<PAGE>
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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: June 30, 1997
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: 0-27752
ANALOGY, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0892014
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9205 SW GEMINI DRIVE
PORTLAND, OREGON 97008
(Address of principal executive offices and zip code)
503-626-9700
(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 [ ]
COMMON STOCK, NO PAR VALUE 9,185,779
(Class) (Shares outstanding at July 31, 1997)
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<PAGE>
ANALOGY, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION Page
- ------------------------------ ----
Item 1. Financial Statements:
Consolidated Balance Sheets - June 30, 1997
and March 31, 1997.................................................... 2
Consolidated Statements of Operations - Three Months
ended June 30, 1997 and 1996.......................................... 3
Consolidated Statements of Cash Flows - Three Months
ended June 30, 1997 and 1996.......................................... 4
Notes to Consolidated Financial Statements............................ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 6
PART II - OTHER INFORMATION
- ---------------------------
Item 2. Changes in Securities........................................ 12
Item 6. Exhibits and Reports on Form 8-K............................. 12
1
<PAGE>
PART I - FINANCIAL INFORMATION
ANALOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, March 31,
1997 1997
------- -------
ASSETS
Current assets:
Cash and cash equivalents $ 4,155 $ 1,827
Marketable securities - 1,697
Accounts receivable 6,731 9,161
Prepaid expenses 1,145 886
Other assets, net 374 455
------- -------
Total current assets 12,405 14,026
Furniture, fixtures and equipment, net of accumulated
depreciation and amortization of $6,278 and $5,833 4,257 4,280
Library costs, net 2,982 2,729
Other assets, net 1,003 1,095
------- -------
$20,647 $22,130
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 862 $ 1,301
Current portion of capital leases 466 566
Accrued salaries and benefits 1,828 2,095
Accrued expenses 27 181
Unearned revenue 5,688 5,812
------- -------
Total current liabilities 8,871 9,955
Non-current portion of capital leases 499 499
Other liabilities 353 359
Shareholders' equity:
Common stock, no par value, authorized 35,000 shares;
9,135 and 9,118 shares issued and outstanding 17,160 17,124
Foreign currency translation (174) (155)
Accumulated deficit (6,062) (5,652)
------- -------
Total shareholders' equity 10,924 11,317
------- -------
$20,647 $22,130
------- -------
------- -------
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE>
ANALOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three months ended June 30,
---------------------------
1997 1996
-------- --------
Revenue:
Product licenses $3,525 $2,670
Service and other 2,461 2,046
-------- --------
Total revenue 5,986 4,716
Cost of revenue:
Product licenses 551 377
Service and other 584 485
-------- --------
Total cost of revenue 1,135 862
-------- --------
Gross profit 4,851 3,854
Operating expenses:
Research and development 1,511 1,361
Sales and marketing 3,149 2,738
General and administrative 668 675
Amortization of intangibles 92 --
-------- --------
Total operating expenses 5,420 4,774
-------- --------
Operating loss (569) (920)
Other income, net 25 9
-------- --------
Loss before income taxes (544) (911)
Income tax benefit (134) (202)
-------- --------
Net loss $ (410) $ (709)
-------- --------
-------- --------
Net loss per common share $(0.04) $ (.09)
-------- --------
-------- --------
Weighted average common shares outstanding 9,127 8,311
-------- --------
-------- --------
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
ANALOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30,
---------------------------
1997 1996
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (410) $ (709)
Adjustments to reconcile net loss to net cash
provided by(used in) operating activities:
Depreciation and amortization 832 574
Changes in operating assets and liabilities:
Accounts receivable 2,377 578
Prepaid expenses and other assets (223) (102)
Accounts payable and accrued expenses (808) (819)
Unearned revenue (90) (536)
--------- ----------
Net cash provided by (used in) operating activities 1,678 (1,014)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities -- (5,910)
Maturities of marketable securities 1,700 --
Capital expenditures for furniture, fixtures and equipment (427) (553)
Capital expenditures for library costs (544) (210)
--------- ----------
Net cash provided by (used in) investing activities 729 (6,673)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on subordinated debt -- (769)
Principal payments on capital lease obligations (101) (179)
Common stock offering costs -- (68)
Proceeds from sale of common stock 36 9
--------- ----------
Net cash used in financing activities (65) (1,007)
--------- ----------
Effect of exchange rate changes on cash and cash equivalents (14) (4)
--------- ----------
Net increase (decrease) in cash and cash equivalents 2,328 (8,698)
