<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
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 0-25040
APPLIX, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2781676
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
112 TURNPIKE ROAD, WESTBORO, MASSACHUSETTS 01581
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(508)870-0300
(REGISTRANT'S TELEPHONE NUMBER)
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
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:
REGISTRANT HAD 9,840,482 SHARES OF COMMON STOCK, $.0025 PAR VALUE,
OUTSTANDING AT NOVEMBER 11, 1996.
<PAGE> 2
APPLIX, INC.
INDEX
Page No.
--------
Part I - Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets as of
September 30, 1996 (unaudited) and December 31, 1995 3
Consolidated Statements of Operations (unaudited)
for the three months ended September 30, 1996 and 1995 4
Consolidated Statements of Operations (unaudited)
for the nine months ended September 30, 1996 and 1995 5
Consolidated Statements of Cash Flows (unaudited)
for the nine months ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APPLIX, INC.
<TABLE>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
(UNAUDITED)
------------- ------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $26,050 $25,380
Accounts receivable, less allowance for doubtful accounts
of $476 and $484 at September 30, 1996 and
December 31, 1995, respectively 7,648 6,007
Other current assets 2,108 834
Deferred tax asset 4,168 4,168
------- -------
Total current assets 39,974 36,389
Property and equipment, at cost 8,694 6,451
Less accumulated amortization and depreciation (4,853) (4,082)
------- -------
Net property and equipment 3,841 2,369
Capitalized software costs, net of accumulated
amortization of $472 and $1,820 at September 30, 1996
and December 31, 1995, respectively 319 201
Other assets 972 539
------- -------
Total assets $45,106 $39,498
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 1,482 $ 1,862
Accrued liabilities 8,171 7,490
Deferred revenue 6,852 8,795
------- -------
Total current liabilities 16,505 18,147
Stockholders' equity:
Common stock, $.0025 par value; 30,000,000 shares
authorized; 9,937,651 and 9,609,728 shares issued at
September 30, 1996 and December 31, 1995,
respectively 25 24
Capital in excess of par value 32,671 31,274
Accumulated deficit (2,891) (8,884)
Treasury stock, 278,698 shares, at cost (933) (933)
Foreign currency translation adjustment (271) (130)
------- -------
Total stockholders' equity 28,601 21,351
------- -------
Total liabilities and stockholders' equity $45,106 $39,498
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
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<PAGE> 4
APPLIX, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THREE MONTHS ENDED
----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
License revenue $ 9,740 $6,220
Service revenue 3,615 2,407
------- ------
Total revenues 13,355 8,627
Cost of license revenue 650 675
Cost of service revenue 1,390 875
------- ------
Gross margin 11,315 7,077
Operating expenses:
Selling and marketing 5,702 3,733
Research and development 1,703 1,118
General and administrative 816 665
------- ------
Total operating expenses 8,221 5,516
------- ------
Operating income 3,094 1,561
Interest income, net 358 369
------- ------
Net income before income taxes 3,452 1,930
Income taxes 1,208 298
------- ------
Net income $ 2,244 $1,632
======= ======
Net income per common and common equivalent share
(see Note C) $ 0.21 $ 0.16
======= ======
Weighted average common and common equivalent shares
outstanding 10,635 10,090
======= ======
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
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<PAGE> 5
APPLIX, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
NINE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
License revenue $26,097 $16,030
Service revenue 10,161 5,937
------- -------
Total revenues 36,258 21,967
Cost of license revenue 1,714 1,716
Cost of service revenue 3,623 2,317
------- -------
Gross margin 30,921 17,934
Operating expenses:
Selling and marketing 15,491 9,863
Research and development 4,709 2,870
General and administrative 2,487 1,644
------- -------
Total operating expenses 22,687 14,377
------- -------
Operating income 8,234 3,557
Interest income, net 985 964
------- -------
Net income before income taxes 9,219 4,521
Income taxes 3,226 693
------- -------
Net income $ 5,993 $ 3,828
======= =======
Net income per common and common equivalent share
(see Note C) $ 0.56 $ 0.38
======= =======
Weighted average common and common equivalent shares
outstanding 10,707 10,016
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
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<PAGE> 6
APPLIX, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
NINE MONTHS ENDED
------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
Operating activities:
Net income $ 5,993 $ 3,828
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 771 781
Amortization of capitalized software costs 461 923
Amortization of goodwill 119 --
Provision for doubtful accounts (8) 23
