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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, 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 0-25494
REMEDY CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 77-0265675
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1505 SALADO DRIVE, MOUNTAIN VIEW, CA 94043
(Address of principal executive offices) (Zip Code)
</TABLE>
(415) 903-5200
(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
There were 13,233,294 shares of the Company's Common Stock, par value
$.00005, outstanding on July 31st, 1996.
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TABLE OF CONTENTS
<TABLE>
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PAGE NO.
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 -- Financial Statements:
Condensed Consolidated Balance Sheets as of June 30, 1996 and
December 31, 1995........................................................ 3
Condensed Consolidated Statements of Income for the Three and
Six Months Ended June 30, 1996 and June 30, 1995......................... 4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1996 and June 30, 1995.......................................... 5
Notes to Condensed Consolidated Financial Statements..................... 6
Item 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 6
PART II OTHER INFORMATION........................................................ 11
Item 4 -- Submission of Matters to a Vote of Security Holders
Item 6 -- Exhibits and Reports on Form 8-K
SIGNATURE.......................................................................... 12
</TABLE>
2
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REMEDY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1995
JUNE ------------
30,
1996
-------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................... $37,721 $ 31,452
Short-term investments.............................................. 29,820 24,734
Accounts receivable, net of allowance for doubtful accounts of $768
and $541 respectively............................................ 12,054 11,590
Income tax receivable............................................... 1,015 2,669
Prepaid expenses and other current assets........................... 1,311 561
Deferred tax assets................................................. 1,251 1,039
------- -------
Total current assets........................................ 83,172 72,045
Property and equipment, net........................................... 3,892 2,688
------- -------
$87,064 $ 74,733
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................... $ 1,323 $ 1,168
Accrued compensation and related liabilities........................ 2,892 3,550
Other accrued liabilities........................................... 2,999 1,734
Deferred revenue.................................................... 5,912 4,732
Current portion of obligations under capital leases................. 122 94
------- -------
Total current liabilities................................... 13,248 11,278
Noncurrent portion of obligations under capital leases................ 342 324
Stockholders' equity:
Common stock and additional paid-in capital........................... 56,549 51,942
Notes receivable from stockholders.................................... (60) (60)
Deferred compensation................................................. (345) (434)
Retained earnings..................................................... 17,330 11,683
------- -------
Total stockholders' equity.................................. 73,474 63,131
------- -------
$87,064 $ 74,733
======= =======
</TABLE>
See accompanying notes.
3
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REMEDY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS ENDED
ENDED JUNE 30, JUNE 30,
----------------- ------------------
1996 1995 1996 1995
------- ------ ------- -------
<S> <C> <C> <C> <C>
Revenue:
Products............................................. $12,594 $5,894 $21,932 $10,414
Maintenance and service.............................. 4,418 2,510 8,081 4,354
------- ------ ------- -------
Total revenue................................ 17,012 8,404 30,013 14,768
Costs and expenses:
Cost of product revenue.............................. 645 327 1,202 768
Cost of maintenance and service revenue.............. 2,153 1,245 4,091 2,274
Research and development............................. 3,180 1,542 5,492 2,919
Sales and marketing.................................. 4,945 2,264 8,742 3,983
General and administrative........................... 1,464 901 2,821 1,405
------- ------ ------- -------
Total costs and expenses..................... 12,387 6,279 22,348 11,349
Income from operations................................. 4,625 2,125 7,665 3,419
Interest income, net................................... 655 430 1,158 451
------- ------ ------- -------
Income before provision for income taxes............... 5,280 2,555 8,823 3,870
Provision for income taxes............................. 1,900 897 3,176 1,410
------- ------ ------- -------
Net income............................................. $ 3,380 $1,658 $ 5,647 $ 2,460
======= ====== ======= =======
Net income per common and common equivalent share...... $ 0.22 $ 0.11 $ 0.38 $ 0.19
======= ====== ======= =======
Shares used in computing per share amounts............. 15,068 14,511 14,930 13,118
======= ====== ======= =======
</TABLE>
See accompanying notes.