Cash and cash equivalents at beginning of period 1,827 10,208
--------- ----------
Cash and cash equivalents at end of period $4,155 $ 1,510
--------- ----------
--------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 34 $ 93
Income taxes 9 41
SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:
Acquisition of equipment under capital lease obligations $ -- $ 257
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
ANALOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited financial information included herein for the three months
ended June 30, 1997 and 1996 was prepared in conformity with generally
accepted accounting principles. The financial information as of March 31,
1997 is derived from the Analogy, Inc. (the "Company") consolidated financial
statements included in the Annual Report on Form 10-K for the year ended
March 31, 1997. 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 the rules
and regulations of the Securities and Exchange Commission. In the opinion of
management, the accompanying consolidated financial statements include all
adjustments necessary (which are of a normal and recurring nature) for the
fair presentation of the results of the interim periods presented. The
accompanying consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements for the year
ended March 31, 1997, as included in the Company's Annual Report on Form 10-K
for the year ended March 31, 1997.
Operating results for the three months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the entire
fiscal year ending March 31, 1998, or any portion thereof.
2. CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash equivalents consist of highly liquid investments with maturities at the
date of purchase of 90 days or less; marketable securities consist primarily
of government and corporate securities. The Company's marketable securities
were classified as "available for sale" and accordingly, these securities
were carried at market value, which was not materially different from cost at
March 31, 1997.
3. EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128), which changes the standards for computing and presenting earnings
per share (EPS) and supersedes Accounting Principles Board Opinion No. 15,
"Earnings per Share." SFAS 128 replaces the presentation of primary EPS with
a presentation of basic EPS, requires dual presentation of basic and diluted
EPS on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation. SFAS 128 is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods and
requires restatement of all prior-period EPS data presented.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS 130), which establishes
requirements for disclosure of comprehensive income. The objective of SFAS
130 is to report all changes in equity that result from transactions and
economic events other than transactions with owners. Comprehensive income is
the total of net income and all other non-owner changes in equity. SFAS 130
is effective for fiscal years beginning after December 15, 1997.
Reclassification of earlier financial statements for comparative purposes is
required.
The Company has not quantified the effect of adoption of SFAS 128 or SFAS 130.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company develops, markets and supports high-performance software and
model libraries for the top-down design and behavioral simulation of
mixed-signal and mixed-technology systems. The Company's core simulator
product, Saber, was introduced in 1987. In addition to Saber, Analogy offers
schematic capture and analysis tools and framework integration products
providing interfaces to the design environments of major electronic design
automation companies.
The Company's product license revenue consists of license fees for its
software products and template and component model library subscription fees.
Service and other revenue consists of software maintenance fees, training,
consulting and both commercial and governmental contract model development
and research and development contracts. The Company's software products are
shipped only after the Company has an executed software license agreement
with a customer. Revenue from software licenses is recognized upon shipment
to the customer. Revenue from library subscription fees is typically billed
annually and the related revenue is recognized ratably over the life of the
contract, usually twelve months. Maintenance is normally billed in advance
and recognized ratably over the life of the contract, which is usually twelve
months. Training, consulting and certain other services revenue is recognized
as the services or portions thereof have been provided. Revenue from contract
model development is recognized upon shipment of the underlying models, or
upon acceptance criteria as agreed to with the customer. The Company received
a modeling contract from the U.S. Air Force in fiscal year 1997. The Company
also received a contract from the Defense Advanced Research Projects Agency
("DARPA") in fiscal year 1997 and a multi-year grant from the National
Institute of Standards and Technology ("NIST") in fiscal year 1996 which
provide funding to the Company for research and development. The DARPA
contract contains cost sharing provisions.
