<PAGE> 1
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 September 30, 1998
[ ] 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 0-25936
USDATA Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 75-2405152
- --------------------------------------------------------------------------------
(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: (972) 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 October 31, 1998:
Class Number of Shares
Outstanding
Common Stock, Par Value $.01 Per Share 11,237,366 shares
<PAGE> 2
USDATA CORPORATION
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at
September 30, 1998 and December 31,
1997 3
Consolidated Statements of Operations
for the Three and Nine Months Ended
September 30, 1998 and 1997 4
Consolidated Statements of Cash Flows
for the Nine Months Ended
September 30, 1998 and 1997 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 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Computation of Per Share Earnings 14
</TABLE>
2
<PAGE> 3
USDATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1998 1997
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,396 $ 5,204
Accounts receivable, net of allowance for doubtful
accounts of $869 and $1,158, respectively 4,210 4,573
Deferred income taxes 2,672 2,345
Other current assets 662 436
--------------- ---------------
Total current assets 9,940 12,558
--------------- ---------------
Property and equipment, net 3,348 2,416
Capitalized computer software development costs,
net of accumulated amortization of $2,521
and $2,161, respectively 3,813 1,938
Other assets 119 90
Net assets of discontinued operations -- 2,252
--------------- ---------------
Total assets $ 17,220 $ 19,254
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,257 $ 952
Deferred revenue 1,129 1,257
Accrued compensation and benefits 861 955
Other accrued liabilities 2,987 1,488
--------------- ---------------
Total current liabilities 6,234 4,652
--------------- ---------------
Deferred income taxes 621 729
Net liabilities of discontinued operations 60 --
--------------- ---------------
Total liabilities 6,915 5,381
--------------- ---------------
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value, 2,200,000 shares
authorized; none issued or outstanding -- --
Common stock, $.01 par value, 22,000,000 shares
authorized; 14,343,550 issued in 1998 and 1997 143 143
Additional paid-in capital 16,534 16,365
Retained earnings 4,557 8,919
Treasury stock at cost, 3,106,184 shares in 1998
and 3,321,894 shares in 1997 (10,929) (11,554)
--------------- ---------------
Total stockholders' equity 10,305 13,873
--------------- ---------------
Total liabilities and stockholders' equity $ 17,220 $ 19,254
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
USDATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 4,890 $ 4,844 $ 16,336 $ 16,269
Cost of sales 221 510 942 1,546
----------- ----------- ----------- -----------
Gross profit 4,669 4,334 15,394 14,723
----------- ----------- ----------- -----------
Operating expenses:
Selling 4,432 3,755 12,118 12,060
Product development 814 871 2,359 2,817
General and administrative 1,320 1,861 3,691 4,526
----------- ----------- ----------- -----------
Total operating expenses 6,566 6,487 18,168 19,403
----------- ----------- ----------- -----------
Loss from operations (1,897) (2,153) (2,774) (4,680)
Interest income 53 46 167 214
----------- ----------- ----------- -----------
Loss from continuing operations before income taxes (1,844) (2,107) (2,607) (4,466)
Income tax (provision) benefit -- 716 (36) 1,518
----------- ----------- ----------- -----------
Loss from continuing operations (1,844) (1,391) (2,643) (2,948)
----------- ----------- ----------- -----------
Discontinued operations:
Income (loss) from discontinued Systems Operations
(net of income taxes of $28 and $88 in 1997) -- 53 (219) 171
Estimated loss on disposal of discontinued Systems Operations,
including provision for operating losses of $250 -- -- (1,500) --
----------- ----------- ----------- -----------
Income (loss) from discontinued operations -- 53 (1,719) 171
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net loss $ (1,844) $ (1,338) $ (4,362) $ (2,777)
=========== =========== =========== ===========
Net earnings (loss) per common share (Basic & Dilutive):
Continuing operations $ (0.16) $ (0.13) $ (0.24) (0.27)
Discontinued operations -- 0.01 (0.15) 0.02
----------- ----------- ----------- -----------
Net loss $ (0.16) $ (0.12) $ (0.39) $ (0.25)
=========== =========== =========== ===========
Weighted average common shares outstanding 11,233 10,852 11,182 11,105
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
USDATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
(IN THOUSANDS) 1998 1997
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss from continuing operations $ (2,643) $ (2,948)
Adjustments to reconcile net loss from continuing operations to ------------- ---------------
net cash used in continuing operations:
Depreciation and amortization 1,156 1,200
Changes in assets and liabilities:
Accounts receivable 363 1,597
Income tax receivable -- 1,050
Deferred income taxes -- (1,736)
Accounts payable and accrued liabilities 795 591
Deferred revenue (128) (401)
Other - net (187) 289
------------ ------------
Net cash used in continuing operations (644) (358)
------------ ------------
Cash flows from investing activities:
Capital expenditures (615) (844)
Purchase of MES software (400) --
Capitalized software development costs (2,234) (1,422)
------------ ------------
Net cash used in investing activities (3,249) (2,266)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common shares 794 193
Payments on capital lease obligations -- (52)
------------ ------------
Net cash provided by financing activities 794 141
------------ ------------
Cash flows from discontinued operations 291 419
------------ ------------
Net decrease in cash and cash equivalents (2,808) (2,064)
Cash and cash equivalents, beginning of period 5,204 6,398
------------ ------------
Cash and cash equivalents, end of period $ 2,396 $ 4,334
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
USDATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) 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 consolidated
financial statements and notes thereto contained in the Company's Form 10-K for
the year ended December 31, 1997.
