPTION>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS OF CANADIAN DOLLARS)
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
----------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
CASH PROVIDED FROM (USED IN):
OPERATING ACTIVITIES
Net income (loss) $(7,048) $ (7,166) $(8,565) $ 1,858
Items not involving cash:
Depreciation and amortization 3,496 3,997 10,246 11,175
Other non-cash items (342) -- 117 --
Net change in operating components of
working capital 8,307 6,263 13,395 (5,545)
----------- ----------- ------------ ------------
4,413 3,094 15,193 7,488
----------- ----------- ------------ ------------
INVESTING ACTIVITIES
Purchase of fixed assets (1,728) (2,393) (3,882) (6,548)
Increase in other assets (736) (1,037) (3,282) (3,883)
----------- ----------- ------------ ------------
(2,464) (3,430) (7,164) (10,431)
----------- ----------- ------------ ------------
FINANCING ACTIVITIES
Proceeds from issuance of shares 155 297 333 2,876
Repayment of long term debt (5,053) (15,529) (19,595) (41,400)
----------- ----------- ------------ ------------
(4,898) (15,232) (19,262) (38,524)
----------- ----------- ------------ ------------
DECREASE IN CASH AND CASH
EQUIVALENTS (2,949) (15,568) (11,233) (41,467)
CASH AND CASH EQUIVALENTS, BEGINNING OF 38,978 65,705 47,262 91,604
PERIOD
----------- ----------- ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $36,029 $ 50,137 $36,029 $ 50,137
=========== =========== ============ ============
</TABLE>
(the accompanying notes are an integral part of these consolidated financial
statements)
<PAGE>
JETFORM CORPORATION
NOTES TO CONSOLIDATED 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") and JetForm
Technologies Limited ("JetForm Ireland"). JetForm and its wholly-owned
subsidiaries are collectively referred to herein as the "Company" 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 $3.2 million at January 31, 2000 and $1.9 million at April
30, 1999.
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. 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 January 31, 2000 and April 30, 1999 total Term
Accounts Receivable with Minimum Payment Dates exceeding one year were
approximately $1.4 million and $6.1 million, 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.
3. FIXED ASSETS AND OTHER ASSETS
The Consolidated Balance Sheets include the following amounts:
JANUARY 31, APRIL 30, 1999
2000
---------------- ----------------
(in thousands of Canadian dollars)
Accumulated depreciation and
amortization included in fixed
assets $ 20,682 $ 16,027
================ ================
Accumulated amortization
included in other assets $ 21,180 $ 17,600
================ ================
4. FINANCIAL INSTRUMENTS AND CREDIT FACILITIES
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 January 31, 2000 and April
30, 1999, the outstanding balance of accounts receivable sold under these
agreements was approximately US$6.5 million and US$6.9 million, respectively.
The Company believes that none of the receivables sold are at risk of recourse.
The Company has a $20 million credit facility with the Royal Bank of Canada (the
"Bank"). 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 February 1, 2001; 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 January 31, 2000, the Company had drawn down the
$10 million term loan facility and fixed the interest rate until April 20, 2000
at 6.77%. The Company had no borrowings against its revolving line of credit as
at January 31, 2000. The Company has granted as collateral a general security
agreement over JetForm's assets, including a pledge of the shares of certain
subsidiaries. The loss incurred during the three months ended January 31, 2000
constituted an event of default under the credit facility with respect to the
unutilized $10 million revolving line of credit.
JetForm hedges its U.S. dollar net asset or liability position to reduce its
exposure to currency fluctuations. To achieve this objective, JetForm primarily
enters into foreign exchange forward contracts with major Canadian chartered
banks, and therefore, does not anticipate non-performance by these
counterparties. JetForm does not enter into foreign exchange forward contracts
for speculative or trading purposes. Gains and losses on these forward exchange
contracts are recognized and included in income as realized and offset against
foreign exchange gains and losses on the underlying net asset or liability
position. As at January 31, 2000 the Company did not have a significant U.S.
dollar exposure or any foreign exchange forward contracts oustanding.
5. DELRINA OBLIGATION
On September 10, 1996, the Company acquired certain assets, including title to
intellectual property, related to the forms software group (the "Delrina
Assets") of Delrina Corporation ("Delrina"), a subsidiary of Symantec
Corporation of Cupertino, California, USA.