Changes in operating assets and liabilities:
Accounts receivable (1,633) (2,381)
Other assets (1,202) (388)
Accounts payable (380) (137)
Accrued liabilities 494 2,207
Deferred revenue (1,943) 2,068
------- --------
Cash provided by operating activities 2,672 6,924
Investing activities:
Purchase of property and equipment (2,243) (1,098)
Capitalized software costs (580) (424)
Investment in securities -- (15,522)
Investment in foreign subsidiary (389) --
------- --------
Cash used in investing activities (3,212) (17,044)
Financing activities:
Principal payments under capital lease obligations (47) (140)
Proceeds from exercise of incentive stock options 1,398 251
------- --------
Cash provided by financing activities 1,351 111
Effect of exchange rate changes on cash (141) (8)
------- --------
Net increase (decrease) in cash and cash equivalents 670 (10,017)
Cash and cash equivalents at beginning of period 25,380 20,092
------- --------
Cash and cash equivalents at end of period $26,050 $ 10,075
======= ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 8 $ --
======= ========
Cash paid during the period for taxes $ 1,886 $ 363
======= ========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
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<PAGE> 7
APPLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. NATURE OF BUSINESS:
Applix markets and supports Applixware, Applix Enterprise and Applix
Anyware. Applixware is an integrated family of software applications and tools
for the real-time enterprise, which provides the ability to access, analyze and
communicate dynamically changing (real-time) information such as stock market
data or information from databases. Applix Enterprise offers customers the
ability to research, track and escalate activities for customer interaction
applications, including help desk and customer service. Applix Anyware is a
family of products for Internet and Intranet applications which provide users
with the ability to connect, from any location worldwide, to server based
information resources via Java enabled web browsers such as Netscape.
B. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. In the
opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting only of those of a normal
recurring nature, necessary for a fair presentation of the Company's financial
position, results of operations and cash flows at the dates and for the periods
indicated. While the Company believes that the disclosures presented are
adequate to make the information not misleading, these financial statements
should be read in conjunction with the audited consolidated financial statements
and related notes included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
The results of the nine month period ended September 30, 1996 are not
necessarily indicative of the results to be expected for the full fiscal year.
C. COMPUTATION OF NET INCOME PER COMMON SHARE
Net income per common share is computed based upon the weighted average
number of common and common equivalent shares outstanding. Common equivalent
shares are included in the per share calculations where the effect of their
inclusion would be dilutive. Common equivalent shares result from the assumed
exercise of outstanding common stock options at the average market price during
the period (the treasury stock method). Fully diluted net income per common
share is substantially the same as primary earnings per share.
In this report, all per share amounts and numbers of shares have been
restated to reflect the two-for-one stock split effected in the form of a stock
dividend on December 26, 1995.
D. RECLASSIFICATIONS
Certain reclassifications have been made to prior quarter amounts to
conform to current quarter's presentation.
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<PAGE> 8
APPLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
E. SUBSEQUENT EVENT
On October 31, 1996, the Company acquired all of the issued capital stock
of Sinper Corporation d/b/a TM1 Software, a Florida Corporation (TM1). The
Acquisition took place pursuant to an Agreement and Plan of Merger, dated as of
October 17, 1996, among the Company, Applix Acquisition Corporation, a
wholly-owned subsidiary of the Company, and TM1. The acquisition will be
recorded as a purchase transaction. Under the terms of the Merger Agreement, the
stockholders of TM1 received an aggregate of approximately $9,900,000, 50% of
which was paid in cash and 50% of which was paid in Applix common stock, in
exchange for the capital stock of TM1. The cash portion of the purchase price
was paid out of the Company's cash reserves. The consideration for the capital
stock was determined by arm's length negotiation between the parties as to the
fair market value of TM1 as a going concern. Under the terms of the Merger
Agreement, approximately 10% of the consideration was deposited in escrow to
secure certain indemnification obligations of the TM1 stockholders.
TM1 is located in Warren, New Jersey, and is in the business of developing
real time on-line analytical processing (OLAP) software for decision support.
