SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 19, 1999
(Date of earliest event reported)
PEERLESS SYSTEMS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 000-21287 95-3732595
(State of (Commission File No.) (IRS Employer
incorporation or Identification No.)
organization)
2381 Rosecrans Avenue
El Segundo, CA
(Address of principal executive offices)
90245
(zip code)
(310) 536-0908
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
We are filing this Current Report on Form 8-K ("Current
Report") to make generally available certain information regarding the
Registrant.
On August 19, 1999, the Registrant reported its financial
results for the second fiscal quarter ended July 31, 1999. A copy of the
press release (the "Press Release") announcing those results is set forth
in Exhibit 99.1 to this Current Report and is hereby incorporated by
reference herein. The Press Release includes historical quarterly financial
results for the Registrant and for Peerless Systems Networking (formerly
Auco, Inc.), which Peerless acquired on June 10, 1999, in a transaction
accounted for as a pooling-of-interests, as well as combined financial
results for the two companies.
ITEM 7. EXHIBITS.
99.1 Press Release of the Registrant, dated August 19, 1999.
SIGNATURE
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, thereto duly authorized.
PEERLESS SYSTEMS CORPORATION
By: /s/ Carolyn Maduza
-----------------------
Name: Carolyn Maduza
Title: Chief Financial Officer
Date: August 19, 1999
EXHIBIT INDEX
EXHIBIT DESCRIPTION
99.1 Press Release of the Registrant, dated August 19, 1999.
EXHIBIT 99.1
PEERLESS SYSTEMS CORPORATION
2381 Rosecrans Avenue
El Segundo, CA 90245
Main: (310) 536-0908
Fax: (310) 536-0058
For further information contact:
Carolyn M. Maduza
Chief Financial Officer
Tel: (310) 297-3109
[email protected]
PEERLESS SYSTEMS REPORTS
SECOND QUARTER RESULTS
EL SEGUNDO, Calif., August 19, 1999 - Peerless Systems Corporation
(Nasdaq:PRLS), a leader in embedded imaging systems, announced today
revenues and earnings for its second fiscal quarter ended July 31, 1999.
All results have been restated to include the acquisition of Auco, Inc.,
which was completed on June 10, 1999 in a pooling of interests transaction.
Second quarter revenues grew to a record $10.5 million in fiscal
2000, up 14% from the $9.2 million recorded for the same quarter a year
ago. Including transaction and one-time expenses, the Company recorded net
income of $420,000 or $0.03 per diluted share in the second quarter fiscal
2000, compared to net income of $1.1 million or $0.08 per share in the same
quarter a year ago. The Company incurred transaction expenses of $2.0
million associated with the acquisition of Auco during the second quarter
of fiscal 2000, and recorded one-time expenses of $275,000 associated with
a proposed transaction that was terminated during the second quarter of
fiscal 1999. Excluding these expenses, the Company would have recorded
second quarter net income of $1.7 million, or $0.12 per share on a diluted
basis, up 33% from net income of $1.3 million or $0.09 per diluted share
for the same period a year ago.
Second quarter revenue growth was led by expanded demand for
Peerless networking, color and digital copier multifunction solutions.
During the second quarter license fees generated by shipments of color and
multifunction products enabled by Peerless imaging technology rose to a
record level. In addition after the close of the Auco acquisition, the
newly formed Peerless Systems Networking (PSN) subsidiary captured its
first networking design win with a Peerless OEM. Ed Gavaldon, President,
Chairman and CEO of Peerless stated "Our entire customer base has responded
positively to this highly synergistic acquisition, which we are leveraging
to offer our OEMs higher performance and lower cost networked imaging
solutions. And, with the signing of the unique contract with Novell
announced yesterday, PSN is now providing unprecedented connectivity across
NetWare, Windows NT, Macintosh and Unix networks for printing and
multifunction applications."
The Company also disclosed today a strategic relationship with
Hewlett-Packard, which is deploying Peerless imaging technology in its line
of professional color inkjet printers. "HP's leadership position in the
printing market makes them a very valuable addition to our customer base,"
said Gavaldon. "We are especially pleased to be partnering with HP as they
spearhead the industry migration of color inkjet technologies into the
workgroup office sector."