Under the asset purchase agreement, the Company will make unequal quarterly
payments to Delrina, from September 27, 1996 to June 27, 2000. On February 12,
1998, the Company and Delrina re-negotiated certain terms of the Delrina Asset
Purchase Agreement whereby the Company agreed to accelerate payment of its
obligation in consideration for a reduction in the effective interest rate,
resulting in a reduction in imputed interest charges. In addition, the amended
agreement provided that the Company may issue its Common Shares to Delrina in
satisfaction of a portion of its payment obligations provided that: (i) the
total market value of the Company's Common Shares held by Delrina immediately
following such issuance does not exceed US$14.0 million; and (ii) the Company
continues to meet certain registration requirements in respect of such issued
Common Shares. As at January 31, 2000, the Company believes that Delrina held no
Common Shares of the Company.
The current estimated fair value of the Delrina obligation is approximately the
same as that recorded in these consolidated financial statements.
6. INCOME TAXES
As at January 31, 2000, the Company had net deferred tax assets of $54.3
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 $49.2
million.
7. PROVISION FOR RESTRUCTURING COSTS
On March 17, 1999, the Corporation announced a restructuring plan 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 three months ended January 31, 2000:
EMPLOYEE TOTAL
TERMINATION FACILITIES OTHER PROVISION
----------------------------------------------
Balance, October 31, 1999...... $2,095 $2,436 $405 $ 4,936
Cash payments................... (583) (468) (48) (1,099)
----------------------------------------------
Balance, January 31, 2000...... $1,512 $1,968 $357 $ 3,837
==============================================
Long term balance.............. $ 453 $1,488 $158 $ 2,099
==============================================
During the three months ended January 31, 2000, the Company bought out the lease
obligation of its vacant Toronto facilities for $420,000. The Company has not
been successful in finding alternative arrangements regarding its vacant
facilities in the United Kingdom.
Employee terminations include salary continuance for which the Company is
contractually obligated to pay. All employees were terminated on or before April
30, 1999.
8. SEGMENTED INFORMATION
Operating segments are defined as components of an enterprise about which
separate financial information is evaluated regularly by the Company's Chief
Executive Officer. The Company's reportable segments include Product,
Consulting, and Customer Support. 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
and Customer Support segments include all costs associated with the delivery of
the service 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.
The following table sets forth, on a comparative basis for the periods
indicated, the Company's segmented information:
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
2000 1999 2000 1999
PRODUCT
Revenues $ 10,630 $ 11,260 $ 37,255 $ 53,289
Costs 8,569 11,677 26,177 32,470
-------- --------- -------- --------
Contribution 2,061 (417) 11,078 20,819
-------- --------- -------- --------
CONSULTING
Revenues 4,576 6,587 15,551 17,990
Costs 2,123 3,126 6,776 9,593
-------- --------- -------- --------
Contribution 2,453 3,461 8,775 8,397
-------- --------- -------- --------
CUSTOMER SUPPORT
Revenues 5,913 5,875 16,434 16,736
Costs 923 1,271 2,399 3,040
-------- --------- -------- --------
Contribution 4,990 4,604 14,035 13,696
-------- --------- -------- --------
Total contribution 9,504 7,648 33,888 42,912
Research and development (4,305) (3,958) (11,973) (11,055)
Other expenses (12,337) (11,458) (32,836) (31,065)
Gain on sale of assets -- -- 1,813 --
-------- --------- -------- ---------
Operating income (loss) $(7,138) $(7,768) $(9,108) $ 792
============= ============ =========== ===========
9. RECENT ACCOUNTING PRONOUNCEMENTS
In December 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP 98-9 "Modification of SOP 97-2, Software Revenue Recognition, With
Respect to Certain Transactions". The adoption of SOP 98-9 has not had a
material impact on the Company's results of operations and financial position.
In June 1998, the FASB issued 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.
Although the impact of SFAS 133 on the Company's financial disclosures is not
known at this time, the Company will adopt SFAS 133 during the year ending April
30, 2002.
10. THE YEAR 2000
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the entity, including
those related to customers, suppliers, or other third parties, have been fully
resolved.
