0000313867-95-000010.txt : 19950811 0000313867-95-000010.hdr.sgml : 19950811 ACCESSION NUMBER: 0000313867-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIAD SYSTEMS CORP CENTRAL INDEX KEY: 0000313867 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 942160013 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10504 FILM NUMBER: 95560820 BUSINESS ADDRESS: STREET 1: 3055 TRIAD DR CITY: LIVERMORE STATE: CA ZIP: 94550 BUSINESS PHONE: 5104490606 MAIL ADDRESS: STREET 1: 3055 TRIAD DRIVE CITY: LIVERMORE STATE: CA ZIP: 94550 10-Q 1 CIK: 0000313867 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 1995 OR ___ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Commission File Number 0-9505 Triad Systems Corporation ------------------------- (Exact name of registrant as specified in its charter) Delaware 94-2160013 -------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3055 Triad Drive, Livermore, CA 94550 -------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (510) 449-0606 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 --- --- As of June 30,1995, the registrant had outstanding 17,184,000 shares of common stock with $.001 par value. Triad Systems Corporation QUARTERLY REPORT FORM 10-Q Index Page # Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets at June 30, 1995 and September 30, 1994 1 Consolidated Statements of Income for the Three and Nine Month Periods Ended June 30, 1995 and 1994 2 Consolidated Statements of Cash Flows for the Nine Month Periods Ended June 30, 1995 and 1994 3 Notes to Consolidated Financial Statements 4-5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 6-9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 10-12 Signatures 13 Exhibit 11.1 Computation of Earnings Per Share 14 Exhibit 27 Financial Data Schedule 15 PART I FINANCIAL INFORMATION Triad Systems Corporation CONSOLIDATED BALANCE SHEETS At June 30, 1995 and September 30, 1994 June 30, September 30, (Amounts in thousands except share data) 1995 1994 ---------- ------------- (Unaudited) Assets Current assets Cash and equivalents $8,170 $7,963 Trade receivables 14,099 14,090 Investment in leases 1,747 4,152 Inventories 7,185 6,113 Prepaid expenses and other current assets 6,712 6,068 -------- -------- Total current assets 37,913 38,386 Service parts 3,383 2,434 Property, plant and equipment, net of accumulated depreciation and amortization of $30,202 at June 30, 1995 and $27,486 at September 30, 1994 27,310 27,033 Long-term investment in leases 12,344 21,836 Land for resale 25,160 25,063 Capitalized software and intangible assets 15,390 13,870 Other assets 9,587 7,741 -------- -------- Total assets $131,087 $136,363 ======== ======== Liabilities Current liabilities Notes payable and current portion of long-term debt $6,699 $6,773 Accounts payable 9,856 8,940 Accrued employee compensation 7,176 8,090 Deferred income taxes 4,338 4,310 Other current liabilities and accrued expenses 9,124 10,189 -------- -------- Total current liabilities 37,193 38,302 Long-term debt 52,756 56,633 Deferred income taxes 26,168 23,855 Other liabilities 5,997 5,432 -------- -------- Total liabilities 122,114 124,222 -------- -------- Stockholders' Equity Cumulative convertible preferred stock $.01 par value; authorized 1,000,000 shares; no shares issued and outstanding at June 30,1995 and 1,000,000 shares issued and outstanding at September 30, 1994; liquidation value $20 million --- 10 Common stock $.001 par value; authorized 50,000,000 shares; issued 17,714,000 shares at June 30, 1995 and 13,896,000 shares at September 30, 1994 18 14 Treasury Stock 530,000 shares at June 30, 1995 and 270,000 shares at September 30, 1994 (2,795) (1,326) Capital in excess of par 25,410 31,680 Accumulated deficit (13,660) (18,237) -------- -------- Total stockholders' equity 8,973 12,141 -------- -------- Total liabilities and stockholders' equity $131,087 $136,363 ======== ======== The accompanying notes are an integral part of these financial statements. Triad Systems Corporation CONSOLIDATED STATEMENTS OF INCOME For the Three and Nine Month Periods Ended June 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended June 30, June 30, (Amounts in thousands except per share data) 1995 1994 1995 1994 ------- ------- ------- ------- Revenues Systems $15,381 $17,264 $50,869 $48,912 Customer support services 15,698 14,826 46,888 44,531 Information services 7,111 6,239 20,741 18,061 Finance 2,993 3,062 8,772 7,924 ------- ------- ------- ------- Total revenues 41,183 41,391 127,270 119,428 ------- ------- ------- ------- Costs