<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
------------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
COMMISSION FILE NUMBER: 0-26156
NOVADIGM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-3160347
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
ONE INTERNATIONAL BLVD., SUITE 200, MAHWAH, NJ 07495
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(201) 512-1000
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 Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
On September 30, 1998, there were 17,501,535 shares of the Registrant's
Common Stock outstanding.
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<PAGE> 2
NOVADIGM, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements................. 3
Condensed Consolidated Balance Sheets as of September 30,
1998 and March 31, 1998..................................... 3
Condensed Consolidated Statements of Operations for the
three-month and six-month periods ended September 30, 1998
and September 30, 1997...................................... 4
Condensed Consolidated Statements of Cash Flows for the
six-month periods ended September 30, 1998 and September 30,
1997........................................................ 5
Notes to Condensed Consolidated Financial Statements........ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 11
Item 2. Changes in Securities....................................... 11
Item 3. Defaults upon Senior Securities............................. 11
Item 4. Submission of Matters to a Vote of Security Holders......... 11
Item 5. Other Information........................................... 11
Item 6. Exhibits and Reports on Form 8-K............................ 11
SIGNATURES........................................................... 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOVADIGM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1998 1998
------------- ---------
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents................................... $ 4,868 $ 4,431
Short-term marketable securities............................ 9,532 14,534
Accounts receivable, net.................................... 10,209 6,352
Prepaid expenses and other current assets................... 912 841
------- -------
Total current assets.............................. 25,521 26,158
Property and equipment, net................................. 1,657 1,763
Other assets................................................ 875 955
------- -------
$28,053 $28,876
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities.................... $ 5,627 $ 6,314
Deferred revenue............................................ 2,161 2,518
------- -------
Total current liabilities......................... 7,788 8,832
Stockholders' equity:
Common stock: 30,000 shares authorized; 17,502 and 17,471
outstanding as of September 30, 1998 and March 31,
1998, respectively..................................... 11 11
Additional paid-in capital................................ 66,029 66,087
Accumulated deficit....................................... (43,547) (43,548)
Treasury Stock............................................ (2,338) (2,527)
Cumulative translation adjustment......................... 110 21
------- -------
Total stockholders' equity........................ 20,265 20,044
------- -------
$28,053 $28,876
======= =======
</TABLE>
See accompanying notes.
3
<PAGE> 4
NOVADIGM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES:
Licenses.......................................... $ 5,759 $ 2,696 $ 9,635 $ 5,304
Services.......................................... 2,130 1,803 4,812 3,686
------- ------- ------- -------
Total revenues............................ 7,889 4,499 14,447 8,990
OPERATING EXPENSES:
Cost of services.................................. 821 1,597 1,851 3,113
Sales and marketing............................... 4,245 2,900 7,940 5,552
Research and development.......................... 1,233 1,626 2,456 3,282
General and administrative........................ 1,243 1,117 2,479 2,269
------- ------- ------- -------
Total operating expenses.................. 7,542 7,240 14,726 14,216
------- ------- ------- -------
Operating income (loss)............................. 347 (2,741) (279) (5,226)
Interest income, net................................ 174 282 283 626
------- ------- ------- -------
Income (loss) before provision (benefit) for income
taxes............................................. 521 (2,459) 4 (4,600)
Provision (benefit) for income taxes................ 0 15 2 (75)
------- ------- ------- -------
Net income (loss)................................... $ 521 $(2,474) $ 2 $(4,525)
======= ======= ======= =======
Earnings (loss) per share -- basic.................. $ 0.03 $ (0.14) $ 0.00 $ (0.26)
======= ======= ======= =======
Weighted average common shares
outstanding -- basic.............................. 17,502 17,388 17,486 17,332
======= ======= ======= =======
Earnings (loss) per share -- diluted................ $ 0.03 $ (0.14) $ 0.00 $ (0.26)
======= ======= ======= =======
Weighted average common and common equivalent shares
outstanding -- diluted............................ 17,562 17,388 17,516 17,332
======= ======= ======= =======
</TABLE>
See accompanying notes.