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REMEDY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................... $ 5,647 $ 2,460
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 760 445
Amortization of deferred compensation........................... 89 88
Changes in assets and liabilities:
Accounts receivable........................................... (464) (42)
Prepaid expenses and other current assets..................... (750) (376)
Deferred tax asset............................................ (212) 110
Accounts payable.............................................. 155 (733)
Accrued compensation and related liabilities.................. (658) (287)
Income taxes.................................................. 4,841 (622)
Other accrued liabilities..................................... 1,265 817
Deferred revenue.............................................. 1,180 791
-------- --------
Net cash provided by operating activities.................. 11,853 2,651
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments.................................. (47,741) --
Maturities of short-term investments................................. 42,655 --
Capital expenditures................................................. (1,864) (827)
-------- --------
Net cash used in investing activities...................... (6,950) (827)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligations................... (54) (25)
Proceeds from issuance of common stock............................... 1,420 43,595
-------- --------
Net cash provided by financing activities.................. 1,366 43,570
-------- --------
Net increase in cash and cash equivalents............................ 6,269 45,394
Cash and cash equivalents at beginning of period..................... 31,452 3,007
-------- --------
Cash and cash equivalents at end of period........................... $ 37,721 $ 48,401
======== ========
</TABLE>
See accompanying notes.
5
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REMEDY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated balance sheet as of June 30, 1996, and the
condensed consolidated statements of income for the three months and six months
ended June 30, 1996 and 1995, and the condensed consolidated statements of cash
flows for the six months ended June 30, 1996 and 1995, have been prepared by the
Company, without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June 30, 1996 and
for all periods presented have been made. The condensed consolidated balance
sheet at December 31, 1995 has been derived from the audited financial
statements at that date.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission's rules and regulations. These condensed financial statements should
be read in conjunction with the audited financial statements and notes thereto
included in the Company's 1995 Annual Report and Report on Form 10-K filed with
the Securities and Exchange Commission in March 1996.
The results of operations for the three and six months ended June 30, 1996
are not necessarily indicative of results that may be expected for any other
interim period or for the full fiscal year.
2. STOCK SPLIT
The Company authorized a three-for-two stock split in the form of a stock
dividend, effective March 25, 1996. Prior period amounts have been restated to
reflect the effect of the stock split.
3. PER SHARE INFORMATION
Net income per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period.
Dilutive common equivalent shares consist of shares issuable upon the exercise
of stock options, using the treasury stock method.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Remedy Corporation (the "Company") develops, markets and supports highly
adaptable, client/server applications software for support and business
processes. The Company was founded in November 1990 and made its initial product
shipments in December 1991. The Company has had seventeen consecutive profitable
quarters, beginning with the quarter ended June 30, 1992. There can be no
assurance, however, that the Company will remain profitable on a quarterly or
annual basis in the future.
This Report on Form 10-Q contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in the
"Risk Factors" section of the Company's 1995 Annual Report on Form 10-K filed
with the Securities and Exchange Commission in March 1996.
RESULTS OF OPERATIONS
The Company's revenue and operating results can vary significantly from
quarter to quarter. License revenue is difficult to forecast because the
Company's sales depend on factors such as the size and timing of transactions,
changes in customers' budget constraints and general economic conditions. The
license revenue in any quarter is predominantly dependent upon orders booked and
shipped in that quarter. The recognition of maintenance and support revenue
ratably over the term of the contract and the relative seasonality and lag of
consulting and training revenue contribute to the variability of service
revenue. However, a high percentage of
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the Company's operating expenses are fixed and are based on anticipated revenue
levels. Consequently, a small variation in the timing of the recognition of
revenue can result in significant variations in operating results from quarter
to quarter.
