<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q/A
AMENDMENT NO. 1
Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996 Commission File Number 0-25936
USDATA Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 75-2405150
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2435 N Central Expressway, Richardson, TX, 75080
- - --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (214) 680-9700
------------------------------
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 twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such 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 April 30, 1996
Class Number of Shares
Outstanding
Common Stock, Par Value $.01 Per Share 11,021,354 shares
Note: This is Page 1 of a document consisting of 13 pages.
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USDATA CORPORATION
FORM 10-Q/A
AMENDMENT NO. 1
QUARTER ENDED MARCH 31, 1996
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at
March 31, 1996 and December 31,
1995 3
Consolidated Statements of Income
for the Three Months Ended
March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows
for the Three Months Ended
March 31, 1996 and 1995 5
Notes to Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7
PART II. OTHER INFORMATION
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
2
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USDATA CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 9,322 $ 1,504
Notes receivable from related party - 7,040
Accounts receivable, net of allowance for
doubtful accounts of $480 and $467,
respectively 8,400 9,203
Inventories 2,087 2,122
Deferred income 267 267
taxes
Other current assets 854 706
--------- ----------
Total current assets 20,930 20,842
--------- ----------
Property and equipment, net 2,449 2,099
Other assets 732 555
Total assets $ 24,111 $ 23,496
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,802 $ 2,115
Deferred revenue 2,267 2,136
Accrued compensation and benefits 737 1,185
Accrued income taxes 252 -
Other accrued liabilities 979 605
Current portion of capital lease obligations 37 52
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Total current liabilities 6,074 6,093
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Capital lease obligations, less current portion 72 72
Stockholders' equity
Preferred stock, par value, 2,200,000 shares
authorized; none issued or outstanding - -
Common stock, $.01 par value, 22,000,000 shares
authorized; 14,343,550 shares issued 143 143
Additional paid-in capital 16,259 16,306
Subscription receivable from officer (1,039) (1,021)
Retained earnings 14,040 13,665
Treasury stock, 3,335,321 and 3,450,484
shares at cost, respectively (11,438) (11,762)
-------- ----------
Total stockholders' equity 17,965 17,331
-------- ----------
Total liabilities and stockholders' equity $ 24,111 $ 23,496
======== ==========
</TABLE>
3
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USDATA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT INCOME PER COMMON SHARE DATA)
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<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
------------------
<S> <C> <C>
Net sales
Software $ 6,912 $ 6,094
Systems 4,089 4,272
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Total sales 11,001 10,366
Cost of sales 2,741 2,705
------------------
Gross profit 8,260 7,661
Operating expenses
Selling 5,550 4,460
Product development 1,224 1,229
General and administrative 1,031 1,025
------------------
Total operating expenses 7,805 6,714
------------------
Income from operations 455 947
Interest income (expense) 120 (61)
------------------
In come before income taxes 575 886
Income tax provision (200) (300)
------------------
Net income $ 375 $ 586
==================
Income per common share $0.03 $0.07
==================
Weighted average number of shares outstanding 12,424 8,443
==================
</TABLE>
4
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USDATA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 375 $ 586
Adjustments to reconcile net income to cash flow
from operating activities:
Depreciation and amortization 313 245
Changes in operating assets and liabilities:
Accounts receivable 803 (103)
Inventories 35 (19)
Accounts payable (313) 183
Deferred revenue 131 101
Accrued income taxes 252 40
Other - net (272) 119
----------------------------
Net cash provided by operating activities 1,324 1,152
----------------------------
Cash flows from investing activities:
Capital expenditures (619) (290)
Related party note receivable 7,040 -
Capitalized software development costs (190) (80)
----------------------------
Net cash provided by (used in) in
vesting activities 6,231 (370)
----------------------------
Cash flow from financing activities:
Payments on long-term debt - (1,050)
Proceeds from issuance of common shares 278 51
Payments on capital lease obligations (15) (23)
----------------------------
Net cash provided by (used in)
financing activities 263 (1,022)
----------------------------
Net increase (decrease) in cash and
cash equivalents 7,818 (240)
Cash and cash equivalents, beginning of period 1,504 939
----------------------------
Cash and cash equivalents, end of period $9,322 $ 699
============================
</TABLE>
5
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USDATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(A) BASIS OF PRESENTATION
---------------------
The accompanying unaudited interim consolidated financial statements
were prepared in accordance with generally accepted accounting principles for
interim financial statements. These financial statements do not include all
disclosures associated with annual financial statements. Accordingly, these
statements should be read in conjunction with the Company's financial statements
and notes thereto contained in the Company's Form 10-K for the year ended
December 31, 1995.
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 for all periods presented have been made.
Interim results are not necessarily indicative of results expected for the full
year.
(B) EARNINGS PER SHARE
-------------------
Earnings per common share were computed by dividing net income by the
weighted average number of shares outstanding during each period. Weighted
average common and common equivalent shares include common shares, stock options
and warrants using the treasury method.