4
<PAGE> 5
NOVADIGM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
SEPTEMBER 30,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 2 $ (4,525)
Adjustments to reconcile net income (loss) to net cash used
in operating activities --
Depreciation and amortization.......................... 399 593
Increase in accounts receivable........................ (3,857) (750)
Increase in prepaid expenses and other current
assets................................................ (71) (295)
Decrease (increase) in other assets.................... 80 (33)
(Decrease) increase in accounts payable and accrued
liabilities........................................... (687) 74
Decrease in accrued restructuring costs................ -- (1,045)
(Decrease) increase in deferred revenue................ (358) 1,126
-------- --------
Net cash used in operating activities............. (4,492) (4,855)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (293) (383)
Purchases of held-to-maturity securities.................. (13,934) (11,106)
Proceeds from redemptions of held-to-maturity
securities............................................. 18,936 11,766
-------- --------
Net cash provided by investing activities......... 4,709 277
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the exercise of options................. (58) 637
Issuance (purchase) of treasury stock..................... 189 (1,469)
-------- --------
Net cash provided by (used in) financing
activities...................................... 131 (832)
-------- --------
Effect of exchange rate changes on cash..................... 89 19
-------- --------
Net increase (decrease) in cash and cash equivalents........ 437 (5,391)
Cash and cash equivalents at the beginning of the period.... 4,431 7,984
-------- --------
Cash and cash equivalents at the end of the period.......... $ 4,868 $ 2,593
======== ========
</TABLE>
See accompanying notes.
5
<PAGE> 6
NOVADIGM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared by Novadigm, Inc. (the "Company"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission (the "Commission").
Certain information or footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of the Company's management, the statements include all adjustments
(which are of a normal and recurring nature) necessary for the fair presentation
of the financial information set forth therein. These financial statements
should be read in conjunction with the Company's audited consolidated financial
statements included within the Company's Form 10-K filed with the Commission on
June 24, 1998. The interim results presented herein are not necessarily
indicative of the results of operations that may be expected for the full fiscal
year ending March 31, 1999, or any other future period.
2. EARNINGS PER SHARE
The Company has implemented Statement of Financial Accounting Standards No.
128, "Earnings Per Share" ("SFAS 128") as of March 31, 1998 and, in accordance
with the pronouncement, has restated prior year amounts. SFAS 128 requires the
presentation of basic earnings per share ("Basic EPS") and diluted earnings per
share ("Diluted EPS"). Basic EPS is calculated by dividing income available to
common shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is calculated by dividing income
available to common shareholders by the weighted average number of common shares
outstanding for the period adjusted to reflect potentially dilutive securities.
Common equivalent shares were excluded from the calculations of loss per share
for the periods ending September 30, 1997 because the effect of including such
shares in the computation would be anti-dilutive.
In accordance with SFAS 128, the following table reconciles income (loss)
and share amounts used to calculate basic earnings per share and diluted
earnings per share.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Numerator:
Net income (loss)........................... 521 (2,474) 2 (4,525)
------- ------- ------- -------
Denominator:
Weighted average number of common shares
outstanding -- basic...................... 17,502 17,388 17,486 17,332
Incremental shares from assumed conversion
of options................................ 60 0 30 0
------- ------- ------- -------
Weighted average common and common
equivalent shares outstanding --diluted... 17,562 17,388 17,516 17,332
======= ======= ======= =======
Earnings (loss) per share -- basic.......... $ 0.03 $ (0.14) $ 0.00 $ (0.26)
======= ======= ======= =======
Earnings (loss) per share -- diluted........ $ 0.03 $ (0.14) $ 0.00 $ (0.26)
======= ======= ======= =======
</TABLE>
3. RECENT ACCOUNTING PRONOUNCEMENTS
During fiscal 1999, the Company will adopt Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS 130") and
Statement of Financial Accounting Standards No. 131 "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131"). The adoption of SFAS 130
is required on an interim basis, however, the impact of adoption was not
material. SFAS 131 is required on an interim basis, however, it is not required
in the year of initial application. The Company is currently assessing the
disclosure impact of SFAS 131 on its financial statements.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or anticipated results. These risks include a history of
operating losses. The Company's quarterly operating results have fluctuated
significantly in the past, and may fluctuate in the future, due to a number of
factors, including the number, size and timing of customer orders, the timing
and market acceptance of the Company's new products, the dependence on
resellers, the level and pricing of international sales, changes in the level of
operating expenses, technological advances and new product introductions by the
Company's competitors, competitive conditions in the industry and foreign
currency exchange rates. In addition, the sales cycle for the Company's products
is lengthy and unpredictable depending upon the interest of the prospective
customer in the Company's products, the size of the order, the decision-making
and acceptance procedures within the customer's organization, the complexity of
implementation and other factors. The Company's operating results may also vary
significantly due to seasonal trends, as a result of efforts by the Company's
direct sales personnel to meet annual quotas, lower international revenues in
the summer months when many European businesses experience lower sales, the
establishment of calendar year capital budgets by prospective customers, as well
as other factors. There can be no assurance that the Company will be able to
achieve or maintain profitability on a quarterly or annual basis in the future.
