================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 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 00-26810
LOGIC WORKS, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2663477
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
University Square at Princeton
111 Campus Drive
Princeton, NJ 08540
(Address and zip code of principal executive offices)
(609) 514-1177
(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[ } .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 11,640,000 common stock shares
outstanding at November 5, 1996.
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<PAGE>
LOGIC WORKS, INC.
Table of Contents
PART I. FINANCIAL INFORMATION Page
- ------- --------------------- ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 1996 and
December 31, 1995 .............................................. 3
Condensed Consolidated Statements of Operations for the Three and
Nine Months Ended September 30, 1996 and 1995 .................. 4
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995 .............................. 5
Notes to Condensed Consolidated Financial Statements ........... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .......................................... 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .............................................. 12
Item 2. Changes in Securities........................................... 12
Item 3. Defaults Upon Senior Securities ............................... 12
Item 4. Submission of Matters to a Vote of Security Holders............ 12
Item 5. Other
Information.................................................... 12
Item 6. Exhibits and Reports on Form 8-K............................... 12
Signatures .................................................... 13
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LOGIC WORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
(unaudited) (audited)
---------------------------
Assets
Current Assets
Cash and cash equivalents $19,415,000 $19,629,000
Marketable securities 7,241,000 10,217,000
Accounts receivable 11,575,000 7,988,000
Other current assets 2,560,000 2,309,000
---------------------------
Total current assets 40,791,000 40,143,000
Property and equipment, net 5,368,000 2,289,000
Other assets 2,466,000 884,000
---------------------------
Total assets $48,625,000 $43,316,000
===========================
Liabilities and stockholders' equity
Current Liabilities
Accounts payable $ 1,716,000 $ 2,583,000
Accrued compensation 1,760,000 1,207,000
Deferred revenue 4,320,000 3,081,000
Income taxes payable -- 1,244,000
Payable for acquisition 1,500,000 --
Other current liabilities 2,119,000 1,452,000
---------------------------
Total current liabilities 11,415,000 9,567,000
Long-term liabilities 232,000 232,000
Total stockholders' equity 36,978,000 33,517,000
---------------------------
Total liabilities and stockholders'
equity $48,625,000 $43,316,000
===========================
See notes to condensed consolidated financial statements.
3
<PAGE>
LOGIC WORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues
License fees $ 8,127,000 $ 7,046,000 $ 24,769,000 $ 18,010,000
Service fees 2,382,000 1,324,000 6,682,000 3,445,000
------------ ------------ ------------ ------------
Total revenues 10,509,000 8,370,000 31,451,000 21,455,000
Cost of revenues
Cost of license fees 617,000 751,000 1,604,000 1,715,000
Cost of service fees 871,000 559,000 2,863,000 1,851,000
------------ ------------ ------------ ------------
Total cost of revenues 1,488,000 1,310,000 4,467,000 3,566,000
Gross margin 9,021,000 7,060,000 26,984,000 17,889,000
Operating expenses
Sales and marketing 6,840,000 4,459,000 18,032,000 11,703,000
Research and development 1,594,000 1,034,000 4,196,000 2,782,000
Acquired in process research and
development 995,000 -- 995,000 --
General and administrative 1,703,000 881,000 4,424,000 2,181,000
------------ ------------ ------------ ------------
Total operating expenses 11,132,000 6,374,000 27,647,000 16,666,000
Operating income (loss) (2,111,000) 686,000 (663,000) 1,223,000
Other income and (expense), net 255,000 (51,000) 749,000 (75,000)
------------ ------------ ------------ ------------
Income (loss) before income taxes (1,856,000) 635,000 86,000 1,148,000
Income tax provision (benefit) (557,000) 241,000 202,000 436,000
------------ ------------ ------------ ------------
Net income (loss) $ (1,299,000) $ 394,000 $ (116,000) $ 712,000
============ ============ ============ ============
Primary earnings (loss) per share $ (0.11) $ 0.05 $ (0.01) $ 0.09
============ ============ ============ ============
Fully diluted earnings (loss) per share $ (0.11) $ 0.04 $ (0.01) $ 0.07
============ ============ ============ ============
Weighted average shares outstanding:
Primary 11,386,000 7,749,000 11,386,000 7,662,000
============ ============ ============ ============
Fully diluted 11,386,000 10,159,000 11,386,000 10,123,000
============ ============ ============ ============
</TABLE>
See notes to the condensed consolidated financial statements.
