-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ik0A2o/XDPljMiqFu8gcPQiqSYs7+VdsMoF86uiIuYy9cO87REJjiKU5YjWaM0Bv k4adTsukzmHlUv8KO0615g== 0000950005-95-000167.txt : 19950814 0000950005-95-000167.hdr.sgml : 19950814 ACCESSION NUMBER: 0000950005-95-000167 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOOLE & BABBAGE INC CENTRAL INDEX KEY: 0000734394 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 941651571 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13258 FILM NUMBER: 95561345 BUSINESS ADDRESS: STREET 1: 3131 ZANKER ROAD CITY: SAN JOSE STATE: CA ZIP: 95134 BUSINESS PHONE: 4085263000 MAIL ADDRESS: STREET 1: 3131 ZANKER ROAD CITY: SAN JOSE STATE: CA ZIP: 95134 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ 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 For the transition period from to ----------- --------- Commission File Number 0-132-58 --------------- BOOLE & BABBAGE, INC. ---------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 94- 1651571 -------- ----------- (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 3131 Zanker Road, San Jose, California 95134-1933 ------------------------------------------------- (Address of principal executive offices) Registrant's Telephone number, including area code: 408-526-3000 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___ 7,156,552 shares of common stock of the Registrant were outstanding as of July 31, 1995. BOOLE & BABBAGE, INC. INDEX Part I FINANCIAL INFORMATION Page No. Item 1. FINANCIAL STATEMENTS Consolidated Balance Sheets June 30, 1995 and September 30, 1994 1 Consolidated Statements of Income Three and Nine Months Ended June 30, 1995 and 1994 2 Consolidated Statements of Cash Flows Nine Months Ended June 30, 1995 and 1994 3 Notes to Consolidated Financial Statements 4 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine Months Ended June 30, 1995, and 1994 Three Months Ended June 30, 1995 and 1994 5-11 Part II OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K 12 Signatures 13 BOOLE & BABBAGE, INC. Consolidated Balance Sheets (Amounts in thousands except shares) (June 30, 1995 unaudited)
June 30, September 30, 1995 1994 -------- -------- Assets Current assets: Cash and cash equivalents $38,616 $34,019 Accounts receivable, net 22,520 23,180 Installment and other receivables, net 24,282 18,251 Deferred tax assets 5,099 4,959 Prepaid expenses and other current assets 5,773 3,199 -------- -------- Total current assets 96,290 83,608 Purchased and internally developed software, net 12,948 14,276 Equipment, furniture and leasehold improvements, net 7,924 8,506 Long term installment and other receivables 26,681 20,011 Long term deferred tax assets 2,316 2,284 Costs in excess of net assets of purchased businesses, net 693 713 Other assets 2,156 2,228 -------- -------- Total assets $149,008 $131,626 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $5,874 $6,762 Accrued payroll expense 6,729 6,603 Other accrued liabilities 15,597 16,835 Notes payable due within one year 753 1,171 Capital lease obligations due within one year 1,663 2,045 Deferred maintenance revenue 38,895 34,174 -------- -------- Total current liabilities 69,511 67,590 Notes payable due after one year 675 1,177 Capital lease obligations due after one year 909 1,903 Deferred maintenance revenue due after one year 16,347 12,731 Minority interest - 61 Stockholders' equity: Preferred stock, 2,000,000 shares authorized, $.001 par value, - - Common stock, $.001 par value, authorized--15,000,000 shares; issued 7,593,653 (7,368,378 at September 30, 1994) 7 7 Additional paid-in capital 26,270 23,844 Retained earnings 38,772 28,724 Unrealized (loss) gain on marketable securities (44) 170 Foreign currency translation adjustment 1,046 (96) Less treasury stock, 455,550 shares, at cost (4,485) (4,485) -------- -------- Total stockholders' equity 61,566 48,164 -------- -------- Total liabilities and stockholders' equity $149,008 $131,626 ======== ======== See accompanying notes.