and expenses Systems 7,703 7,718 24,693 22,437 Services and Finance 13,345 12,518 39,786 37,583 Marketing 11,068 11,141 33,930 31,749 Product development 1,998 1,937 6,164 6,125 General & administrative and other expenses 2,660 2,690 8,622 8,373 ------- ------- ------- ------- Total costs and expenses 36,774 36,004 113,195 106,267 ------- ------- ------- ------- Operating income 4,409 5,387 14,075 13,161 Interest and other expense 1,838 1,836 5,256 5,675 ------- ------- ------- ------- Income before income taxes and extraordinary charge 2,571 3,551 8,819 7,486 Provision for income taxes 977 1,350 3,351 2,845 ------- ------- ------- ------- Income before extraordinary charge 1,594 2,201 5,468 4,641 Extraordinary charge on repurchase of debt, net of taxes ---- 143 153 143 ------- ------- ------- ------- Net income $1,594 $2,058 $5,315 $4,498 ======= ======= ======= ======= Earnings per share Primary Income before extraordinary charge $0.09 $0.13 $0.31 $0.27 Net income $0.09 $0.12 $0.30 $0.26 Weighted average shares 17,842 17,422 17,943 17,423 Fully diluted Income before extraordinary charge $0.09 $0.13 $0.31 $0.27 Net income $0.09 $0.12 $0.30 $0.26 Weighted average shares 17,914 17,422 18,028 17,423 ======= ======= ======= ======= The accompanying notes are an integral part of these financial statements. Triad Systems Corporation CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Month Periods Ended June 30, 1995 and 1994 (Unaudited) Nine Months Ended June 30, (Amounts in thousands) 1995 1994* Cash flows from operating activities Income before extraordinary charge $5,468 $4,641 Adjustments to reconcile income before extraordinary charge to net cash provided by operating activities Extraordinary charge on repurchase of debt, net of taxes (153) (143) Depreciation and amortization 6,240 6,173 Receivable and inventory loss provisions 5,732 5,717 Gains from lease discounting (5,761) (4,544) Other (1,064) 723 Changes in assets and liabilities Trade accounts receivable (2,140) (4,542) Leases (purchased) discounted 16,729 9,871 Inventories (1,704) (1,703) Deferred income taxes 2,341 1,496 Prepaid expenses and other current assets (644) (2,299) Accounts payable 916 (622) Accrued employee compensation (914) 231 Other current liabilities and accrued expenses (1,065) (406) -------- -------- Net cash provided by operating activities 23,981 14,593 Cash flows from investing activities Investment in property, plant and equipment (2,091) (2,256) Capitalized software (2,115) (2,479) Other (5,820) (3,654) -------- -------- Net cash used in investing activities (10,026) (8,389) Cash flows from financing activities Issuance of debt 34,424 30,410 Repayment of debt (39,420) (39,774) Redemption of preferred stock (10,000) --- Proceeds from sale of common stock 3,439 2,037 Dividends paid (400) (600) Purchase of treasury stock (1,469) (615) Other (322) --- -------- -------- Net cash used in financing activities (13,748) (8,542) Net decrease in cash and equivalents 207 (2,338) Beginning cash and equivalents 7,963 8,250 -------- -------- Ending cash and equivalents $8,170 $5,912 ======== ======== Supplemental disclosures of cash flow information Cash paid during the period for Interest $4,407 $4,750 Income Taxes 461 770 Noncash investing and financing activity Redemption of preferred stock 11,195 --- Capital leases 913 294 ======== ======== * Certain fiscal year 1994 amounts have been restated due to correction of an error. The accompanying notes are an integral part of these financial statements. Triad Systems Corporation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1995 and 1994 (Unaudited) 1. In the opinion of the Registrant, the consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of June 30, 1995 and the results of operations and cash flows for the nine month periods ended June 30, 1995 and 1994. The results of operations for the three and nine month periods ended June 30, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. The Balance Sheet does not include all disclosure requirements under GAAP and should be read in conjunction with the September 30, 1994 audited financial statements and notes thereto. 2. The consolidated financial statements include the accounts of Triad Systems Corporation and its wholly-owned subsidiaries, including Triad Systems Financial Corporation ("Triad Financial"), after elimination of intercompany accounts and transactions. Financial information relating to the Company's combined leasing operations is presented in Note 6. 