<PAGE>
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, 1999. The
following discussion provides a comparative analysis of material changes in the
financial condition and results of operations of the Company and its
wholly-owned subsidiaries: JetForm Corporation (a Delaware corporation), JetForm
Pacific, JetForm Nordic, JetForm France, JetForm UK, JetForm Germany, JetForm
Ireland, and JetForm Japan for the three and nine months ended January 31, 2000
and 1999.
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
recognizes product revenue when orders are shipped, or for irrevocable
commitment license agreements, when the Company has fulfilled its material
obligations in connection therewith and there is reasonable assurance of
collection. 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.
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 JANUARY 31, NINE MONTHS ENDED JANUARY 31,
--------------------------------------------- ---------------------------------------------
2000 1999 2000 1999
--------------------- -------------------- -------------------- ---------------------
(in thousands of Canadian dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Product revenue $ 10,630 100% $ 11,260 100% $37,255 100% $ 53,289 100%
Cost of product 2,828 27% 2,485 22% 7,600 20% 6,776 13%
--------- -------- --------- ------- -------- ------- --------- --------
Product margin $ 7,802 73% $ 8,775 78% $29,655 80% $46,513 87%
========= ======== ========= ======= ======== ======= ========= ========
Service revenue $ 10,489 100% $ 12,462 100% $31,985 100% $ 34,726 100%
Cost of service 3,037 29% 5,184 42% 9,694 30% 13,995 40%
--------- -------- --------- ------- -------- ------- --------- --------
Service margin $ 7,452 71% $ 7,278 58% $22,291 70% $ 20,731 60%
========= ======== ========= ======= ======== ======= ========= ========
Total revenues $ 21,119 100% $ 23,722 100% $69,240 100% $ 88,015 100%
Cost of product
and service 5,865 28% 7,669 32% 17,294 25% 20,771 24%
--------- -------- --------- ------- -------- ------- --------- --------
Product and
service margin $ 15,254 72% $ 16,053 68% $51,946 75% $ 67,244 76%
========= ======== ========= ======= ======== ======= ========= ========
</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 NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Product 50% 47% 54% 61%
Service 50% 53% 46% 39%
---------- ---------- ---------- ----------
100% 100% 100% 100%
---------- ---------- ---------- ----------
COSTS AND EXPENSES
Cost of product 13% 10% 11% 8%
Cost of service 14% 22% 14% 16%
Sales and marketing 51% 59% 48% 44%
General and administrative 23% 12% 14% 9%
Research and development 20% 17% 17% 13%
Depreciation and amortization 12% 13% 11% 10%
Gain on sale of assets -- -- -3% --
---------- ---------- ---------- ----------
134% 133% 113% 99%
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) -34% -33% -13% 1%
Other Income 1% 3% 2% 3%
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE TAXES -32% -29% -11% 4%
Provision for income taxes -1% -1% -1% -2%
---------- ---------- ---------- ----------
NET INCOME (LOSS) -33% -30% -12% 2%
========== ========== ========== ==========
</TABLE>
The following table provides details of product revenue by geographic
segment and within North America, by distribution channel:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JANUARY 31, NINE MONTHS ENDED JANUARY 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 $ 6,256 $ 5,089 23% $22,717 $36,154 -37%
Europe 4,233 5,290 -20% 12,129 13,478 -10%
Rest of World 141 881 -84% 2,409 3,657 -34%
---------- -------- ---------- -------
$10,630 $ 11,260 -6% $37,255 $53,289 -30%
========== ========= ========== =========
PRODUCT REVENUE BY
Direct sales $ 4,281 $ 2,895 48% $ 9,664 $15,555 -38%
Reseller and OEM 1,975 2,194 -10% 13,053 20,599 -37%
---------- -------- ---------- -------
$ 6,256 $ 5,089 23% $22,717 $36,154 -37%
========== ========= ========== =========
</TABLE>
<PAGE>
THREE MONTHS ENDED JANUARY 31, 2000, COMPARED TO THREE MONTHS ENDED JANUARY 31,
1999
REVENUES
TOTAL REVENUES. Total revenues decreased 11% to $21.1 million for the three
months ended January 31, 2000 from $23.7 million for the three months ended
January 31, 1999. Total revenues consisted of 50% product revenue and 50%
service revenue for the three months ended January 31, 2000.
