-----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, U+go2H3A6TYcjHTdWsFrbK0oRtQbjXCfXPAd3R/QzP1SW8C3gmEWj5mxYx0wBv6M U0dUNYygOmD5wP+qkHrbpQ== 0000718976-96-000020.txt : 19960613 0000718976-96-000020.hdr.sgml : 19960613 ACCESSION NUMBER: 0000718976-96-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960611 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BGS SYSTEMS INC CENTRAL INDEX KEY: 0000718976 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 042559993 STATE OF INCORPORATION: MA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12192 FILM NUMBER: 96579203 BUSINESS ADDRESS: STREET 1: 128 TECHNOLOGY CENTER CITY: WALTHAM STATE: MA ZIP: 02254 BUSINESS PHONE: 6178910000 MAIL ADDRESS: STREET 1: 128 TECHNOLOGY CENTER CITY: WALTHAM STATE: MA ZIP: 02254-9111 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 0-12192 BGS SYSTEMS, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2559993 (State of Incorporation) (I.R.S. Employer Identification No.) 128 Technology Center, Waltham, Massachusetts 02254 (Address of principal executive offices) Registrant's telephone number, including area code: (617) 891-0000 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 Number of shares outstanding of each of the issuer's classes of common stock. Common stock, $.10 par value Shares outstanding @ April 30, 1996.................................3,214,849 BGS Systems, Inc. Table of Contents Part I Financial Information: Page No. Item 1 - Financial Statements: Balance Sheets 3 Statements of Income 4 Statements of Cash Flows 5 Notes to Financial Statements 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 Part II Other Information: Item 3 - Exhibits and Reports on Form 8-K 10 Signatures 13
Part I Financial Information Item 1. Financial Statements BGS SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) April 30, January 31, 1996 1996 ----------------------------- ASSETS Current Assets: Cash and cash equivalents $14,891,623 $11,228,411 Marketable securities 1,730,000 1,040,000 Accounts receivable, less allowances of $365,000 at April 30, 1996 and January 31, 1996 for doubtful accounts 9,265,148 14,162,823 Prepaid expenses and other assets 1,157,383 951,033 Deferred income taxes 257,398 257,398 Total current assets 27,301,552 27,639,665 Capitalized software 803,125 775,000 Equipment: Land 2,258,360 2,258,360 Building 3,064,357 3,037,777 Furniture and fixtures 1,625,360 1,607,098 Computer equipment 6,754,017 6,488,993 13,702,094 13,392,228 Less accumulated depreciation 6,673,908 6,426,094 7,028,186 6,966,134 Total Assets $35,132,863 $35,380,799 ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,277,923 $ 1,343,665 Accrued expenses 541,928 1,162,102 Accrued compensation and employee benefits 1,466,725 2,197,567 Deferred revenue 14,848,406 15,082,034 Federal and state income taxes payable 681,990 421,159 Billings in excess of costs and earnings on uncompleted contracts - 213,110 Dividends payable - - Total current liabilities 18,816,972 20,419,637 Stockholders' equity: Common stock, $.10 par value-authorized 10,000,000 shares; issued and outstanding 3,214,849 shares 321,486 321,486 Capital in excess of par value 14,387,404 14,387,404 Retained earnings 4,403,616 3,082,920 Equity adjustment from foreign currency translation (666,647) (700,680) 18,446,859 17,091,130 Less cost of 91,120 shares (112,885 shares in 1995) of common stock in treasury 2,129,968 2,129,968 Total stockholders' equity 16,315,891 14,961,162 Total liabilities and stockholders' equity $35,132,863 $35,380,799 ============ ============ See Accompanying Notes to Financial Statements
BGS SYSTEMS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended April 30, 1996 1995 ----------------------------- REVENUES: License fees $ 5,281,048 $ 4,108,930 Maintenance fees 4,457,879 4,177,615 Other 750,115 634,437 ------------ ------------ 10,489,042 8,920,982 ------------ ------------ COSTS AND EXPENSES: Cost of software 1,029,879 561,200 Cost of maintenance and support 1,926,238 1,511,834 Cost of consulting, development contracts and other 206,115 171,129 Sales and marketing 3,135,191 2,741,956 General and administrative 813,859 842,252 Research and development 411,046 544,821 ------------ ------------ 7,522,328 6,373,192 ------------ ------------ OPERATING INCOME 2,966,714 2,547,790 Investment income: Interest income, net 143,035 199,475 Other income 64,113 81,703 ------------ ------------ 207,148 281,178 ------------ ------------ INCOME BEFORE TAXES 3,173,862 2,828,968 Income taxes 1,072,232 956,285 NET INCOME $ 2,101,630 $ 1,872,683 ============ ============ Net income per share $ .67 $ .60 ============ ============ Weighted average number of shares outstanding 3,144,953 3,116,220 ============ ============ Net income per share: The computations of income per share are based on the weighted average number of shares of Common Stock outstanding during the periods, including the dilutive effect of stock options. See Accompanying Notes to Financial Statements