1 BOOLE & BABBAGE, INC. Consolidated Statements of Income (Amounts in thousands, except net income per share) (Unaudited)
Three Months Ended Nine Months Ended June 30, June 30, ------------------- ------------------- 1995 1994 1995 1994 -------- -------- -------- -------- Revenue: Product licensing $ 18,755 $ 16,221 $ 58,240 $ 46,765 Maintenance fees 17,888 16,171 52,494 47,421 Services and other 725 637 2,460 1,983 -------- -------- -------- -------- Total revenue 37,368 33,029 113,194 96,169 -------- -------- -------- -------- Costs and expenses: Cost of sales 4,986 3,659 15,528 12,279 Product development and support 5,872 6,219 17,676 18,118 Sales and marketing 20,145 16,872 57,431 45,701 General and administrative 3,006 3,414 10,975 10,556 Purchased R&D expense -- 3,251 -- 3,251 -------- -------- -------- -------- Total costs and expenses 34,009 33,415 101,610 89,905 -------- -------- -------- -------- Operating income (loss) 3,359 (386) 11,584 6,264 Interest and other income, net 1,037 719 2,784 1,410 -------- -------- -------- -------- Income before provision for income taxes 4,396 333 14,368 7,674 Provision for income taxes 1,230 105 4,320 2,380 -------- -------- -------- -------- Net income $ 3,166 $ 228 $ 10,048 $ 5,294 ======== ======== ======== ======== Net income per share $ 0.41 $ 0.03 $ 1.31 $ 0.74 ======== ======== ======== ======== Shares used in per share calculations 7,775 7,270 7,650 7,165 ======== ======== ======== ======== See accompanying notes.
2 BOOLE & BABBAGE, INC. Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited)
Nine Months Ended June 30, --------------------------- 1995 1994 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 10,048 $ 5,294 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and write-off of capitalized software 7,129 9,531 Stock issued under compensatory stock plans 96 98 Minority interest (61) (90) Changes in operating assets and liabilities: Accounts receivable and installment and other receivables (10,238) (12,383) Prepaid expenses and other assets (2,117) (615) Accounts payable and accrued expenses (2,958) 8,488 Deferred maintenance revenue 6,970 (888) -------- -------- Net cash provided by operating activities 8,869 9,435 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Investments in minority interests (344) (746) Purchases of equipment, furniture and leasehold improvements (2,527) (2,027) Payments for purchased and internally developed software (2,314) (5,542) -------- -------- Net cash used for investing activities (5,185) (8,315) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Sale of lease contracts receivable -- 6,376 Proceeds from issuance of common stock 2,329 3,557 Treasury stock purchase -- (705) Payments on notes payable (936) (1,205) Payments on capital leases (1,480) (1,497) -------- -------- Net cash provided by financing activities (87) 6,526 -------- -------- Effect of exchange rate changes on cash 1,000 1,037 -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 4,597 8,683 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 34,019 23,726 -------- -------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 38,616 $ 32,409 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 900 $ 1,146 Income taxes, net of refunds $ 2,760 $ 1,040 Supplemental disclosures of noncash investing and financing activities: In April 1995, capital lease obligations of $103,000 were incurred when the Company entered into a lease for certain computer equipment See accompanying notes.
3 BOOLE & BABBAGE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of all subsidiaries after the elimination of all significant inter-company items and transactions. A summary of the significant accounting policies of the Company is included in Note 1 of Notes to Consolidated Financial Statements in the Company's annual report on Form 10-K for the year ended September 30, 1994. These consolidated financial statements should be read in conjunction with those notes. The consolidated financial information at June 30, 1995 and for the three and nine-month periods ended June 30, 1995 and 1994 is unaudited. The statements in this report include all adjustments of a normal recurring nature. In the opinion of management, these adjustments are necessary for a fair statement of the interim results for the periods presented. The interim results are not necessarily indicative of the results for the full year. 2. Net Income Per Share Net income per common share is computed by adding to the weighted average number of common shares outstanding during the period the number of dilutive common shares that would be issuable upon the exercise of outstanding options using the treasury stock method of computation. Fully diluted net income per share is not disclosed because it is not materially different from primary net income per share.