PRODUCT REVENUE. Product revenue decreased 6% to $10.6 million for the
three months ended January 31, 2000 from $11.3 million for the three months
ended January 31, 1999. Product revenue derived from North America, Europe and
Rest of World represented 59%, 40%, and 1%, respectively, of product revenue for
the three months ended January 31, 2000, as compared to 45%, 47% and 8%,
respectively, of product revenue for the three months ended January 31, 1999.
The Company attributes the decrease in product revenue to external market
factors including the Year 2000 issue, a shift towards Internet based solutions
from traditional client/server solutions, and the emergence of new competitors
selling pre-packaged solutions.
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
Year 2000 as 1900 or some other date, resulting in errors when information using
Year 2000 dates is processed. As a result, the Company's primary customer base,
large financial services organizations and government agencies, who are deeply
affected by the Year 2000 problem due to their reliance on computer systems,
have focused their information technology resources on ensuring Year 2000
readiness. This has dramatically impacted the Company's ability to sell
enterprise wide licenses to these customers.
The Company has also experienced a shift of focus by its customers to
Internet-based solutions from more traditional client/server solutions and the
emergence of new competitors selling pre-packaged solutions. The Company has
developed a comprehensive strategy to address both the market for Internet-based
solutions and prepackaged applications. However, there can be no assurance that
revenue derived from this strategy will be sufficient to offset the potential
decrease in revenue from the Company's client/server products.
Product revenue derived from North America increased 23% to $6.3 million
for the three months ended January 31, 2000 from $5.1 million for the three
months ended January 31, 1999. Product revenue from direct sales, which
represented 68% of North American product revenue, increased 48% to $4.3 million
for the three months ended January 31, 2000 from $2.9 million for the three
months ended January 31, 1999. Reseller and OEM sales, which represented 32% of
North American product revenue, decreased 10% to $2.0 million for the three
months ended January 31, 2000 from $2.2 million for the three months ended
January 31, 1999.
Product revenue derived from Europe decreased 20% to $4.2 million for the
three months ended January 31, 2000 from $5.3 million for the three months ended
January 31, 1999 primarily due to decreased licence revenue from Germany and
Sweden.
Product revenue derived from Rest of World decreased 84% to $141,000 for
the three months ended January 31, 2000 from $881,000 for the three months ended
January 31, 1999, primarily due to decreased licence revenue from Australia and
Japan.
SERVICE REVENUE. Service revenue decreased 16% to $10.5 million for the
three months ended January 31, 2000 from $12.5 million for the three months
ended January 31, 1999. For both the three months ended January 31, 1999 and
2000, maintenance and support revenue remained constant at $5.9 million. The
Company's consulting revenue decreased 31% to $4.6 million for the three months
ended January 31, 2000 from $6.6 million for the three months ended January 31,
1999. For the three months ended January 31, 1999 consulting revenue included
$767,000 from Why Interactive which was sold in May 1999. Excluding revenue from
Why Interactive, consulting revenue decreased 21% primarily due to the general
decrease in product sales.
COSTS AND EXPENSES
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 JetForm products and
amortization of deferred product development costs. Cost of service includes all
costs of providing technical support, training, consulting, custom forms
development and application development services. Sales and marketing expenses
are principally related to salaries and commissions paid to sales and marketing
personnel. 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 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. In general,
the Company expects goodwill from acquisitions of technology to have a useful
life of not more than seven years and distribution rights to have a useful life
of not more than fifteen years.
TOTAL COSTS AND EXPENSES. Total costs and expenses were $28.3 million for
the three months ended January 31, 2000, a decrease of 10% from $31.5 million
for the three months ended January 31, 1999.
COST OF PRODUCT. Cost of product increased 14% to $2.8 million for the
three months ended January 31, 2000 from $2.5 million for the three months ended
January 31, 1999, primarily due to increases in third party royalties and
amortization of development and translation costs charged to cost of product.
For the three months ended January 31, 2000, total deferred costs charged to
cost of product increased to $952,000 from $839,000 for the three months ended
January 31, 1999. The product margin decreased to 73% for the three months ended
January 31, 2000 from 78% for the three months ended January 31, 1999, primarily
due to a decrease in product revenue and an increase in amortization of
development and translation costs.