FORWARD LOOKING STATEMENTS
This report, including the following discussion and analysis of financial
condition and results of operations, contains certain statements, trend
analysis and other information that constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
which may involve risks and uncertainties. Such forward looking statements
include, but are not limited to, statements including the words "anticipate,"
"believe," "estimate," "expect," "plan," "intend" and other similar
expressions. These forward looking statements are subject to the business and
economic risks faced by the Company and the Company's actual results of
operations may differ materially from those contained in the forward looking
statements. Results of operations for the periods discussed below should not
be considered indicative of the results to be expected in any future period,
and fluctuations in operating results may also result in fluctuations in the
market price of the Company's common stock. Like most high technology
companies, the Company faces certain business risks that could have adverse
effects on the Company's results of operations, including those discussed
below and elsewhere in this Report.
The Company's quarterly operating results have in the past and may in the
future vary significantly depending on factors such as the receipt and timing
of significant orders, increased competition, the timing of new product
announcements, changes in pricing policies by the Company or its competitors,
lengthy sales cycles, lack of market acceptance or delays in the introduction
of new or enhanced versions of the Company's products, seasonal factors, the
mix of direct and indirect sales and general economic conditions. In
particular, the Company's quarterly operating results have in the past
fluctuated as a result of the large percentage of orders that are not
received by the Company until near the end of the quarter. Substantially all
of the Company's product licensing revenue in each quarter results from
orders booked in that quarter. The Company's expense levels are based, in
part, on its expectations as to future revenue. If revenue levels are below
expectations, results of operations may be disproportionately affected
because only a small portion of the Company's expenses varies with its
revenue. Seasonal factors, particularly
6
<PAGE>
decreases in revenues in European markets in the second fiscal quarter
resulting from European holidays in July and August, and cyclical economic
patterns in the aerospace, defense, automotive or other end-user industries
also contribute to quarter-to-quarter fluctuations. Additionally, a
significant portion of the Company's revenue in a quarter typically is earned
in the last few weeks of that quarter. As a result, the Company may not learn
of, or be able to confirm, revenue or earnings shortfalls until late in the
quarter or following the end of the quarter. Any shortfall in revenue or
earnings from expected levels or other failure to meet expectations of the
financial markets regarding results of operations could have an immediate and
significant adverse effect on the trading price of the Company's Common Stock
in any given period.
The Company has historically derived a significant portion of its revenue
from the aerospace and defense industries, which have been characterized by
significant technological changes, high cyclicality and the potential for
significant downturns in business activity resulting from changes in economic
conditions or governmental resources and spending policies. No assurance can
be given that the aerospace and defense industries will experience economic
growth, will not experience a downturn or that any downturn will not be
severe, or that such conditions would not have a material adverse effect on
the Company's business, financial condition and results of operations.
The Company's operating results have depended, and will continue to depend,
upon designers of mixed-signal and mixed-technology systems adopting methods
of design analysis and simulation which use behavioral modeling techniques.
The design analysis and simulation industry is characterized by rapid
technological change, frequent new product introductions and evolving
industry standards. The introduction of products embodying new technologies
and the emergence of new industry standards can render existing products
obsolete and unmarketable. The Company's future success will depend upon its
ability to enhance its current products and to develop or acquire new
products that keep pace with technological developments and emerging industry
standards and address the increasingly sophisticated needs of its customers.