The following table sets forth, as a percentage of total revenue, statement
of income data for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Products............................................... 74 % 70 % 73 % 71 %
Maintenance and service................................ 26 30 27 29
-- -- -- --
Total revenue.................................. 100 100 100 100
Costs and expenses:
Cost of product........................................ 4 4 4 5
Cost of maintenance and service revenue................ 13 15 14 15
Research and development............................... 19 18 18 20
Sales and marketing.................................... 29 27 29 27
General and administrative............................. 9 11 9 10
-- -- -- --
Total costs and expenses....................... 73 75 75 77
-- -- -- --
Income from operations................................... 27 25 25 23
Interest income, net..................................... 4 5 4 3
-- -- -- --
Income before provision for income taxes................. 31 30 29 26
Provision for income taxes............................... 11 10 10 9
-- -- -- --
Net income............................................... 20 % 20 % 19 % 17 %
== == == ==
</TABLE>
Revenue
The Company's revenue is derived from two sources: product licenses and
fees for services. License revenue is derived from product licensing fees, while
service revenue is derived from maintenance support services, training and
consulting. The Company recognizes revenue in accordance with the Statement of
Position on Software Revenue Recognition ("SOP 91-1"), issued by the American
Institute of Certified Public Accountants. Product revenue is recognized upon
delivery only if no significant vendor obligations remain and collection of the
resulting receivable is deemed probable. Delivery is defined in certain
contracts as delivery of the product master or first copy for noncancelable
product licensing arrangements under which the customer has certain software
reproduction rights. Service revenue from customer maintenance fees for ongoing
customer support and product updates is recognized ratably over the term of the
maintenance contract, which is typically twelve months. Service revenue from
training and consulting is recognized when the services are performed. Fees for
such services are charged separately from the Company's software products. The
Company's license agreements generally do not provide a right of return.
However, reserves are maintained for return allowances and potential credit
losses, which have not been significant to date.
The Company distributes the majority of its products through its
headquarters-based direct sales force that is complemented by indirect sales
channels, including value-added resellers ("VARs"), system integrators and
original equipment manufacturers ("OEMs"). Sales derived through indirect
channels accounted for approximately 44% and 45% of the Company's total billings
for the quarter ended June 30, 1996 and six months ended June 30, 1996,
respectively. The Company expects that sales derived through indirect channels,
which have lower average selling prices and gross margins than direct sales,
will increase as a percentage of total revenue. As a result, the Company expects
that its gross margins on product sales may decline if sales through indirect
channels increase.
7
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Product Revenue. The Company currently derives substantially all of its
product revenue from licenses of the Action Request System and related products.
Revenue from product licenses increased by 114% from $5.9 million for the
quarter ended June 30, 1995 to $12.6 million in the comparable 1996 quarter.
Product license fees increased 111% from $10.4 million for the six months ended
June 30, 1995 to $21.9 million in the comparable 1996 period. The increase in
license fees was primarily attributable to increased market acceptance, both
domestic and international, of the Company's Action Request System, as well as
the introduction of several related products. International sales accounted for
approximately 23% and 38% of the Company's total revenue for the quarters ended
June 30, 1995 and 1996, respectively. International sales accounted for
approximately 27% and 38% of the Company's total revenue for the six months
ended June 30, 1995 and 1996, respectively. Substantially all of the
period-to-period growth in product revenue was due to higher unit sales volumes.
The prices of the Company's products have remained relatively constant from 1993
through June 30, 1996. Broad market acceptance of the Company's products is
critical to the Company's future success. The Company expects that both market
penetration and competition will increase, and, as a result, that prior growth
rates of the Company's product revenue may not be sustainable in the future.
Maintenance and Service Revenue. Revenue from services increased by 76%
from $2.5 million for the quarter ended June 30, 1995 to $4.4 million in the
comparable 1996 quarter. Service revenue increased 84% from $4.4 million for the
six months ended June 30, 1995 to $8.1 million in the comparable 1996 period.
This growth is primarily due to increased licensing activity, which has resulted
in increases in revenue from services related to maintenance and support,
training and consulting. Renewal of maintenance contracts after the initial
one-year term also contributes to the growth rate. The Company expects that as
market penetration and competition increase, prior growth rates of the Company's
installed base and, consequently, in the Company's service revenue, may not be
sustainable in the future.
Costs and Expenses
Cost of Product Revenue. Cost of product revenue consists primarily of the
costs of royalties paid to third-party vendors, product media and duplication,
manuals, packaging materials, personnel-related costs and shipping expenses.
Cost of product revenue increased from $327,000 for the quarter ended June 30,
1995 to $645,000 for the comparable 1996 quarter, representing 6% and 5% of the
related product revenue in such quarters, respectively. Cost of product revenue
increased from $768,000 for the first six months ended June 30, 1995 to
$1,202,000 in the comparable 1996 period, representing 7% and 5% of related
product revenue in such periods, respectively. The increases in the dollar
amounts of cost of product revenue were primarily due to the higher volumes of
product shipped in the respective 1996 periods. The decreases in cost as a
percentage of the related product revenue from June 30, 1995 to the comparable
1996 period is primarily due to economies of scale realized as a result of
shipping greater quantities of product in the quarter ended June 30, 1996.