COST OF SERVICE. Cost of service decreased 41% to $3.0 million for the
three months ended January 31, 2000 from $5.2 million for the three months ended
January 31, 1999, primarily as a result of a decrease in staff resulting from
the Company's restructuring in the fourth quarter of fiscal year 1999 and the
sale of Why Interactive in May 1999. The service margin increased to 71% for the
three months ended January 31, 2000 from 58% for the three months ended January
31, 1999 primarily as a result of the sale of Why Interactive which had lower
margins than other services.
SALES AND MARKETING. Sales and marketing expenses decreased 23% to $10.7
million for the three months ended January 31, 2000 from $14.0 million for the
three months ended January 31, 1999, primarily as a result of a decrease in
sales and marketing staff resulting from the Company's restructuring in the
fourth quarter of fiscal year 1999.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
77% to $4.8 million for the three months ended January 31, 2000 from $2.7
million for the three months ended January 31, 1999, primarily due to
approximately $2.3 million relating to the write-off of a non-core technology
investment and the departure of the Company's Chief Executive Officer and one
other executive. Excluding these charges, general and administrative expenses
decreased 7% to $2.5 million for the three months ended January 31, 2000. As a
percentage of total revenues, general and administrative expenses (excluding the
write-off and departure charges) remained constant at 12% for the three months
ended January 31, 2000 and 1999.
RESEARCH AND DEVELOPMENT. Research and development expenses increased 9% to
$4.3 million for the three months ended January 31, 2000 from $4.0 million for
the three months ended January 31, 1999, primarily due to an increase in the
number of employees and related costs. During both the three months ended
January 31, 2000 and 1999, the Company capitalized approximately $900,000 of
software development costs. Research and development expense was 40% and 35% of
product revenue for the three months ended January 31, 2000 and 1999,
respectively.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased 19%
to $2.5 million for the three months ended January 31, 2000 from $3.2 million
for the three months ended January 31, 1999, primarily as a result of the write
down of certain intangible assets in the fourth quarter of fiscal year 1999.
OPERATING LOSS. Operating loss decreased 8% to an operating loss of $7.2
million for the three months ended January 31, 2000 from $7.8 million for the
three months ended January 31, 1999.
OTHER INCOME (EXPENSE). Interest and other income decreased to $311,000 for
the three months ended January 31, 2000 from $812,000 for the three months ended
January 31, 1999, primarily due to a decrease in investment income on cash and
cash equivalents.
PROVISIONS FOR INCOME TAXES. The Company recorded a provision for taxes of
$221,000 for the three months ended January 31, 2000, compared to $210,000 for
the three months ended January 31, 1999.
NINE MONTHS ENDED JANUARY 31, 2000, COMPARED TO NINE MONTHS ENDED JANUARY 31,
1999
REVENUES
TOTAL REVENUES. Total revenues decreased 21% to $69.2 million for the nine
months ended January 31, 2000 from $88.0 million for the nine months ended
January 31, 1999. Total revenues consisted of 54% product revenue and 46%
service revenue for the nine months ended January 31, 2000.
PRODUCT REVENUE. Product revenue decreased 30% to $37.3 million for the
nine months ended January 31, 2000 from $53.3 million for the nine months ended
January 31, 1999. Product revenue derived from North America, Europe and Rest of
World represented 61%, 33%, and 6%, respectively, of product revenue for the
nine months ended January 31, 2000, as compared to 68%, 25% and 7%,
respectively, of product revenue for the nine months ended January 31, 1999. The
Company attributes the decrease in product revenue to external market factors
including the Year 2000 issue, a shift towards Internet based solutions from
traditional client/server solutions, and the emergence new competitors selling
pre-packaged solutions.
Product revenue derived from North America decreased 37% to $22.7 million
for the nine months ended January 31, 2000 from $36.2 million for the nine
months ended January 31, 1999. Product revenue from direct sales, which
represented 43% of North American product revenue, decreased 38% to $9.7 million
for the nine months ended January 31, 2000 from $15.6 million for the nine
months ended January 31, 1999. Reseller and OEM sales, which represented 57% of
North American product revenue, decreased 37% to $13.1 million for the nine
months ended January 31, 2000 from $20.6 million for the nine months ended
January 31, 1999.