BGS SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) April 30, 1996 1995 ----------------------------- OPERATING ACTIVITIES: Net income $ 2,101,630 $ 1,872,683 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 363,671 208,041 Changes in operating assets and liabilities: Accounts receivable 4,883,236 4,170,404 Billings in excess of costs & estimated earnings on uncompleted contracts (213,111) - Other current assets (207,607) 105,262 Accounts payable and accrued expenses (1,390,970) (1,384,027) Deferred revenue (212,887) (635,525) Federal and state income taxes 259,536 (181,337) Foreign currency transaction 12,870 (55,219) ------------ ------------ Net cash provided by operating activities 5,596,368 4,100,282 ------------ ------------ FINANCING ACTIVITIES: Purchases of common stock for treasury 0 0 Proceeds from issuance of common stock 0 0 Dividends paid (780,932) (775,491) ------------ ------------ Net cash used in financing activities (780,932) (775,491) ------------ ------------ INVESTING ACTIVITIES: Purchases of available-for-sale securities (690,000) (505,000) Proceeds from maturity of available-for-sale securities - 900,000 Additions to capitalized software costs (142,188) (125,000) Additions to equipment (309,943) (335,824) Net cash provided by (used in) investing ------------ ----------- activities (1,142,131) (65,824) ------------ ------------ Effect of exchange rate changes on cash and cash equivalents (10,093) 113,168 Net increase (decrease) in cash and cash equivalents 3,663,212 3,372,135 Cash and cash equivalents at beginning of fiscal year 11,228,411 9,084,622 ------------ ------------ Cash and cash equivalents at end of period $14,891,623 $12,456,757 ============ ============ See Accompanying Notes to Financial Statements
BGS SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS I. Accounting Comments With respect to the unaudited statements for the interim periods included in this report, management of the Company believes that all adjustments necessary for fair presentation of the results for such interim periods have been included, and are of a normal recurring nature. Reference is made to the registrant's Form 10-K Annual Report, filed with the Securities and Exchange Commission on April 26, 1996, which incorporates the financial statements and notes thereto, including a summary of significant accounting policies, for the fiscal years ended January 31, 1996 and January 31, 1995. The results for the interim periods are not necessarily indicative of the results for the entire year. Part 1-Item 2 BGS SYSTEMS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Material Changes in Results of Operations Revenue from license fees for the first quarter grew 29% to $5,281,000 from $4,109,000 last year and provided the basis for an 18% increase in operating revenues. Sales of the Company's products for distributed systems increased over 200% over last year's first quarter. The domestic operations posted a 17% gain in license fees over the prior year's first quarter while the Company's international operations almost doubled the license fee revenue for the first quarter over the prior year's weak first quarter. The Company's German operations continued to rebound and posted revenue gains for the quarter and the Company's UK operations also posted revenue gains over the prior year's first quarter. The Company's other international operations, in total, posted revenue gains for the period. The Company's new network products are not expected to have a material impact on the Company's revenue until the latter part of this fiscal year, at the earliest. Maintenance fees for the first quarter increased 7% to $4,458,000. The Company's domestic maintenance renewal rate improved slightly over last year's renewal rate which had been adversely impacted by the cancellation of a few renewals of large dollar value. The Company expects to continue to experience a deterioration of the maintenance renewals from its older Crystal, VM and SNA network product lines. The Company lacks any meaningful historical data concerning the renewal trends of UNIX products. This is hampering the Company's ability to ascertain any trend in maintenance revenue over the balance of the current fiscal year. Consulting, development contracts and other revenue increased 18% to $750,000 on the strength of improved levels of consulting work completed during the quarter. Revenue from development contracts and other revenue were at levels similar to those of the prior year. Revenue from these sources tends to come from the Company's existing customer base and continues to be done primarily for the convenience of our customers. Aggregate costs and expenses for the three month period increased 18% to $7,522,000 from $6,373,000 during the comparable period last year. Sales and marketing expenses were higher as a result of the higher level of commissionable revenue, a continuation of the expansion of the sales force and marketing activity relating to the Company's new products. General and administrative expenses were essentially even with the prior year. The cost of software increased 84% to $1,030,000, as the Company continues to increase its investment in the development of new products. The cost of maintenance and support also increased as