-8-
<PAGE> 9
APPLIX, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1995
License revenue increased 57% to $9,740,000 for the quarter ended September
30, 1996 from $6,220,000 for the quarter ended September 30, 1995. Domestic
license revenue increased 48% to $5,245,000 from $3,540,000 for the same period
in 1995. International license revenue increased 68% to $4,495,000 from
$2,680,000 for the same period in 1995. The majority of the increase was
attributable to the two following factors, an increase in license revenue
from our international subsidiaries and the license revenue from products
developed using the technology from Target Systems Corporation (TSC) which was
acquired by the Company in October 1995. Revenue from the financial services
sector increased 102% to $5,924,000 from $2,937,000 for the quarter ended
September 30, 1995. Revenue from the government sector decreased 6% to
$2,069,000 from $2,196,000 for the quarter ended September 30, 1995. Revenue
from the government sector has fluctuated significantly in the past, and the
Company expects fluctuations to continue. The Company recently introduced Applix
Anyware, a Java enabled family of products for internet and intranet
applications. The Company's future operating results will be partially dependent
upon the success of Applix Anyware and its impact, if any, on a certain segment
of Applixware sales.
Deferred revenue as of September 30, 1996 decreased 22% compared to
December 31, 1995, and 39% compared to June 30, 1996. Deferred revenue may
fluctuate from time to time due to several factors such as the timing of
customer billings and collections, license and service revenue mix, indirect
channel activity and new product shipments.
Service revenue increased 50% to $3,615,000 (or 27% of total revenues) from
$2,407,000 (or 28% of total revenues) for the same period in 1995. This increase
was due to increased maintenance revenue from the Company's growing customer
base, the maintenance revenue attributable to TSC, as well as an increased
emphasis by the Company on selling training and consulting services. The Company
expects that the service component of total revenue will remain at approximately
this percentage for the next several quarters.
Gross margin increased to 85% for the quarter ended September 30, 1996 from
82% for the quarter ended September 30, 1995. License gross margin increased to
93% from 89% for the same period in 1995 due to the reduction of capitalized
software amortization partially offset by an increase in royalties and
documentation costs. Service gross margin decreased to 62% for the quarter ended
September 30, 1996 from 64% for the quarter ended September 30, 1995, due to the
increase in the number of support employees.
Selling and marketing expenses, which include domestic sales and marketing
expenses and the cost of the Company's international operations, increased 53%
to $5,702,000 for the quarter ended September 30, 1996 from $3,733,000 for the
quarter ended September 30, 1995. The expense increase was due primarily to
increased staffing and marketing programs to support the Company's sales growth
and the acquisition of TSC in October 1995. These expenses remained consistent
as a percentage of total revenues at 43% for both quarters.
Research and development expenses, which consist primarily of employee
salaries and benefits and related expenses, increased 52% to $1,703,000 for the
quarter ended September 30, 1996 from $1,118,000 for the quarter ended September
30, 1995, but remained consistent as a percentage of total revenues at 13% for
both quarters. The increase in these expenses was primarily due to the hiring of
additional personnel and the acquisition of TSC in October 1995. Total
-9-
<PAGE> 10
research and development expenditures, including capitalized software costs,
were $1,888,000, including $185,000 in capitalized software development costs,
or 14% of total revenues for the quarter ended September 30, 1996 and
$1,219,000, including $101,000 in capitalized software development costs, or 14%
of total revenues for the quarter ended September 30, 1995.
General and administrative expenses, which include the costs of the
finance, human resources and administrative functions, increased 23% to $816,000
from $665,000 for the same period in 1995, but decreased as a percentage of
total revenues between these periods to 6% from 8%. The increase in expenses was
primarily due to the acquisition of TSC in October 1995.
Interest income decreased to $358,000 from $369,000 due to lower interest
rates on the higher cash balances available for investments as a result of the
funds generated from operations.
The Company recorded a provision for income taxes for the quarter ended
September 30, 1996 of $1,208,000 consistent with the Company's estimated annual
effective tax rate of 35% compared to a provision of $298,000 or 15% of net
income for the same period in 1995. In 1996, the Company increased the effective
tax rate after having determined in 1995 that sufficient income would be
realized to utilize its net operating loss carryforwards and tax credit
carryforwards. The deferred tax asset was recognized on the balance sheet as of
December 31, 1995.
The Company's Applixware product family, and Applix Real Time in
particular, are marketed as a real-time decision support solution. Accordingly,
the Company's future success is substantially dependent upon the growth of the
demand for real-time decision support solutions in a number of industry sectors
and the Company's ability to identify this demand, develop solutions for the
industry-specific needs and successfully market its products to customers
requiring such solutions. In addition, the Company's success within any
particular market for real-time decision support applications is dependent in
large part upon its ability to establish strategic marketing relationships with
leading vendors within that market.
The Company is currently dependent to a significant degree on revenue from
domestic and international customers in the securities trading industry, which
has been the first industry to embrace real-time decision support solutions.
