<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
November 17, 1998
PC DOCS GROUP INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
2005 SHEPPARD AVENUE EAST
SUITE 800
TORONTO, ONTARIO, CANADA
M2J 5B4
(Address of principal executive offices)
(416) 497-7700
(Registrant's telephone number, including area code)
[Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F ....X....... Form 40-F ............
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ............ No ......X......
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[LETTERHEAD]
INTERIM REPORT
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998
TO THE SHAREHOLDERS
PC DOCS Group International Inc., a leader in enterprise document and knowledge
management systems and information management systems for professionals, reports
the financial results for its First Quarter ended September 30, 1998.
FINANCIAL HIGHLIGHTS (U.S. GAAP, CANADIAN DOLLARS)
Revenues for the First Quarter were $37.5 million, a 45% increase over the $25.8
million for the same quarter last year. In particular, software license revenues
rose by 39% to $18.3 million this quarter from $13.2 million in the same quarter
last year. Net earnings were $0.4 million, compared to $0.6 million for the
First Quarter last year. Fully diluted earnings per share were $0.01 compared to
$0.03 in the same quarter last year.
The Company maintained its strong financial position including cash of
approximately $58.4 million, working capital of $69.8 million, shareholders'
equity of $82.4 million and total assets of $174.6 million.
OPERATING HIGHLIGHTS
The Company's DOCS Open Enterprise Suite and Web-enabled CyberDOCS products were
selected as the core software components for the national "RDIMS" (Records,
Document, Imaging Management Systems) project for the Canadian Federal
Government. As a result, all Canadian Government departments will be able to
readily acquire the RDIMS solution based on PC DOCS products. This contract is
the largest document/knowledge management deal ever signed in the industry and
it confirms the strength of our technology and our enterprise solutions. Just
after the end of the quarter, Arthur Andersen and Unisys, members of the PC
DOCS/Fulcrum Global Enterprise Support Partners program, added PC DOCS/Fulcrum's
knowledge management solution to further enhance and complement their current
document/knowledge management and workflow solutions for both internal use and
client offerings.
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For the second consecutive year, PC DOCS/Fulcrum won Microsoft's Annual Industry
Solution Award in Electronic Document Management Systems (EDMS) for the Best
Document Management Solution. This award is co-sponsored by Microsoft
Corporation and KM (Knowledge Management) World magazine.
DOCS/Fulcrum software also was honored in the ninth annual Giga Excellence
Awards competition for Europe, Asia/Pacific Rim and Africa. The application for
Australian law firm, Phillips Fox won the silver medal for excellence in
innovation and implementation in the Document/Knowledge Management category. The
awards are sponsored by Giga Information Group and the Workflow and
Reengineering International Association.
New customers this quarter included, Columbia Gas Transmission Company, Port
Authority of New York and New Jersey, System Software Associates, American
Electric Power Services, a major US Bank and one of the world's largest network
providers. International wins included British Broadcasting Corporation and
Alcatel Australia Limited, a leading telecommunications company.
CORPORATE HIGHLIGHTS
The Company repurchased a total of 441,500 shares for approximately $2.7 million
under its share repurchase plan. The total number of shares that the Company has
repurchased since the initial plan was instituted is 955,300 shares. The Company
continues to believe that its shares are undervalued and that it may be
advantageous to continue its share repurchase plan. The total number of shares
the Company will repurchase depends on a number of factors including the price
at which the shares can be acquired and other cash requirements of the Company.
Craig Wallace was appointed president & chief operating officer of our PC DOCS,
Inc. division. Mr. Wallace has held several notable senior management positions
at large technology companies as well as being president of PC DOCS' Internet
division.
The Company announced the acquisition of Globus International Quality Group,
which provides research, analysis and internet-based services and programs.
Globus also develops and publishes an international database of organizations
that have achieved registration to recognized management standards such as ISO
9000 and ISO 14000. Every organization that seeks to achieve and maintain ISO
registration must document their business policies and procedures. This presents
PC DOCS with a unique opportunity to sell its document/knowledge management
solutions.
At the end of October, Ben Swirsky was appointed Chairman of PC DOCS Group. Mr.