(Amounts in thousands, except 3 mos ended June 30, 9 mos ended June 30, net income per share) 1995 1994 1995 1994 -------- -------- ---------- ------- Primary: Common shares outstanding 7,115 6,763 7,017 6,622 Employee stock option plans 660 507 633 543 ------- ------- --------- ------- 7,775 7,270 7,650 7,165 ======= ======= ========= ======= Net income $ 3,166 $ 228 $ 10,048 $5,294 ======= ======= ========= ======= Net income per share $.41 $.03 $1.31 $.74 ======= ======= ========= =======
3. Contingencies The Company is involved in certain legal actions and claims arising in the ordinary course of business. Management believes that such litigation and claims will be resolved without material adverse effect on the Company's financial position or results of operations. 4 BOOLE & BABBAGE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: Nine Months ended June 30, 1995 REVENUES: The Company derives its revenues primarily from the licensing of computer software programs and the sales of software maintenance services. The Company also generates revenue from computer services and other sources, although to a much lesser degree. Total revenue for the nine months ended June 30, 1995 increased over the same period in the prior year by 17.7%. % of Revenue ----------------------- Year-to-Year 1995 1994 % Change ------------------------------------- Product licensing 51.4% 48.6% 24.5% Maintenance fees 46.4% 49.3% 10.7% Services and other 2.2% 2.1% 24.1% ------------------------------------- Total 100.0% 100.0% 17.7% ===================================== Product licensing: The Company licenses its products to customers for use on their computer systems. Product licensing accounted for 51.4% or $58,240,000 of total revenue in 1995, compared to 48.6% or $46,765,000 in 1994 and increased by 24.5% in 1995 compared to 1994. As is common in the industry, more than 50% of the Company's license revenue is derived from transactions that close in the last month of a quarter, which can make quarterly revenues difficult to forecast. And, since operating expenses are relatively fixed, failure to achieve projected revenues could materially and adversely affect the Company's operating results. This, in turn, could result in an immediate and adverse effect on the market price of the Company's stock. Products: The product area with the highest growth rate so far in 1995 is the client/server group which has grown by 50.5% comprising 11.6% of the total licensing revenue. The Company anticipates that this group will continue to show high growth rates for the remainder of fiscal 1995 as new products such as Ensign and Stage3 begin to produce greater revenue. However, these two new products have taken longer to rollout than originally planned and the Company competes with certain firms who have greater resources along with products already in the marketplace. In addition, the Company is dependent on the client/server market developing at a rapid rate despite recent reports by industry analysts that implementation of client/server networks may be more expensive and time-consuming than users had anticipated, which could potentially slow the growth of the market. Due to these factors, there can be no assurances that these new products will 5 BOOLE & BABBAGE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS achieve significant market acceptance or competitive success and thus contribute to revenue growth. The Company currently derives approximately 88% of its licensing revenue from mainframe-based technology. Plex products, which have grown 9.2% so far in 1995, enable customers to handle large groups of computer processors, particularly the new parallel processing machines recently introduced by IBM. The Company's licensing growth rates could be materially and adversely impacted if these new parallel processors do not gain significant market acceptance and customer spending shifts away from traditional mainframes to technology platforms where the Company does not have significant product acceptance. Traditional mainframe products have grown 27.8% principally as a result of built-up demand for mainframes combined with customer budget years ending in December along with the beginning of new budget years in January, both of which tended to make funds available for higher levels of customer purchases, including several larger deals, in the first half of 1995. Management does not expect the growth rate to be this high on traditional mainframe products in the future. Markets: % of Licensing ---------------------- Year-to-Year 1995 1994 % Change -------------------------------------- Domestic 29.2% 35.6% 2.3% International 70.8% 64.4% 36.8% -------------------------------------- 