During the quarter ended September 30, 1996, revenue from the financial services
sector comprised 44% of the Company's total revenue, and the Company believes
that the substantial majority of its financial services sector revenue was
derived from companies engaged in the trading of securities. The financial
performance of the securities trading industry is volatile as a result of its
dependence upon unpredictable factors such as economic conditions and securities
market conditions. The Company's financial performance will be subject to, and
may be adversely affected by, factors affecting the economic performance and
capital expenditure levels of the securities trading industry.
The international portion of the Company's business is subject to a number
of inherent risks, including difficulties in building and managing international
operations and international reseller networks, difficulties or delays in
translating products into foreign languages, fluctuations in the value of
foreign currencies, import/export duties and quotas, and unexpected regulatory,
economic or political changes in international markets.
Most of the Company's international sales are denominated in foreign
currencies. Accordingly, a decrease in the value of foreign currencies relative
to the U.S. dollar could result in a significant decrease in U.S. dollar
revenues received by the Company for its international sales. Due to the number
of currencies involved in the Company's international sales and the volatility
of foreign currency exchange rates, the Company cannot predict the effect of the
exchange rate fluctuations on future operating results. To date, foreign
currency fluctuations have not had a material adverse effect on the Company's
operating results. During the second quarter 1996, the Company began entering
into foreign exchange forward contracts to hedge against the risk of changes in
foreign currency exchange rates to the Company's intercompany balances. The
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<PAGE> 11
principal currencies hedged are the German mark, British pound, French franc and
the Netherland guilder.
The Company's quarterly operating results have varied and may continue to
vary significantly depending on factors such as the timing of significant
orders, the timing of new product introductions and upgrades by the Company, its
competitors, and the mix of distribution channels through which the products are
sold. Revenues are particularly difficult to predict because of the sales cycle
of the Company's products, which varies substantially from customer to customer
and industry to industry. In addition, the Company's dependence on international
sales may adversely affect revenues in the fourth quarter, when European
business is traditionally weaker. Substantially all of the Company's license
revenue in a quarter is derived from orders received in that quarter.
Accordingly, delays in orders are likely to result in the associated revenue not
being realized by the Company in that period. Moreover, the Company's expense
levels are based in part on expectations of future revenue levels, and a
shortfall in expected revenue could therefore result in a disproportionate
decrease in the Company's net income.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 1995
License revenue increased 63% to $26,097,000 for the nine months ended
September 30, 1996 from $16,030,000 for the nine months ended September 30,
1995. Domestic license revenue increased 57% to $14,465,000 from $9,203,000 for
the same period in 1995. International license revenue increased 70% to
$11,632,000 from $6,827,000 for the same period in 1995. The majority of the
increase was attributable to the two following factors, an increase in license
revenue from our international subsidiaries and the license revenue from
products developed using the technology from Target Systems Corporation (TSC)
which was acquired by the Company in October 1995. Financial services sector
revenue increased 88% to $15,834,000 from $8,414,000 for the nine months ended
September 30, 1995. Revenue from the government sector increased 51% to
$7,494,000 from $4,956,000 for the nine months ended September 30, 1995.
Service revenue increased 71% to $10,161,000 (or 28% of total revenues)
from $5,937,000 (or 27% of total revenues) for the same period in 1995. This
increase was due to increased maintenance revenue from the Company's growing
customer base, the maintenance revenue attributable to TSC, as well as an
increased emphasis by the Company on selling training and consulting services.
Gross margin increased to 85% for the nine months ended September 30, 1996
from 82% for the nine months ended September 30, 1995. License gross margin
increased to 93% from 89% for the same period in 1995 due to the reduction of
capitalized software amortization partially offset by an increase in royalties
and documentation costs. Service gross margin increased to 64% for the nine
months ended September 30, 1996 from 61% for the nine months ended September 30,
1995, due to the relative fixed costs of operating the service organization
combined with the increase in service revenue. The overall gross margin increase
was limited by the increase in service revenue as a proportion of total
revenues. Service revenue has a significantly lower gross margin than license
revenue and therefore has the effect of reducing overall gross margin.
Selling and marketing expenses increased 57% to $15,491,000 for the nine
months ended September 30, 1996 from $9,863,000 for the nine months ended
September 30, 1995. The expense increase was due primarily to increased staffing
in both domestic sales and international sales to support the Company's growth
and the acquisition of TSC. These expenses decreased as a percentage of total
revenues to 43% from 45% for the same period in 1995.
