-----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, MBuQvyTD9BkTKgEBhK8vopIfMAwPdt1QFuRvZCVzQ4RFWKNoCV1DPHTTu+B+DswK ThnhwTYv8t43NomPPvv9TQ== 0000718976-96-000028.txt : 19960913 0000718976-96-000028.hdr.sgml : 19960913 ACCESSION NUMBER: 0000718976-96-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960912 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: 96629045 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 July 31, 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 @ July 31, 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 7-8 Part II Other Information: Item 6 - Exhibits and Reports on Form 8-K 9 Signatures
3 Part I Financial Information Item 1. Financial Statements BGS SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) July 31, January 31, 1996 1996 ----------------------------- ASSETS Current Assets: Cash and cash equivalents $12,701,654 $11,228,411 Marketable securities 1,700,000 1,040,000 Accounts receivable, less allowances of $365,000 at July 31, 1996 and January 31, 1996 for doubtful accounts 10,684,294 14,162,823 Prepaid expenses and other assets 1,288,857 951,033 Deferred income taxes 257,398 257,398 Total current assets 26,632,203 27,639,665 Capitalized software 831,250 775,000 Equipment: Land 2,258,360 2,258,360 Building 3,085,480 3,037,777 Furniture and fixtures 1,653,276 1,607,098 Computer equipment 7,107,719 6,488,993 14,104,835 13,392,228 Less accumulated depreciation 6,945,831 6,426,094 7,159,004 6,966,134 Total Assets $34,622,457 $35,380,799 ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 940,860 $ 1,343,665 Accrued expenses 664,255 1,162,102 Accrued compensation and employee benefits 1,412,742 2,197,567 Deferred revenue 13,915,944 15,082,034 Federal and state income taxes payable 579,301 421,159 Billings in excess of costs and earnings on uncompleted contracts - 213,110 Dividends payable - - Total current liabilities 17,513,102 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 14,424,076 14,387,404 Retained earnings 5,015,868 3,082,920 Equity adjustment from foreign currency translation (656,706) (700,680) 19,104,724 17,091,130 Less cost of 85,363 shares (112,885 shares in 1995) of common stock in treasury 1,995,369 2,129,968 Total stockholders' equity 17,109,355 14,961,162 Total liabilities and stockholders' equity $34,622,457 $35,380,799 ============ ============
FORM 10-Q 4
BGS SYSTEMS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended July 31, July 31, 1996 1995 1996 1995 REVENUES: License fees $ 6,272,251 $ 5,087,888 $11,553,299 $ 9,196,818 Maintenance fees 4,424,534 4,243,678 8,882,413 8,421,293 Other 621,107 375,818 1,371,222 1,010,255 ------------ ------------ ------------ ------------ 11,317,892 9,707,384 21,806,934 18,628,366 ------------ ------------ ------------ ------------
COSTS AND EXPENSES: Costs of software 1,095,161 197,159 2,125,040 1,175,965 Costs of maintenance & support 2,156,716 2,283,312 4,082,954 3,377,540 Costs of consulting, develop- ment contracts and other 352,906 209,617 559,021 380,746 Sales and marketing 3,406,551 3,065,767 6,541,742 5,807,723 General and administrative 960,840 883,698 1,774,699 1,725,950 Research and development 373,606 461,582 784,652 1,006,403 ------------ ----------- ----------- ----------- 8,345,780 7,101,135 15,868,108 13,474,327 ------------ ----------- ----------- ----------- OPERATING INCOME 2,972,112 2,606,249 5,938,826 5,154,039 Investment income: Interest income, net 140,966 215,302 284,001 414,777 Other income 173,139 92,352 237,252 174,055 ------------ ----------- ------------ ----------- 314,105 307,654 521,253 588,832 ------------ ----------- ------------ ----------- INCOME BEFORE TAXES 3,286,217 2,913,903 6,460,079 5,742,871 Income taxes 1,112,100 1,017,281 2,184,332 1,973,566 NET INCOME $ 2,174,117 $ 1,896,622 $ 4,275,747 $ 3,769,305 ============ =========== =========== =========== Net income per share $ .69 $ .61 $ 1.36 $ 1.21 ============ ============ ============ =========== Weighted average number of shares outstanding 3,163,224 3,123,413 3,154,089 3,119,817 ============ ============ ============ =========== 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.