100.0% 100.0% 24.5% -------------------------------------- Domestic: Total domestic licensing revenues have grown 2.3% in 1995 as the telesales group grew 9.2% while the field sales group was up 2.5%. There has been solid growth in client/server and traditional mainframe products mostly offset by a decrease on plex products. For growth to continue in this geographic market, the Company is dependent on increased productivity from both the field sales force and the telesales group. International: In 1995 the Company's revenues from its international operations, comprised of foreign subsidiaries and marketing agents, increased 36.8% due primarily to the economic recovery in Europe and continued growth in the Far East, particularly in Japan. Without the effect of favorable currency rate changes, international licensing grew 23.2% in 1995. Since the majority of new license revenue is derived from international markets, the Company's operations and financial results could be significantly and adversely affected by international factors such as changes in currency exchange rates and specific countries' political and economic circumstances. The Company has implemented an economic 6 BOOLE & BABBAGE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS hedging program to attempt to reduce its exposure to currency fluctuations for a portion of its anticipated intercompany royalty transactions for the next four quarters. As a result of this strategy, the Company has recognized less benefit from continued weakness in the U.S. dollar than if no hedging programs were undertaken. For growth to continue in both of the above geographic markets, the Company is dependent on the traditional mainframe products remaining relatively stable with overall growth resulting from the plex and client/server groups achieving higher growth rates than shown in the nine months of the year. The Company is also dependent on closing larger-size transactions as occurred in the first two quarters of this year. Maintenance fees: Maintenance revenue is generated from services the Company provides including technical support, product enhancements, system updates and user documentation. Maintenance revenue also includes the first year of maintenance services which is included in the initial charge when the Company licenses its software products under a long-term agreement. Thereafter on each anniversary date of the license, the customer may elect to renew its maintenance contract with the Company. Customers may also elect to purchase advance maintenance at the time of product licensing for maintenance periods beyond the first year. Maintenance revenue has grown 10.7% in 1995 accounting for 46.4% and 49.3% of total revenues in 1995 and 1994, respectively. Without the effect of currency rate changes, maintenance revenue grew 4.4%. This increase is mainly the result of increased product licensing in the previous year combined with high renewal rates but reduced by higher discounts granted on multiple-year maintenance packages purchased by customers. The Company anticipates that maintenance revenues in fiscal 1995 will continue to increase due to the higher license revenue growth in 1994, although it will be negatively impacted by reduced revenue associated with site consolidations, non-CPU specific pricing and multiple-year maintenance package discounts. In addition, to produce maintenance revenue increases, the Company must continue to generate new product licensing revenues and continue to provide high quality maintenance support and upgrades. Services and Other: Revenue derived from computer services, educational services and other comprised 2.2% and 2.1% of total revenues for 1995 and 1994, respectively. The increase of 24.1% is attributable primarily to more international consulting revenue partially offset by decreased computer service revenue as this service is no longer actively marketed. 7 BOOLE & BABBAGE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COSTS AND EXPENSES: % of Revenue -------------------- Year-to-Year 1995 1994 % Change ------------------------------------- Cost of sales 13.7% 12.8% 26.5% Product development and support 15.6% 18.8% (2.4%) Sales and marketing 50.8% 47.5% 25.7% General and administrative 9.7% 11.0% 4.0% Purchased R&D expense -- 3.4% N/A ------------------------------------- Total 89.8% 93.5% 13.0% ===================================== Cost of sales: Cost of sales consists primarily of royalties paid to independent software authors, amortization of purchased and internally developed software, the cost of hardware associated with sales of client/server products and costs related to operating the computer services