Because all development costs incurred in the research and development of
software products and enhancements to existing software products have been
expensed as incurred, cost of product revenue includes no amortization of
capitalized software development costs. Cost as a percentage of product revenue
may fluctuate from quarter to quarter due to seasonality of revenue, offset by
cost of sales containing some fixed costs such as personnel costs and royalties.
Cost of Maintenance and Service Revenue. Cost of maintenance and service
revenue consists primarily of personnel-related costs incurred in providing
telephone support, consulting and training to customers. Cost of maintenance and
service revenue increased from $1.2 million for the quarter ended June 30, 1995
to $2.2 million in the comparable 1996 quarter, representing 50% and 49% of the
related maintenance and service revenue for the respective quarters. Cost of
maintenance and service revenue increased from $2.3 million for the six months
ended June 30, 1995 to $4.1 million in the comparable 1996 period, representing
52% and 51%, respectively, of the related maintenance and service revenue in
such periods. Cost of maintenance and service revenue increased significantly in
absolute dollars from the quarter ended June 30, 1995 to the quarter ended June
30, 1996 primarily due to increased personnel-related costs as the Company
continued to build its customer support and training organizations. In addition,
such costs increased from quarter to quarter due to the Company's increased
partnering with third-party service providers to deliver consulting services to
its
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customers. The Company believes that cost of maintenance and service revenue
will increase in dollar amounts and may increase as a percentage of total
revenue in the future.
Research and Development. Research and development expenses were $1.5
million and $3.2 million, or 18% and 19% of total revenue, for the quarters
ended June 30, 1995 and June 30, 1996, respectively. Research and development
expenses increased from $2.9 million for the six months ended June 30, 1995 to
$5.5 million in the comparable 1996 period, or 20% and 18% of total revenue,
respectively. The increases in dollar amounts in research and development
expenses were primarily attributable to increased staffing and associated
support for software engineers required to expand and enhance the Company's
product line. The Company believes that research and development expenses will
continue to increase in dollar amounts and may increase as a percentage of total
revenue in the future.
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses of sales and marketing personnel, as well as
promotional expenses. Sales and marketing expenses were $2.3 million and $4.9
million, or 27% and 29% of total revenue, for the quarters ended June 30, 1995
and June 30, 1996, respectively. Sales and marketing expenses increased from
$4.0 million for the six months ended June 30, 1995 to $8.7 million in the
comparable 1996 period, or 27% and 29% of total revenue, respectively. The
increases in sales and marketing expenses in both absolute dollar amounts and in
percentages were primarily due to the expansion of sales and marketing resources
and increased marketing activities, including trade shows and promotional
activities. The Company believes that such expenses will increase in dollar
amounts and may increase as a percentage of total revenue in the future as the
Company expands its sales and marketing staff.
General and Administrative. General and administrative expenses were
$901,000 and $1.5 million, or 11% and 9% of total revenue, for the quarters
ended June 30, 1995 and June 30, 1996, respectively. General and administrative
expenses increased from $1.4 million for the six months ended June 30, 1995 to
$2.8 million for the comparable 1996 period, or 10% and 9% of total revenue,
respectively. The increases in dollar amounts were primarily the result of
increased staffing and associated expenses necessary to manage and support the
Company's growth. The Company believes that its general and administrative
expenses will increase in dollar amounts and may increase as a percentage of
total revenue in the future as the Company expands its staffing.
Interest Income, net
Interest Income, net. Interest income, net was $430,000 and $655,000 for
the quarters ended June 30, 1995 and June 30, 1996, respectively. Interest
income, net increased from $451,000 for the six months ended June 30, 1995 to
$1.2 million for the comparable 1996 period. The increase in interest income,
net for the quarter ended June 30, 1996 is primarily due to the investment of
proceeds from the Company's March 1995 initial public offering.