5 FORM 10-Q
BGS SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) July 31, 1996 1995 ------------------------------- OPERATING ACTIVITIES: Net income $ 4,275,747 $ 3,769,305 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 732,010 442,930 Changes in operating assets and liabilities: Accounts receivable 3,560,503 5,155,630 Billings in excess of costs & estimated earnings on uncompleted contracts (213,111) - Other current assets (329,324) (216,516) Accounts payable and accrued expenses (1,777,883) (1,411,764) Deferred revenue (1,237,551) (1,564,918) Federal and state income taxes 150,588 (168,273) Foreign currency transaction 8,511 (107,235) ------------ ------------ Net cash provided by operating activities 5,169,490 5,899,159 ------------ ------------ FINANCING ACTIVITIES: Purchases of common stock for treasury 36,672 273,312 Proceeds from issuance of common stock 134,599 (75,016) Dividends paid (2,342,797) (1,550,982) ------------ ------------ Net cash used in financing activities (2,171,526) (1,352,686) ------------ ------------ INVESTING ACTIVITIES: Purchases of available-for-sale securities (660,000) (1,210,000) Proceeds from maturity of available-for-sale securities - 2,005,000 Additions to capitalized software costs (284,375) (250,000) Additions to equipment (686,241) (645,090) Net cash provided by (used in) investing ------------ ------------ activities (1,630,616) (100,090) ------------ ------------ Effect of exchange rate changes on cash and cash equivalents 105,895 129,600 Net increase (decrease) in cash and cash equivalents 1,473,243 4,575,983 Cash and cash equivalents at beginning of fiscal year 11,228,411 9,084,622 ------------ ------------ Cash and cash equivalents at end of period $12,701,654 $13,660,605 ============ ============
6 FORM 10-Q 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 Annual Report on Form 10-K, 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. 7 FORM 10-Q 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 Operating revenues for both the second quarter the first six months of fiscal year 1997 increased 17% over the comparable periods of the prior year. A combination of the increased sales of the Company s newer UNIX products and growth from the Company's German and French operations pushed license fee growth to 26% for the six month period and 23% for the second quarter. Sales of the Company's Datacenter and Visualizer products continued at levels similar to the prior year's. Additionally, the Company entered into several agreements which call for the delivery of products in the third and fourth quarters of the current fiscal year, resulting in a backlog of approximately $1,270,000. Maintenance fee revenue grew increased 5% for the six-month period and 4% for the second quarter. As expected, maintenance renewals of the Company's older product lines such as VM, SNA and Crystal are declining at a faster pace than in the past as our customers replace their older technology with new systems. The benefits of an improved domestic operations maintenance renewal rate and maintenance renewals of the Company's newer products will not have a positive impact on maintenance revenue for several quarters. Other revenue for the six-month period increased 36% and increased 65% for the second quarter. Consulting revenue, which is usually earned at a comparable level from quarter to quarter, increased as more of the Company's customers required additional services. Revenue from third party development contracts was at a minimum maintenance level and did not vary significantly from the levels of either period last year. Aggregate costs and expenses for both the second quarter and the six-month period increased approximately 18%. Sales and marketing expenses were higher for both periods as a result of increased marketing activity relating to the Company's newer UNIX and Network products and the higher level of commissionable revenue. This trend should continue for the foreseeable future. The increased cost of software reflects the continuation of the increased investment in both people and equipment required for the Company to develop products for distributed systems. The Company currently markets and supports 21 versions of UNIX products and has recently released several different products for computer networks and Windows NT. The Company expects that this trend will continue as more companies enter the market and drive up the cost of the resources needed to develop products in this area, especially the cost of labor. Maintenance and support costs also increased in the current fiscal year primarily for the same reason as software costs and are expected to follow a trend line similar to that of software costs. Margins for both license fee revenue and maintenance revenue will be slightly lower than in the past until revenue growth catches up with the increased costs of both product development and product support. Research and development costs declined in the current fiscal year as more products were released to production and less work could be characterized as pure research. 