3. Primary and fully diluted earnings per share are based on the average common shares outstanding, the dilutive effect of the stock options and the assumed conversion of the preferred stock and exercise of warrants. On March 31, 1995, Triad Systems Corporation (the "Registrant") effected an exchange ("Exchange") of all of the outstanding units ("Units") (consisting of 1,000,000 shares of the Registrant's Senior Cumulative Convertible Preferred Stock and associated Warrants to purchase 3,500,000 shares of the Registrant's Common Stock par value $.001 held by entities affiliated with Richard C. Blum & Associates, L.P. for an aggregate of $10,000,000 and 2,222,222 shares of Registrant's Common Stock. Please refer to the Liquidity section of the Management Discussion & Analysis for explanation of the exchange. Dilution from common equivalents have been adjusted under the treasury stock method in fiscal year 1995 and further adjusted under the modified treasury stock method in fiscal year 1994. 4. Trade accounts receivable at June 30,1995 and September 30,1994 include allowances for doubtful accounts of $1,400,000 and $1,166,000, respectively. 5. Inventories are stated at the lower of cost (first-in, first-out method) or market and include amounts which ultimately may be capitalized as equipment or service parts. (Amounts in thousands) June 30, 1995 September 30, 1994 ------------- ------------------ Purchased Parts $2,532 $2,404 Work in process 522 448 Finished Goods 4,131 3,261 ------- ------- Inventories $7,185 $6,113 ------- ------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 6. Triad Financial is a wholly-owned subsidiary which purchases Triad systems and other products and leases those products to third parties under full-payout, direct financing leases. Summarized financial information of the Company's combined leasing operations, included in the Consolidated Financial Statements is as follows: CONDENSED COMBINED BALANCE SHEETS At June 30, 1995 and September 30, 1994 June 30, September 30, (Amounts in thousands) 1995 1994 ----------- ------------- (Unaudited) Assets Cash $104 $--- Net investment in leases 14,091 25,988 Residual value retained on leases discounted 6,376 5,544 Receivable from parent company 41,330 25,633 Other assets 3,531 2,857 -------- -------- Total Assets $65,432 $60,022 Liabilities and Stockholder's Equity Other liabilities and accrued expenses $8,174 $8,115 Deferred income 2,290 1,955 Debt 1,506 2,171 Stockholder's equity 53,462 47,781 -------- -------- Total Liabilities and Stockholder's Equity $65,432 $60,022 CONDENSED COMBINED STATEMENTS OF INCOME For the Three and Nine Month Periods Ended June 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended June 30, June 30, (Amounts in thousands) 1995 1994 1995 1994 ------- ------- ------- ------- Revenues $2,993 $3,062 $8,772 $7,924 Selling and administrative expenses 492 548 1,473 1,660 Provision for doubtful accounts 750 700 2,052 1,804 ------ ------ ------ ------ Operating income 1,751 1,814 5,247 4,460 Intercompany income 1,562 840 4,047 2,107 ------ ------ ------ ------ Income before taxes 3,313 2,654 9,294 6,567 Provision for income taxes 1,229 1,084 3,598 2,571 ------ ------ ------ ------ Net income $2,084 $1,570 $5,696 $3,996 ====== ====== ====== ====== Triad Systems Corporation MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Summary Total third quarter revenues were relatively consistent with 1994. Revenues for the first nine months were higher than the prior year by $7.8 million, or 6.6%. Services revenues continued to show improvements, driven by an increase in recurring revenues from the Company's growing customer base. The quarterly improvement in Service revenues was partially offset by a decline of $1.9 million in Systems revenues. Systems revenues were down from the same quarter a year ago due primarily to a controlled rollout of the second phase of the Triad Prism(R) ("Prism B") and an overall softness in the automotive aftermarket. Lower product margins during the quarter decreased operating income by 2.4%, primarily due to sales price discounting and product mix. Operating income of 11.0% was similar to the first nine months of 1994. Quarterly net income (before a 1994 extraordinary charge) declined $.6 million. Net income for the first nine months (before a 1994 and 1995 extraordinary charge) of $5.5 million improved 17.8%. The 1994 and 1995 extraordinary charges were due to the early retirement of $2.8 million and $2.9 million, respectively, in senior fixed rate notes. Third quarter earnings per share were $.09 compared