In the opinion of management, all 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.
(2) MES SOFTWARE PRODUCT
Effective January 12, 1998, the Company entered into an agreement to
purchase a Manufacturing Execution Systems ("MES") software product, for
$400,000 cash and 165,000 shares of the Company's common stock for $.01 per
share. The common stock is expected to be issued in 1998 and will be restricted
from sale. Restrictions on the sale of the stock will lapse upon the achievement
of certain performance factors and time. The Company recorded $782,000 in
accrued liabilities at September 30, 1998, which reflects the value of the stock
to be issued based upon the closing price of the Company's common stock on
January 12, 1998. The total purchase price of $1,182,000 is included in property
and equipment at September 30, 1998. The Company made its first production
shipment of this product at the end of third quarter 1998.
(3) DISCONTINUED OPERATIONS
Effective July 1, 1998, the Company sold its Auto ID hardware
integration and servicing business. In conjunction therewith, during the first
quarter of 1998, the Company reported a loss of $1,250,000 related to the
disposal thereof and $469,000 related to operations through the date of
disposal.
(4) RECENT ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted pronouncements issued by
the Financial Accounting Standards Board ("FASB") relating to the presentation
and disclosure of information related to comprehensive income (SFAS 130),
segment data (SFAS 131) and pensions and other postretirement benefits (SFAS
132). The adoption of these provisions did not have a material effect on the
Company's financial position or results of operations for the first nine months
of 1998 and the Company does not anticipate it will have a material impact in
the future, but may change the presentation of certain of the Company's
financial statements and related notes and data thereto.
Also, effective January 1, 1998, the Company adopted a Statement of
Position (SOP) on software revenue recognition (SOP 97-2) issued by the
Accounting Standards Executive Committee of the American Institute of Certified
Public Accountants that supersedes SOP 91-1. The adoption of SOP 97-2 did not
have a material effect on the Company's financial position or results of
operations for the first nine months of 1998 and the Company does not anticipate
it will have a material impact in the future.
(5) SUBSEQUENT EVENT
Subsequent to September 30, 1998 the Company received approximately
$1,500,000 in tax refunds related to filing its 1997 income tax return. The tax
refunds were generated from the carryback of 1997 operating losses to profitable
years.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
USDATA Corporation (the "Company") is a global supplier of real-time
manufacturing application development software that enables information
integration, decision support and supervisory control throughout the
manufacturing enterprise ("Software Operations"). The Company's client/server
products help automate manufacturing and process control, allowing customers to
reduce operating costs, shorten cycle times, and improve product quality. The
Company provides this knowledge through software products and services and
delivers it through a community of business partners. The Company brings nearly
a quarter-century of expertise in manufacturing performance improvement to its
partners and end-users.
USDATA is committed to solving customer problems and increasing
productivity on the manufacturing floor through technological innovation. The
Company's products are noted for high-performance, ease-of-use and support of
enterprise computing environments. The Company's customers are in a wide variety
of industries, including chemical, oil and gas, food, beverage, automotive,
aerospace, telecom, electronics, transportation and other industries.
The Company's family of software products, marketed under the names of
FactoryLink ECS(R) and Xfactory(R) provide a powerful set of software tools and
applications designed for users who are technically competent but who may not be
experienced software programmers.