Many currently installed computer systems and software products are unable
to distinguish 21st century dates from 20th century dates ("Year 2000"). The
Company has on occasion warranted, and generally represents to its customers,
that the newer version of its products, EDM version 4.0 and RADIA, are free from
Year 2000 defects. There can be no assurance that the Company's products are
Year 2000 compliant, or that the Company's products will not be integrated with,
or otherwise interact with, non-compliant software. The Company has assessed the
Year 2000 compliance of its internal systems and has determined that some
internal systems may not be Year 2000 compliant. Failure of such internal
systems to operate properly with regard to Year 2000 and thereafter could
require the Company to incur unanticipated expenses to address any problems,
which could have a material adverse effect on the Company's business, operating
results and financial condition. However, the Company believes the economic
impact of replacing or upgrading these noncompliant internal systems should be
immaterial and will replace these systems within the next year. The Company is
in the process of assessing whether any of its customers, suppliers or service
providers will be adversely affected by Year 2000 issues. The failure of its
customers, suppliers or service providers to be Year 2000 compliant could have
material adverse effects on the Company's business, financial condition and
results of operations. The Company believes a Year 2000 contingency plan is not
necessary.
This report should be read in conjunction with the Company's annual report
on Form 10-K as filed with the Securities and Exchange Commission, in particular
the section therein entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Business Risks."
RESULTS OF OPERATIONS
The Company generates revenues principally from licensing the rights to use
its software products to end users and from sublicense fees received from
resellers. The Company also generates service revenues from consulting and
training activities performed for license customers and maintenance revenues
from support and software update rights.
7
<PAGE> 8
For the periods indicated, the following table sets forth the percentage of
total revenue represented by the respective line items in the Company's
condensed consolidated statements of operations (unaudited):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ------------------
1998 1997 1998 1997
-------- -------- ------- -------
<S> <C> <C> <C> <C>
REVENUES:
Licenses.............................................. 73.0% 59.9% 66.7% 59.0%
Services.............................................. 27.0 40.1 33.3 41.0
------ ------ ------ ------
Total revenues................................ 100.0 100.0 100.0 100.0
------ ------ ------ ------
OPERATING EXPENSES:
Cost of services...................................... 10.4 35.5 12.9 34.6
Sales and marketing................................... 53.8 64.5 55.0 61.8
Research and development.............................. 15.6 36.1 17.0 36.5
General and administrative............................ 15.8 24.8 17.2 25.2
------ ------ ------ ------
Total operating expenses...................... 95.6 160.9 102.1 158.1
------ ------ ------ ------
Operating income (loss)................................. 4.4 (60.9) (1.9) (58.1)
Interest income, net.................................... 2.2 6.3 2.0 7.0
------ ------ ------ ------
Income (loss) before provision (benefit) for income
taxes................................................. 6.6 (54.6) 0.1 (51.1)
Provision (benefit) for income taxes.................... -- 0.3 -- (0.8)
------ ------ ------ ------
Net income (loss)....................................... 6.6% (54.9)% 0.1% (50.3)%
====== ====== ====== ======
</TABLE>
Total revenues for the Company's second fiscal quarter ended September 30,
1998 were $7.9 million compared to $4.5 million for the same quarter of the
previous year, an increase of $3.4 million or 76%. The increase in total revenue
in this year's second quarter is due primarily to an increase in license
revenue. Total revenues for the six-month period ended September 30, 1998 were
$14.4 million compared to $9.0 million for the six-month period of the previous
year. Total revenues increased $5.4 million or 60% comparing the six-month
period ended September 30, 1998 with the comparable period of last year due to
higher license and service revenues.