Product revenue derived from Europe decreased 10% to $12.1 million for the
nine months ended January 31, 2000 from $13.5 million for the nine months ended
January 31, 1999, primarily due to decreased licence revenue from Germany and
Sweden.
Product revenue derived from Rest of World decreased 34% to $2.4 million
for the nine months ended January 31, 2000 from $3.7 million for the nine months
ended January 31, 1999, primarily due to decreased licence revenue from
Australia and Japan.
SERVICE REVENUE. Service revenue decreased 8% to $32.0 million for the nine
months ended January 31, 2000 from $34.7 million for the nine months ended
January 31, 1999. For the nine months ended January 31, 2000, maintenance and
support revenue decreased 2% to $16.4 million from $16.7 million for the nine
months ended January 31, 1999. The Company's consulting revenue decreased 14% to
$15.6 million for the nine months ended January 31, 2000 from $18.0 million for
the nine months ended January 31, 1999. For the nine months ended January 31,
1999 consulting revenue included $2.8 million from Why Interactive which was
sold in May 1999. Excluding revenue from Why Interactive, consulting revenue
increased 2%.
COSTS AND EXPENSES
TOTAL COSTS AND EXPENSES. Total costs and expenses were $78.3 million for
the nine months ended January 31, 2000, a decrease of 10% from $87.2 million for
the nine months ended January 31, 1999.
COST OF PRODUCT. Cost of product increased 12% to $7.6 million for the nine
months ended January 31, 2000 from $6.8 million for the nine months ended
January 31, 1999, primarily as a result of the increase in amortization of
deferred development costs. For the nine months ended January 31, 2000, total
deferred costs charged to cost of product increased to $2.6 million from $2.2
million for the nine months ended January 31, 1999. The product margin decreased
to 80% for the nine months ended January 31, 2000 from 87% for the nine months
ended January 31, 1999 primarily due to a decrease in product revenue and an
increase in amortization of development and translation costs.
COST OF SERVICE. Cost of service decreased 31% to $9.7 million for the nine
months ended January 31, 2000 from $14.0 million for the nine months ended
January 31, 1999, primarily as a result of an decrease in the number of
employees resulting from the Company's restructuring in the fourth quarter of
fiscal year 1999 and the sale of Why Interactive in May 1999. The service margin
increased to 70% for the nine months ended January 31, 2000 from 60% for the
nine months ended January 31, 1999, primarily as a result of the sale of Why
Interactive which has lower margins than other services.
SALES AND MARKETING. Sales and marketing expenses decreased 14% to $33.2
million for the nine months ended January 31, 2000 from $38.5 million for the
nine months ended January 31, 1999, primarily as a result of a decrease in sales
and marketing staff resulting from the Company's restructuring in the fourth
quarter of fiscal year 1999.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
26% to $10.0 million for the nine months ended January 31, 2000 from $7.9
million for the nine months ended January 31, 1999, primarily due to
approximately $2.3 million of costs relating to the write-off of a non-core
technology investment and the departure of the Company's Chief Executive Officer
and one other executive. Excluding these charges, general and administrative
expenses decreased 3% to $7.7 million for the nine months ended January 31,
2000. As a percentage of total revenues, general and administrative expenses
(excluding the write-off and departure charges) increased to 11% for the nine
months ended January 31, 2000 from 9% for the nine months ended January 31,
1999.
RESEARCH AND DEVELOPMENT. Research and development expenses increased 8% to
$12.0 million for the nine months ended January 31, 2000 from $11.1 million for
the nine months ended January 31, 1999, primarily due to an increase in the
number of employees and related costs. During both the nine months ended January
31, 2000 and 1999, the Company capitalized approximately $2.7 million of
software development costs. Research and development expense was 32% and 21% of
product revenue for the nine months ended January 31, 2000 and 1999,
respectively.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased 15% to $7.6 million for the nine months ended January 31, 2000 from
$9.0 million for the nine months ended January 31, 1999, primarily as a result
of the write down of certain intangible assets in the fourth quarter of fiscal
year 1999.
OPERATING INCOME (LOSS). Operating income decreased to a loss of $9.1
million for the nine months ended January 31, 2000 from income of $792,000 for
the nine months ended January 31, 1999.