Among other key strategic developments during the second quarter
were the Company's introduction of its scalable and modular ImageWorks(TM)
embedded imaging platform and the signing of a key technology agreement
with Adobe. "With the incorporation of Adobe(R) PostScript 3(TM) products
as one of the industry-standard components in our ImageWOrks platform, now
further augmented with the addition of a unique Novell NEST networking
capability, Peerless is now offering an unprecedented array of vital
technologies to imaging and printing OEMs in both turnkey and software
development kit (SDK) options" said Gavaldon. "With OEMs now increasingly
opting to adopt our enhanced ImageWorks solution in SDK form, operating
margins, excluding transaction fees, rose in the second quarter to a record
22%."
Revenues for the first half of fiscal 2000 grew 7% to $20.4
million, up from the $19.0 million recorded for the prior year period.
Including Auco transaction expenses and one-time expenses noted previously,
the Company reported net income for the first six months of fiscal 2000 of
$1.6 million, or $0.11 per share on a diluted basis, compared to $2.5
million or 0.18 per share for the previous year. Excluding these expenses,
the Company would have reported net income for the first six months of
fiscal 2000 of $2.9 million, or $0.20 per share on a diluted basis,
compared with net income of $2.7 million, or $0.19 per share on a diluted
basis, recorded for the comparable period last year.
Peerless Systems is a leading provider of software-based embedded
imaging and networking systems to original equipment manufacturers of
digital document products. Digital document products include printers,
copiers, fax machines, scanners and color products, as well as
multifunction products that perform a combination of these imaging
functions. In order to process digital text and graphics, digital document
products rely on a core set of imaging software and supporting electronics,
collectively known as an embedded imaging system. Embedded networking
systems supply the core software technologies to digital document products
that enable them to communicate over local area networks and the Internet.
The Peerless Systems family of products and engineering services provides
advanced embedded imaging and networking technologies that enable the
company's OEM customers to develop digital printers, copiers and
multifunction products quickly and cost-effectively. The Peerless Systems
Networking subsidiary provides comprehensive software products and
engineering services to office peripheral OEMs to enable networking support
in their products. Peerless Systems Corporation is headquartered at 2381
Rosecrans Avenue, El Segundo, California 90245.
Main telephone: 310/536-0908; facsimile: 310/536-0058; www.peerless.com.
Auco, ImageWorks, Memory Reduction Technology, Peerless, PeerlessPage,
PeerlessPrint and QuickPrint are trademarks of Peerless Systems Corp. All
other brand and product names are trademarks or registered trademarks of
their respective owners.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: With the exception of historical information, the statements set
forth above include forward-looking statements that involve risk and
uncertainties. These statements include the acquisition of Auco. The
company wishes to caution readers that a number of important factors could
cause actual results to differ materially from those in the forward-looking
statements. Those factors include the following: the fact that the
company's markets are characterized by rapidly changing technology,
evolving industry standards and frequent introductions of new products and
enhancements, and the company's ability to respond to such changes;
fluctuations in OEM shipments which generate the Company's license fee
revenue; difficulties which the company may experience in completing the
development of turnkey designs for OEM customers, its digital photography
technology, its integrated multifunction semiconductor solutions or other
products; the fact that the multifunction and color markets targeted by the
company are at an early stage of development; the highly competitive nature
of the markets for the company's products; the company's ability to attract
and retain skilled personnel; the company's reliance on third party
suppliers for components used in the company's products; the quarterly
variability in the company's bookings and design wins; and the company's
reliance on a relatively small number of OEM customers for a large
percentage of its revenue. These and other factors which could cause actual
results to differ materially from those in the forward-looking statements
are also discussed in the company's filings with the Securities and
Exchange Commission, including its recent filings on Forms S-4, 10-K and
10-Q. The company disclaims any obligation to update these statements for
subsequent events.
This news release refers to various products and companies by their trade
names. In most, if not all, cases these designations are claimed as
trademarks or registered trademarks by their respective companies.