to $.12 in the prior year. Earnings per share for the first nine months were $.30 compared to $.26 a year ago. Percent of Revenues Three Months Ended Nine Months Ended June 30, June 30, 1995 1994 1995 1994 ------ ------ ------ ------ Revenues 100.0% 100.0% 100.0% 100.0% Costs and expenses Cost of systems, services and finance 51.1 48.9 50.7 50.3 Marketing 26.9 26.9 26.7 26.6 Product development 4.9 4.7 4.8 5.1 General & administrative and other expense 6.5 6.5 6.8 7.0 Total costs and expenses 89.4 87.0 89.0 89.0 Operating income 10.6 13.0 11.0 11.0 Interest and other expense 4.5 4.4 4.1 4.7 Income before taxes and extraordinary charge 6.1 8.6 6.9 6.3 Provision for taxes 2.4 3.3 2.6 2.4 Income before extraordinary charge 3.7 5.3 4.3 3.9 Extraordinary charge on repurchase of debt, net of taxes --- 0.3 0.1 0.1 Net income 3.7% 5.0% 4.2% 3.8% Systems Revenues Systems revenues in the Automotive Market declined $2.8 million from the third quarter of 1994. This was due primarily to the Automotive Jobber segment, which had revenues of $5.4 million compared to $7.5 million. This 27.6% decrease reflected controlled shipments of the second phase of the Triad Prism(R) ("Prism B"), due primarily to software problems. During the third quarter, delivery of the Prism B product was temporarily placed on hold to correct these problems, followed by a controlled rollout to closely monitor the product's performance. The controlled rollout is expected to continue through the fourth quarter. There was also a $1.0 million decline in revenue in the Automotive Service Dealer segment, due mainly to purchase deferrals reflecting economic concerns and a temporary reduction in the sales force. Systems revenues for the Hardlines and Lumber Market increased by 11.5% due to the addition of new customers. Systems revenues for the first nine months of $50.9 million improved by $2.0 million. Hardlines and Lumber Systems revenues increased 4.7% to $19.6 million, offset by a decrease in Automotive Systems revenues. Multi-vendor Systems revenues, which represents sales of non-Triad equipment, increased $1.8 million from $.8 million. Services Revenues Third quarter 1995 Services revenues of $22.8 million improved 8.3%. Customer Support Services revenues of $15.7 million improved $.9 million or 5.9%, with growth of $.3 million each in education revenues and multi-vendor services revenues, primarily due to the addition of new customers and third party service activity. Business Products revenues increased $.4 million due to price increases and continued penetration into existing markets. Information Services revenues of $7.1 million improved $.9 million or 14.0% due to continued market penetration. Services revenues for the first nine months of $67.6 million improved $5.0 million, primarily in Information Services, which increased $2.7 million. Customer Support revenues increased $2.4 million, including an increase of $1.1 million in business products. Finance Revenues Finance revenues for the third quarter decreased by 2.3%. This was due primarily to a decrease in the lease portfolio following accelerated lease discounting during the second quarter to help fund the March 31, 1995 exchange of the outstanding preferred shares and warrants for common stock (refer to the Liquidity section for further explanation of the equity exchange). Revenues for the first nine months increased $.8 million, resulting from the additional discounting. Costs and Expenses Gross margin as a percentage of total revenues was 48.9% for the quarter and 49.3% for the first nine months, a decline of 2.2% and 0.4%, respectively. The decline was due primarily to sales price discounting and product mix. Gross margin as a percentage of systems revenues was down 5.2% and 2.7% for the third quarter and first nine months, respectively. Gross margin as a percentage of services and finance revenues for the quarter remained consistent with the prior year and increased 1.2% for the first nine months. Marketing expenses of $11.1 million and $33.9 million for the quarter and first nine months, respectively, were fairly even as a percentage of revenue. Product Development costs, after capitalization of software development expense, were $2.0 million for the quarter and $6.2 million for the first nine months and consistent as a percentage of revenues at 5%. General and administrative costs, litigation and other expenses were about even with prior year expenses as a percentage of revenue. Lower fixed rate debt, offset by the slightly higher floating debt rate, resulted in