division. Cost of sales increased by 26.5% in 1995 and represented 13.7% and 12.8% of revenues for 1995 and 1994, respectively. Without the effect of currency rate changes, the increase would be 16.5%. The increase in 1995 is primarily attributable to increased royalties on higher third-party revenue in Europe and Japan which was partially offset by lower maintenance royalties payable to one of the third-party vendors in Europe. This decrease resulted from a new contract with that vendor which significantly reduced the royalty rate on maintenance billings through fiscal 1996. Software amortization increased from the combination of 1994's Sysnet acquisition, a large number of product releases at the end of 1994, and the write-down of certain software products. In general, the relationship of cost of sales to revenue will fluctuate due primarily to changes in revenue mix, royalty agreements and amortization of capitalized software. Product development and support: Product development and support costs decreased by 2.4% in 1995 and represented 15.6% and 18.8% of revenues for 1995 and 1994, respectively. The decrease in 1995 is primarily attributable to lower personnel costs, as certain replacement headcount positions have not yet been filled, and lower outside consulting costs which were partially offset by higher costs related to staff increases from the Sysnet a.s. acquisition in April 1994. Without the effect of currency rate changes, the decrease would be 4.2%. The Company capitalizes certain development costs in accordance with Statement of Financial Accounting Standard No. 86 ("FAS 86"). To the extent the Company capitalizes its product development costs, the effect is to defer such costs to future periods and match them to the revenue generated by the products. Product development and support expenses may fluctuate annually depending in part upon the number and status of internal software development projects. 8 BOOLE & BABBAGE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales and marketing: Sales and marketing expenses increased by 25.7% and represented 50.8% of revenues in 1995 compared to 47.5% in 1994. Without the effect of currency rate changes, the increase would be 17.8%. Most of the increase in 1995 is due to higher personnel and marketing costs and increased commission expense on increased product licensing. Commission rates were comparable to those in 1994. North America and Europe had higher personnel costs as sales force headcount was increased in both channels while 1995 has the incremental costs of the Company's Japanese subsidiary which started sales operations during the third quarter of 1994. General and Administrative: General and administrative expenses increased 4.0% in 1995 and represented 9.7% and 11.0% of revenues for 1995 and 1994. Without the effect of currency rate changes, general and administrative expenses would have decreased 1.0%. In 1995, increases in personnel related costs were offset by charges in 1994 related to the transfer of certain client/server product operations from Mt. Laurel, NJ to San Jose, CA. In addition, the Company negotiated a lease termination in the third quarter of 1995 which resulted in the recovery of approximately $350,000 of accrued lease payments on an idle facility. Interest and other income, net: Interest and other income consists principally of interest income, interest expense, and currency gain or loss. The increase in 1995 over 1994 is mainly comprised of additional net interest income as a result of higher average cash balances, higher market interest rates, increased installment receivables and $288,000 related to a refund from the Internal Revenue Service received during the second quarter of 1995. Income Taxes: The effective tax rate was 30.0% and 31.0% for 1995 and 1994, respectively. The Company's effective tax rate differs from the federal statuary rate due primarily to permanently invested earnings of foreign subsidiaries being taxed at rates lower than the federal statutory rate. Management believes future taxable income will be sufficient to realize the tax benefit of the net deferred tax asset of $7,415,000. 