-11-
<PAGE> 12
Research and development expenses increased 64% to $4,709,000 for the nine
months ended September 30, 1996 from $2,870,000 for the nine months ended
September 30, 1995, and remained consistent as a percentage of total revenues at
13% for both nine month periods. The increase in these expenses was primarily
due to the hiring of additional personnel and the acquisition of TSC. Total
research and development expenditures, including capitalized software costs,
were $5,289,000, including $580,000 in capitalized software costs, or 15% of
total revenue for the nine months ended September 30, 1996 and $3,294,000,
including $424,000 in capitalized software development costs, or 15% of total
revenues for the nine months ended September 30, 1995.
General and administrative expenses increased 51% to $2,487,000 from
$1,644,000 for the same period in 1995, and remained consistent as a percentage
of total revenues at 7% for both nine month periods. The increase in expenses
was primarily due to the acquisition of TSC in October 1995.
Interest income increased to $985,000 from $964,000 due to the higher cash
balances available for investments a result of the Company generating funds from
operations.
The Company recorded a provision for income taxes for the nine months ended
September 30, 1996 of $3,226,000 consistent with the Company's estimated annual
effective tax rate of 35% compared to a provision of $693,000 or 15% of net
income for the same period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated funds from operations of $2,672,000 for the nine
months ended September 30, 1996. Approximately $2,243,000 was utilized for the
purchase of property and equipment during the period. As of September 30, 1996,
the Company had cash and cash equivalents of $26,050,000 and working capital of
$23,469,000.
The Company believes that the funds currently available and funds expected
to be generated from operations will be sufficient to fund the Company's
operations at least through the next twelve months.
To date, inflation has not had a material adverse effect on the Company's
operating results.
The information contained in the Management's Discussion and Analysis is
provided pursuant to applicable regulations of the Security and Exchange
Commission and is not intended to serve as a basis for projections of future
operating results.
SUBSEQUENT EVENT
On October 31, 1996, the Company acquired all of the issued capital stock
of Sinper Corporation d/b/a TM1 Software, a Florida Corporation (TM1). The
Acquisition took place pursuant to an Agreement and Plan of Merger, dated as of
October 17, 1996, among the Company, Applix Acquisition Corporation, a
wholly-owned subsidiary of the Company, and TM1. The acquisition will be
recorded as a purchase transaction. Under the terms of the Merger Agreement, the
stockholders of TM1 received an aggregate of approximately $9,900,000, 50% of
which was paid in cash and 50% of which was paid in Applix common stock, in
exchange for the capital stock of TM1. The cash portion of the purchase price
was paid out of the Company's cash reserves. The consideration for the capital
stock was determined by arm's length negotiation between the parties as to the
fair market value of TM1 as a going concern. Under the terms of the Merger
Agreement, approximately 10% of the consideration was deposited in escrow to
secure certain indemnification obligations of the TM1 stockholders.
TM1 is located in Warren, New Jersey, and is in the business of developing
real time on-line analytical processing (OLAP) software for decision support.
-12-
<PAGE> 13
APPLIX, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
THE EXHIBIT FILED AS A PART OF THIS FORM 10Q IS THE FOLLOWING:
EXHIBIT 27.1: FINANCIAL DATA SCHEDULE
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter for which this report is
to be filed.
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<PAGE> 14
SIGNATURE
Pursuant to the requirements of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APPLIX, INC.
By: Patrick J. Scannell, Jr.
-----------------------------------------
Patrick J. Scannell, Jr.
Vice President, Finance & Administration,
Chief Financial Officer and Treasurer
Date: November 12, 1996
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 26,050
<SECURITIES> 0
<RECEIVABLES> 8,124
<ALLOWANCES> (476)
<INVENTORY> 0
<CURRENT-ASSETS> 39,974
<PP&E> 8,694
<DEPRECIATION> (4,853)
<TOTAL-ASSETS> 45,106
<CURRENT-LIABILITIES> 16,505
<BONDS> 0
<COMMON> 25
0
0
<OTHER-SE> 28,576
<TOTAL-LIABILITY-AND-EQUITY> 45,106
<SALES> 36,258
<TOTAL-REVENUES> 36,258
<CGS> 5,337
<TOTAL-COSTS> 5,337
<OTHER-EXPENSES> 22,687
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,219
<INCOME-TAX> 3,226
<INCOME-CONTINUING> 5,993
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,993
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