interest expense comparable with the prior quarter. Interest expense for the first nine months decreased $.4 million due primarily to the reduction of fixed rate debt and bank line of credit. Future Operating Results The Company's future operating results will depend upon conditions in its markets that may affect demand for its products, and upon the Company's ability to introduce products and enhancements on a timely basis. Results will also be affected by seasonal changes in product demand, market acceptance of new products and enhancements, the size and experience of the sales force and the mix of products sold. All could cause operating results to fluctuate, especially on a quarterly basis. Liquidity Working Capital - management believes that working capital and the Company's ability to generate working capital is sufficient to meet foreseeable business needs. The Company utilizes its cash in excess of operating requirements to fund Triad Financial's lease portfolio and to reduce the Company's debt level. On March 31, 1995, the Company financed the exchange of 1 million shares of preferred stock and associated warrants to purchase 3.5 million shares of common stock for $10 million cash and approximately 2.2 million shares of Triad common stock. The exchange eliminated $400,000 in preferred shares dividend payments over the second half of the current year and up to $2 million annually that would have been paid in future years. The exchange was accomplished without incurring new debt. Cash provided by operating activities was $24.0 million for the first nine months compared to $14.6 million. Lease discounting, net of purchases, was up $6.9 million primarily to fund the preferred shares exchange and to retire debt. Depreciation and amortization were consistent with the prior year at $6.2 million. Cash used in investing activities increased to $10.0 million for the first nine months compared to $8.4 million. Capital expenditures for the first nine months of $2.1 million were about even with the prior year. Cash used in financing activities was $13.7 million for the first nine months, an increase of $5.2 million. Cash of $10.0 million was paid for the redemption of preferred stock on March 31, 1995. Cash used for repayment of debt net of issuances was $4.0 million less during the first nine months. Business Resources Management believes available cash resources, primarily generated from operations, lease discounting and credit lines, will provide adequate funds to finance foreseeable operating needs. The Company maintains $16.8 million in bank lines of credit and there were no borrowings at June 30, 1995. The Company currently invests its available cash resources in the lease portfolio of Triad Financial due to the higher yields achieved and the flexibility to offer customers financing. Triad Financial financed $24.0 million of Triad's domestic business systems sales and $12.5 million in non-Triad equipment through client lease programs during the first nine months of 1995. Additionally, Triad Financial received $17.5 million and $57.3 million of proceeds from discounting in the third quarter and first nine months, respectively. Limited and full-recourse discounting agreements are maintained with banks and lending institutions. The discounting agreements contain certain restrictive covenants which allow Triad Financial to discount only while in compliance with such covenants. The Company is in compliance with the restrictive covenants and management believes that it will maintain compliance with such covenants in the foreseeable future. Under the discounting agreements, Triad Financial is contingently liable for losses in the event of lessee nonpayment. The agreements provide for limited recourse of up to 10% or full recourse at 100% of discounting proceeds, depending on the credit risk associated with specific leases. At June 30, 1995, the portfolio available for discounting was $14.1 million and commitments for $43.7 million in discounting lines were available. PART II OTHER INFORMATION Item 1. Not applicable Item 2.