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PEERLESS SYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
JULY 31, JANUARY 31,
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- -----------------------------------------------------------------------------------------------
1999 1999
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ASSETS
- -----------------------------------------------------------------------------------------------
Current assets:
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 7,756 $ 5,744
Short term investments 16,423 16,158
Trade accounts receivable, net 8,387 9,940
Unbilled receivables 6,239 2,994
Deferred tax asset 2,615 2,615
Prepaid expenses and other current assets 820 632
Total current assets 42,240 38,083
Investments 1,011 4,605
Property and equipment, net 6,271 5,374
Other assets 2,675 2,603
- -----------------------------------------------------------===========-----------===========---
Total assets $ 52,197 $ 50,665
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LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 1,150 $ 893
Accrued wages 1,282 1,557
Accrued compensated absences 948 784
Other current liabilities 2,208 867
Income taxes payable 185 788
Deferred rent, current portion 95 76
Deferred revenue, current portion 409 1,533
Note payable to stockholder - 350
Total current liabilities 6,277 6,848
Deferred rent 396 431
Deferred revenue 400 800
Total liabilities 7,073 8,079
- -----------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock 13 12
Additional paid-in capital 46,955 39,348
Convertible preferred stock Series A - 3,217
Convertible preferred stock Series B - 3,520
Deferred compensation (155) (188)
Accumulated deficit (1,689) (3,323)
Total stockholders' equity 45,124 42,586
- -----------------------------------------------------------===========-----------===========---
Total liabilities and stockholders' equity $ 52,197 $ 50,665
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PEERLESS SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
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JULY 31,
- ---------------------------------------------------------------------------------------------------------------------------
1999 1998
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$ % $ %
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<S> <C> <C> <C> <C>
Revenues $10,512 100.0% $ 9,229 100.0%
Cost of revenues 3,207 30.5% 3,120 33.8%
- ---------------------------------------------------------------------------------------------------------------------------
Gross margin 7,305 69.5% 6,109 66.2%
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Operating expenses:
Research and development 2,248 21.4% 2,238 24.2%
Sales and marketing 1,444 13.7% 1,062 11.5%
General and administrative 1,257 12.0% 1,500 16.3%
Other - non recurring costs 2,014 19.1% - 0.0%
- ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 6,963 66.2% 4,800 52.0%
- ---------------------------------------------------------------------------------------------------------------------------
Income from operations 342 3.3% 1,309 14.2%
Interest income, net 304 2.8% 332 3.6%
- ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 646 6.1% 1,641 17.8%
Provision for income taxes 226 2.1% 548 5.9%
- ----------------------------------------------------------============-----=============-----==========------=========-----
Net income $ 420 4.0% $ 1,093 11.9%
- ----------------------------------------------------------============-----=============-----==========------=========-----
Net income per common share $ 0.03 $ 0.09
- ----------------------------------------------------------============-----------------------==========--------------------
Net income per common share -
assuming dilution $ 0.03 $ 0.08
- ----------------------------------------------------------============-----------------------==========--------------------
Weighted average common shares
- ----------------------------------------------------------============-----------------------==========--------------------
outstanding 12,675 11,675
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Weighted average common shares
- ----------------------------------------------------------============-----------------------==========--------------------
outstanding and dilutive shares 14,475 14,365
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<CAPTION>
PEERLESS SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JULY 31,
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1999 1998
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$ % $ %
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<S> <C> <C> <C> <C>
Revenues $20,372 100.0% $19,049 100.0%
Cost of revenues 6,292 30.9% 6,915 36.3%
- ----------------------------------------------------------------------------------------------------------------------------
Gross margin 14,080 69.1% 12,134 63.7%
- ----------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Research and development 4,400 21.6% 4,317 22.7%
Sales and marketing 2,779 13.7% 2,115 11.1%
General and administrative 2,981 14.6% 2,608 13.7%
Other - non recurring costs 2,014 9.9% - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------