The Company develops, markets and supports FactoryLink ECS software
products for customers requiring enterprise-wide, open systems solutions for
supervising, monitoring and controlling manufacturing and production processes.
These software products enable customers to develop real-time client/server
computer applications that provide interactive, dynamic and graphical interfaces
to a manufacturing and production processes. These applications collect, connect
and communicate information about an automated manufacturing process, typically
drawn from complex operating sources or from multiple sites throughout an
enterprise, and enable the user to interact with and control plant-wide
processes. The real-time information provided by the Company's products enables
customers to reduce operating costs, improve product quality and increase
overall throughput and productivity.
In mid-1998 the company introduced its newest software product,
Xfactory, a manufacturing execution software (MES) product which incorporates
Microsoft's newest technologies and is built on Microsoft's DNA (Distributed
interNet Applications) architecture. Xfactory enables manufacturing plants to
more easily and quickly automate their production processes and is the first
visual object modeling MES. Xfactory bridges the gap between the plant floor and
ERP (Enterprise Resource Planning) systems. The Company develops markets and
supports Xfactory software products for customers requiring enterprise-wide,
open systems solutions for production management and leveraging business and
planning (ERP) systems. The Xfactory software product enables customers to
develop versatile and flexible MES applications for production management,
product tracking, product scheduling, and genealogy tracking for manufacturing
and production processes. The information provided by the Company's products
enables customers to reduce operating costs, improve product quality and
increase overall throughput and productivity. The Company made its initial
production shipment of Xfactory at the end of the third quarter 1998 and
believes this product has significant growth potential beginning in the fourth
quarter 1998 and throughout 1999.
Effective July 1, 1998, the Company sold its Auto ID hardware
integration and servicing business ("Systems Operations"). In conjunction
therewith, during the first quarter of 1998, the Company reported a loss of
$1,250,000 related to the disposal thereof and $469,000 related to operations
through the date of disposal. As a result of this action, the Company's revenues
and operating expenses for the periods presented herein reflect only the
Software Operations with the net results of the Systems Operations reported on
its statements of operations under the caption Discontinued operations.
7
<PAGE> 8
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
statement of operations data as a percentage of net sales:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 4.5% 10.5% 5.8% 9.5%
----------- ----------- ----------- -----------
Gross profit 95.5% 89.5% 94.2% 90.5%
----------- ----------- ----------- -----------
Operating expenses:
Selling 90.6% 77.5% 74.2% 74.1%
Product development 16.6% 18.0% 14.4% 17.3%
General and administrative 27.0% 38.4% 22.6% 27.8%
----------- ----------- ----------- -----------
Total operating expenses 134.3% 133.9% 111.2% 119.3%
----------- ----------- ----------- -----------
Loss from operations (38.8)% (44.4)% (17.0)% (28.8)%
Interest income 1.1% 0.9% 1.0% 1.3%
----------- ----------- ----------- -----------
Loss from continuing operations before income taxes (37.7)% (43.5)% (16.0)% (27.5)%
Income tax (provision) benefit 0.0% 14.8% (0.2)% 9.3%
----------- ----------- ----------- -----------
Loss from continuing operations (37.7)% (28.7)% (16.2)% (18.1)%
----------- ----------- ----------- -----------
Discontinued operations:
Income (loss) from discontinued Systems Operations 0.0% 1.1% (1.3)% 1.1%
Estimated loss on disposal of discontinued System Operations 0.0% 0.0% (9.2)% 0.0%
----------- ----------- ----------- -----------
Income (loss) from discontinued operations 0.0% 1.1% (10.5)% 1.1%
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net loss (37.7)% (27.6)% (26.7)% (17.1)%
----------- ----------- ----------- -----------
</TABLE>
Comparison of Three Months Ended September 30, 1998 and 1997
Net sales for the quarter ended September 30, 1998 increased slightly
compared to 1997 primarily due to higher software product sales and support and
service revenues, partially offset by lower consulting revenues. Support and
service revenue represented 16.5%, and 14.3% of Software Operations' net sales
during the three months ended September 30, 1998 and 1997, respectively.
Cost of sales, as a percentage of net sales, decreased primarily due to
the replacement of printed product documentation with CD based product
documentation. In addition, the three months ended September 30, 1998 did not
include any amortization of computer software development costs, as all
development costs, except development costs related to future unreleased
products, were fully amortized as of June 30, 1998.
Selling expenses increased compared to the third quarter of 1997
primarily due to increased marketing expenses designed to promote and pull
product through the Company's sales channel.