7
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated selected items of
the Company's consolidated statements of operations and such items expressed
as a percentage of total revenue:
THREE MONTHS THREE MONTHS
ENDED ENDED
STATEMENT OF OPERATIONS DATA: JUNE 30, 1997 JUNE 30, 1996
------------------ ------------------
Revenue:
Product licenses $3,525 58.9 % $2,670 56.6 %
Service and other 2,461 41.1 2,046 43.4
------ ----- ------ -----
Total revenue 5,986 100.0 4,716 100.0
Cost of revenue:
Product licenses 551 9.2 377 7.9
Service and other 584 9.8 485 10.3
------ ----- ------ -----
Total cost of revenue 1,135 19.0 862 18.2
------ ----- ------ -----
Gross profit 4,851 81.0 3,854 81.8
Operating expenses:
Research and development 1,511 25.2 1,361 28.8
Sales and marketing 3,149 52.6 2,738 58.1
General and administrative 668 11.2 675 14.3
Amortization of intangibles 92 1.5 -- --
------ ----- ------ -----
Total operating expenses 5,420 90.5 4,774 101.2
------ ----- ------ -----
Operating loss (569) (9.5) (920) (19.4)
Other income, net 25 .4 9 .1
------ ----- ------ -----
Loss before income taxes (544) (9.1) (911) (19.3)
Income tax benefit (134) 2.2 (202) 4.2
------ ----- ------ -----
Net loss $ (410) (6.9)% $ (709) (15.1)%
------ ----- ------ -----
------ ----- ------ -----
FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997
REVENUE
Total revenue increased 26.9% to $6.0 million in the first quarter of fiscal
year 1998 from $4.7 million in the first quarter of fiscal year 1997. No one
customer accounted for 10% or more of total revenue in the first quarters of
fiscal year 1998 and 1997.
Product license revenue increased 32.0% to $3.5 million in the first quarter
of fiscal year 1998 from $2.7 million in first quarter of fiscal year 1997.
The increase was primarily attributable to continued customer acceptance of
the Company's new SaberDesigner suite of products for the Windows NT
operating system.
Service and other revenue increased 20.3% to $2.5 million in the first
quarter of fiscal year 1998 from $2.0 million in the first quarter of fiscal
year 1997. The increase was due primarily to increased demand for the
Company's maintenance and other services, growth in the Company's installed
base; and revenues from NIST under a $2.0 million grant awarded in fiscal
year 1996, the U.S. Air Force under a $2.0 million modeling contract awarded
during the first quarter of fiscal year 1997, and DARPA under a $1.3 million
contract awarded in September 1996. In the first quarter of fiscal year 1998,
the Company recognized revenues of $209,000, $161,000 and $137,000, related
to the NIST grant, the U.S. Air Force contract and the DARPA contract,
respectively. In the first quarter of fiscal year 1997, the Company
recognized revenues of $242,000, $256,000 and $0, related to the NIST grant,
the U.S. Air Force contract and the DARPA contract, respectively.
8
<PAGE>
In addition to revenues received under the NIST grant, and under the
contracts with the U.S. Air Force and DARPA, the Company received other
revenues from the U.S. government or its subcontractors during the first
quarters of fiscal years 1998 and 1997. Total revenues from U.S.
government-related sources, including the previously mentioned specific
awards, accounted for approximately 20.0% of total revenues in the first
quarter of fiscal year 1998, and approximately 10.8% of total revenues in the
first quarter of fiscal year 1997. The cancellation or reduction of projects
being undertaken by the U.S. government requiring products or services of the
type provided by the Company, or the Company's failure to obtain awards of
such projects, could have a material adverse effect on the Company's
business, financial condition and results of operations.
International revenue was $2.7 million (44% of total revenue) in the first
quarter of fiscal year 1998 compared to $1.9 million (41% of total revenue)
in the first quarter of fiscal year 1997. International revenue increased
primarily as a result of increased sales in Germany and Taiwan. The Company
sells its products and services through its wholly-owned subsidiaries in
Europe, and through distributors in Asia.
COST OF REVENUE
Total cost of revenue increased 31.7% to $1.1 million in the first quarter of
fiscal year 1998 from $862,000 in the first quarter of fiscal year 1997.