Swirsky has been a Director of the Company since December 1997. He is currently
Chairman and Chief Executive Officer of Nextel Group Inc., a telecommunications
company and was formerly President and Chief Executive Officer of Slater Steel
Inc., a diversified industrial company. Prior to 1994, he was President and
Chief Executive Officer of Bramalea Limited, one of North America's largest real
estate development companies. Mr. Swirsky is also a Director of The Four Seasons
Hotels Inc., and CamVec Inc., as well as several international companies. With
the tremendous growth that PC DOCS Group has undergone over the past few years
and the
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opportunities and challenges ahead, Mr. Swirsky's experience with large
international growth companies will be invaluable to the Company going forward.
COMMENTARY
Typically our First Quarter is soft because of the summer months and although
our revenues increased over last year, our European and Asian sales were below
our expectations. This could be due to the apparent slowdown of the global
economy or an aberration for this quarter. We continue to focus on our
geographic and vertical market strategies, the integration of PC DOCS/Fulcrum
operations and products and other growth opportunities.
FORWARD-LOOKING STATEMENTS
Certain of the above statements are forward-looking statements that involve
risks and uncertainties. Actual results could differ materially as a consequence
of a number of factors, including: fluctuations in the Company's operating
results due to product demand, length of the sales cycle, size and timing of
individual customer transactions and similar matters; changes in the
client/server application software market, including technology change, changes
in customer requirements, frequent new product introductions by competitors and
emerging standards; dependence of the Company on the legal services market;
reliance by the Company on its third-party resellers; dependence of the Company
on its key management; uncertainties relating to acquisitions, including
operational disruptions, unexpected operating expenses and losses, and expenses
associated with the integration of such acquisitions; and other factors set
forth in the Company's Securities and Exchange Commission and Ontario Securities
Commission reports and filings.
(signed)
Rubin Osten
Chief Executive Officer
PC DOCS GROUP INTERNATIONAL INC.
2005 Sheppard Avenue East, Suite 800, Toronto, Ontario, Canada
Telephone: (416) 497-7700 Fax: (416) 499-7777
<TABLE>
<S> <C> <C>
Burlington, Massachusetts Ottawa, Ontario Sydney, Australia
New York, New York Toronto, Ontario Osaka, Japan
San Francisco, California London, England Tokyo, Japan
Tallahassee, Florida Paris, France Singapore
Washington, DC Frankfurt, Germany
Munich, Germany
Milan, Italy
Rome, Italy
</TABLE>
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PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME U.S. GAAP
In Accordance with U.S. Generally Accepted Accounting Principles
(Canadian dollars, in thousands except per share amounts)
for the periods ended September 30
<TABLE>
<CAPTION>
Year
% change
1998 % of Rev. 1997 % of Rev. 98 vs. 97
<S> <C> <C> <C> <C> <C>
REVENUES
Software sales $ 18,398 49% $ 13,241 51% 39%
Software support, services
and other sales 18,372 49% 11,033 43% 67%
Hardware sales 76 0% 783 3% -90%
Interest income and other revenues 662 2% 774 3% -14%
-------- --------
TOTAL REVENUES 37,508 100% 25,831 100% 45%
-------- --------
COST OF SALES 2,445 7% 3,208 12% 24%
-------- --------
GROSS PROFIT 35,063 93% 22,623 88% 55%
-------- --------
EXPENSES
Selling and marketing 11,690 31% 8,059 31% -45%
Support and services 7,241 19% 3,496 14% -107%
Research and development 7,171 19% 3,582 14% -100%
General and administration 4,970 13% 4,121 16% -21%
-------- --------
TOTAL EXPENSES 31,072 83% 19,258 75% -61%
-------- --------
EARNINGS BEFORE DEPRECIATION
AND INTEREST 3,991 11% 3,365 13% 19%
Depreciation of fixed assets 1,804 5% 988 4% -83%
Amortization of product
development costs 41 0% 1,325 5% 97%