4
<PAGE>
LOGIC WORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine months Ended
September 30,
----------------------------
1996 1995
----------------------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (116,000) $ 712,000
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation and amortization 968,000 418,000
Compensation element of common
stock, warrants and stock option grants 423,000 305,000
Acquired in process research and development 920,000 --
Changes in operating assets and liabilities:
Increase in current assets and other noncurrent assets (2,468,000) (3,267,000)
Increase in accounts payable and accrued liabilities 610,000 1,498,000
Increase in deferred revenue 1,239,000 802,000
----------------------------
Net cash provided by operating activities 1,576,000 468,000
Cash flows from investing activities
Purchase of property and equipment (3,840,000) (1,199,000)
Acquisition of Testbytes (1,500,000) --
Purchase of marketable securities (1,559,000) --
Proceeds from sale of marketable securities 4,536,000 --
Purchase of intangibles (129,000) --
----------------------------
Net cash used in investing activities (2,492,000) (1,199,000)
Cash flows from financing activities
Proceeds from the issuance of stock 847,000 228,000
Dividends paid -- (100,000)
Purchase of treasury stock (279,000) --
Borrowings on line of credit -- 250,000
Borrowings on term loan -- 700,000
Repayments on term loan -- (97,000)
----------------------------
Net cash provided by financing activities 568,000 981,000
Effect of foreign exchange rate on cash 134,000 (4,000)
Net (decrease) increase in cash and cash equivalents (214,000) 246,000
Cash and cash equivalents at beginning of period 19,629,000 936,000
----------------------------
Cash and cash equivalents at end of period $ 19,415,000 $ 1,182,000
============================
</TABLE>
See notes to the condensed consolidated financial statements.
5
<PAGE>
LOGIC WORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Organization and Basis of Presentation
Logic Works, Inc. (the "Company") is a provider of database design and business
process modeling tools and services. The Company was incorporated in Delaware in
1985 and operates in one industry segment. The Company has subsidiaries in
Australia, Canada, England, France, Germany and Switzerland. The accompanying
condensed consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries.
The accompanying condensed consolidated financial statements have been prepared
in accordance with the rules and regulations of the Securities and Exchange
Commission and, accordingly, do not include all financial information and
footnotes required under generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying condensed
consolidated financial statements contain all adjustments consisting of normal
recurring adjustments that the Company considers necessary for a fair
presentation of the financial position of the Company as of September 30, 1996
and the results of the Company's operations for the three and nine months ended
September 30, 1996 and 1995, respectively, and its cash flows for the nine
months ended September 30, 1996 and 1995, respectively. This report on Form 10-Q
should be read in conjunction with the Company's audited financial statements
for the year ended December 31, 1995 and the notes therein, included in the
Company's annual report on Form 10K. Certain amounts have been reclassified to
conform with current year presentation. The results of operations for interim
periods are not necessarily indicative of the results of operations to be
expected for the entire year.
2. Acquisition
On September 30, 1996, the Company acquired the source code for Testbytes, an
automatic test data generation tool, from a privately-held software company. The
Company has accounted for the transaction as a purchase. The total cost of the
transaction was approximately $1.5 million and subsequent to a valuation, the
Company has recorded a charge of $995,000 for the acquisition of in-process
research and development, and acquisition costs in the quarter ended September
30, 1996. The remaining amount is included in other assets and is being
amortized over three years.
3. Per Share Amounts
Primary net income per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding and gives effect to
certain adjustments. Shares used in computing primary net income per share
include common shares and common equivalent shares consisting of outstanding
stock options and warrants. For periods prior to August 23, 1995, such
computations have been adjusted to reflect as outstanding, using the treasury
stock method, all common and common equivalent shares issued during the twelve
month period preceding August 24, 1995, the date of the Company's initial filing
of its Registration Statement on Form S-1 with the Securities and Exchange
Commission, as if they were outstanding for all periods presented.
Fully diluted net income per share is computed in the same manner as primary net
income per share adjusted for the end of period estimated fair value and the
assumed conversion for the period prior to August 24, 1995 (using the if
converted method) of the 2,400,000 shares of Series A Redeemable Preferred Stock
outstanding, which converted to common shares on a one-for-one basis upon the
consummation of the Company's initial public offering.
6
<PAGE>
4. Marketable Securities
Management determines the appropriate classification of debt securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
Debt and equity securities are classified as available-for-sale when the Company
does not have the positive intent and ability to hold to maturity.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported in a separate component of shareholders'
equity. The amortized cost of debt securities in this category is adjusted for
amortization of premiums and accretion of discounts to maturity. Such
amortization is included in investment income. Realized gains and losses and
declines in value judged to be other-than-temporary on available-for-sale
securities are included in investment income. The cost of securities sold is
based on the specific identification method. Interest and dividends on
securities classified as available-for-sale are included in investment income.
The following is a summary of available-for-sale securities:
Available-for-Sale Securities
--------------------------------------------------
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains (Losses) Value
--------------------------------------------------
September 30, 1996
U.S. Treasury securities
and obligations of U.S.
government agencies $ 577,000 $ 10,000 $ -- $ 587,000
U.S. corporate securities 853,000 -- (4,000) 849,000
Municipal securities 5,804,000 1,000 -- 5,805,000
--------------------------------------------------
Total marketable securities $7,234,000 $ 11,000 $ (4,000) $7,241,000
==================================================
5. Restructuring Charge
In October 1996, the Company announced that it will have a restructuring charge
of approximately $2 million to $3 million in the fourth quarter of 1996
associated with streamlining the Company's operations in the United States and
Europe.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ significantly from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed in "Business Considerations" in Company's
Annual Report on Form 10-K for the year ended December 31, 1995, which has been
filed with the Securities and Exchange Commission.
The Company is a leading provider of client/server database design and business
process modeling software. The Company's Windows-based products allow customers
to realize the benefits of client/server systems by enabling easy, rapid and
high-quality design, deployment and management of relational databases and
related applications.
Results of Operations
The following table sets forth certain operating data as a percentage of total
revenues for the periods indicated (subtotals not adjusted for rounding):
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
1996 1995 1996 1995
---------------------------------------
Percentages of Revenues:
Revenues:
License fees 77.3% 84.2% 78.8% 83.9%
Services 22.7 15.8 21.2 16.2
---------------------------------------
Total revenues 100.0 100.0 100.0 100.0
---------------------------------------
Cost of revenues:
License fees 5.9 9.0 5.1 8.0
Services 8.3 6.7 9.1 8.6
---------------------------------------
Total cost of revenues 14.2 15.7 14.2 16.6
---------------------------------------
Gross margin 85.8 84.3 85.8 83.4
---------------------------------------
Operating expenses:
Sales and marketing 65.1 53.3 57.3 54.5
Research and development 15.2 12.4 13.3 13.0
Acquisition of in process research
and development 9.5 -- 3.2 --
General and administrative 16.2 10.5 14.1 10.2
---------------------------------------
Total operating expenses 106.0 76.2 87.9 77.7
---------------------------------------
Operating income (loss) (20.2) 8.1 (2.1) 5.7
Other income 2.4 0.6 2.4 0.3
---------------------------------------
Income (loss) before income taxes (17.8) 7.5 0.3 5.4
Income taxes (benefit) (5.3) 2.9 0.6 2.0
---------------------------------------
Net income (loss) (12.5)% 4.6% (0.3)% 3.4%
=======================================
Total Revenues. Total revenues increased 26.5% to $10.5 million in the three
months ended September 30, 1996 from $8.4 million in the three months ended
September 30, 1995. Total revenues increased 46.5% to $31.5 million in the nine
months ended September 30, 1996 from $21.5 million in the nine months ended
September 30, 1995. The Company's revenues are derived from two sources: license
fees and services. The Company derived approximately $2.1 million and $2.1
million, or 20.0% and 25.3% of its total revenues, from international customers
in the three months ended September 30, 1996 and 1995, and $6.9 million and $4.2
million, or 21.9% and 19.5% of its total revenues, from international customers
in the nine months ended September 30, 1996 and 1995, respectively. The Company
expects that
8
<PAGE>
international revenues will continue to represent a significant percentage of
total revenues. The Company anticipates that, in the future, an increasing
proportion of the Company's sales could be denominated in foreign currencies. In
such event, foreign currency translations may contribute to significant
fluctuations in the Company's results of operations and the Company may enter
into hedging transactions to mitigate the effects of exchange rate variations.
License Fees. License fees increased 15.7% to $8.1 million in the three months
ended September 30, 1996 from $7.0 million in the three months ended September
30, 1995. License fees increased 37.7% to $24.8 million in the nine months ended
September 30, 1996 from $18.0 million in the nine months ended September 30,
1995. License fees include revenues from software licensed either directly by
the Company or through VARs, dealers or distributors, and resales of third party
software. The increases during these periods resulted from the introduction of
Logic Works ModelMart, the Company's workgroup management system, continued
increased market acceptance of the Company's products, including ERwin and
BPwin, which were stimulated by the Company's sales and marketing activities,
and the expansion of the Company's direct and indirect channels. Revenue from
the Logic Works ModelMart server accounted for 11.4% and 8.0% of total license
fees in the three and nine months ended September 30, 1996. The ERwin product
line accounted for 75.9% and 90.4% of its license fees in the three months ended
September 30, 1996 and 1995, and 78.6% and 89.5% for the nine months ended
September 30, 1996 and 1995. The remainder of the license fees were received
from licenses of BPwin, and to a significantly lesser extent, RPTwin and OOwin.
Cost of License Fees. Cost of license fees consists primarily of the costs of
product media, duplication, manuals and shipping for software licensed to the
Company's customers. The dollar increase in the cost of license fees reflects
the growth in license fees during the periods presented. However, the decrease
in the cost of license fees as a percentage of license fees resulted primarily
from the termination of an agreement with Sybase Inc.'s Powersoft unit in the
third quarter of 1995. The agreement permitted the Company to purchase and
resell Powersoft's Powerbuilder product as part of a bundled product with ERwin.
The Company may enter into, from time to time, other arrangements under which
the Company will resell third party products, resulting in additional costs of
license fees.
Services Fee Revenue. Services revenue increased by 84.6% to $2.4 million in the
three months ended September 30, 1996 from $1.3 million in the three months
ended September 30, 1995. Services revenue increased 97.0% to $6.7 million in
the nine months ended September 30, 1996 from $3.4 million in the nine months
ended September 30, 1995. Services revenue includes fees from software
maintenance agreements, and training and consulting services. The growth in
services revenues during the periods presented was primarily the result of
increased maintenance fees associated with the increased number of licenses
during such periods, and to a lesser extent increased consulting and training
services provided by the Company's Professional Services Group.
Cost of Services. Cost of services consists primarily of personnel and related
costs for training, consulting provided by the Professional Services Group,
customer technical support and payments to third party service providers. Cost
of services also reflects the costs associated with product media, duplication,
manuals, and shipping product upgrades to customers who have subscribed to the
Company's maintenance plans. The increase in cost of services is the result of
the expansion and increasing amount of training and consulting services provided
by the Professional Services Group.
Sales and Marketing. Sales and marketing expenses increased to $6.8 million in
the three months ended September 30, 1996 from $4.4 million in the three months
ended September 30, 1995 and represented 65.1% and 53.3%, respectively, of total
revenues in each period. Sales and marketing expenses increased to $18.0 million
in the nine months ended September 30, 1996 from $11.7 million in the nine
months ended September 30, 1995 and represented 57.3% and 54.5% respectively, of
total revenues in each period. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses paid to sales and marketing personnel, as well
as travel and promotional expenses.
9
<PAGE>
Sales and marketing expenses increased markedly during each of the periods
presented, due primarily to substantial increases in personnel expenses from
increased hiring, increased advertising and promotional costs, and increased
sales commissions. During each of the periods presented, the Company has
increased the number of employees in its sales and marketing organization. The
significant growth in the Company's sales and marketing expenses during the
three and nine months ended September 30, 1996 reflects the expansion of its
direct field sales force and its European sales and marketing staff. The
increases in sales and marketing expenses during the three and nine months ended
September 30, 1996 also reflects increased advertising and promotional programs
related to releases of extended versions of ERwin and new products such as Logic
Works' ModelMart, ERwin/Open and Erwin/Navigator. During the three and nine
months ended September 30, 1996, the Company also increased its seminar activity
and expanded its targeted direct mail efforts. The Company is taking significant
actions to reduce sales and marketing expenses (see Restructuring Charge).
Research and Development. Research and development expenses increased to $1.6
million in the three months ended September 30, 1996 from $1.0 million in the
three months ended September 30, 1995 and represented 15.2% and 12.4% of total
revenues, respectively. Research and development expenses increased to $4.2
million in the nine months ended September 30, 1996 from $2.8 million in the
nine months ended September 30, 1995 and represented 13.3% and 13.0% of total
revenues, respectively. Research and development expenses consist primarily of
software engineering personnel costs, costs of third party equipment and
software for development purposes and costs of outside consultants hired by the
Company to assist in its product development efforts. Research and development
expenses are generally charged to operations as they are incurred and have not
been capitalized since capitalizable costs have not been material. The increase
in research and development expenses during the periods presented was the result
of the Company's ongoing development of extended versions of ERwin and BPwin,
and Logic Works ModelMart, as well as ongoing development of new products for
future release and the continuation of its quality control and quality assurance
programs.
Acquired In-Process Research and Development. On September 30, 1996, the Company
acquired the source code for Testbytes, an automatic test data generation tool,
from a privately-held software company. The total cost of the transaction
was approximately $1.5 million and subsequent to a valuation, the Company has
recorded a charge of $995,000 for the acquisition of in-process research and
development, and acquisition costs in the quarter ended September 30, 1996.
General and Administrative. General and administrative expenses increased to
$1.7 million for the three months ended September 30, 1996 from $0.8 million for
the three months ended September 30, 1995 and represented 16.2% and 10.5% of
total revenues, respectively. General and administrative expenses increased to
$4.4 million for the nine months ended September 30, 1996 from $2.1 million for
the nine months ended September 30, 1995 and represented 14.1% and 10.2% of
total revenues, respectively. General and administrative expenses consist
primarily of salaries of administrative, executive and financial personnel,
provision for doubtful accounts, and professional fees. The increase in general
and administrative expenses related primarily to the overall expansion of the
Company's operations and facilities, provisions for doubtful accounts and to its
becoming a public company which is subject to reporting and other requirements
since October 1995. The Company is taking significant actions to reduce general
and administrative expenses (see Restructuring Charge).
Restructuring Charge. In October 1996, the Company announced that it will have a
restructuring charge of approximately $2 million to $3 million in the fourth
quarter of 1996 associated with streamlining the Company's operations in the
United States and Europe.
Income Taxes. The Company provides for income taxes at an effective tax rate of
38%. However, due to certain foreign, state and alternative minimum taxes the
rate used to benefit the loss for the three months ended September 30, 1996 was
reduced to 30%. These effective tax rates were based on estimated annual federal
and state statutory rates.
10
<PAGE>
Liquidity and Capital Resources
At September 30, 1996, the Company had cash and cash equivalents of $19,415,000
and marketable securities of $7,241,000.
Net cash provided by operating activities was $1,576,000 and $468,000 for the
nine months ended September 30, 1996 and 1995, respectively. The increase in
cash provided by operating activities is primarily related to an increase in
deferred revenue and an increase in other liabilities.
Net cash and cash equivalents used in investing activities increased $1,293,000
in the first nine months of 1996 as compared to the same period in 1995. This
increase in investing activities is the result of purchases of marketable
securities, acquisition of Testbytes, and increased purchases of property, plant
and equipment resulting from the growing headcount and the move of the Company's
corporate headquarters from a 27,000 square foot facility to a 70,000 square
foot facility.
Net cash provided by financing activities decreased by $413,000 in the first
nine months of 1996 compared to the same period in 1995 as a result of the
purchase of treasury stock.
The Company believes that its existing cash balances together with cash flow
from operations will be sufficient to meet its cash requirements for at least
the next twelve months.
"LOGIC WORKS" "ERwin" and "BPwin" are registered trademarks of the Company.
"OOwin," "RPTwin," "Logic Works ModelMart," "ERwin/OPEN for ModelMart," and
"ERwin Navigator" are trademarks of the Company.
11
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not subject to any lawsuits or other claims
which, in the opinion of management, based upon consultation
with legal counsel, will have a material adverse effect on the
Company's business, financial condition, and/or results of
operations.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
11. Statement regarding computation of per share earnings.
27. Statement regarding financial data schedule.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LOGIC WORKS, INC.
Dated: November 14 , 1996 By: /s/ BENJAMIN C. COHEN
-------------------------
Benjamin C. Cohen
Chief Executive Officer, President and Director
(Principal Executive Officer)
Dated: November 14, 1996 By: /s/GREGORY A. PETERS
------------------------
Gregory A. Peters
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
13
<PAGE>
EXHIBIT INDEX
Number Description Page No.
- ------ ----------- --------
11 Statement re: Computation of Per Share
Earnings 15
27 Statement re: Financial Data Schedule 16
14
Exhibit 11
LOGIC WORKS, INC.
COMPUTATION OF EARNINGS PER SHARE
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine months Ended
September 30, September 30,
-------------------------------------------------------------
1996 1995 1996 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary
Net income (loss) $ (1,299,000) $ 394,000 $ (116,000) $ 712,000
============================================================
Weighted average number of common shares outstanding 11,386,000 5,446,000 11,348,000 5,365,000
Stock options granted one year prior to initial filing -- 817,000 -- 862,000
Stock warrants granted one year prior to initial filing -- 199,000 -- 199,000
Dilutive weighted average stock options outstanding -- 1,287,000 -- 1,236,000
------------------------------------------------------------
Weighted average number of common shares outstanding as adjusted 11,386,000 7,749,000 11,348,000 7,662,000
Net income (loss) per share $ (0.11) $ 0.05 $ (0.01) $ 0.09
============================================================
Fully Diluted
Net income (loss) $ (1,299,000) $ 394,000 $ (116,000) $ 712,000
============================================================
Weighted average number of common shares outstanding 11,386,000 5,446,000 11,348,000 5,365,000
Automatic conversion feature of Series A redeemable convertible -- 2,400,000 -- 2,400,000
preferred stock
Stock options granted one year prior to initial filing -- 817,000 -- 862,000
Stock warrants granted one year prior to initial filing -- 199,000 -- 199,000
Dilutive weighted average stock options outstanding -- 1,297,000 -- 1,297,000
------------------------------------------------------------
Weighted average number of common shares outstanding as adjusted 11,386,000 10,159,000 11,348,000 10,122,000
============================================================
Net income (loss) per share $ (0.11) $ 0.04 $ (0.01) $ 0.07
============================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Sep-30-1996
<CASH> 19,415,000
<SECURITIES> 7,241,000
<RECEIVABLES> 13,233,000
<ALLOWANCES> 1,658,000
<INVENTORY> 0
<CURRENT-ASSETS> 40,791,000
<PP&E> 6,860,000
<DEPRECIATION> 1,492,000
<TOTAL-ASSETS> 48,625,000
<CURRENT-LIABILITIES> 11,415,000
<BONDS> 0
0
0
<COMMON> 116,000
<OTHER-SE> 36,862,000
<TOTAL-LIABILITY-AND-EQUITY> 48,625,000
<SALES> 24,769,000
<TOTAL-REVENUES> 31,451,000
<CGS> 1,604,000
<TOTAL-COSTS> 4,467,000
<OTHER-EXPENSES> 27,647,000
<LOSS-PROVISION> 472,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 86,000
<INCOME-TAX> 202,000
<INCOME-CONTINUING> (116,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (116,000)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