additional resources are required to provide adequate support for our expanding product base. The cost of consulting, development contracts and other revenue increased at approximately the same rate as the related revenue. Investment income declined 26% to $207,000 in the first quarter of fiscal year 1997, compared to $281,000 earned a year earlier. A decrease in the amount invested in interest bearing securities was the primary reason for the decline. In the fourth quarter of the prior fiscal year the Company used some of its cash reserves to purchase a building that will serve as its new headquarters. Net income and earnings per share grew 12% over last year's first quarter. The effective tax rate for both years was 34%. Material Changes in Financial Condition/Liquidity Cash increased $4,353,000 primarily as a result of the collections of fiscal year 1996 fourth quarter sales. The decrease in accounts receivable from January 31 is primarily due to the collection of outstanding accounts and the lower sales levels in the first quarter of the year versus the normal increased sales activity during the fourth quarter. The Company's cash resources are considered sufficient to finance the Company's growth in the foreseeable future. Accrued compensation declined by $731,000 as a result of the payment in the first quarter of bonuses accrued at January 31, 1996. Accrued expenses declined primarily as a result of the payment of compensation related fringe benefits and other expenses relating to the year end increased level of revenue. The Company declared and paid one regular quarterly $.25 per share dividend during the quarter. Subsequent to the end of the quarter, the Company declared and increased its regular quarterly dividend to .$50 per share from $.25 per share. Trends and Uncertainties Having a relatively small "float" has been a characteristic of the Company's stock performance since the Company "went public" in 1983. Historically, one of the consequences of having a small float has been that there are relatively few "market makers" in the stock compared to substantially larger companies with much larger floats. Heretofor the number of market makers has ranged from one to five. Additionally, average spreads between the bid and asked prices of the Company's stock have ranged from approximately $2.00 to $3.00. As investors know, the spread on the bid and asked prices of the Company's common stock has recently increased to an approximate range of $4.00 to $10.00, and the number of market makers has declined from five to two. Investors are also aware that the implementation by the NASDAQ Stock Market of the so-called "Small Order Entry System" has given apparent rise to so-called "SOES Bandits." The Company does not know if the risks faced by market makers in its stock from raids by these "SOES Bandits" has caused this increased spread on the bid and asked prices of the Company's stock or resulted in the current decline in the number of market makers. While these apparent trends are not expected to materially affect the Company's corporate performance, the Company does not know if they may have had some indeterminable effect on the amount and volatility of its stock prices. The Company is unable to predict the future effect of the Small Order Entry System, the SOES Bandits, the spreads between bid and asked or changes in the number of market makers on the future performance of its stock. BGS SYSTEMS, INC. Part II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits. The exhibits filed as part of this form 10-Q are listed on the Exhibit Index immediately preceding such exhibits and are incorporated herein by reference. (b) Form 8-K. The Registrant did not file any reports on Form 8-K during the quarter for which this report is filed. INDEX TO EXHIBITS Exhibits Page Number 11 Statement regarding Computation of per share earnings 27 Financial Data Schedule BGS SYSTEMS, INC. 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. BGS Systems, Inc. 128 Technology Center Waltham, Massachusetts 02254 Date: June 10, 1996 By: /S/ HAROLD S. SCHWENK, JR. Harold S. Schwenk, Jr. President and Chief Executive Officer Date: June 10, 1996 By: /S/ NORMAND BILODEAU Normand Bilodeau Chief Financial Officer EX-11 2
STATEMENT REGARDING COMPUTATIONS OF PER SHARE EARNINGS BGS SYSTEMS, INC. For the quarter ended April 30, 1996 1995 -------------------------- PRIMARY Average shares outstanding 3,123,729 3,101,964 Net effect of stock options, if dilutive, based on the treasury stock method using the average market price 21,224 14,256 ----------- ----------- Total 3,144,953 3,116,220 ----------- ----------- Net income $ 2,101,630 $ 1,872,683 =========== =========== Net income per share $ .67 $ .60 =========== ===========
EX-27 3
5 0000718976 BGS SYSTEMS, INC. 1 U.S. DOLLARS 3-MOS JAN-31-1997 FEB-01-1996 APR-30-1996 1 14,891,623 1,730,000 9,265,148 365,000 0 27,301,552 13,702,094 6,673,908 35,132,863 18,816,972 0 0 0 321,486 15,994,405 35,132,863 5,281,048 10,489,042 6,915,764 7,522,328 0 0 0 3,173,862 1,072,232 2,101,630 0 0 0 2,101,630 .67 .67
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