(b) Changes in the rights of the Company's security holders. On March 31, 1995, Triad Systems Corporation (the "Registrant") effected an exchange ("Exchange") of all of the outstanding units ("Units") consisting of 1,000,000 shares of the Registrant's Senior Cumulative convertible Preferred Stock and associated Warrants to purchase 3.5 million shares of the Registrant's Common Stock par value $.001 held by entities affiliated with Richard C. Blum & Associates, L.P. for an aggregate of $10,000,000 and 2,222,222 shares of Registrant's Common Stock. For further information concerning the exchange, please refer to the Management's Discussion and Analysis of Finanical Condition and Results of Operations - "Liquidity" in Part I of this report and the Company's Current Report on Form 8-K filed May 11, 1995. Item 3. Not applicable Item 4. Submission of Matters to a vote of Security Holders. Registrant's Annual Meeting of Stockholders was held on February 9, 1995. The following director was elected at the annual meeting, to serve a three year term until the 1998 Annual Meeting of Stockholders and his successor is duly elected and qualified: Henry M. Gay; the number of shares in favor were 11,419,622; and the number of shares withheld were 134,569. James R. Porter, George O. Harmon, William W. Stevens and Richard C. Blum continue to serve as directors. At the Annual Meeting, the stockholders approved an amendment to the Triad Systems Corporation 1990 Employee Stock Purchase Plan (the "Purchase Plan") to increase the number of shares reserved for issuance under the Purchase Plan from 650,000 shares to 1,150,000 shares. The number of shares voting for such proposal was 10,709,096; the number of shares voting against such proposal was 451,938; the number of shares abstaining from voting on such proposal was 120,139; and the number of broker non-votes was 273,018. Item 5. Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibit Index for June 30, 1995 Sequentially Exhibit Numbered Number Page -------- ------------ *10.1 Triad Systems Corporation Amended and Restated 1982 Stock Option Plan as amended on October 22, 1993, incorporated by reference from Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.2 Form of Indemnification Agreement, incorporated by reference from Exhibit 10.4 to the Company's Registration Statement on Form S-2 (File No. 33-2966) filed July 3, 1989 (the "1989 Form-2 Registration Statement"). *10.3 Nonqualified Stock Option Agreement between the Company and James R. Porter dated January 13, 1987, incorporated by reference from Exhibit 10.5 to the 1987 Form S-2 Registration Statement, (File No. 33-13599) (the "1987 Company's Form S- 2 Registration Statement"). 10.4 Development Agreement between the Company and the City of Livermore dated December 2, 1985, incorporated by reference from Exhibit 10.5 to the 1987 Form S-2 Registration Statement. 10.5 Subdivision Improvement Agreement between the Company and the City of Livermore dated December 2, 1985, incorporated by reference from Exhibit 10.7 to the 1987 Form S-2 Registration Statement. 10.6 Mortgage between Variable Annuity Life Insurance Company and 3055 Triad Drive dated August 23, 1988, incorporated by reference from Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1988 (the "1988 Form 10-K"). *10.7 Nonqualified Stock Option Agreement between the Company and James R. Porter dated as of February 17, 1987, incorporated by reference from Exhibit 10.7 of the 1988 Form 10-K. *10.8 Nonqualified Stock Option Agreement between the Company and James R. Porter dated November 12, 1988, incorporated by reference from Exhibit 10.8 of the 1988 Form 10-K. *10.9 Triad Systems Corporation 1990 Stock Option Plan as amended on October 22, 1993, incorporated by reference from Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. *10.10 Triad Systems Corporation Amended and Restated Outside Directors Stock Option Plan, incorporated by reference from Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1991. 10.11 Revolving Credit Loan Agreement dated as of June 30, 1992, as amended, between the Company and Plaza Bank of Commerce, incorporated by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K filed August 17, 1992. 10.12 Unit Purchase Agreement dated as of July 2, 1992, between the Company, Richard C. Blum & Associates, Inc. and certain purchasers, together with the First Amendment to Unit Purchase Agreement dated as of August 3, 1992, and the form of irrevocable Proxy, incorporated by reference from Exhibit 10.4 to the Company's Current Report on Form 8-K filed August 17, 1992. 10.13 Unit Certificate evidencing Units to purchase Preferred Stock and Warrants, together with Form of Warrant Certificate, attached as Exhibit A thereto, incorporated by reference from Exhibit 3.2 to the Company's Current Report on Form 8-K filed August 17, 1992. 10.14 Registration Rights Agreement between the Company and certain purchasers under the Unit Purchase Agreement dated as of August 3, 1992, incorporated by reference from Exhibit 10.5 to the Company's Current Report on Form 8-K filed August 17, 1992. 