Amortization of acquired software 621 2% - 0%
Amortization of goodwill 139 0% 59 0% -136%
Interest on long-term debt 524 1% 17 0% -2982%
-------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES AND
MINORITY INTEREST 862 2% 976 4%
Income taxes 495 1% 393 2% -26%
-------- --------
NET EARNINGS (LOSS) $ 367 1% $ 583 2% -37%
======== ========
EARNINGS (LOSS) PER SHARE
Basic $ 0.02 $ 0.03 -47%
Diluted 0.01 $ 0.03
Average number of shares,
basic (000's) 23,577 19,918 18%
Average number of shares,
diluted (000's) 24,606 21,285 16%
</TABLE>
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PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS U.S. GAAP
In Accordance with U.S. Generally Accepted Accounting Principles
(Canadian dollars, in thousands)
<TABLE>
<CAPTION>
as of SEPTEMBER 30 June 30
1998 1998
UNAUDITED audited
<S> <C> <C>
ASSETS
Current
Cash and short-term investments $ 58,448 $ 62,537
Trade receivables 52,664 65,717
Unbilled receivables 13,508 11,146
Prepaid expenses 7,999 8,039
Other assets 7,178 -
Loan receivable - -
--------- ---------
139,797 147,439
--------- ---------
Fixed assets 13,748 13,813
Product development costs 1,859 1,832
Acquired software 2,390 3,011
Deferred income taxes 13,192 12,695
Investment - 2,762
Goodwill 3,602 3,742
--------- ---------
$ 174,588 $ 185,294
========= =========
LIABILITIES
Current
Accounts payable and accrued liabilities $ 40,316 $ 55,299
Deferred revenues 29,667 25,548
--------- ---------
69,983 80,847
--------- ---------
Long-term debt 21,882 22,044
Minority interest 297 297
--------- ---------
92,162 103,188
--------- ---------
SHAREHOLDERS' EQUITY
Share capital, 23,259,838 shares
outstanding (June 30 - 23,644,147) 143,779 146,456
Cumulative translation adjustments 5,001 2,371
Retained earnings (deficit) (66,354) (66,721)
--------- ---------
82,426 82,106
--------- ---------
$ 174,588 $ 185,294
========= =========
</TABLE>
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PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. GAAP
In Accordance with U.S. Generally Accepted Accounting Principles
(Canadian dollars, in thousands except per share amounts)
for the periods ended September 30
<TABLE>
<CAPTION>
Year
1998 1997
UNAUDITED unaudited
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 367 $ 583
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 2,605 2,372
Loss on disposal of fixed assets 9 -
Decrease in accounts receivable 13,053 2,003
Increase in unbilled receivables (2,362) (1,537)
Decrease (increase) in prepaid expenses 2,803 (187)
Increase in other assets (7,178) -
Increase in deferred income taxes (497) (60)
Decrease in accounts payable and
accrued liabilities (14,962) (2,146)
Increase in deferred revenues 4,119 684
-------- --------
Net cash provided by (used for) operating activities (2,043) 1,712
-------- --------
INVESTING ACTIVITIES
Increase in loan receivable - (386)
Additions to fixed assets (1,357) (1,616)
Additions to product development costs - (2,210)
Increase in investment - (2,778)
Cumulative translation adjustments 2,213 45
-------- --------
Net cash provided by (used for) investing activities 856 (6,945)
-------- --------
FINANCING ACTIVITIES
Decrease in long-term debt (204) (242)
Repurchase of common stock (2,749) -
Net proceeds from issuance of common stock 51 34
-------- --------
Net cash used for financing activities (2,902) (208)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (4,089) (5,441)
Cash and cash equivalents
Beginning of period 62,537 89,708
-------- --------
END OF PERIOD $ 58,448 $ 84,267
======== ========
</TABLE>
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PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) CANADIAN GAAP
In Accordance with Canadian Generally Accepted Accounting Principles
(Canadian dollars, in thousands except per share amounts)
for the periods ended September 30
<TABLE>
<CAPTION>
Year
1998 1997
UNAUDITED unaudited
<S> <C> <C>
REVENUES
Software sales $ 18,398 $ 13,241
Software support, services and other sales 18,372 11,033
Hardware sales 76 783
Interest income and other revenues 662 774