OTHER INCOME (EXPENSE). Interest and other income decreased to $1.1 million
for the nine months ended January 31, 2000 from $2.9 million for the nine months
ended January 31, 1999, primarily due to a decrease in investment income on cash
and cash equivalents.
PROVISIONS FOR INCOME TAXES. The Company recorded a provision for taxes of
$605,000 for the nine months ended January 31, 2000, compared to $1.8 million
for the nine months ended January 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As at January 31, 2000 and April 30, 1999, the Company had $36.0 million
and $47.3 million of cash and cash equivalents respectively. During the nine
months ended January 31, 2000, the Company's cash and cash equivalents decreased
by $11.2 million, primarily due to three payments to Delrina totaling $19.6
million which was partly offset by cash inflows from operations.
OPERATIONS
The Company decreased its investment in the non-cash operating components
of working capital during the nine months ended January 31, 2000, by
approximately $13.4 million, primarily due to decreases in accounts receivable
and prepaid charges offset by decreases in accounts payable and accrued
liabilities.
The Company purchased approximately $3.9 million of fixed assets in the
nine months ended January 31, 2000. The purchases of fixed assets included
computer hardware and software, office equipment and furniture, and leasehold
improvements. During the nine months ended January 31, 2000, the Company
increased its investment in other assets by $3.3 million related primarily to
capitalized development costs.
During the nine months ended January 31, 2000, the Company generated cash
of approximately $333,000 relating to the Company's stock purchase plan and the
exercise of stock options by employees and others.
ACCOUNTS RECEIVABLE AND TERM ACCOUNTS RECEIVABLE
Total accounts receivable and term accounts receivable decreased $14.2
million to $34.7 million at January 31, 2000 from $48.9 million at April 30,
1999, due to the reduction in revenue, the Company's increased focus on
collections, and the Company's decision to reduce granting extended payment
terms. Accounts receivable decreased to $23.8 million at January 31, 2000 from
$29.3 million at April 30, 1999. Term accounts receivable, which are accounts
receivable with payment dates exceeding the Company's customary trade terms,
decreased by $8.7 million to $10.9 million as at January 31, 2000 from $19.6
million on April 30, 1999.
Term accounts receivable primarily arise from the recording of revenue from
irrevocable commitments to purchase licenses ("Irrevocable Commitment
Licenses"). Under an Irrevocable Commitment License, a 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 for a fixed
amount. The amount of revenue recorded is the amount of the minimum commitment
over the term of the license, less deemed interest for that part of the license
term that is beyond the Company's customary trade terms.
Payments under Irrevocable Commitment Licenses are generally received from
the customer on the earlier of (i) installation of the Company's products by the
customer or delivery to its customers or end users and (ii) specified minimum
payment dates in the license agreement. Amounts by which revenues recorded
exceed payments received are recorded as accounts receivable. Payments that are
expected beyond the Company's customary trade terms are recorded as term
accounts receivable. Payments that are expected to be received more than one
year from the balance sheet date, are recorded as non-current term accounts
receivable. Total license fees over the term of the Irrevocable Commitment
License may be greater than the minimum commitment initially recorded as
revenue. Revenues from installations or sales of the Company's products in
excess of the minimum commitment are recorded by the Company as and when they
are reported by the customer.
DELRINA OBLIGATION
On September 10, 1996, the Company acquired the Delrina Assets from Delrina
Corporation ("Delrina"), a subsidiary of Symantec Corporation of Cupertino,
California. Under the asset purchase agreement (the "Delrina Asset Purchase
Agreement"), the Company will make quarterly payments to Delrina, from September
27, 1996 to June 27, 2000.
On February 12, 1998, the Company and Delrina re-negotiated certain terms
of the Delrina Asset Purchase Agreement whereby the Company agreed to accelerate
payment of its obligation in consideration for a reduction in the effective
interest rate which will result in a reduction in future imputed interest
charges. In addition, the amended agreement provides that the Company may issue
its Common Shares to Delrina in satisfaction of a portion of its payment
obligations provided that: (i) the total market value of the Company's Common
Shares held by Delrina immediately following such issuance does not exceed
US$14.0 million thereafter; and (ii) the Company continues to meet certain
registration requirements in respect of such issued Common Shares. As at January
31, 2000, the Company believes that Delrina held no Common Shares of the
Company.