Provision for Income Taxes
The Company had recorded $1.3 million in net deferred tax assets at June
30, 1996. No valuation allowance has been provided on this amount based on
management's assessment that current levels of taxable income in future years
will be sufficient to realize the net deferred tax assets. The effective tax
rate of 36% for the quarter ended June 30, 1996 differs from the federal
statutory rate primarily due to state income taxes, offset by tax-exempt
interest income.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1995 and June 30, 1996, the Company's
cash provided by operating activities was $2.7 million and $11.9 million,
respectively. The Company's net cash provided by operations for the six months
ended June 30, 1996 was primarily attributable to the net income generated in
the six-month period.
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During the six months ended June 30, 1995 and June 30, 1996, the Company's
investing activities have consisted of purchases of short-term investments and
property and equipment. Purchases of short-term investments exceeded maturities
by $5.1 million for the six months ended June 30, 1996, primarily due to
investment of cash provided by operating activities during the period. To date,
the Company has not invested in derivative securities or any other financial
instruments that involve a high level of complexity or risk. Management expects
that, in the future, cash in excess of current requirements will continue to be
invested in investment grade, interest-bearing securities.
Cash used to purchase property and equipment was $827,000 and $1.9 million
during the six months ended June 30, 1995 and June 30, 1996, respectively,
primarily for computer workstations and file servers for the Company's growing
employee base. The Company expects that the rate of purchases of property and
equipment will remain constant or increase as the Company's employee base grows.
The Company's principal commitments consist primarily of leases on its
headquarters facilities and its telephone system.
At June 30, 1996, the Company had $37.7 million in cash and cash
equivalents, $29.8 million in short-term investments and $69.9 million of
working capital. The Company also has available a $10.0 million unsecured bank
line of credit that expires in June 1997. There were no borrowings outstanding
under this line of credit as of June 30,1996.
The Company believes that its current cash and short-term investments
balances, cash available under its line of credit and cash flow from operations
will be sufficient to meet its working capital and capital expenditure
requirements for at least the next 12 months. Although operating activities may
provide cash in certain periods, to the extent the Company experiences growth in
the future, the Company anticipates that its operating and investing activities
may use cash. Consequently, significant future growth may require the Company to
obtain additional equity or debt financing.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS:
Although the Company has experienced significant percentage growth in
revenue and net income in recent years, the Company does not believe prior
growth rates are sustainable or indicative of future operating results. There
can be no assurance that the Company will remain profitable on a quarterly or
annual basis. In addition, the Company's limited operating history makes the
prediction of future operating results difficult or impossible. The Company
currently derives substantially all of its revenue from licenses of the Action
Request System and related products and services. Broad market acceptance of the
Action Request System is critical to the Company's future success. As a result,
a decline in demand for or failure to achieve broad market acceptance of the
Action Request System as a result of competition, technological change or
otherwise, would have a material adverse effect on the business, operating
results and financial condition of the Company.
The Company intends to continue to hire a significant number of additional
sales personnel in 1996 and beyond, which is required if the Company is to
achieve significant revenue growth in the future. Competition for such personnel
is intense and there can be no assurance that the Company can retain its
existing sales personnel or that it can attract, assimilate or retain additional
highly qualified sales persons in the future. If the Company is unable to hire
such personnel on a timely basis, the Company's business, operating results and
financial condition could be adversely affected.
Due to factors noted above, the Company's future earnings and stock price
may be subject to significant volatility, particularly on a quarterly basis. Any
shortfall in revenue or earnings from levels anticipated by securities analysts
could have an immediate and significant adverse effect on the trading price of
the Company's common stock. The Company typically receives and fulfills a
majority of its orders within the quarter, with a substantial portion occurring
in the third month of the fiscal quarter. As a result, the Company may not learn
of revenue shortfalls until late in a fiscal quarter, which could result in an
even more immediate and adverse effect on the trading price of the Company's
common stock.
The Company's business entails a variety of additional risks, which are set
forth in the "Risk Factors" section of the Company's 1995 Report on Form 10-K
filed with the Securities and Exchange Commission.
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PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 21, 1996, the Annual Meeting of Stockholders of Remedy Corporation
was held in Mountain View, California.