License revenues were $5.8 million or 73.0% of total revenues for the
quarter ended September 30, 1998 compared to $2.7 million or 59.9% of total
revenues for the same period last year. License revenues for the six-month
period ended September 30, 1998 were $9.6 million or 66.7% of total revenues
compared to $5.3 million or 59.0% of total revenues for the same period last
year. The increase in license revenues for the quarter and six-month periods
ended September 30, 1998 were primarily attributable to closing contracts with
higher average contract prices, particularly in Europe. For the quarter and
six-month period ended September 30, 1998, license revenues from indirect
channels were 81% and 62% of all license revenues, respectively. For the quarter
and six-month period ended September 30, 1997, license revenues from indirect
channels were 43% and 61% of all license revenues, respectively. International
license revenues (license revenue from customers outside North America) for the
quarter and six-month period ended September 30, 1998 were 69% and 64% of all
license revenue, respectively. International license revenues for the quarter
and six-month period ended September 30, 1997 were 28% and 53% of all license
revenue, respectively. The increases this year in license revenue from indirect
channels and the increases this year in international license revenue in both
absolute dollars and as a percent of all license revenues is primarily due to
the sale of guaranteed sublicenses to a European distributor. From time to time,
the Company accepts guaranteed sublicense fees from distributors. Distributors
pay guaranteed sublicense fees in order to have the right to sublicense the
Company's products to its customers and to receive training and support services
from the Company. During the quarter ended September 30, 1998, the Company
accepted and recognized in license revenue, a significant guaranteed sublicense
fee from a European distributor. At September 30, 1998, approximately fifty
percent (50%) of all guaranteed sublicense fees received by the Company had not
yet been relicensed by the Company's distributors to end-users. The Company
expects international license revenue to
8
<PAGE> 9
grow and be a significant contributor to total license revenue, though as a
percent of total license revenues, international license revenues may fluctuate
from quarter to quarter.
Service revenues were $2.1 million or 27.0% of total revenues for the
quarter ended September 30, 1998 compared to $1.8 million or 40.1% of total
revenues for the comparable quarter last year. Service revenues for the
six-month period ended September 30, 1998 were $4.8 million or 33.3% of total
revenues compared to $3.7 million or 41.0% of total revenues for the comparable
period last year. The higher service revenues for the quarter and the six-month
period ended September 30, 1998 were due to higher maintenance revenues
associated with a growing installed base and an adjustment to reseller
maintenance. The Company expects maintenance revenue to increase on a quarterly
basis as compared to the prior year due to a growing customer installed base and
an increase in its charge for maintenance services. Revenues from customer
training fees are also expected to increase on a quarterly basis compared to the
prior year due to the Company's growing customer base. Consulting services,
however, are not expected to grow due to the Company's practice of referring
consulting services to its partners.
Cost of services includes the direct and indirect costs of providing
training, technical support and consulting services to the Company's customers.
Cost of services consists primarily of payroll, related benefits, and travel for
field engineers and support personnel, other related overhead and third-party
consulting fees. Cost of services were $0.8 million or 38% of service revenues
for the quarter ended September 30, 1998 compared to $1.6 million or 88% of
service revenues for the quarter ended September 30, 1997. Cost of services for
the six-month period ended September 30, 1998 was $1.9 million or 39% of service
revenues compared to $3.1 million or 84% of service revenues for the same period
last year. The lower cost of services in the quarter and six-month period ended
September 30, 1998 compared to the same periods for the prior year, were mainly
attributable to the reorganization of the technical services department after
the close of fiscal 1998, which reduced staff and redefined service packages and
to the reduction in use of outside consultants. The Company expects cost of
services to increase throughout fiscal 1999.
Sales and marketing expenses consist primarily of salaries, related
benefits, commissions, travel, consultant fees, and other costs associated with
the Company's sales and marketing efforts. Sales and marketing expenses for the
quarter ended September 30, 1998 were $4.2 million or 53.8% of total revenues as
compared to $2.9 million or 64.5% of total revenues for the same period last
year. The sales and marketing expenses increased $1.3 million or 46% in the
fiscal second quarter this year compared to the same quarter last year. Sales
and marketing expenses for the six-month period ended September 30, 1998 were
$8.0 million or 55% of total revenues as compared to $5.6 million or 61.8% of
total revenues for the same period last year. The sales and marketing expenses
increased $2.4 million or 43% in the six-month period this year compared to the
same period last year. The increase in the quarter and the six-month period this
year as compared to the same periods last year was primarily due to higher
compensation costs resulting from higher reported revenues in the quarter and
six month periods. The Company expects sales and marketing expenses in dollars
to increase for the remainder of the fiscal year in support of the Company's
revenue plans.