During the nine months ended January 31, 2000, the Company made payments of
approximately US$13.2 million ($19.6 million) in satisfaction of its quarterly
obligations to Delrina. As at January 31, 2000, the next two scheduled quarterly
payments total US$2.0 million.
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 January 31, 2000 and
April 30, 1999, the outstanding balance of accounts receivable sold under these
agreements were approximately US$6.5 million and US$6.9 million, respectively.
The Company believes that none of the receivables sold are at risk of recourse.
The Company has a $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 February 1, 2001; 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 January 31, 2000, the Company had drawn down the $10 million
term loan facility and fixed the interest rate until April 20, 2000 at 6.77%.
The Company had no borrowings against its revolving line of credit as at January
31, 2000. The Company has granted as collateral a general security agreement
over JetForm's assets, including a pledge of the shares of certain subsidiaries.
The loss incurred during the three months ended January 31, 2000 constituted an
event of default under the credit facility with respect to the unutilized $10
million revolving line of credit.
JetForm hedges its U.S. dollar net asset or liability position to reduce its
exposure to currency fluctuations. To achieve this objective, JetForm primarily
enters into foreign exchange forward contracts with major Canadian chartered
banks, and therefore, does not anticipate non-performance by these
counterparties. JetForm does not enter into foreign exchange forward contracts
for speculative or trading purposes. Gains and losses on these forward exchange
contracts are recognized and included in income as realized and offset against
foreign exchange gains and losses on the underlying net asset or liability
position.
PROVISION FOR RESTRUCTURING COSTS
On March 17, 1999, the Corporation announced a restructuring plan 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 three months ended January 31, 2000:
<TABLE>
<CAPTION>
EMPLOYEE TOTAL
TERMINATION FACILITIES OTHER PROVISION
---------------- ------------ --------- ---------------
<S> <C> <C> <C> <C>
Balance, October 31, 1999...... $2,095 $2,436 $405 $ 4,936
Cash payments..................... (583) (468) (48) (1,099)
---------------- ------------ --------- ---------------
Balance, January 31, 2000........ $1,512 $1,968 $357 $ 3,837
================ ============ ========= ===============
Long term balance................. $ 453 $1,488 $158 $ 2,099
================ ============ ========= ===============
</TABLE>
During the three months ended January 31, 2000, the Company bought out its lease
obligation of its vacant Toronto facilities for $420,000. The Company has not
been successful in finding alternative arrangements regarding its vacant
facilities in the United Kingdom.
Employee terminations include salary continuance for which the Company is
contractually obligated to pay. All employees were terminated on or before April
30, 1999.
THE YEAR 2000
What is commonly known as the Year 2000 issue arises because many computerized
systems use two digits rather than four to identify a year. Date sensitive
systems may recognize the Year 2000 as 1900 or some other date, resulting in
errors when information using Year 2000 dates is processed. The effect of the
Year 2000 issue may be experienced before, on, or after January 1, 2000, and, if
not addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations.
The Company believes that it has successfully implemented the systems and
programming changes necessary to address the Year 2000 issues with respect to
its products and internal systems. However, the risks from the inability of the
Company's software products or internal systems to properly function in the Year
2000 could result in increased warranty costs, customer satisfaction issues,
inability to ship products, potential lawsuits, and other costs and liabilities
resulting from business interruptions. The amount of potential customer claims
arising from the advent of the Year 2000 and the possible inability of the
Company's products to adequately handle date changes cannot be estimated.
As at January 31, 2000 the Company was not aware of any significant problems
resulting from the Year 2000 Issue. Although the change in date has occurred, it
is not possible to conclude that all aspects of the Year 2000 Issue that may
affect the Company, including those related to customers, suppliers, or third
parties, have been fully resolved.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceeding.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
There were no reports on Form 8-K during the quarter.
<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
March 10, 2000 By: /s/John Gleed
- ---------------------------------- --------------------------------------
Date John Gleed
Chief Executive Officer and Director
March 10, 2000 By: /s/Jeffrey McMullen
- ---------------------------------- --------------------------------------
Date Jeffrey McMullen
Vice President, Finance and Chief
Financial Officer