Cost of product license revenue consists primarily of documentation expense,
media manufacturing costs, supplies, shipping expense and the amortization of
component and template model library costs and royalty payments. The Company
does not capitalize development costs for software products since the time
between the establishment of a working model of the software product and its
commercialization is typically of a short duration. Cost of product license
revenue increased to 15.6% of product license revenue in the first quarter of
fiscal year 1998 from 14.1% in the first quarter of fiscal year 1997, due
primarily to increased amortization of model library costs, royalty payments,
and commissions paid to a new sales agent Taiwan in the first quarter of
fiscal year 1998 which were included in cost of product revenue in the
quarter.
The cost of service and other revenue consists primarily of maintenance and
customer support expenses (including product enhancements and improvements,
bug fixes, telephone support, installation assistance and on-site support),
contract model development costs and the direct cost of providing services
such as training and consulting. The costs associated with service and other
revenue as a percentage of total revenue are typically higher than the costs
of product license revenue. As a percentage of service and other revenue,
cost of service and other revenue was flat at 23.7% in the first quarter of
fiscal year 1998 and 1997.
RESEARCH AND DEVELOPMENT
Research and development expense includes all costs associated with
development of new products and technology research. The costs classified in
this category primarily include such items as salaries, fringe benefits,
depreciation of capital equipment and an allocation of facilities and systems
support costs used in research and development. Research and development
expenses increased 11.0% to $1.5 million in the first quarter of fiscal year
1998 from $1.4 million the first quarter of fiscal year 1997, primarily as a
result of increased personnel. As a percentage of total revenue, research and
development costs decreased to 25.2% in the first quarter of fiscal year 1998
from 28.8% in the first quarter of fiscal year 1997 due to increased revenue
in the first quarter of fiscal year 1998.
9
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SALES AND MARKETING
Sales and marketing expense consists primarily of salaries, commissions and
travel. Sales and marketing expense increased 15.0% to $3.1 million in the
first quarter of fiscal year 1998 from $2.7 million in the first quarter of
fiscal year 1997. The increase primarily resulted from increases in
personnel, salaries, related benefits, travel and training. Additionally, in
the first quarter of fiscal year 1998 the Company established a new
telemarketing division. As a percentage of total revenue, sales and marketing
expenses decreased to 52.6% in the first quarter of fiscal year 1998 from
58.1% in the first quarter of fiscal year 1997 due to increased revenue in
the first quarter of fiscal year 1998.
GENERAL AND ADMINISTRATIVE
General and administrative expenses include costs associated with the
Company's executive staff, legal, accounting, corporate systems, facilities
and human resources departments. General and administrative expenses remained
relatively flat at $668,000 in the first quarter of fiscal year 1998 compared
to $675,000 in the first quarter of fiscal year 1997. As a percentage of
total revenue, general and administrative expenses decreased to 11.2% in the
first quarter of fiscal year 1998 from 14.3% in the first quarter of fiscal
year 1997 primarily due to increased revenue in the first quarter of fiscal
year 1998.
OTHER INCOME (EXPENSE), NET
Other expense, net primarily consists of interest income on cash, cash
equivalents and marketable securities offset by interest expense associated
with capital leases and the effects of foreign currency transaction gains and
losses. Other income, net was $25,000 and $9,000 in the first quarter of
fiscal years 1998 and 1997, respectively. This change is primarily
attributable to reduced interest expense resulting from a lower level of debt
outstanding and the effect of foreign currency gains and losses.
BENEFIT FROM INCOME TAXES
The Company provided for foreign withholding taxes of $30,000 and $26,000 in
the first quarters of fiscal years 1998 and 1997, respectively. In the first
quarter of fiscal year 1998 the Company recorded a benefit from the
utilization of net operating loss carryforwards of $164,000, which it
believes will be realized in the fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception with private equity
investments, cash from operations, subordinated debt, bank loans, capital
equipment leases, accounts receivable financing and in March 1996, with an
initial public offering of common stock which resulted in net proceeds to the
Company of approximately $9.4 million.