9 BOOLE & BABBAGE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES: The significant sources of cash during 1995 include cash provided by operating activities of $8,869,000; the exercise of employee stock options of $1,355,000 and stock purchases through the Employee Stock Purchase Plan of $974,000. The significant uses of cash during 1995 include $2,527,000 for purchases of furniture, equipment and leasehold improvements; $2,314,000 for internally developed capitalized software; $1,480,000 for payments on capital leases; $936,000 for payments on notes payable; and $344,000 for investments in minority interests. Included in cash is a $1,400,000 certificate of deposit pledged as collateral for the lease financing of certain computer equipment. Management believes cash flows from operations and existing cash resources will be adequate to meet its working capital requirements for the foreseeable future. RESULTS OF OPERATIONS: Three months ended June 30, 1995 Many of the same explanations and variances from the nine month results discussion also apply to the third quarter results, and therefore, are not repeated here. A summary is provided as follows: REVENUES: Revenue for the three months ended June 30, 1995 increased 13.1% to $37,368,000 compared to $33,029,000 for the same quarter in fiscal 1994. Revenue mix/growth: % of Revenue ---------------------- Year-to-Year 1995 1994 % Change ------------------------------------- Product licensing 50.2% 49.1% 15.6% Maintenance fees 47.9% 49.0% 10.6% Services and other 1.9% 1.9% 13.8% ------------------------------------- Total 100.0% 100.0% 13.1% ===================================== Licensing mix/growth: % of Licensing ------------------- Year-to-Year 1995 1994 % Change ------------------------------------- Domestic 24.4% 35.1% (19.5%) International 75.6% 64.9% 34.7% ------------------------------------- Total 100.0% 100.0% 15.6% ===================================== Without the effect of currency rate changes, international licensing growth would have been 17.4%. The decrease domestically resulted from a decline in the field sales force, particularly in plex products. The increase internationally resulted from strong growth in 10 BOOLE & BABBAGE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS the Company's European operations and sales through marketing agents, particularly in South America. This was offset slightly by a decrease in sales in the Japanese and Australian subsidiaries. From a product perspective, the traditional mainframe products and the plex product group both increased 11% and the client/server group grew by 47%. COSTS AND EXPENSES % of Revenue ------------------- Year-to-Year 1995 1994 % Change -------------------------------- Cost of sales 13.4% 11.1% 36.3% Product development and support 15.7% 18.8% (5.6)% Sales and marketing 53.9% 51.1% 19.4% General and administrative 8.0% 10.3% (12.0%) Purchased R&D expense -- 9.9% N/A -------------------------------- Total 91.0% 101.2% 1.8% ================================ Cost of sales increase was 36.3% for the quarter compared to 26.5% for nine months primarily due to higher royalty costs from a change in one vendor's rate from last quarter. Without the effect of currency exchange rates, cost of sales would have increased 21.1% for the quarter. Product development and support decreased 5.6% for the quarter versus 2.4% for nine months as a result of decreased personnel costs in the United States in the second and third quarters. The Company anticipates that costs in this area will increase during the fourth quarter of 1995 due to open headcount positions being filled. Without the effect of currency exchange rates, product development and support would have decreased 7.9%. Sales and marketing increased 19.4% for the quarter and 25.7% for nine months and are a function of increases in product licensing of 15.6% and 24.5% for the quarter and nine months, respectively. Without the effect of currency rate changes, the increase for the quarter was 9.0%. General and administrative decreased 12.0% for the quarter compared to an increase of 4.0% for nine months due primarily to the Q395 recovery of accrued lease payments upon the negotiated termination of a lease of a previously idle facility. In addition, the third quarter had lower increases in personnel cost, bad debt expense and professional fees. Without the effect of currency rate changes, the decrease for the quarter was 18.3%. 11 BOOLE & BABBAGE, INC. PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K - None 12 BOOLE & BABBAGE, 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. BOOLE & BABBAGE, INC. August 10, 1995 \Paul E. Newton\ -------------------------- Paul E. Newton President and Director (Principal Executive Officer) August 10, 1995 \Arthur F. Knapp, Jr.\ --------------------------- Arthur F. Knapp, Jr. Senior Vice President Chief Financial Officer (Principal Financial and Accounting Officer) 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS SEP-30-1995 OCT-01-1994 JUN-30-1995 38,616 0 75,215 1,732 0 96,290 34,578 26,654 149,008 69,511 0 7 0 0 61,559 149,008 113,194 113,194 0 15,528 86,082 0 861 14,368 4,320 10,048 0 0 0 10,048 1.31 1.31
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