Research and development expenses consist primarily of salaries, related
benefits, consultant fees, and other costs associated with the Company's
research and development efforts. Research and development expenses were $1.2
million or 15.6% of total revenues for the quarter ended September 30, 1998
compared to $1.6 million or 36.1% of total revenues for the same period last
year. Research and development expenses for the six-month period ended September
30, 1998 were $2.5 million or 17% of total revenues as compared to $3.3 million
or 36.5% of total revenues for the same period last year. The lower expenses for
the quarter and the six-month period ended September 30, 1998 was primarily due
to lower staffing levels in the current year periods compared to the same
periods last year, due to the completion of the development of version 4.0 of
the Enterprise Desktop Manager and version 1.0 of Radia. The Company believes
that a significant investment in research and development is essential to
provide for the Company's future growth, particularly research and development
relating to the Company's Internet activities. Though the Company anticipates
that it will continue to invest resources to further enhance and develop its
products the Company does not anticipate significant growth in research and
development expense in the remainder of the fiscal year.
9
<PAGE> 10
General and administrative expenses consist primarily of salaries, related
benefits, travel and fees for professional services such as legal, consulting
and accounting. General and administrative expenses were $1.2 million or 15.8%
of total revenue for the quarter ended September 30, 1998 compared to $1.1
million or 24.8% of total revenues for the same period of last year. General and
administrative expenses for the six-month period ended September 30, 1998 were
$2.5 million or 17.2% of total revenue compared to $2.3 million or 25.2% of
total revenues for the same period of last year. The increase in general and
administrative expenses in the quarter and six-month period ended September 30,
1998 compared to the same periods last year is primarily due to additional
personnel. The Company expects general and administrative expenses to increase
moderately in dollar terms and to decrease as a percent of total revenue in the
future quarters.
Net interest income was $174,000 and $283,000 for the quarter and six-month
periods ended September 30, 1998, respectively, compared to $282,000 and
$626,000 for the same periods of last year, respectively. Interest income is
comprised primarily of interest earned on the Company's cash equivalents and
marketable securities. Interest income decreased for the quarter and six-month
period ended September 30, 1998 compared to the same periods in the prior year
due to lower average cash and securities balances in the current year. Interest
income is offset by interest expense and bank fees.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operations for the six-month period ended September 30, 1998
was $4.5 million compared to cash used in operations of $4.9 million for the
same period last year. The reduction in cash for the six-month period ended
September 30, 1998 was primarily due to an increase in accounts receivable
related to extended payment terms granted on large license contracts. The
reduction in cash for the six-month period ended September 30, 1997 was
primarily due to the net loss of $4.5 million and the payment of $1.0 million of
restructuring costs accrued in an earlier period.
As of September 30, 1998, the Company had working capital of $17.7 million
including $14.4 million of cash, cash equivalents and short-term marketable
securities. The Company has a revolving line of credit, which permits unsecured
borrowings up to $1.0 million through August, 1999. As of September 30, 1998,
there were no outstanding loans under the line of credit and the Company was in
compliance with the terms of the agreement.
Property and equipment expenditures were $138,000 and $293,000 for the
quarter and six-month period ended September 30, 1998, respectively. The Company
had no material commitments to purchase property and equipment at September 30,
1998 and expects to purchase property and equipment throughout the remainder of
the fiscal year at a rate consistent with the prior fiscal year.
Although it is difficult for the Company to predict future liquidity
requirements with certainty, the Company believes that its existing cash and
marketable securities balances, together with cash from operations and funds
available under the existing line of credit, will be adequate to finance its
operations for the next twelve months.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its 1998 Annual Meeting of Stockholders on September 24,
1998. The following matters were approved by the stockholders by the votes
indicated below:
<TABLE>
<CAPTION>
VOTES VOTES BROKER
FOR AGAINST ABSTAIN NON-VOTES
----------- -------- -------- ---------
<S> <C> <C> <C> <C>
a. Election of four directors to serve
for the ensuing year as follows:
Albion J. Fitzgerald.................. 11,068,810 -- 382,492 --
Robert B. Anderson.................... 11,069,110 -- 382,192 --
H. Kent Petzold....................... 11,009,208 -- 442,094 --
Deborah Doyle McWhinney............... 11,073,354 -- 377,948 --
b. Amend the Company's 1992 Stock Option
Plan to increase the number of shares
reserved for issuance thereunder by
500,000 shares........................ 10,784,180 628,543 38,579 --
c. Appointment of Arthur Andersen LLP as
independent auditors of the Company
for the fiscal year ending March 31,
1999.................................. 11,425,778 19,300 6,224 --
</TABLE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports
None
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 13, 1998 NOVADIGM, INC.
By: /s/ WALLACE D. RUIZ
------------------------------------
Wallace D. Ruiz
Vice President & Chief Financial
Officer
(principal financial and chief
accounting officer)
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,868
<SECURITIES> 9,532
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0
0
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</TABLE>