8
<PAGE> 9
Product development expenses decreased slightly as a result of lower
personnel costs partially offset by increased outside development expenses.
Product development expenses are net of capitalized development costs of
$765,000 and $840,000, for 1998 and 1997, respectively, related to the Company's
next major FactoryLink ECS version. The Company expects to continue capitalizing
these development costs throughout 1998.
General and administrative expenses for 1998 decreased compared to 1997
primarily as a result of lower provisions for doubtful accounts, due to
improvements in the overall quality of the Company's accounts receivable
balance, and lower consultant fees.
During the third quarter of 1997, the Company recorded a deferred
income tax benefit based on its ability to carryback losses to prior profitable
periods. There are no loss carrybacks available in 1998.
Comparison of Nine Months Ended September 30, 1998 and 1997
Net sales for the nine months ended September 30, 1998 increased
slightly compared to the same period in 1997, primarily due to increased
software product sales and customer support revenues partially offset by a
decrease in consulting and training revenues.
Cost of sales as a percentage of net sales decreased primarily due to
the replacement of printed product documentation with CD based product
documentation as well as decreased amortization of capitalized software
development costs.
Total selling expenses for the nine months ended September 30, 1998
remained relatively flat compared to the same period in 1997, however the
composition of total selling expenses between these periods included increased
marketing and customer support expenses offset by a decrease in distribution
expenses. The decrease in distribution expenses is primarily a result of cost
reductions, due to organizational changes, reflecting the Company's transition
from a direct sales model to an indirect, channel based distribution model.
Product development expenses decreased slightly as a result of lower
personnel costs partially offset by increased outside development expenses.
Product development expenses are net of capitalized development costs of
$2,234,000 and $1,424,000, for 1998 and 1997, respectively.
General and administrative expenses for 1998 decreased compared to 1997
primarily as a result of lower provisions for doubtful accounts, due to
improvements in the overall quality of the Company's accounts receivable
balance, and lower consultant fees.
During the third quarter of 1997, the Company recorded a deferred
income tax benefit based on its ability to carryback losses to prior profitable
periods. There are no loss carrybacks available in 1998. Income tax expense for
1998 is related to state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities used $644,000 of cash during the
nine months ended September 30, 1998. During the nine months ended September 30,
1998, the Company invested $615,000 in capital equipment, primarily computers,
$400,000 for the purchase of an MES software product and capitalized $2,234,000
in software development costs. The Company also received $794,000 of proceeds
related to the exercise of stock options. Total cash usage for the first nine
months of 1998 was $2,808,000. Subsequent to September 30, 1998, the Company
received income tax refunds of approximately $1,500,000 related to the carryback
of 1997 operating losses to profitable years.
The Company believes cash on hand and cash generated from operations
will be sufficient to satisfy its operating cash needs into the future. The
Company is in the process of establishing a new credit facility which
9
<PAGE> 10
could be used to fund operating and capital requirements should the business
expand more rapidly than expected. In addition, the Company could consider
seeking additional public or private debt or equity financing to fund future
growth opportunities or acquisitions although there is no assurance that such
debt or financing will be available.
IMPACT OF YEAR 2000 ISSUES
The Company is currently addressing the Year 2000 ("Y2K") issue, which
results from the fact that many computer programs were previously written using
two digits rather than four to define the applicable year. Programs written in
this way may recognize a date ending in "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruptions of operations.
The Company's integrated business software, which provides order
processing, sales administration, accounts receivable, accounts payable and
general ledger systems, is not currently Y2K compliant. During the first quarter
of 1999, the Company plans on upgrading to the most recent version of the
software, which is Y2K compliant. Thereafter, the Company is planning on
conducting transaction based testing to confirm the system's ability to handle
transactions related to the Y2K. The Company has not estimated the cost of
completing this upgrade, but currently believes it will not be material.
The Company has recently upgraded to a new internal network server,
both hardware and software, which are both Y2K compliant. Outside of its
integrated business software applications, the Company has very few systems that
are interfaced together and therefore believes that its exposure is relatively
low that a Y2K problem with any one system or application can adversely impact
the entire IT environment.
For primarily operational purposes, the Company has been upgrading PCs
and individual applications running thereon throughout 1998 and 1997. The
upgraded PCs and application software are Y2K compliant and the Company believes
it has minimal exposure to any business interruption from out-of-date PC's,
network equipment or related software. In addition, the Company has a backup
process in place under which data from individual PCs are backed up to an IT
controlled server. Therefore, if any one application does not function due to
Y2K issues, the data can easily be moved to another desktop station that is Y2K
compliant. Additionally, during 1998 the Company conducted an inventory of PC's
and network equipment to determine which of those might need to be replaced
because of Y2K related issues.