Net cash provided by operating activities was $1.7 million in the first
quarter of fiscal year 1998. This primarily resulted from a decrease in
accounts receivable, representing the collection of billings to the U.S.
government which were outstanding at March 31, 1997, and adjustments for
depreciation and amortization. These changes were offset by a decrease in
accounts payable and accrued expenses as a result of timing of purchases and
payments, an increase in prepaid expenses and other assets as a result of the
timing of payment of prepaid insurance and royalties, and a net loss for the
period.
10
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Net cash provided by investing activities was $729,000 in the first quarter
of fiscal year 1998, which primarily included the maturities of investments
in marketable securities, offset by capital expenditures for the upgrade of
corporate information systems and capital expenditures associated with the
investment in the Company's component and template model libraries.
Net cash used in financing activities was $65,000 in the first quarter of
fiscal year 1998, which primarily included payments on capital lease
obligations.
During the first quarter of fiscal year 1998, the Company negotiated an
operating line of credit with a bank which allows the Company to receive
advances of up to $3 million based on eligible accounts receivable and is
secured by accounts receivable, furniture, fixtures and equipment and general
intangibles. Interest is payable monthly at the bank's prime rate plus 1%.
The line of credit facility requires the Company to maintain certain
financial and other covenants and matures on March 9, 1998. No amounts were
outstanding under this facility at June 30, 1997.
In April 1997 the Company negotiated a lease line of credit, which allows the
Company to lease up to $1,000,000 of computers and related equipment. Amounts
borrowed under the lease line of credit are to be repaid over 36 months. The
lease line of credit expires March 31, 1998. No amounts were outstanding
under this facility at June 30, 1997. In connection with the negotiation of
the lease line of credit the Company issued warrants to purchase 10,000
shares of its common stock at $7.50 per share which expire on June 23, 2001.
The Company believes its existing cash, cash equivalents and marketable
securities, combined with amounts available under its operating line of
credit and lease line of credit, and cash flows expected to be generated by
operations, will be sufficient to meet its anticipated cash needs for working
capital and capital expenditures for the next 12 months.
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128), which changes the standards for computing and presenting earnings
per share (EPS) and supersedes Accounting Principles Board Opinion No. 15,
"Earnings per Share." SFAS 128 replaces the presentation of primary EPS with
a presentation of basic EPS, requires dual presentation of basic and diluted
EPS on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation. SFAS 128 is effective for financial statements issued for both
interim and annual periods ending after December 15, 1997, and requires
restatement of all prior-period EPS data presented.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS 130), which establishes
requirements for disclosure of comprehensive income. The objective of SFAS
130 is to report all changes in equity that result from transactions and
economic events other than transactions with owners. Comprehensive income is
the total of net income and all other non-owner changes in equity. SFAS 130
is effective for fiscal years beginning after December 15, 1997.
Reclassification of earlier financial statements for comparative purposes is
required.
The Company has not quantified the effect of adoption of SFAS 128 or SFAS 130.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(c) In April 1997, in connection with the negotiation of a lease line of
credit, the Company issued warrants to purchase 10,000 shares of the
Company's common stock at an exercise price of $7.50 per share, which expire
on June 23, 2001, in reliance on Section 4 (2) of the Securities Act of 1933.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits filed as part of this report are listed below:
Exhibit No.
-----------
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 1997.
12
<PAGE>
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: August 8, 1997
ANALOGY, INC.
By: /s/ GARY P. ARNOLD
-------------------------------------
Gary P. Arnold
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
By: /s/ TERRENCE A. RIXFORD
-------------------------------------
Terrence A. Rixford
Vice President, Finance and Administration
(Principal Financial Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements found in the Company's Form 10Q for the three
months ended June 30, 1997, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,155
<SECURITIES> 0
<RECEIVABLES> 6,731
<ALLOWANCES> 0
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0
0
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