Total operating expenses 12,174 59.8% 9,040 47.5%
- ----------------------------------------------------------------------------------------------------------------------------
Income from operations 1,906 9.3% 3,094 16.2%
Interest income, net 606 3.0% 688 3.6%
- ----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 2,512 12.3% 3,782 19.8%
Provision for income taxes 879 4.3% 1,263 6.6%
- ----------------------------------------------------------------------------------------------------------------------------
Net income $ 1,633 8.0% $2,519 13.2%
- -----------------------------------------------------------=============-----=========------============-----=========------
Net income per common share $ 0.13 $ 0.22
- -----------------------------------------------------------=============--------------------============--------------------
Net income per common share -
- -----------------------------------------------------------=============--------------------============--------------------
assuming dilution $ 0.11 $ 0.18
- -----------------------------------------------------------=============--------------------============--------------------
Weighted average common shares
- -----------------------------------------------------------=============--------------------============--------------------
outstanding 12,345 11,597
- -----------------------------------------------------------=============--------------------============--------------------
Weighted average common shares
- -----------------------------------------------------------=============--------------------============--------------------
outstanding and dilutive shares 14,383 14,295
- -----------------------------------------------------------=============--------------------============--------------------
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PEERLESS SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
QUARTER ENDED
- ----------------------------------------------------------------------------------------------------------------------------
APRIL 30, 1999 JANUARY 31, 1999 OCTOBER 31, 1998 JULY 31, 1998 APRIL 30, 1998
- ----------------------------------------------------------------------------------------------------------------------------
$ % $ % $ % $ % $ %
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $9,860 100.0% $9,902 100.0% $7,774 100.0% $ 9,229 100.0% $ 9,820 100.0%
Cost of revenues 3,085 31.3% 3,102 31.3% 3,226 41.5% 3,120 33.8% 3,795 38.6%
- ----------------------------------------------------------------------------------------------------------------------------
Gross margin 6,775 68.7% 6,800 68.7% 4,548 58.5% 6,109 66.2% 6,025 61.4%
- ----------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Research and development 2,152 21.8% 1,993 20.1% 2,114 27.2% 2,238 24.2% 2,079 21.2%
Sales and marketing 1,335 13.5% 1,235 12.5% 1,315 16.9% 1,062 11.5% 1,053 10.7%
General and administrative 1,724 17.5% 1,542 15.6% 1,403 18.1% 1,500 16.3% 1,108 11.3%
- ----------------------------------------------------------------------------------------------------------------------------
Total operating expenses 5,211 52.8% 4,770 48.2% 4,832 62.2% 4,800 52.0% 4,240 43.2%
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations 1,564 15.9% 2,030 20.5% (284) -3.7% 1,309 14.2% 1,785 18.2%
- ----------------------------------------------------------------------------------------------------------------------------
Interest income, net 302 3.0% 320 3.2% 311 4.0% 332 3.6% 356 3.6%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,866 18.9% 2,350 23.7% 27 0.3% 1,641 17.8% 2,141 21.8%
Provision for income taxes 653 6.6% 784 7.9% 9 0.1% 548 5.9% 715 7.3%
- -----------------------------------================-=================-========-=======-=================-================---
Net income $1,213 12.3% $1,566 15.8% $ 18 0.2% $ 1,093 11.9% $ 1,426 14.5%
- -----------------------------------================-=================-========-=======-=================-================---
Net income per common
share $ 0.10 $ 0.13 $ 0.00 $ 0.09 $ 0.12
- -----------------------------------=========--------=========---------========---------=========---------=========----------
Net income per common
- -----------------------------------=========--------=========---------========---------=========---------=========----------
share - assuming dilution $ 0.08 $ 0.11 $ 0.00 $ 0.08 $ 0.10
- -----------------------------------=========--------=========---------========---------=========---------=========----------
Weighted average common
- -----------------------------------=========--------=========---------========---------=========---------=========----------
shares outstanding 12,019 11,913 11,785 11,675 11,553
- -----------------------------------=========--------=========---------========---------=========---------=========----------
Weighted average common
shares outstanding and
- -----------------------------------=========--------=========---------========---------=========---------=========----------
dilutive shares 14,308 14,284 14,064 14,365 14,259
- -----------------------------------=========--------=========---------========---------=========---------=========----------
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