The Company's primary products are manufacturing related software. The
Company has established a process for testing and certifying these software
products for Y2K compliance. During 1998, the Company released a Y2K compliant
version of FactoryLink ECS for all major platforms supported by the Company. The
Company has used and plans on continuing to use its own internal development and
support resources to test and remediate its product software for Y2K compliance.
All new products of the Company, introduced in 1998, are Y2K compliant.
The Company has also established a special section on its World Wide
Web site devoted to Y2K compliance. The site clearly indicates what the Company
means when it states a product is Y2K compliant, which specific products are Y2K
compliant and what the upgrade path is, if required, to bring older versions of
its products up to Y2K compliance. Customers who are covered under the Company's
service and support agreements are eligible to receive Y2K versions of the
Company's products at no additional cost. The Company has instituted specific
marketing and pricing programs to identify and assist customers who are not
covered under the Company's service and support agreements in upgrading to Y2K
compliant versions of its software products. Additionally, the Company has added
specific language to its standard product warranty addressing Y2K. The Company
has not nor does it anticipate obtaining any insurance coverage for Y2K
problems.
To date, the Company has not incurred any material expense directly
related to Y2K compliance for its internal IT and non-IT computer systems.
Activities and expenses associated with conversion to new or upgraded systems
have been driven primarily by operational considerations. The Company plans to
use its internal resources to address any Y2K compliance issues which are
currently planned or may yet arise. The Company has not separately tracked these
types of expense, but does not currently believe they have been or will be
material.
10
<PAGE> 11
The Company has incurred costs in terms of time spent on research,
modification, testing and remediation for its manufacturing related software
products but has not determined the magnitude of such costs to date. Additional
internal resources will be utilized during 1999 however, the Company does not
currently expect such expenses to be material to the its financial position or
results of operations.
The Company does not currently believe it is dependent on any
significant suppliers for which there may be Y2K compliant issues. Services such
as banking and insurance are conducted with companies that either are or will be
Y2K compliant.
FORWARD LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this report, including without
limitation, certain statements in this Item 2 under the captions "Results of
Operations" and "Liquidity and Capital Resources" may constitute forward looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to be correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("cautionary
statements") are disclosed in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by these cautionary statements.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits (filed as part of this report).
Number Description
------ -----------
11.1 Computation of Per Share Earnings
27.1 Financial Data Schedule
(Edgar Version Only)
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the
Registrant during the quarter ended September 30,
1998
12
<PAGE> 13
USDATA CORPORATION AND SUBSIDIARIES
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: November 16, 1998 /s/ Robert A. Merry
-------------------------------------------
Robert A. Merry
President and Chief Executive Officer
Date: November 16, 1998 /s/ Robert L. Drury
-------------------------------------------
Robert L. Drury
Vice President Finance, Chief Financial
Officer
Treasurer and Secretary (Principal
Financial and Accounting Officer)
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
11.1 Computation of Per Share Earnings
27.1 Financial Data Schedule
(Edgar Version Only)
</TABLE>
<PAGE> 1
EXHIBIT 11.1 - COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
(IN THOUSANDS, EXPECT PER SHARE DATA) 1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net earnings (loss):
Continuing operations $ (1,844) $ (1,391) $ (2,643) $ (2,948)
Discontinued operations -- 53 (1,719) 171
----------- ----------- ----------- -----------
Net loss $ (1,844) $ (1,338) $ (4,362) $ (2,777)
=========== =========== =========== ===========
Weighted average common shares outstanding 11,233 10,852 11,182 11,105
Common share equivalents -- -- -- --
----------- ----------- ----------- -----------
Weighted average common shares and common share
equivalents (if dilutive) outstanding 11,233 10,852 11,182 11,105
=========== =========== =========== ===========
Net earnings (loss) per common share (Basic & Dilutive)
Continuing operations $ (0.16) $ (0.13) $ (0.24) $ (0.27)
Discontinued operations -- 0.01 (0.15) 0.02
----------- ----------- ----------- -----------
Net loss $ (0.16) $ (0.12) $ (0.39) $ (0.25)
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,396
<SECURITIES> 0
<RECEIVABLES> 5,079
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0
0
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</TABLE>