8 FORM 10-Q The growth in general and administrative expenses was primarily due to normal inflation and is expected to continue to grow slowly for the near term. The cost of consulting and other revenue increased in as a result of the temporary allocation of additional resources for providing the revenue related services. Interest income declined for both periods as funds that were invested in the prior year's first several quarters was used to purchase a building that will serve as the Company's new headquarters. Other income improved primarily as a result of rental income, from tenants currently occupying a portion of the aforementioned building, and currency transaction exchange gains incurred in the normal course of business. The Company does not enter into any forward exchange contracts. Net income grew approximately 13% over last year's first six months and 15% over last year's second quarter. The effective tax rate was approximately 34% for both years. Material Changes in Financial Condition/Liquidity Cash and marketable securities increased $2,133,000 primarily as a result of the collections of fiscal year 1996 fourth quarter sales and current year earnings. 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 and second quarters of the current fiscal 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. Accounts payable and accrued expenses declined primarily as a result of a lower level of spending in the second quarter as compared to the fourth quarter and earlier payment of vendors invoices at the end of the second quarter. Accrued compensation declined as a result of the payment of year-end bonuses in the first quarter of the current fiscal year. Deferred revenue declined as revenue from maintenance contracts pre-billed last year was partially recognized during the first two quarters of the current fiscal year. Trends and Uncertainties The Company has several new product offerings available for release in the third quarter of the current fiscal year. These products continue the Company's push into markets not currently served by the Company's product lines. The long-term success of these products is contingent upon these products being accepted by customers who normally do not purchase the Company's products. The frequency of large software purchases by the Company's customers continues to impact the performance of one or more of the Company's operating units each quarter, and continues to be of concern because of the increased potential for unevenness in the total revenue of the Company for the foreseeable future. 9 FORM 10-Q BGS SYSTEMS, INC. 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. 10 FORM 10-Q INDEX TO EXHIBITS Exhibits Page Number 11 Statement regarding Computation of per share earnings 27 Financial Data Schedule FORM 10-Q 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: September 12, 1996 By: /S/ HAROLD S. SCHWENK, JR. Harold S. Schwenk, Jr. President and Chief Executive Officer Date: September 12, 1996 By: /S/ NORMAND BILODEAU Normand Bilodeau Chief Financial Officer EX-11 2 FORM 10-Q STATEMENT REGARDING COMPUTATIONS OF PER SHARE EARNINGS BGS SYSTEMS, INC.
For the quarter ended July 31, 1996 1995 --------------------------- PRIMARY Average shares outstanding 3,126,608 3,107,312 Net effect of stock options, if dilutive, based on the treasury stock method using the average market price 36,616 16,101 ----------- ----------- Total 3,163,224 3,123,413 ----------- ----------- Net income $ 2,174,117 $ 1,896,622 =========== =========== Net income per share $ .69 $ .61 =========== ===========
For the six months ended July 31, 1996 1995 --------------------------- PRIMARY Average shares outstanding 3,125,169 3,104,638 Net effect of stock options, if dilutive, based on the treasury stock method using the average market price 28,920 15,179 ----------- ----------- Total 3,154,089 3,119,817 ----------- ----------- Net income $ 4,275,747 $ 3,769,305 =========== =========== Net income per share $ 1.36 $ 1.21 =========== ===========
EX-27 3
5 0000718976 BGS SYSTEMS, INC. 1 U.S. DOLLARS 6-MOS JAN-31-1997 FEB-01-1996 JUL-31-1996 1 12,701,654 1,700,000 10,684,294 365,000 0 26,632,203 14,104,835 6,945,831 34,622,457 17,513,102 0 0 0 321,486 16,787,869 34,622,457 11,553,299 21,806,934 14,814,188 15,868,108 0 0 0 6,460,079 2,184,332 0 0 0 0 4,275,747 1.36 1.36
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