10.15 Grant Agreement between the Industrial Development Authority and Triad Systems Ireland Limited, Triad Systems Corporation and Tridex Systems Limited and related agreements, incorporated by reference from Exhibit 10.15 to the 1992 Form S-4 Registration Statement. 10.16 Cancellation of Development Agreement between the Company and the City of Livermore dated July 15, 1993, incorporated by reference from Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. 10.17 Amended and Restated Subdivision Improvement Agreement between the Company and the City of Livermore dated May 12, 1993, incorporated by reference from Exhibit 10.17 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. *10.18 Supplemental Deferred Compensation Plan between the Company and a select group of Triad Key Employees and their beneficiaries dated April 1, 1994, incorporated by reference from Exhibit 10.18 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1994. *10.19 Amendment to the Amended and Restated 1982 Stock Option Plan dated April 25, 1994, incorporated by reference from Exhibit 10.19 to the Company's Form 10-Q for the fiscal quarter ended June 30, 1994. 10.20 Amendment No. Three to Revolving Credit Loan Agreement and Consent (to Exchange Agreement) between Triad Systems Corporation, Triad Systems Financial Corporation and Comerica Bank-California dated March 31, 1995, incorporated by reference from Exhibit 6 to the May 1995 Form 8-K. 11.1 Computation of Earnings Per Share. 14 27.0 Financial Data Schedule 15 (b) Reports on Form 8-K The Company filed a report on Form 8-K on May 11, 1995, which described under Item 5 - Other Events, the Company's March 31, 1995 exchange of 1,000,000 shares of preferred stock and associated warrants to purchase 3,500,000 shares of common stock for $10,000,000 cash and 2,222,222 shares of Triad common stock, and the respective amendments to the Revolving Credit Loan Agreement and the Indentures governing the Fixed Rate Notes and Floating Rate Notes. ---------- * Compensatory or employment agreement 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, a duly authorized officer of the Registrant. Triad Systems Corporation ------------------------- (Registrant) Date: August 8, 1995 /s/ STANLEY F. MARQUIS -------------- ----------------------- Stanley F. Marquis Vice President, Finance (Principal Financial Officer) EX-11 2 Exhibit 11.1 Triad Systems Corporation COMPUTATION OF EARNINGS PER SHARE For the Three and Nine Month Periods Ended June 30, 1995 and 1994 Three Months Ended Nine Months Ended June 30, June 30, (Amounts in thousands except per share data) 1995 1994 1995 1994 ------- ------- ------- ------- Calculation of number of shares entering into computations Weighted average shares outstanding 17,079 13,167 17,123 12,838 Assumed conversion of preferred stock and exercise of warrants ---- 3,137 ---- 3,137 ------- ------- ------- ------- 17,079 16,304 17,123 15,975 Net effect of dilutive stock options and warrants based on the average stock price 763 1,118 820 1,448 ------- ------- ------- ------- Average primary shares outstanding 17,842 17,422 17,943 17,423 Net effect of dilutive stock options and warrants based on the ending stock price 72 ---- 85 ---- ------- ------- ------- ------- Average fully diluted shares outstanding 17,914 17,422 18,028 17,423 ======= ======= ======= ======= Income before extraordinary charge $1,594 $2,201 $5,468 $4,641 Net interest costs associated with assumed retirement of debt ---- 7 ---- 63 ------- ------- ------- ------- Adjusted income before extraordinary charge 1,594 2,208 5,468 4,704 Extraordinary charge on repurchase of debt, net of taxes ---- 143 153 143 ------- ------- ------- ------- Adjusted net income $1,594 $2,065 $5,315 $4,561 ======= ======= ======= ======= Earnings per share Primary Income before extraordinary charge $0.09 $0.13 $0.31 $0.27 Net income $0.09 $0.12 $0.30 $0.26 Fully diluted Income before extraordinary charge $0.09 $0.13 $0.31 $0.27 Net income $0.09 $0.12 $0.30 $0.26 ======= ======= ======= ======= EX-27 3 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets at June 30, 1995 and the Consolidated Statement of Income and Statement of Cash Flow for the nine months ended June 30, 1995, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS SEP-30-1995 JUN-30-1995 8,170 0 15,499 1,400 7,185 37,913 57,512 30,202 131,087 37,193 52,756 18 0 0 8,955 131,087 50,869 127,270 24,693 64,479 0 5,732 5,256 8,819 3,351 5,468 0 153 0 5,315 0.30 0.30