An election of directors was held, with the following individuals being
elected to the Board of Directors of the Company:
<TABLE>
<S> <C>
Lawrence L. Garlick (11,648,078 votes for, 89,330 votes withheld)
David A. Mahler (11,574,578 votes for, 162,830 votes withheld)
Harvey C. Jones, Jr. (11,648,078 votes for, 89,330 votes withheld)
John F. Shoch (11,648,078 votes for, 89,330 votes withheld)
James R. Swartz (11,648,078 votes for, 89,330 votes withheld)
</TABLE>
Other matters voted upon at the meeting and the number of affirmative
and negative votes cast with respect to each such matter were as follows:
1. To approve an amendment to and restatement of the Company's Certificate
of Incorporation (i) to increase the number of shares of Common Stock
that the Company is authorized to issue from 20,000,000 to 60,000,000,
and (ii) to increase the number of shares of Preferred Stock that the
Company is authorized to issue from 2,000,000 to 10,000,000 (9,039,962
votes in favor, 1,534,864 votes opposed, 27,085 votes abstaining).
2. To approve an amendment of the Company's Employee Stock Purchase Plan
(the "Plan") to (i) provide for the commencement of a new 24-month
enrollment period every six months; (ii) permit participants to
contribute a maximum of 20% of eligible compensation; (iii) increase the
maximum amount of payroll deductions by a participant during any
semiannual purchase period to $10,000; and (iv) expand the types of
compensation eligible for withholding under the Plan to include
commissions, bonuses and certain other cash compensation (11,475,162
votes in favor, 180,602 votes opposed, 5,280 votes abstaining).
3. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the year ended December 31, 1996.(11,735,933 votes in
favor, 1,025 votes opposed, 450 votes abstaining)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
<TABLE>
<CAPTION>
NUMBER EXHIBIT DESCRIPTION
------ ------------------------------------------------------------------------
<C> <S>
11.1 Computation of Net Income per Common and Common Equivalent Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K: None
11
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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 thereunto duly authorized.
Dated: August 9, 1996
REMEDY CORPORATION
By: /s/ GEORGE A. DE URIOSTE
---------------------------------
George A. de Urioste
Vice President, Finance and Chief
Financial
Officer (Duly Authorized
Officer and
Principal Financial and
Accounting Officer)
12
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EXHIBIT 11.1
REMEDY CORPORATION
COMPUTATION OF NET INCOME
PER COMMON AND COMMON EQUIVALENT SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average number of common shares
outstanding.................................. 13,139 12,224 13,044 8,985
Convertible preferred shares, as if converted... -- -- -- 1,887
Incremental common shares attributable to shares
issuable under employee stock plans.......... 1,929 2,287 1,886 2,246
------- ------- ------- -------
Total shares............................ 15,068 14,511 14,930 13,118
======= ======= ======= =======
Net income:
Amount.......................................... $ 3,380 $ 1,658 $ 5,647 $ 2,460
======= ======= ======= =======
Per share....................................... $ 0.22 $ 0.11 $ 0.38 $ 0.19
======= ======= ======= =======
FULLY DILUTED
Weighted average number of common shares
outstanding.................................. 13,138 12,224 13,044 8,985
Convertible preferred shares, as if converted... -- -- -- 1,887
Incremental common shares attributable to shares
issuable under employee stock plans.......... 1,930 2,287 1,940 2,283
------- ------- ------- -------
Total shares............................ 15,069 14,511 14,984 13,155
======= ======= ======= =======
Net income:
Amount.......................................... $ 3,380 $ 1,658 $ 5,647 $ 2,460
======= ======= ======= =======
Per share....................................... $ 0.22 $ 0.11 $ 0.38 $ 0.19
======= ======= ======= =======
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 37,721
<SECURITIES> 29,820
<RECEIVABLES> 12,822
<ALLOWANCES> 768
<INVENTORY> 0
<CURRENT-ASSETS> 83,172
<PP&E> 6,397
<DEPRECIATION> 2,505
<TOTAL-ASSETS> 87,064
<CURRENT-LIABILITIES> 13,248
<BONDS> 0
0
0
<COMMON> 56,549
<OTHER-SE> (405)
<TOTAL-LIABILITY-AND-EQUITY> 87,064
<SALES> 21,932
<TOTAL-REVENUES> 30,013
<CGS> 1,202
<TOTAL-COSTS> 5,293
<OTHER-EXPENSES> 5,492
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31
<INCOME-PRETAX> 8,823
<INCOME-TAX> 3,176
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,647
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