Stock options and warrants granted with exercise prices below the
initial offering price during the twelve-month period preceding the initial
filing date of the offering have been included in the calculation of common
stock equivalents using the treasury stock method, assuming an offering price of
$5.00 per share, as if they were outstanding for all periods presented.
(C) RELATED PARTY TRANSACTIONS
--------------------------
Effective January 1, 1996, the Company and Safeguard Scientifics, Inc.
("Safeguard"), a stockholder of the Company, renewed an administrative services
agreement whereby Safeguard provides the Company with day-to-day business and
organizational strategy, legal, financial, investment management, merchant and
investment banking services. The agreement provides for the payment of an
administrative services fee of $30,000 per month and will expire on December 31,
1996, and will be renewable for one year terms thereafter by mutual agreement
between the parties.
In August 1995, Safeguard and the Company entered into an agreement
whereby the Company would lend to Safeguard a portion of its excess cash and
receive a negotiated interest rate which was higher than the rate the Company
might realize by independently investing the funds, but which was less than
Safeguard's cost of funds. The loan was fully repaid to the Company on March
8, 1996.
6
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USDATA CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
- - --------
USDATA Corporation (the "Company") provides a wide range of software
components, hardware systems and services, design, consulting, and maintenance
support used by its customers to improve the overall productivity of their
businesses and to monitor their automated processes. Specifically, the Company
produces automation software tools, marketed under the name FactoryLink(R), that
enable an organization's information systems to supervise, monitor and control
manufacturing and other automated processes and to interface with management
information systems (the "Software Operations"). The Company is also engaged in
the sale of automatic identification (auto ID) equipment, distributed management
software and related integration services that allow remote, real-time data
collection using a variety of automatic identification techniques (the "Systems
Operations").
The Company currently derives all of its net sales from the Software
Operations and the Systems Operations. The Software Operations' net sales are
generated substantially from licenses of the FactoryLink family of products and
also from related integration services, training classes and customer support
and service agreements, which are generally one-year, renewable contracts
entitling a customer to certain software upgrades and technical support.
Support and service revenue represented 11.3% and 10.5% of Software Operations'
net sales during the quarters ended March 31, 1996 and March 31, 1995,
respectively. The System Operations' net sales are generated from sales of
third-party automated data collection equipment and related repair and
integration services.
In late 1994, the Company determined that in order to increase
awareness of its products, to accelerate growth, to obtain a larger share of a
rapidly growing market and to position the Company for future revenue growth, it
should substantially increase expenditures on sales, marketing and product
development. The Company increased spending in these areas throughout 1995 and
into the first quarter of 1996. As a result of these significant expenditures,
which include expenditures for the development and rollout of the Company's most
recent version of its FactoryLink software, FactoryLink-Enterprise Control
System (ECS), earnings for the quarter ended March 31, 1996, were slightly lower
than the comparable period in 1995, even though the Company had a 6.1% increase
in revenue.
In the first quarter of 1996, the Company released FactoryLink ECS for
PC platforms and expects to release the product on UNIX platforms during the
second quarter of 1996. FactoryLink ECS represents a significant upgrade of
FactoryLink that adds important additional features, power and "ease of use" to
the Company's products. Consequently, the Company expects that net sales from
Software Operations will increase during 1996, and, as the Company's Software
Operations generally carry a higher gross profit margin than Systems Operations,
that its gross profit margins will improve. These statements are forward-looking
statements and may be adversely affected by a number of factors including market
acceptance of the new product, actions by the Company's competitors (e.g. price
decreases, new product introductions), the effectiveness of the Company's sales
and marketing efforts and the efficiency of the Company's distribution channels.
7
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USDATA CORPORATION
RESULTS OF OPERATIONS
- - ---------------------
The following table sets forth the periods indicated selected statements of
income data as a percentage of net sales:
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1996 1995
----------------
<S> <C> <C>
Net sales
Software 62.8% 58.8%
Systems 37.2 41.2
---------------
Total sales 100.0 100.0
Cost of sales 24.9 26.1
---------------
Gross profit 75.1 73.9
Operating expenses
Selling 50.4 43.0
Product development 11.1 11.9
General and administrative 9.4 9.9
---------------
Total operating expenses 70.9 64.8
---------------
Income from operations 4.2 9.1
Interest income (expense) 1.1 (0.6)
---------------
Income before income taxes 5.3% 8.5%
===============
</TABLE>
Net sales for the quarter ended March 31, 1996 increased 6.1%
compared to the same period in 1995. Software Operations' net sales for the
quarter ended March 31, 1996 increased 13.4% compared to the same period in
1995. The increase is primarily a result of international sales growth,
increased sales leads from marketing and trade show activity, larger average
sales prices and the increased activity of new sales personnel. International
sales represented 49.8% of Software Operations' sales for the quarter ended
March 31, 1996, as compared to 47.3% the same quarter last year. Systems
Operations' net sales for the quarter ended March 31, 1996 decreased 4.3%
compared to the same period in 1995 reflecting primarily a slowdown in the
overall hardware reseller industry and the turnover of sales personnel in the
quarter.
