-----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, EsENnn8fm+xaEcaAeE7+VYYVB6IB+FC2mX5fQ1Sy8BCBFOqmF/Ba9wTSUOHrbv6G ukf1HZO38q8YTViqLJCNCQ== 0000950131-97-000115.txt : 19970113 0000950131-97-000115.hdr.sgml : 19970113 ACCESSION NUMBER: 0000950131-97-000115 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970107 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970110 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEM SOFTWARE ASSOCIATES INC CENTRAL INDEX KEY: 0000808207 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 363144515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15322 FILM NUMBER: 97504249 BUSINESS ADDRESS: STREET 1: 500 W MADISON ST 32ND FLR CITY: CHICAGO STATE: IL ZIP: 60661 BUSINESS PHONE: 3126412900 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) January 7, 1997 SYSTEM SOFTWARE ASSOCIATES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-15322 36-3144515 - -------------------------------------------------------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) 500 West Madison Chicago, Illinois 60661 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (312) 258-6000 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) N/A - -------------------------------------------------------------------------------- (Former name of former address, if changed since last report.) ITEM 5. OTHER EVENTS On January 7, 1997, the Registrant issued (i) a press release announcing a change in accounting method and its results of operations for the fourth quarter and year ended October 31, 1996 and (ii) a press release announcing restated financial results for fiscal years ended October 31, 1994 and 1995. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99.1 Press Release dated January 7, 1997 Re: Fiscal 1996. 99.2 Press Release dated January 7, 1997 Re: Fiscal 1995 and 1994. 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 hereunto duly authorized. SYSTEM SOFTWARE ASSOCIATES, INC. Date: January 10, 1997 BY: /s/ Joseph J. Skadra -------------------------------------- Joseph J. Skadra, Chief Financial Officer EX-99.1 2 PRESS RELEASE EXHIBIT 99.1 [Logo of System Software Associates, Inc. Appears Here] NEWS RELEASE - -------------------------------------------------------------------------------- Corporate Headquarters 500 West Madison - Chicago, Illinois, U.S.A. 60661 - Telephone: (312) 258-6000 Facsimile: (312) 474-7500 SSA Announces Change in Accounting Method, 1996 Results CHICAGO--Jan. 7, 1997--System Software Associates, Inc. (NASDAQ:SSAX) announced today a change in accounting method for revenue recognition and results for 1996 in light of that change. Joseph J. Skadra, Chief Financial Officer of SSA, said, "After consultation with the Company's new independent auditors, KPMG Peat Marwick LLP, the Company decided to change its accounting for reseller agreements so that revenue is recorded at the time of sale to the end user. Reseller agreements are common in the software industry, and this change of method makes for a more conservative accounting practice." Roger E. Covey, CEO and Chairman, commented that "the net effect of this change in accounting method was to take approximately $46 million of revenue and associated income out of 1996 and push it into later accounting periods. This included a reduction in fourth quarter 1996 revenue of approximately $12 million." With the change in accounting method, revenue for the fourth fiscal quarter ended October 31, 1996 was $109.4 million, as compared to $122.7 million in the same period of the prior year. Earnings per share showed a loss for the quarter of $.13 per share as compared with a profit of $.35 per share in the prior year. Fourth quarter expenses were affected by a substantial increase in reserves for warranty and doubtful accounts as well as accounts receivable write-offs, which altogether totaled $10.5 million. Roger E. Covey, SSA CEO and Chairman, said: "We were very pleased with the strong sequential growth in our software license revenue, despite very disappointing results in Europe. Software license fee revenue rose to $81.6 million, up 81% from the third quarter, reflecting early success from our roll-out of BPCS Client/Server version 6.0. We had the best ever quarter in our North America operations, as well as strong results in the Asia Pacific region. The success of our North America and Asia Pacific business was the result of strong marketplace acceptance of BPCS Client/Server version 6.0. This strong acceptance validates both SSA's product strategy and product delivery."
Quarter Ended Year Ended October October Percent October October Percent 31, 31, Change 31, 31, Change 1996 1995(1) 1996 1995(1) ---------------------------------------- ------------------------------------- Total Revenues $ 109.4 $ 122.7 (10.8) $ 340.8 $ 374.1 (8.9) License Fees 81.5 91.6 (11.0) 226.7 250.0 (9.3) Client Services & Other 27.9 31.1 (10.3) 114.1 124.1 (8.1) Income Before Income Taxes and Minority Interest (8.9) 23.2 N.A. (51.4) 40.9 N.A. Net Income (5.7) 15.3 N.A. (32.8) 26.6 N.A. