-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TCbT8k3YaHdchsDbFfpJilhmH8aQ9+I13/XMD0/yY0kKmZvzG/Z7BGJ7G3MAtGww imQR8Lih+1hkAwbiofv/2Q== 0000950135-04-001130.txt : 20040305 0000950135-04-001130.hdr.sgml : 20040305 20040305133302 ACCESSION NUMBER: 0000950135-04-001130 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040305 FILED AS OF DATE: 20040305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEAC COMPUTER CORP LTD CENTRAL INDEX KEY: 0001145047 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 000000000 STATE OF INCORPORATION: A6 FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50568 FILM NUMBER: 04651292 BUSINESS ADDRESS: STREET 1: 11 ALLSTATE PARKWAY STREET 2: SUITE 300 CITY: MARKHAM ONTARIO CANADA L3R 9T8 STATE: A6 ZIP: 00000 BUSINESS PHONE: 9059403704 6-K 1 b498046ke6vk.txt FORM 6-K DATED 3/5/04 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------------- FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of: March 2004 ---------- Commission File Number: 333-103019 ---------- Geac Computer Corporation Limited ----------------------------------------------- (Translation of registrant's name into English) 11 Allstate Parkway, Suite 300, Markham, Ontario L3R9T8 Canada -------------------------------------------------------------- (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F....X..... Form 40-F......... Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____ Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders. Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____ Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR. Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes ..... No ..X... If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________ On February 25, 2004, Geac Computer Corporation Limited filed on the SEDAR website maintained by the Canadian Depository for Securities Limited at www.sedar.com a press release issued on February 25, 2004, a copy of which is attached as Exhibit 99.1 to this Report of Foreign Private Issuer on Form 6-K. On March 4, 2004, Geac Computer Corporation Limited filed on the SEDAR website maintained by the Canadian Depository for Securities Limited at www.sedar.com a press release issued on March 4, 2004, a copy of which is attached as Exhibit 99.2 to this Report of Foreign Private Issuer on Form 6-K. On March 4, 2004, Geac Computer Corporation Limited filed on the SEDAR website maintained by the Canadian Depository for Securities Limited at www.sedar.com its Management Discussion and Analysis, a copy of which is attached as Exhibit 99.3 to this Report of Foreign Private Issuer on Form 6-K. 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. GEAC COMPUTER CORPORATION LIMITED /s/ Jonathan Salon ------------------------- Jonathan Salon Vice President and Deputy General Counsel Date: March 5, 2004 EXHIBIT INDEX
Number Title - ------ ----- 99.1 Press Release issued on February 25, 2004 99.2 Press Release issued on March 4, 2004 99.3 Management Discussion and Analysis
EX-99.1 3 b498046kexv99w1.txt PRESS RELEASE DATED 2/25/04 Exhibit 99.1 (GEAC LOGO) NEWS RELEASE - -------------------------------------------------------------------------------- EARNINGS ADVISORY: GEAC TO ANNOUNCE THIRD QUARTER, FISCAL 2004 RESULTS ON MARCH 4, 2004 MARKHAM, ONTARIO - FEBRUARY 25, 2004 - Geac (NASDAQ: GEAC, TSX: GAC), a global enterprise software company for business performance management, today announced it will release third quarter, fiscal 2004 financial results on March 4, 2004, at 4:30 p.m. Eastern Time. The company will discuss the results on a conference call and webcast on March 4, 2004, beginning at 5:30 p.m. Eastern Time. Listeners can access the conference call at 416.405.9310 / 877.211.7911, or via webcast at HTTP://WWW.INVESTORS.GEAC.COM. A replay of the conference call will be available from March 4, 2004 at 7:30 p.m. Eastern Time until March 12, 2004, at 11:59 p.m. Eastern Time. The replay can be accessed at 416.695.5800 or 1.800.408.3053. The pass code for the replay is 3006340. For more information, contact: Alys Scott Vice President, Global Communications & Investor Relations 905.940.3751 ALYS.SCOTT@GEAC.COM Melody Firth Investor Relations Specialist Tel. 905.475.0525 ext. 3325 Fax 905.475.3847 MELODY.FIRTH@GEAC.COM EX-99.2 4 b498046kexv99w2.txt PRESS RELEASE DATED 3/4/04 Exhibit 99.2 (GEAC LOGO) GEAC ANNOUNCES FISCAL YEAR 2004 THIRD QUARTER RESULTS THIRD QUARTER EARNINGS OF $0.17 PER SHARE SOFTWARE LICENSE REVENUE RISES APPROXIMATELY 50% PERCENT YEAR OVER YEAR REVENUE INCREASES BY NEARLY $14 MILLION OVER SAME QUARTER LAST YEAR MARKHAM, ONTARIO - March 4, 2004 - Geac Computer Corporation Limited (TSX: GAC and NASDAQ: GEAC), a global enterprise software company for Business Performance Management, today announced its third quarter financial results for the quarter ending January 31, 2004. THIRD QUARTER FINANCIAL REVIEW All references to dollars are to U.S. dollars unless otherwise noted. Geac reported revenue in the third quarter of fiscal year 2004 of $116.2 million, an increase of $13.6 million compared to $102.6 million in revenue in the third quarter of fiscal year 2003, and an increase of $4.7 million compared to $111.5 million in the second quarter of this year. The Company's net income was $14.4 million, or $0.17 per diluted share, compared with net income of $12.0 million, or $0.15 per diluted share in the third quarter of last year. Net income in the third quarter of fiscal year 2004 increased by $3.7 million from $10.7 million, or $0.13 per diluted share, in the second quarter of this year. The gross profit margin increased to 60.5% of revenue from 59.2% in the third quarter of fiscal year 2003. "With evidence of organic growth in three existing product lines and with initial sales of the Performance Management products acquired in the Comshare and Extensity transactions into our existing Geac customer base, Geac has surpassed its short-term goal of increasing license sales year over year with a substantial increase in new licenses sales of nearly 50% to $18.7 million. In this quarter, license sales accounted for 16.1% of total revenue," said Charles S. Jones, President and CEO of Geac. "We have remained diligently focused on integrating and selling our newest product lines, on streamlining costs throughout the organization and on delivering competitive products to our customers through pricing and deployment alternatives. These efforts and the commitment and ability of the management team to execute have resulted in the best net income for Geac that we have achieved in our last nine consecutive quarters." With the completion of the Comshare and Extensity acquisitions, operating expenses were $51.1 million in the third quarter of fiscal year 2004, compared to $42.5 million in the third quarter of 2003. While this represents a 20.3% increase in operating costs year over year, operating costs as a percentage of revenue increased by only 2.6% in the third quarter of fiscal year 2004 as compared to the same period in 2003. The Company remains committed to maintaining cost control initiatives and to identifying avenues of efficiency maximization throughout the organization. Personnel related costs constitute the largest portion of our operations costs, and as such we strive to identify areas of duplication or redundancy on an ongoing basis. Although the acquisitions of Comshare and Extensity had the effect of increasing headcount by 367 positions, consolidated headcount has actually decreased by a net total of 109, from 2,506 at the end of the third quarter of fiscal year 2003 to 2,397 at the end of the current period. Third quarter analysis resulted in a 4.2% reduction of headcount from the second quarter of fiscal year 2004. "Geac's cash position was $79.0 million at January 31, 2004 and today is in excess of $97.5 million. Operating activities and fiscal responsibility continue to strengthen our cash position, which enables us to pursue strategic new product investment opportunities and potential acquisitions," said Donna de Winter, Chief Financial Officer of Geac. "Sustained profitability and continued cost management have generated expanded interest from investors not only in Canada, but also in the United States. We were pleased that Geac's listing on NASDAQ should afford easier access to interested U.S. investors and increased visibility with Geac's large number of U.S. customers." ORGANIC GROWTH Geac's reinvention efforts continue with three of its product lines demonstrating organic growth with new license revenue. SYSTEM21/AURORA - Including approximately $1 million in revenue being realized this quarter from a single contract, license sales in the third quarter for this product line have increased by 63.0% year over year and 45.6% from the second quarter of this year. Revenue in this period represents the highest revenue for the System 21 Division since the third quarter of fiscal year 2002. Geac currently has 23 implementation projects worldwide for Geac System21 Aurora, its next-generation enterprise resource planning (ERP) system with real-time business process management capabilities, launched last April. Commenting on the success of System 21 Aurora, Mr. Jones stated, "This business has made great strides since our difficult acquisition of JBA five years ago. We were able to rationalize the business in line with revenue. By altering our strategy and competitive position, with key investments and developments in this product line, our management team has enabled our System 21 customers to extend the life of their existing systems by offering them expanded functionality and the ability to integrate with the rest of their enterprise framework. The latest enhancements to this product line have also laid the groundwork for the seamless integration of Geac's full Performance Management family." GEAC LIBRARY SOLUTIONS - Geac Library Solutions Division continued to grow its revenue from Vubis Smart, its next generation library information management system, in the third quarter. Its largest transaction during the quarter was a $500,000 contract for Vubis Smart(R) library automation software with the Vrije Universiteit Amsterdam. Other transactions and upgrades during the quarter, most of which involved Vubis Smart, spanned six countries in Europe and North America. GEAC LOCAL GOVERNMENT - License revenue for Local Government increased 22.2% over the same quarter last year. With installations in nearly 100 local government authorities across Australia and New Zealand, Geac's land information system product, called Pathway PPR - People, Property and Regulatory System, continues to win new accounts. During the quarter, Geac Local Government secured new contracts with the City of Swan in Western Australia, the City of Rockdale in New South Wales, the City of Campbelltown in New South Wales, the City of Unley in South Australia, the Livingstone Shire Council in Queensland, and the Horowhenua District Council in New Zealand. Pathway PPR assists local governments to automate property administration, rates and billing, building and development applications, customer service, e-commerce, income receipting and licensing. PERFORMANCE MANAGEMENT During the third quarter, Geac closed several significant Geac Performance Management sales, encompassing planning and expense management applications, with new and existing Geac customers. Of note, Geac concluded a $425,000 sale of its Geac Expense Reports solution to a global manufacturer, and a $300,000 sale of its MPC budgeting and planning application to a U.S. company. We anticipate increasing sales of our Performance Management products to other EAS platform customers and certain ISA customers. These transactions underscore a component of the Company's acquisition strategy - increasing sales by leveraging our extensive existing customer base and extending new functionality for our customers with new product offerings that create value. Revenue from the businesses acquired in the Comshare and Extensity transactions contributed $15.9 million to year-over-year revenue. The Company's partnership with Microsoft was also valuable in propelling the success of Geac Performance Management. Working together, in the third quarter, Geac and Microsoft jointly closed business representing more than $500,000 in software license revenue to Geac. The companies executed an extremely successful and well-attended Webcast with CFO Magazine in January, which generated approximately 40 opportunities. Geac continues to follow up with target leads in this quarter. In addition, the companies ran joint sales prospecting events in Houston, Los Angeles and Detroit in the quarter. In March, Microsoft and Geac will host a joint executive briefing in Redmond, Washington for 50 tier-one prospects, during which both companies will discuss corporate security, compliance and best practices as they relate to the Performance Management vision. With a focus on customer loyalty and retention, in this quarter, Geac experimented with a limited number of high-value customers by offering a focused multi-year value-based maintenance program for certain renewing E&M customers (formerly Dun & Bradstreet). This customized program was designed to support more directly specific customer maintenance requirements and to enable Geac to sell additional license and support offerings. The Company submitted proposed agreements to approximately 50 customers and has seen a 50% favorable response so far. In the nine-month period ending January 31, 2004, overall attrition within the enterprise group in North America was 11.0%, an improvement from the 13.0% for the same period in the prior year. Based upon the success of this limited program to date, the Company will continue to offer this to other E&M customers upon maintenance renewal and to expand the offering to other key customer groups. THIN CLIENT The planned launch early in fiscal year 2005 of Geac's thin-client solution for Performance Management is expected to add additional momentum to the increasingly popular hosted version of Geac Expense Reports (formerly Extensity). With the thin-client solution, authorized employees can use any Web-enabled device to submit and approve expense reports. The final development, quality assurance testing and initial deployment of the new product internally at Geac, will take place over the next three months, paving the way for early adopter deployments in the first quarter of fiscal year 2005. HOSTING Geac is experiencing growth in users and strong interest in its hosted product offerings. Despite the negative influence that the hosted services model has on short-term revenue, Geac experienced an increase in overall revenue in the quarter of $13.6 million year over year. Geac currently provides hosting solutions in Europe, America and Australia across a range of its product lines. At the end of January, Anael signed a large four-year software and support contract with a leading temporary staffing and recruitment firm for a comprehensive ASP solution, encompassing Anael Payroll, Anael HR and Anael Voyageur embedded with the Geac time and expense application. Geac is considering the expansion of hosted offerings across additional product lines. "Geac will continue to invest in the new technologies and models that enable our customers to realize the greatest benefit from our solutions with the least impact on their own environment. By bringing new delivery options to the market, we have expanded our product footprint with existing customers and attracted new customers with ease-of-use, effective ROI these solutions offer and competitive pricing on each delivery model," said Timothy Wright, Chief Technology and Information Officer. "We believe there are market opportunities to take our Performance Management products to certain ISA markets. Geac will also be releasing new business process/Sarbanes- Oxley tools early in the new fiscal year to extend the Performance Management family." CUSTOMERS In the third quarter, Geac closed more than 200 sales worldwide across its Enterprise Applications businesses. Nine deals each exceeded $200,000 in software license or hosting revenue and included: - Geac Performance Management - a global pharmaceutical manufacturer; a marquee sportswear brand; and a multi-billion-dollar publicly traded global company - EnterpriseServer - a leading New York hospital and a global aerospace company - Comshare - a global financial services company - SmartStream - a natural gas utility - Anael - an employment services firm - Libraries - the Vrije Universiteit Amsterdam CONCLUDING REMARKS "We are tremendously pleased with this quarter and with the ongoing commitment of our most important constituencies. Validating our course, approximately 30% of all employees eligible for the Geac Stock Purchase Plan introduced this quarter have chosen to participate. Among a range of success metrics, I find the endorsement by our employees, many of whom interact with customers each day, particularly meaningful," said Mr. Jones. "However strong we feel our third quarter results may be, we still realize that market conditions continue to be intensely challenging for Geac. In this quarter, we benefited from many parts of our diverse business performing well at the same time. In light of the higher degree of uncertainty associated with new license sales, as we continue to be successful in generally increasing new license revenue, there will likely be greater volatility in revenues from quarter to quarter. We will remain focused on cost control and on our commitment to the long-term success of our shareholders, customers and employees." REVENUE SEGMENTATION BY GEOGRAPHY (Unaudited) (In millions of U.S. dollars)
THREE MONTHS ENDED NINE MONTHS ENDED JANUARY 31 JANUARY 31 2004 2003 2004 2003 Americas $ 56 52 $167 162 Europe 52 43 138 122 Asia 8 7 24 22 ---- --- ---- --- Total $116 102 $329 306
EARNINGS CALL Management will discuss today's results on a conference call scheduled for March 4, 2004 at 5:30 p.m. EDT. The conference call can also be accessed by dialing 416.405.9310 (local area) or 877.211.7911 (toll-free). A recording of the teleconference will be archived on Geac's web site at www.investors.geac.com. The telephone numbers to call for instant replay are 416.695.5800 or 800.408.3053. The pass code for the instant replay is 3006340. This instant replay will be available until 11:59 p.m. March 11, 2004. The conference call will be broadcast over Geac's web site at www.investors.geac.com. Attendees will need to log in at least fifteen minutes prior to the call. ABOUT GEAC Geac (TSX: GAC, NASDAQ: GEAC) is a global enterprise software company for Business Performance Management, providing customers worldwide with the core financial and operational solutions and services to improve their business performance in real time. Further information is available at http://www.geac.com or through email at info@geac.com. Geac trades on the Toronto Stock Exchange under the symbol "GAC" and on the NASDAQ under the symbol "GEAC" and had 84,898,780 common shares issued and outstanding at January 31, 2004. THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT ARE BASED ON CURRENT EXPECTATIONS, INCLUDING STATEMENTS REGARDING THE ANTICIPATED BENEFITS TO GEAC AND ITS CUSTOMERS OF THE ACQUISITIONS OF EXTENSITY AND COMSHARE, THE EFFECT OF THOSE MERGERS ON GEAC'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND THE SUCCESS OF GEAC IN SELLING NEWLY DEVELOPED SOFTWARE TO NEW AND EXISTING CUSTOMERS. THESE FORWARD-LOOKING STATEMENTS ENTAIL VARIOUS RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THESE FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES ARE SUBSTANTIALLY UNCHANGED FROM THOSE PRESENTED UNDER THE "RISK FACTORS" HEADING IN THE "KEY INFORMATION" SECTION OF OUR ANNUAL REPORT ON FORM 20-F, NO. 333-103019, FOR THE YEAR ENDED APRIL 30, 2003 FILED ON OCTOBER 31, 2003 WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, AND AVAILABLE THROUGH THE WEBSITE MAINTAINED BY THE COMMISSION AT WWW.SEC.GOV, AND FILED ON NOVEMBER 3, 2003 WITH THE CANADIAN SECURITIES ADMINISTRATORS, AND AVAILABLE THROUGH THE WEBSITE MAINTAINED BY THE CANADIAN SECURITIES ADMINISTRATORS AND THE CANADIAN DEPOSITORY FOR SECURITIES AT WWW.SEDAR.COM, WHICH RISKS AND UNCERTAINTIES ARE INCORPORATED BY REFERENCE HEREIN. FOR MORE INFORMATION, PLEASE CONTACT: FINANCIAL CONTACT: Donna de Winter Chief Financial Officer Geac 905.475.0525 ext. 3204 donna.dewinter@geac.com MEDIA AND INVESTOR CONTACTS: Alys Scott Vice President, Corporate Communications Geac 905.940.3751 alys.scott@geac.com Melody Firth Investor Relations Geac 905.475.0525 ext. 3325 melody.firth@geac.com Geac Computer Corporation Limited CONSOLIDATED BALANCE SHEETS (In accordance with Canadian GAAP) (In thousands of U.S. dollars)
UNAUDITED JANUARY 31, 2004 April 30, 2003 ---------------- -------------- ASSETS Current assets Cash and cash equivalents $ 78,952 $ 89,819 Restricted cash and cash equivalents 146 -- Accounts receivable and other 63,821 54,721 Unbilled receivables 7,639 6,901 Future income taxes 23,201 16,238 Inventory 585 787 Prepaids and other assets 12,738 11,898 --------- --------- 187,082 180,364 Restricted cash and cash equivalents 1,653 2,395 Future income taxes 11,752 23,008 Property, plant and equipment 25,825 25,649 Intangible assets 35,021 11,172 Goodwill 122,533 89,386 Other assets (notes 7 and 8) 4,743 -- --------- --------- $ 388,609 $ 331,974 ========= ========= LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 116,220 $ 94,979 Income taxes payable 38,042 31,114 Current portion of long-term debt 458 733 Deferred revenue 111,220 119,937 --------- --------- 265,940 246,763 Deferred revenue 3,420 2,690 Long-term debt 7,715 5,616 --------- --------- 277,075 255,069 --------- --------- SHAREHOLDERS' EQUITY Share capital (note 3) 122,651 120,976 Options 163 163 Deficit 12,676 (21,914) Cumulative foreign exchange translation adjustment (23,956) (22,320) --------- --------- 111,534 76,905 --------- --------- $ 388,609 $ 331,974 ========= =========
See accompanying notes to the interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements. Geac Computer Corporation Limited CONSOLIDATED STATEMENTS OF OPERATIONS (In accordance with Canadian GAAP) (Unaudited)
Three months ended Nine months ended (In thousands of U.S. dollars, except January 31 January 31 share and per share data) 2004 2003 2004 2003 --------- ------ --------- ------ REVENUES Software $ 18,672 12,458 $ 46,803 33,441 Support and services 89,591 81,394 261,502 247,259 Hardware 7,912 8,736 20,862 25,189 --------- ------ --------- ------ Total revenues 116,175 102,588 329,167 305,889 --------- ------ --------- ------ COST OF REVENUES Software 1,355 1,649 5,492 4,631 Support and services 37,757 32,678 108,505 103,012 Hardware 6,751 7,536 17,844 21,614 --------- ------ --------- ------ Total cost of revenues 45,863 41,863 131,841 129,257 --------- ------ --------- ------ GROSS PROFIT 70,312 60,725 197,326 176,632 --------- ------ --------- ------ OPERATING EXPENSES Sales and marketing 18,683 13,556 54,672 42,096 Product development 15,561 13,330 44,227 38,971 General and administrative 15,479 15,360 47,363 43,474 Net restructuring and other unusual items (note 5) (948) 0 (3,754) (733) Amortization of intangible assets 2,333 248 5,363 530 --------- ------ --------- ------ 51,108 42,494 147,871 124,338 --------- ------ --------- ------ INCOME FROM OPERATIONS 19,204 18,231 49,455 52,294 --------- ------ --------- ------ Interest income 313 343 899 931 Interest expense (418) (114) (842) (368) Other (expense) income, net (1,007) 743 (1,764) 2,274 --------- ------ --------- ------ (1,112) 972 (1,707) 2,837 --------- ------ --------- ------ INCOME FROM OPERATIONS BEFORE INCOME TAXES 18,092 19,203 47,748 55,131 --------- ------ --------- ------ INCOME TAXES 3,655 7,190 13,158 20,995 --------- ------ --------- ------ NET INCOME FOR THE PERIOD $ 14,437 12,013 $ 34,590 34,136 ========= ====== ========= ====== BASIC NET INCOME PER SHARE $ 0.17 0.15 $ 0.41 0.43 DILUTED NET INCOME PER SHARE $ 0.17 0.15 $ 0.40 0.42 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ('000s) Basic 84,830 80,184 84,523 78,945 Diluted 86,389 81,662 85,763 80,793
See accompanying notes to the interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements Geac Computer Corporation Limited CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In accordance with Canadian GAAP) (In thousands of U.S. dollars, except share data)
SHARE CAPITAL PURCHASE RETAINED CUMULATIVE TOTAL WARRANTS EARNINGS FOREIGN SHAREHOLDERS' (DEFICIT) EXCHANGE EQUITY TRANSLATION ADJUSTMENT --------------------------------- SHARES AMOUNT OPTIONS ('000S) $ $ $ $ $ $ ------ ------- ------- -------- --------- ----------- ------------- BALANCE - APRIL 30, 2002 78,145 110,987 -- 1,139 (53,944) (24,055) 34,127 Issued for cash 58 129 -- -- -- -- 129 Exercise of purchase warrants 5,000 9,860 -- (1,139) -- -- 8,721 Issued in exchange for shares of acquired company 933 -- -- -- -- -- -- Option value resulting from acquisition -- -- 163 -- -- -- 163 Net income -- -- -- -- 32,030 -- 32,030 Foreign exchange translation adjustment -- -- -- -- -- 1,735 1,735 ------ ------- --- ---- ------ ------- ------- BALANCE - APRIL 30, 2003 84,136 120,976 163 -- (21,914) (22,320) 76,905 Issued for cash 763 1,675 -- -- -- -- 1,675 Net income for the period -- -- -- -- 34,590 -- 34,590 Foreign exchange translation adjustment -- -- -- -- -- (1,636) (1,636) ------ ------- --- ---- ------ ------- ------- UNAUDITED BALANCE - JANUARY 31, 2004 84,899 122,651 163 -- 12,676 (23,956) 111,534 ====== ======= === ==== ====== ======= =======
See accompanying notes to the interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements. Geac Computer Corporation Limited CONSOLIDATED STATEMENTS OF CASH FLOWS (In accordance with Canadian GAAP) (Unaudited) (In thousands of U.S. dollars)
Three months ended Nine months ended January 31 January 31 2004 2003 2004 2003 -------- ------ -------- -------- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net income for the period $ 14,437 12,013 $ 34,590 $ 34,136 Adjusted for items not involving cash: Amortization of intangible assets 2,333 248 5,363 530 Amortization of property, plant and 1,913 2,481 5,454 8,563 equipment Amortization of other assets 237 -- 372 -- Reversal of accrued liabilities and other provisions (774) -- (3,998) (733) Gain on divestiture of operations (243) -- (243) -- Future income tax expense 252 6,726 6,847 17,406 Other (25) 387 (42) (438) -------- ------ -------- -------- CASH PROVIDED BY OPERATING ACTIVITIES BEFORE CHANGES 18,130 21,855 48,343 59,464 IN NON-CASH WORKING CAPITAL AND DEFERRED REVENUE Change in non-cash working capital excluding (3,650) (7,358) 1,699 (34,513) deferred revenue Change in deferred revenue 16,331 23,356 (21,878) (13,973) -------- ------ -------- -------- CASH PROVIDED BY OPERATING ACTIVITIES 30,811 37,853 28,164 10,978 -------- ------ -------- -------- INVESTING ACTIVITIES Acquisition less cash acquired (129) -- (39,148) (2,362) Proceeds from divestiture of operations less cash divested 339 -- 339 -- Net additions to property, plant and equipment (1,632) (376) (3,144) (1,169) Additions to other assets (24) -- (2,828) -- Change in restricted cash and cash equivalents 403 1,398 805 2,321 -------- ------ -------- -------- CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (1,043) 1,022 (43,976) (1,210) -------- ------ -------- -------- FINANCING ACTIVITIES Issue of common shares 279 7,803 1,675 8,807 Issuance (repayment) of long-term debt 655 (354) 269 (2,132) -------- ------ -------- -------- CASH PROVIDED BY FINANCING ACTIVITIES 934 7,449 1,944 6,675 -------- ------ -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,377 1,627 3,001 2,269 -------- ------ -------- -------- CASH AND CASH EQUIVALENTS Net decrease in cash and cash equivalents 32,079 47,951 (10,867) 18,712 Cash and cash equivalents - beginning of the 46,873 44,399 89,819 73,638 period CASH AND CASH EQUIVALENTS - END OF THE PERIOD $ 78,952 $ 92,350 $ 78,952 $ 92,350 ======== ======== ======== ========
See accompanying notes to the interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements. GEAC COMPUTER CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In accordance with Canadian GAAP) (Unaudited) Unless otherwise stated, amounts are in thousands of U.S. dollars except share data and per share amounts. 1. SIGNIFICANT ACCOUNTING POLICIES These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles, using the same accounting policies as outlined in note 2 to the consolidated financial statements for the year ended April 30, 2003 except as noted below. These interim consolidated financial statements do not conform in all respects with disclosures required for annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended April 30, 2003 in the 2003 Annual Report. The financial statements of the Company have historically been reported in Canadian dollars. Effective May 1, 2003 the Company adopted the U.S. dollar as its reporting currency as U.S. dollar denominated operations represent an increasingly significant portion of the Company's operations. Comparative financial information has been recast as if the U.S. dollar reporting currency had always been used, and financial statements have been reported in U.S. dollars for all periods presented. Effective May 1, 2003 the Company changed its policy with respect to the classification of reimbursements received for out-of-pocket expenses to classify these amounts as revenue. In previous years these reimbursements had been characterized as a reduction of expenses incurred. The change has been applied retroactively and comparative figures restated. In addition, effective May 1, 2003 the Company has reclassified certain "bug-fixing" expenses that had been characterized as support costs in certain product lines as product development expenses across all product lines. In the Consolidated Statement of Operations for the quarter ended January 31, 2004 results for the comparable period ended January 31, 2003 have been restated to conform with the current year's presentation. The net effect of the change in policy and reclassification on results for the 3 months ended January 31, 2003 was to increase support and services revenue by $801 (9 months ended January 31, 2003 - $2,356), to reduce support and services costs by $1,470 (9 months ended January 31, 2003 - $3,479), and to increase product development expenses by $2,271 (9 months ended January 31, 2003 - $5,835). There was no impact on net income for the 3 or 9 months ended January 31, 2003. 2. STOCK-BASED COMPENSATION The Company has two stock-based compensation plans, which are described in note 13 to the consolidated financial statements in the 2003 Annual Report. During the third quarter of fiscal 2004, the Company issued 0.3 million stock options in total to employees at a weighted average exercise price of $5.41. These options vest over a period of 4 years. They were all granted at an exercise price the same as or above the market value of the shares at the date of grant. The weighted average estimated fair value at the date of grant for employee options granted for the quarter ended January 31, 2004 was $3.87 per share. If the Company had adopted the fair value method, the total amount of compensation expense in the third quarter of fiscal year 2004 for stock options granted since fiscal 2003 would have been approximately $829 (2003 - $88) after tax and $1,711 in the first 9 months of fiscal 2004 (2003 - $173) after tax. The fair value of each share issued was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions at the measurement date: Risk-free interest rate: 3.97% - 4.35% Expected life: 7 years Estimated volatility in the market price of the common shares: 71.59% - 73.22% Dividend yield: Nil The weighted average estimated fair value at the date of grant for shares issued under the Employee Stock Purchase Plan (ESPP) for the quarter ended January 31, 2004 was $1.38 per share. If the Company had adopted the fair value method, the total amount of compensation expense for shares issued under ESPP for the third quarter of fiscal year 2004 would have been approximately $6 (2003 - $9) and $17 for the first 9 months of fiscal 2004 (2003 - $31). The fair value of each share issued was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions at the measurement date: Risk-free interest rate: 2.70% - 3.17% Expected life: 3 months Estimated volatility in the market price of the common shares: 31.49% - 35.94% Dividend yield: Nil GEAC COMPUTER CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In accordance with Canadian GAAP) (Unaudited) Unless otherwise stated, amounts are in thousands of U.S. dollars except share data and per share amounts. Had the Company recorded compensation expense based on the fair value of the options at the grant date and shares issued under ESPP, results would have been as follows:
Three months ended Nine months ended January 31 January 31 2004 2003 2004 2003 ---------- ------ ---------- ------ NET INCOME - AS REPORTED $ 14,437 12,013 $ 34,590 34,136 Pro forma stock-based compensation expense 835 97 1,728 204 ---------- ------ ---------- ------ NET INCOME - PRO FORMA $ 13,602 11,916 $ 32,862 33,932 ========== ====== ========== ====== BASIC NET INCOME PER SHARE - AS REPORTED $ 0.17 0.15 $ 0.41 0.43 Pro forma stock-based compensation expense per share 0.01 -- 0.02 -- ---------- ------ ---------- ------ BASIC NET INCOME PER SHARE - PRO FORMA $ 0.16 0.15 $ 0.39 0.43 ========== ==== ========== ==== DILUTED NET INCOME PER SHARE - AS REPORTED $ 0.17 0.15 $ 0.40 0.42 Pro forma stock-based compensation expense per share 0.01 -- 0.02 -- ---------- ------ ---------- ------ DILUTED NET INCOME PER SHARE - PRO FORMA $ 0.16 0.15 $ 0.38 0.42 ========== ==== ========== ====
For the purpose of pro forma disclosure, the estimated fair value of the options is amortized to expense over their vesting period on a straight-line basis. The pro forma disclosure excludes the effect of options granted before the adoption of CICA 3870. 3. SHARE CAPITAL The number of shares outstanding as of January 31, 2004 was 84,898,780 (April 30, 2003 - 84,136,490). 4. SEGMENTED INFORMATION The Company operates the following business segments, which have been segregated based on product offerings, reflecting the way that management organizes the segments within the business for making operating decisions and assessing performance. ENTERPRISE APPLICATIONS SYSTEMS (EAS) offers software solutions, which include cross-industry enterprise business applications for financial administration and human resource functions, and enterprise resource planning applications for manufacturing, distribution and supply chain management. INDUSTRY-SPECIFIC APPLICATIONS (ISA) products include applications for the real estate, hospitality, property management and construction marketplaces, as well as a range of applications for libraries and public safety administration. There are no significant inter-segment revenues. Segment assets consist of working capital items, excluding cash and cash equivalents. Cash and cash equivalents are considered to be corporate assets. Property, plant and equipment are typically shared by operating segments and those assets are managed by geographic region, rather than through the operating segments. GEAC COMPUTER CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In accordance with Canadian GAAP) (Unaudited) Unless otherwise stated, amounts are in thousands of U.S. dollars except share data and per share amounts.
THREE MONTHS ENDED JANUARY 31, 2004 NINE MONTHS ENDED JANUARY 31, 2004 ------------------------------------ ------------------------------------ EAS ISA TOTAL EAS ISA TOTAL -------- ----- ------ -------- ----- ------ Revenues Software $ 16,946 1,726 18,672 $ 40,920 5,883 46,803 Support and services 72,277 17,314 89,591 209,125 52,377 261,502 Hardware 7,184 728 7,912 18,073 2,789 20,862 -------- ----- ------ -------- ----- ------ Total revenues 96,407 19,768 116,175 268,118 61,049 329,167 -------- ----- ------ -------- ----- ------ Segment contribution $ 20,316 3,926 24,242 $ 53,029 7,652 60,681 ======== ===== ====== ======== ===== ======
Three months ended Nine months ended ------------------------------------ ------------------------------------ January 31, 2003 January 31, 2003 ------------------------------------ ------------------------------------ EAS ISA Total EAS ISA Total -------- ------ ------- -------- ------ ------- Revenues Software $ 9,851 2,607 12,458 $ 26,492 6,949 33,441 Support and services 62,844 18,550 81,394 186,765 60,494 247,259 Hardware 7,504 1,232 8,736 21,304 3,885 25,189 -------- ------ ------- -------- ------ ------- Total revenues 80,199 22,389 102,588 234,561 71,328 305,889 -------- ------ ------- -------- ------ ------- Segment contribution $ 19,104 795 19,899 $ 50,941 5,307 56,248 ======== ====== ======= ======== ====== =======
RECONCILIATION OF SEGMENT CONTRIBUTION TO INCOME FROM OPERATIONS BEFORE INCOME TAXES
Three months ended Nine months ended ----------------------- ----------------------- January 31 January 31 ----------------------- ----------------------- 2004 2003 2004 2003 -------- ------ -------- ------ Segment contribution $ 24,242 19,899 $ 60,681 56,248 Corporate expenses - net of recharges (3,629) (1,257) (9,575) (3,170) Amortization of intangible assets (2,333) (248) (5,363) (530) Interest income (expense), net (105) 229 57 563 Net restructuring and other unusual items 948 -- 3,754 733 Foreign exchange (1,031) 580 (1,806) 1,287 -------- ------ -------- ------ Income from operations before income taxes $ 18,092 19,203 $ 47,748 55,131 ======== ====== ======== ======
GEAC COMPUTER CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In accordance with Canadian GAAP) (Unaudited) Unless otherwise stated, amounts are in thousands of U.S. dollars except share data and per share amounts. 5. NET RESTRUCTURING AND OTHER UNUSUAL ITEMS During the 9 months ended January 31, 2004 the Company recorded a net reversal of $3,754 in net restructuring and other unusual items, which included a reversal of $4,823 of accrued liabilities and other provisions recorded in prior years which were no longer required, partially offset by a charge of $487 for severance related to the restructuring of the Company's business in North America and a charge of $825 resulting from adjustments to a lease obligation assumed in the JBA acquisition. In addition, a pre-tax gain of $243 on the sale of the assets of the NTC Northern Ontario business was recorded in the third quarter of fiscal 2004. 6. LITIGATION In May, 2001 Cels Enterprises, Inc. (Cels) filed a complaint in the United States District Court for the Central District of California against Geac, Geac Enterprise Solutions (GES) and JBA International, Inc. (JBA). GES is JBA's successor in interest as a result of Geac's acquisition of JBA Holdings plc in 1999. The complaint alleged that JBA software supplied to Cels was experimental and did not work. The software product in question, which was part of JBA's product offering prior to the acquisition, is no longer sold by Geac. Cels claimed damages of $28,300. In August, 2003 the jury returned a verdict against GES awarding Cels approximately $1,800 in compensatory damages and $2,300 in punitive damages, and judgment was entered. GES has appealed the award of punitive damages, and Cels has appealed the Court's denial of its motion seeking approximately $1,000 in attorneys' fees and, in the alternative, is seeking to appeal the verdict. At April 30, 2003 Geac had accrued $2,000 in respect of the Cels claim. Geac increased the amount of this reserve to $4,100 at July 31, 2003. Extensity, a subsidiary acquired by Geac in March 2003, is subject to a class action suit, which alleges that Extensity, certain of its former officers and directors, and the underwriters of its initial public offering in January 2000 violated U.S. securities laws by not adequately disclosing the compensation paid to such underwriters. The class action suit has been consolidated with a number of similar class action suits brought against other issuers and underwriters involved in initial public offerings. The plaintiffs seek an unspecified amount of damages. The plaintiffs and issuer parties have entered into a memorandum of understanding to settle all claims, which would be funded by the issuers' insurers. The settlement is subject to a number of conditions, including approval by the proposed settling parties and the Court. In addition, Geac is subject to various other legal proceedings and claims in the ordinary course of business, arising out of disputes over contracts, alleged torts, intellectual property, real estate and employee relations, among other things. In the opinion of management, resolution of these matters is not reasonably expected to have a material adverse effect on Geac's financial position, results of operations or cash flows. A negative outcome far in excess of amounts currently accrued with respect to such matters may materially affect our future financial position, results of operations or cash flows. 7. CREDIT FACILITY On September 9, 2003 Geac and certain of its subsidiaries entered into a Loan, Guaranty and Security Agreement (the "Loan Agreement") with Wells Fargo Foothill, Inc., pursuant to which the Company and certain of its subsidiaries obtained a three-year revolving credit facility (the "Facility") with a $50,000 revolving line of credit and a $5,000 letter of credit sub-facility. The interest rate payable on advances under the Facility is, at Geac's option, the prime rate plus 0.50% or LIBOR plus 3.00%. The Facility is collateralized by substantially all of the assets of Geac and certain of its United States and Canadian subsidiaries and guaranteed by certain of its United States, Canadian, United Kingdom and Hungarian subsidiaries. The Facility is available for the working capital needs and other general corporate purposes of Geac and its subsidiaries that are parties to the Loan Agreement. As of January 31, 2004, the $50,000 revolving line of credit is available and has not been drawn on and $1,815 of the letter of credit sub-facility has been utilized. The financing costs of approximately $2,800 incurred to close the transaction were recorded as other assets in the second quarter of fiscal 2004 and amortized to expense on a straight line basis over the term of the Facility. GEAC COMPUTER CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In accordance with Canadian GAAP) (Unaudited) Unless otherwise stated, amounts are in thousands of U.S. dollars except share data and per share amounts. 8. ACQUISITION On August 6, 2003 the Company acquired Comshare, Incorporated (Comshare), a provider of corporate performance management software, based in Michigan, by way of a cash tender offer for all outstanding shares of Comshare at a price of $4.60 per share. The acquisition was accounted for by the purchase method with the results of operations of the business included in the consolidated financial statements from the date of acquisition. The total purchase price was approximately $55,772, consisting of $53,807 of cash and $1,965 of acquisition costs. The acquired net assets included, at fair value: $16,625 of cash; $10,411 of other current assets; $909 of office and computer equipment; $4,216 of other assets; $28,491 of acquired intangible assets, including $21,736 of acquired software, and $6,755 of customer agreements; $12,876 of current liabilities; and $24,980 of other liabilities. The Company recorded $5,889 of future income tax assets and $4,481 of future income tax liabilities as a component of the transaction. The difference between the purchase price and the fair value of all identifiable assets and liabilities acquired was $31,568 and is accounted for as goodwill. The additions to reserves of approximately $3,125 for workforce reductions related to employees of Comshare in the development, support and services, sales and marketing, and administrative areas, and $1,867 for premises restructuring were recorded at acquisition. As at January 31, 2004 there was a charge of $2,870 against the provision for workforce reductions and $27 against the premises restructuring reserve. In addition, a release of $125 of excess provision for premises restructuring was recorded as an adjustment to goodwill in the third quarter of fiscal 2004. The purchase price allocation for this acquisition has been based on available information at the time of preparation of these interim consolidated financial statements. To the extent that these amounts prove to be excessive or inadequate, they will be adjusted up to the end of the current year by an adjustment to goodwill. 9. COMPARATIVE FIGURES Certain prior year's comparative figures in the financial statements have been reclassified to conform to the current year's presentation. EX-99.3 5 b498046kexv99w3.txt MANAGEMENT DISCUSSION AND ANALYSIS Exhibit 99.3 MANAGEMENT DISCUSSION AND ANALYSIS The following management discussion and analysis of results of operations and financial position should be read in conjunction with the financial statements and notes for the third quarter ended January 31, 2004 and the audited financial statements and notes for the fiscal year (FY) ended April 30, 2003. This discussion contains certain forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. These risks and uncertainties are substantially unchanged from those presented under the "Risk Factors" heading in the "Key Information" section of our annual report on Form 20-F, No. 333-103019, for the fiscal year ended April 30, 2003 filed on October 31, 2003 with the United States Securities and Exchange Commission, and available through the website maintained by the Commission at www.sec.gov, and filed on November 3, 2003 with the Canadian Securities Administrators, and available through the website maintained by the Canadian Securities Administrators and the Canadian Depository for Securities at www.sedar.com, which risks and uncertainties are incorporated by reference herein. Unless otherwise indicated, all dollar amounts are expressed in U.S. dollars, and the word "dollars" and the symbol "$" refer to U.S. dollars. Our financial statements are prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP"). The financial statements of the Company have historically been reported in Canadian dollars. Effective May 1, 2003 the Company adopted the U.S. dollar as its reporting currency, as U.S. dollar denominated operations represent an increasingly significant portion of the Company's operations. Accordingly, the change of the Company's reporting currency from the Canadian dollar to the U.S. dollar reduces the Company's exposure to foreign currency translation adjustments. Comparative financial information has been recast as if the U.S. dollar had always been used as the Company's reporting currency, and financial information has been translated into U.S. dollars for all periods presented. As used in this discussion and unless the context otherwise requires or unless otherwise indicated, all references to "Geac," "we," "our," or "the Company" refer to Geac Computer Corporation Limited and its consolidated subsidiaries. On February 3, 2004 our common shares were registered under the Securities and Exchange Act of 1934 and began trading on the NASDAQ National Market under the ticker symbol "GEAC". Our common shares also continue to be listed on the Toronto Stock Exchange under the ticker symbol "GAC." OVERVIEW Geac is a global enterprise software company for business performance management, providing customers worldwide with the core financial and operational solutions and services to improve their business performance in real time. Our solutions include cross-industry enterprise application systems (EAS) for financial administration and human resources functions, expense management, time capture, budgeting, financial Page 1 of 12 consolidation, management reporting and analysis and enterprise resource planning applications for manufacturing, distribution, and supply chain management. These cross-industry applications are marketed globally and span a number of product lines. We also provide industry specific applications (ISA) tailored to the real estate, restaurant, property management and construction marketplaces, and for libraries and public safety agencies. In addition to our families of software products, we are a reseller of computer hardware and software, and we provide a broad range of professional services, including application hosting, consulting, implementation services, and training worldwide. Geac today has a presence in the financial front and back offices of many of the largest companies in the world. These companies rely on our software applications for their financial and operational processing. GEAC GROWTH STRATEGY SOFTWARE REVENUE GROWTH Geac's dual objectives are (i) to extend relationships with our existing customers by improving the productivity of those customers' existing business processes with new products that build on those customers' ERP and Internet frameworks, and (ii) to attract new customers by delivering a suite of software solutions that can be integrated with their existing enterprise application systems. In both cases, we aim to help our customers improve their business performance with their existing resources. In order to continue to do so effectively, we need to identify compelling products that are consistent with our existing suite of products and then to employ a combination of three strategies to aggregate those product offerings into a complimentary suite: build, buy and partner. We believe that, if we are successful in achieving these objectives, the result is likely to be an increase in new software license revenues. BUILD: ORGANIC GROWTH/PRODUCT EXPANSION During our third quarter we continued to focus on growing our business organically along key product lines, integrating important product and organizational components of Comshare and other recent acquisitions and developing new extension and integration applications in support of our Performance Management strategy. We have broadened our service offerings, expanded our delivery model, and enhanced the value of existing product lines with a series of initiatives designed to sustain our customer base by extending the value our customers derive from Geac software. - VALUE FOR MAINTENANCE - In Q2 FY 2004 we introduced a value-based maintenance offering, which delivers new technology to users of our mainframe software products that simplifies Web-enablement of applications and integration with Geac and non-Geac systems. The new program was rolled out to existing Geac E and M Series customers coming up for maintenance renewal in Q3 FY 2004. An important component of the value - based maintenance offering is an Page 2 of 12 initiative that offers multiple years of support including incentives to encourage customers to extend beyond our traditional one year maintenance contract. To date, approximately 13% of our renewing E and M series customers have elected to participate in the Value For Maintenance (VFM) program representing 20% of the total renewal dollars. We will continue to refine this offering as we receive customer feedback. We expect more customers to transition to this program as they renew their maintenance contracts. Once we have determined that the VFM program achieves our dual objectives of providing customer value and increasing customer retention we will look to introduce it to customers in other product lines. - HOSTED APPLICATION OFFERING - As we announced when reporting as to our second quarter, we have expanded our delivery model by broadening the availability of our ASP offering across our Performance Management suite. There are currently 133,000 individual licensed users of Geac Performance Management presently under contract worldwide. Our hosted solutions represent one of several application delivery and deployment options that we offer our customers as part of our commitment to provide flexibility and choice. Our expanded application delivery model also includes licensed software and usage-based programs. - ORGANIC GROWTH/PRODUCT EXPANSION - We continue to experience strengthening interest in our System21 Aurora line. We currently have more than 23 active projects with customers and license sales in this quarter increased by 63% over the same quarter last year. In January, our Library Solutions division was awarded a new license and maintenance agreement with the Vrije Universiteit Amsterdam having a value of more than $500,000 for Vubis Smart(R) library automation software. Vubis Smart will be used in Vrije Universiteit's Central Library and all 12 of its branches. Vrije Universiteit Amsterdam joined more than 100 customers who have purchased this next generation product to date. BUY: GROWTH THROUGH ACQUISITIONS On August 6, 2003 we acquired Comshare, a leading provider of business performance management software for planning, budgeting, forecasting, financial consolidation, management reporting, and analysis. This acquisition, coupled with the acquisition of Extensity in Q4 FY 2003, is a significant piece of our strategy to build a business performance management product suite. Approximately 30% of our current Performance Management sales pipeline is comprised of existing Geac customers, which underscores an important component of our acquisition strategy - the ability to sell newly-acquired Performance Management products into new and existing Geac customer accounts. In the third quarter, Geac closed several Geac Performance Management sales with existing customers, encompassing planning and expense management applications. For example, we concluded a $425,000 sale of our time and expense management solution to a global manufacturer, and another $300,000 sale of our budgeting and planning application to a major retailer. Page 3 of 12 Geac Performance Management is an integrated product suite that enables companies to bolster their effectiveness by tightening the linkage between business strategy formulation and operational execution. Geac Performance Management can be linked to a multitude of general ledger, ERP, CRM, and other applications provided by Geac and other software vendors. More than 600 customers with non-Geac back-office systems rely on Geac Performance Management for any or all of their planning, budgeting, forecasting, expense and travel management, financial consolidation and reporting and analysis. PARTNER: KEY RELATIONSHIPS During the third quarter of FY 2004, Geac expanded its relationship with Microsoft(R). The two companies delivered joint marketing and sales events within the business performance management market. In addition, the companies ran a well-attended webcast with the CFO Magazine in January for the purpose of educating the marketplace on the impact of business performance management and generating interest in Geac's product offering. Geac and Microsoft jointly closed business representing more than $500,000 in software license revenue for our third quarter. RESULTS OF OPERATIONS THREE MONTH PERIOD ENDED JANUARY 31, 2004 COMPARED TO THE THREE MONTH PERIOD ENDED JANUARY 31, 2003 Revenue - Revenue for the third quarter of FY 2004 ended January 31, 2004 was $116.2 million compared to $102.6 million in the corresponding period in FY 2003, an increase of $13.6 million, or 13.2%. An increase in software license revenue of 49.9% or $6.2 million, from $12.5 million to $18.7 million, and an increase in support and services revenue of $8.2 million, from $81.4 million to $89.6 million, was offset by a decrease in hardware revenue of $0.8 million, from $8.7 million to $7.9 million. The Company will continue to report on its two major business segments: Enterprise Applications Solutions (EAS) and Industry Specific Applications (ISA). The software products acquired in the Comshare and Extensity transactions are components of the EAS business segment. The business integration of Comshare and Extensity has reached a level where it is not possible to identify the expense components of the merged businesses separately. Revenue in the EAS segment was $96.4 million in the third quarter of FY 2004, compared to $80.2 million in the third quarter of FY 2003 and $90.9 million in the second quarter of FY2004. Revenue from the business acquired in the Comshare and Extensity transactions contributed $15.9 million to this year-over-year 20.2% increase. Excluding revenue from these acquired businesses, EAS segment revenue organically grew by $0.3 million. EAS software license sales to new and existing customers were $16.9 million, compared to $9.9 million in the third quarter of FY 2003 and compared to $13.2 million Page 4 of 12 in the second quarter of FY 2004. This represents an increase of 72.0% and 28.6% respectively. The software products acquired in the Comshare and Extensity transactions represented $5.2 million of total EAS software license sales during the quarter. EAS software license revenue is anticipated to continue to grow through the remainder of the fiscal year as a result of license sales of the software products acquired in the Comshare and Extensity transactions and from our new System 21 Aurora application. EAS support and services revenue was $72.3 million, compared to $62.8 million in the third quarter of FY 2003. Support and services revenue generated by the Comshare and Extensity businesses represented $10.7 million of the total during the quarter. Therefore, excluding this revenue, there was a $1.2 million decline. Services and other revenue, which consists primarily of professional implementation and training services, accounted for $4.8 million of the net $9.5 million increase. EAS hardware sales revenue was $7.2 million, a decrease of $0.3 million from the $7.5 million in the third quarter of FY 2003. ISA segment revenue was $19.8 million, compared to $22.4 million in the third quarter of FY 2003. The net $2.6 million decline was primarily attributable to reduced revenues in the Interealty division, as the result of clients' decisions not to renew their contracts. The ISA segment is not viewed as a growth segment for Geac and competitive pricing pressure is expected to continue; however Vubis, our new Libraries product, has met with success. Cost of revenue increased by 9.6%, to $45.9 million from $41.9 million in the corresponding period in FY 2003. These increased costs were in support of a notable increase in both software license sales and support and services revenue. The gross profit margin in the third quarter of FY 2004 increased to 60.5% of revenue from 59.2% a year ago and from 59.5% in the second quarter of FY 2004. Operating Expenses. Operating expenses were $51.1 million in the third quarter of FY 2004, compared to $42.5 million in the corresponding period last year. The year over year increase in operating expenses is primarily attributable to the Comshare and Extensity acquisitions. - - Sales and marketing expenses increased by $5.1 million, and sales and marketing expenses as a percentage of revenues increased from 13.2% in the third quarter of FY 2003, to 16.1% in the third quarter of FY 2004. This increase reflects personnel expenses and related sales and marketing costs intended to drive increased new software license revenue. Sales and marketing expenses as a percentage of revenues decreased from 17.8% in Q2 of FY 2004 to 16.1% in Q3 of FY 2004 as a result of further integration of the Comshare and Extensity sales force. We continue to prioritize integration efforts with the goal of facilitating and accelerating the selling process. Page 5 of 12 - - Product development expenses increased by $2.2 million, and product development expenses as a percentage of revenues increased from 13% in the third quarter of FY 2003 to 13.4% in the third quarter of FY 2004. This increase is primarily attributable to continued spending to support the development of applications associated with the Extensity and Comshare businesses, and the release of internally developed products. - - General and administrative (G&A) expenses are basically flat year over year but G & A expenses as a percentage of revenues decreased from 15.0% in the third quarter of FY 2003, to 13.3% in the third quarter of FY 2004. G & A decreased as a percentage of revenue from 13.9% in the second quarter of FY 2004, to 13.3% in the third quarter of FY 2004. Net Restructuring and Other Unusual Items. During the third quarter of FY 2004, the Company recorded a net reversal of $0.9 million in net restructuring and other unusual items, which included a reversal of $1.6 million of accrued liabilities and other provisions recorded in prior years which were no longer required, and a gain of $0.2 million resulting from the sale of assets associated with our Northern Ontario Networks and Technical Consulting (NTC) division. These credits were partially offset by a charge of $0.8 million relating to adjustments with respect to a lease obligation assumed in the JBA acquisition and a charge of $0.1 million for severance related to the restructuring of the Company's business in North America. In the corresponding period last year, the Company did not record any restructuring and other unusual items. Amortization of Intangible Assets. As a result of the intellectual property acquired in the Extensity and Comshare transactions, $2.3 million has been recorded in amortization of intangibles. In the third quarter of FY 2003 there was a $0.2 million charge for amortization of intangible assets on the income statement. The purchase price allocation for the acquisition of Comshare has been based on available information at the time of the preparation of these interim consolidated financial statements and management's best estimate of the fair value of the net assets acquired. To the extent that these amounts prove to be excessive or inadequate, they will be adjusted up to the end of our current fiscal year by an adjustment to goodwill. Other Income (Expense). Other expense of $1.0 million in the third quarter of FY 2004 was directly attributable to a net loss on foreign exchange. The foreign exchange loss in the quarter is primarily attributable to the acquisition of Comshare. At the time of acquisition, Comshare US recorded amounts owing to the European Comshare entity in US dollars, resulting in the foreign exchange loss as the US dollar depreciated as compared to the British Pound Sterling during the quarter. In the corresponding period last year, other income in the amount of $0.7 million included a $0.6 million gain on foreign exchange and $0.5 million in investment income from the sale of marketable securities, partially offset by a $0.4 million adjustment in the valuation of fixed assets. Page 6 of 12 Income Taxes. The provision for income taxes was $3.7 million in the third quarter of FY 2004, compared to $7.2 million in the corresponding period last year. Of the total $3.7 million provision for income taxes recorded in the third quarter of FY 2004, $0.3 million reflected utilization of income tax assets, and $3.4 million represented cash taxes. Of the total $7.2 million provision for income taxes recorded in the third quarter of FY 2003, $6.7 million reflected utilization of income tax assets, and $0.5 million represented cash taxes. The effective tax rate for the third quarter of FY 2004 was 20.2%, compared to a rate of 37.4% for the third quarter of FY 2003. The decrease in the effective tax rate from the third quarter of FY 2003 to the third quarter of FY 2004 is due to the use of previously unrecognized losses and timing differences to reduce income, as well as the recognition of future tax assets due to changes in tax circumstances in various subsidiaries. These decreases, which are reflected in the future tax provision are partially offset by additional current taxes from adjusting the liability for current taxes previously recorded to actual tax liabilities on tax returns. Net Income Net income was $14.4 million, or $0.17 per diluted share, compared to $12.0 million, or $0.15 per diluted share, in the third quarter of FY 2003. Compared to the third quarter of FY 2003, currency fluctuations -- primarily attributable to the British Pound Sterling and the Euro against the U.S. Dollar - -- had the effect of increasing net income by $0.6 million or $0.01 per share. RESULTS OF OPERATIONS NINE MONTHS ENDED JANUARY 31, 2004 COMPARED TO THE NINE MONTHS ENDED JANUARY 31, 2003 Revenue - Revenue for the nine months ended January 31, 2004 was $329.2 million compared to $305.9 million for the nine months ended January 31, 2003, an increase of $23.3 million, or 7.6%. EAS segment revenue grew by 14.3% as a result of revenue from both acquired and organic software, while ISA segment revenue declined by 14.4%. A 40.0% increase in software license revenue of $13.4 million, from $33.4 million to $46.8 million, and an increase in support and services revenue of $14.2 million, from $247.3 million to $261.5 million, was offset by a decrease in hardware revenue of $4.3 million, from $25.2 million to $20.9 million. As a percentage of total revenue, Software has increased from 10.9% for the year ended April 30, 2003 to 14.2% for the nine months ended January 31, 2004. This increase is strong evidence of management execution of our strategy to increase software revenue in our total revenue mix. Revenue in the EAS segment was $268.1 million in the first nine months of FY 2004, compared to $234.6 million in the first nine months of FY 2003. This year-over-year $33.6 million, or 14.3% increase is attributable to $35.2 million in revenue from the Comshare and Extensity product lines. Page 7 of 12 EAS software license sales to new and existing customers were $40.9 million, compared to $26.5 million in the first nine months of FY 2003. This represents an increase of $14.4 million, or 54.5%. The software products acquired in the Comshare and Extensity transactions represented $10.8 million of total EAS software license sales during the first nine months of FY 2004. EAS support and services revenue was $209.1 million, compared to $186.8 million in the same period in FY 2003. Support and services revenue generated by the Comshare and Extensity businesses represented $24.4 million of the FY 2004 total. Therefore, excluding this revenue, there was a $2.1 million decrease primarily in support revenue. Services and other revenue, which consists primarily of professional implementation and training services, accounted for $12.0 million of the net $22.4 million increase. EAS hardware sales revenue was $18.1 million, compared to $21.3 million during the first nine months of FY 2003. This represents a 15.2% decline in hardware revenue. This declining trend may continue as a result of Geac's shift of focus away from this low margin business. ISA segment revenue declined by $10.3 million, from $71.3 million to $61.0 million, or 14.4% as compared to the first nine months of FY 2003. The decline is primarily attributable to revenue from the Interealty division, which declined by $8.4 million, reflecting significant price pressure and customer losses in the core Multiple Listing Service (MLS) application business and the continuing decline in revenue from the MLS book publishing business, which was expected. Revenue for the restaurants division also declined by $1.4 million of which $1.2 million was a decline in hardware revenue. All other ISA businesses combined accounted for the remaining $0.5 million revenue decline. Cost of Revenues. Costs of revenues increased by $2.6 million, or 2.0%, from $129.3 million in the first nine months of FY 2003 to $131.8 million in the first nine months of FY 2004 because of the increase in revenue and the variable nature of the expenses. However, gross profit margins increased from 57.7% to 59.9%. Costs of software license revenues increased by $0.9 million related to licensing of third party software in several of our product lines. Costs of support and services, primarily comprised of personnel and related costs, increased by $5.5 million, or 5.3% as a result of a 5.8% increase in support and services revenue. Operating Expenses. Operating expenses were $147.9 million, compared to $124.3 million in the first nine months of last year. The results for the first nine months of FY 2004 include expenses relating to the Extensity and Comshare businesses, whereas the results for the first nine months of FY 2003, which pre-date the acquisition of these businesses, do not. The year over year increase in operating expenses is attributable to these acquisitions. Page 8 of 12 - - Sales and marketing expenses increased by $12.6 million, and sales and marketing expenses as a percentage of revenues increased from 13.8% in the first nine months of FY 2003 to 16.6% in the first nine months of FY 2004. Sales and marketing expenses are expected to increase as a percentage of revenue as software revenue increases as a percentage of Geac's total revenue. - - Product development expenses increased by $5.3 million, and product development expenses as a percentage of revenues increased from 12.7% in the first nine months of FY 2003 to 13.4% in the first nine months of FY 2004. This increase is primarily attributable to the acquisitions of Extensity and Comshare, which are designed to support Geac's strategy of buy, build and partner for software license revenue growth. - - General and administrative (G&A) expenses increased by $3.9 million in the first nine months of FY2004 compared to the first nine months of FY 2003, although only $0.1 million of the increase occurred in Q3 of FY2004. G & A expenses as a percentage of revenue is expected to decline going forward. Net Restructuring and Other Unusual Items. During the nine months ended January 31, 2004 the Company recorded a net reversal of $3.8 million in net restructuring and other unusual items, which included a reversal of $4.8 million of accrued liabilities and other provisions recorded in prior years which were no longer required, and a gain of $0.2 million resulting from the sale of assets associated with our Northern Ontario NTC division. These credits were partially offset by a charge of $0.8 million relating to new information obtained on a lease obligation assumed in the JBA acquisition and a charge of $0.4 million for severance related to the restructuring of the Company's business in North America. In the corresponding period last year the Company recorded a net reversal of $0.7 million in net restructuring and other unusual items. Amortization of Intangible Assets. Amortization of intangible assets, primarily acquired software, was $5.4 million for the period ending January 31, 2004, compared to $0.5 million in the same period in FY 2003. This $4.9 million increase is attributable to amortization of intangible assets associated with the Extensity and Comshare businesses, which were acquired in the fourth quarter of FY 2003 and the second quarter of FY 2004, respectively. The purchase price allocation for the acquisition of Comshare has been based on available information at the time of the preparation of these interim consolidated financial statements. To the extent that these amounts prove to be excessive or inadequate, they will be adjusted up to the end of our current fiscal year by an adjustment to goodwill. Other Income (Expense). Other expense of $1.8 million YTD in FY 2004 was attributable to a net loss on foreign exchange. In the corresponding period last year, Other income in the net amount of $2.3 million is attributable to $1.3 million of foreign Page 9 of 12 exchange gains, a $0.6 million gain on the sale of marketable securities, and a $0.4 million gain on the sale of fixed assets. Income Taxes. The provision for income taxes was $13.2 million in the first nine months of FY 2004, compared to $21.0 million in the corresponding period last year. Of the total $13.2 million provision for income taxes recorded in the first nine months of FY 2004, $6.9 million reflected utilization of income tax assets, and $6.3 million represented cash taxes. Of the total $21.0 million provision for income taxes recorded in the first nine months of FY 2003, $17.4 million reflected utilization of income tax assets, and $3.6 million represented cash taxes. The effective tax rate for the first nine months of FY 2004 was 27.6%, compared to a rate of 38.0% for the first nine months of FY 2003. The decrease in the effective tax rate from the third quarter of FY 2003 to the third quarter of FY 2004 is due to the use of previously unrecognized losses and timing differences to reduce income, as well as the recognition of future tax assets due to changes in tax circumstances in various subsidiaries. These decreases, which are reflected in the future tax provision, are partially offset by additional current taxes from adjusting the liability for current taxes previously recorded to actual tax liabilities on tax returns. Net Income. Net income was $34.6 million, or $0.40 per diluted share, compared to $34.1 million, or $0.42 per diluted share, in the first nine months of FY 2003. During the first nine months of FY 2004, currency fluctuations - primarily attributable to the strength of the British Pound Sterling and the Euro against the U.S. Dollar - had the effect of increasing net income by $1.0 million, or $0.01 per share. LIQUIDITY AND FINANCIAL CONDITION At January 31, 2004 cash and cash equivalents totalled $79.0 million, compared to $89.8 million at April 30, 2003. Excluding from the cash and cash equivalents figure of $79.0 million at January 31, 2004 an increase of $3.0 million from the effect of foreign exchange rates, cash and cash equivalents declined by $13.9 million in the first nine months of FY 2004. However, $39.1 million in net cash was used for the acquisition of Comshare in Q2 of this fiscal year. The third quarter of each fiscal year continues to be the period in which we generally record the highest number of renewals for maintenance and support contracts. Accordingly, cash receipts from maintenance contract renewals are highest in the third quarter of the fiscal year and lowest in the first and second quarters, while maintenance revenue is recognized ratably over the year. This seasonality is reflected in the increase in cash provided from operating activities from negative $2.2 million in the second quarter of FY 2004 to positive $30.8 million in the third quarter of FY 2004. Compared to the third quarter of FY 2003 cash provided from operating activities decreased by $7.0 million, or 18.6% primarily caused by a Page 10 of 12 longer renewal cycle on maintenance contracts resulting in a lower deferred revenue balance. For the first nine months of FY 2004 cash provided in operating activities was $28.2 million, compared to $11.0 million in the first nine months of FY 2003. In the first nine months of FY 2003 there was a decrease of $34.5 million in non-cash working capital primarily attributable to payments of prior year restructuring charges. Such a significant restructuring charge did not occur in FY 2003 that would impact FY 2004 and we do not expect to record an unusual item related to restructuring in FY 2004. Excluding changes in non-cash working capital and deferred revenue, cash provided by operating activities was $48.3 million for the first nine months of FY 2004, compared to $59.5 million for the first nine months of FY 2003 largely due to a $17.4 million future tax asset recorded for FY 2003 compared to a $6.8 million future tax asset for FY 2004. Cash used in investing activities was $1.0 million in the third quarter of FY 2004, compared to cash provided by investing activities of $1.0 million in the corresponding period last year. Cash used in investing activities in the third quarter of FY 2004 included $1.6 million in additions to property, plant and equipment, offset by $0.3 from the proceeds on sale of our Northern Ontario NTC division, and $0.4 million in restricted cash and cash equivalents. Cash provided by financing activities was $1.0 million in the third quarter of FY 2004 as a result of the receipt of $0.3 million in proceeds from the issuance of common shares and the addition of a capital lease of $0.7 million in Europe. In the corresponding period last year, cash provided by financing activities was $7.4 million as a result of the receipt of $7.8 million in proceeds from the exercise of 4,475,000 warrants, offset by the repayment of long-term debt in the amount of $0.4 million. Accounts receivable and other, including unbilled receivables, was $71.5 million at January 31, 2004 compared to $61.6 million at the end of FY 2003. This $9.9 million increase included the effects of a $6.1 million increase due to changes in foreign exchange rates, an $8.9 million increase associated with the Comshare acquisition, net of a $5.1 million reduction in other receivables primarily attributable to collections of outstanding receivables at January 31, 2004. Prepaid other assets, which are comprised of deposits, prepaid maintenance, insurance, and prepaid royalties, increased by $0.8 million, from $11.9 million at the end of FY 2003 to $12.7 million at the end of the third quarter of FY 2004. The increase is primarily attributable to prepaid amounts associated with the acquisition of Comshare. Other assets of $4.7 million were recorded for the period ended January 31, 2004, which includes a pension asset, currently valued at $3.2 million, acquired in the Comshare transaction and $1.5 million related to the financing costs of the Wells Fargo three year revolving credit facility. Page 11 of 12 Accounts payable and accrued liabilities were $116.2 million at the end of the third quarter of FY 2004, compared to $95.0 million at the end of FY 2003. This $21.2 million net increase is primarily attributable to a $17.6 million pension liability assumed in the Comshare acquisition, and a net $2.0 million reserve for premises, severance and other reserves related to the Comshare acquisition. Legal accruals increased by $1.3 million, and other liabilities increased by $9.4 million, including $4.3 million for tax related liabilities. These increases were offset by a $9.1 million net reduction in other restructuring reserves. Deferred revenue is comprised of deferred maintenance and support revenues, which are recognized ratably over the term of the related maintenance agreement and deferred professional services revenue, which is recognized as such services are performed. The term for maintenance agreements has historically been one year; however, we have recently initiated a campaign for customer retention that offers multiple years of support with incentives to encourage customers to extend beyond one year. Deferred revenue declined by $8.0 million, from $122.6 million at the end of FY 2003 to $114.6 million at the end of the third quarter of FY 2004. Excluding the effect of a $9.2 million increase in deferred revenue at January 31, 2004 associated with the Comshare acquisition, a $6.1 million increase attributable to foreign exchange rates, and a $1.4 million decrease associated with the release of previously recorded provisions, deferred revenue declined by $21.9 million. Factors that contributed to this decline are: longer customer renewal cycles in part because of the introduction of VFM and multiple year contracts, attrition in maintenance contracts and longer time period for collections of annual maintenance billings in Europe. In the corresponding period last year, deferred revenue declined by $14.0 million, excluding the effect of foreign exchange rates. COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET As disclosed in note 12 to the FY 2003 financial statements and in accordance with Canadian GAAP, the Company has commitments that are not reflected in the balance sheet of the Company. These commitments include operating leases for office equipment and premises, and letters of credit, bank guarantees, and performance bonds that are routinely issued on Geac's behalf by financial institutions, primarily in connection with premises leases and contracts with public sector customers. The Company does not have any other business arrangements, derivative financial instruments, or any equity interests in unconsolidated companies that would have a material effect on the assets and liabilities of the Company at January 31, 2004. Page 12 of 12 -----END PRIVACY-ENHANCED MESSAGE-----