-------- --------
TOTAL REVENUES 37,508 25,831
-------- --------
COST OF SALES 2,445 3,208
-------- --------
GROSS PROFIT 35,063 22,623
-------- --------
EXPENSES
Selling and marketing 11,690 8,059
Support and services 7,241 3,496
Research and development 7,171 3,582
General and administration 4,970 4,121
-------- --------
TOTAL EXPENSES 31,072 19,258
-------- --------
EARNINGS BEFORE AMORTIZATION AND INTEREST 3,991 3,365
Amortization 4,399 2,372
Interest on long-term debt 524 17
-------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES (932) 976
Income tax expense 495 393
-------- --------
NET EARNINGS (LOSS) $ (1,427) $ 583
======== ========
EARNINGS (LOSS) PER SHARE
Basic $ (0.06) $ 0.03
Fully diluted Antidilutive $ 0.03
Average number of shares, basic (000's) 23,577 19,918
Average number of shares, fully diluted (000's) 28,104 23,382
</TABLE>
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PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION CANADIAN GAAP
In Accordance with Canadian Generally Accepted Accounting Principles
(Canadian dollars, in thousands )
<TABLE>
<CAPTION>
as of SEPTEMBER 30 June 30
1998 1998
UNAUDITED unaudited
<S> <C> <C>
ASSETS
Current
Cash and short-term investments $ 58,448 $ 62,537
Trade receivables 52,664 65,717
Unbilled receivables 13,508 11,146
Prepaid expenses 7,999 8,039
Other assets 7,178 -
Loan receivable - -
-------- --------
139,797 147,439
-------- --------
Fixed assets 13,748 13,813
Product development costs 1,859 1,832
Acquired software 2,390 3,011
Deferred income taxes 13,192 12,695
Investment - 2,762
Goodwill and purchased research and development 49,927 51,860
-------- --------
$220,913 $233,412
======== ========
LIABILITIES
Current
Accounts payable and accrued liabilities $ 40,312 $ 55,292
Deferred revenues 29,667 25,548
-------- --------
69,979 80,840
-------- --------
Long-term debt 21,882 22,044
Minority interest 297 297
-------- --------
92,158 103,181
-------- --------
SHAREHOLDERS' EQUITY
Share capital, 23,259,838 shares outstanding
(June 30 - 23,644,147) 142,008 144,688
Cumulative translation adjustments 5,283 2,652
Retained earnings (deficit) (18,536) (17,109)
-------- --------
128,755 130,231
-------- --------
$220,913 $233,412
======== ========
</TABLE>
<PAGE> 10
PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION CANADIAN GAAP
In Accordance with Canadian Generally Accepted Accounting Principles
(Canadian dollars, in thousands except per share amounts)
for the periods ended September 30
<TABLE>
<CAPTION>
Year
1998 1997
UNAUDITED unaudited
<S> <C> <C>
CASH FROM (FOR) OPERATING ACTIVITIES
Net earnings (loss) $ (1,427) $ 583
Items not affecting cash
Amortization 4,399 2,372
Loss on disposal of fixed assets 9 -
Deferred income taxes (497) (60)
-------- --------
2,484 2,895
Changes in non-cash working capital items
relating to operations
Trade receivables 13,053 2,003
Unbilled receivables (2,362) (1,537)
Prepaid expenses 40 (187)
Other assets (7,178) -
Accounts payable and accrued liabilities (14,980) (2,146)
Deferred revenues 4,119 684
-------- --------
(4,824) 1,712
-------- --------
CASH FROM (FOR) INVESTING ACTIVITIES
Loan receivable - (386)
Additions to fixed assets (1,357) (1,616)
Additions to product development costs - (2,210)
Increase in investment 2,762 (2,778)
Cumulative translation adjustments 2,214 45
-------- --------
3,619 (6,945)
-------- --------
CASH FROM (FOR) FINANCING ACTIVITIES
Decrease in long-term debt (204) (242)
Share capital issued for acquisition 18 -
Repurchase of common shares (2,749) -
Share capital issued for cash, net of expenses 51 34
-------- --------
(2,884) (208)
-------- --------
DECREASE IN CASH AND SHORT-TERM INVESTMENTS (4,089) (5,441)
CASH AND SHORT-TERM INVESTMENTS
Beginning of period 62,537 89,708
-------- --------
End of period $ 58,448 $ 84,267
======== ========
</TABLE>
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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.
PC DOCS GROUP INTERNATIONAL INC.
By /s/ Martin Day
---------------
Martin Day
General Counsel
Date November 17, 1998