Gross profit as a percentage of net sales for the quarter ended March
31, 1996 improved to 75.1% compared to 73.9% in the comparable quarter of
1995. This is primarily due to the increased sales of the Company's software
products which carry higher gross profit margins than System Operations.
8
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USDATA CORPORATION
Selling expenses increased to 50.4% of net sales for the quarter ended
March 31, 1996 compared to 43.0% in the comparable period in 1995. This
increase is a result of the Company's expenditures in sales seminars to promote
FactoryLink ECS, advertising, international and domestic trade shows, sales
collateral material, demonstration CD's, sales videos, travel and training
expenses for new salespeople.
As a percent of net sales, product development expenses for the
quarter ended March 31, 1996 of 11.1% were slightly below the comparable period
of 1995, at 11.9% primarily as a result of increased net sales.
General and administrative expenses decreased to 9.4% of net sales for the
quarter ended March 31, 1996 compared to 9.9% in the comparable period in 1995,
as the Company leveraged its existing infrastructure to support the higher
sales.
The Company's interest income in 1996 is a result of investing the
proceeds of its public offering in July 1995. Interest expense in 1995 was a
result of a bank term loan which was paid off with the proceeds of the Company's
public offering.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
The Company's operating activities generated $1.3 million of cash
during the quarter ended March 31, 1996, primarily a result of a decrease in
outstanding accounts receivable. The Company's accounts receivable balance was
higher at the end of 1995 as a result of strong year-end sales volumes.
Management anticipates that capital expenditures for 1996 will be higher than
1995 due to computer system upgrades in the product development area and the
expansion of the corporate computer system and database. The outstanding
principal balance plus accrued interest due to the Company from Safeguard was
repaid in the first quarter of 1996.
The Company believes cash on hand and cash generated from operations
together with the existing bank line of credit will be sufficient to satisfy its
operating cash needs in 1996. In addition, the Company could consider seeking
additional public or private debt or equity financing or increased bank credit
lines to fund future growth opportunities.
9
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USDATA CORPORATION
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
As previously announced, the Company entered into a new master cooperation
agreement with long-term partner AEG Schneider Automation ("ASA") during the
first quarter of 1996. Under this agreement, ASA is expected to expand its
purchase and resale of the Company's FactoryLink product. Although the new
agreement will not obligate ASA to meet any minimum purchase requirements, ASA
will be entitled to certain volume discounts and other rights if it meets the
sales targets specified in the agreement. ASA will begin purchasing products
under the new agreement once the terms and conditions of certain significant
subagreements are finalized, which is expected to be during the second quarter
of 1996. ASA and its predecessors have been purchasing products from the Company
since 1989 and, for the year ended December 31, 1995, accounted for $1,833,000
or approximately 4% of total net sales. Purchases by ASA under the new agreement
are not expected to exceed 10% of total net sales.
ITEM 6. EXHIBITS
(a) Exhibits (filed as part of this report).
Number Description
11 Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant
during the quarter ended March 31, 1996.
10
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USDATA CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on behalf by the undersigned
thereunto duly authorized.
USDATA CORPORATION, INC.
Date: May 14, 1996 /s/ William G. Moore, Jr.
------------------------------------------
William G. Moore, Jr.
President and Chief Executive Officer
Date: May 14, 1996 /s/ P. Michael Sullivan
------------------------------------------
P. Michael Sullivan
Vice President of Finance, Chief Financial
Officer, Treasurer and Secretary (Principal
Financial and Principal Accounting Officer)
11
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EXHIBIT 11
USDATA CORPORATION
COMPUTATION OF INCOME PER COMMON SHARE
(in thousands, except income per common share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
Net income $ 375 $ 586
=============== ===============
Average common shares outstanding 10,961 7,644
Average common share equivalents 1,463 799
--------------- ---------------
Average number of common shares and
common share equivalents outstanding 12,424 8,443
=============== ===============
Income per common share $ 0.03 $ 0.07
=============== ===============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING MARCH 31, 1996
(UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 9,322
<SECURITIES> 0
<RECEIVABLES> 8,400
<ALLOWANCES> 480
<INVENTORY> 2,087
<CURRENT-ASSETS> 854
<PP&E> 6,561
<DEPRECIATION> 4,112
<TOTAL-ASSETS> 24,111
<CURRENT-LIABILITIES> 6,074
<BONDS> 0
0
0
<COMMON> 143
<OTHER-SE> 17,822
<TOTAL-LIABILITY-AND-EQUITY> 24,111
<SALES> 11,001
<TOTAL-REVENUES> 11,001
<CGS> 2,741
<TOTAL-COSTS> 7,805
<OTHER-EXPENSES> 120
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 575
<INCOME-TAX> (200)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 375
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
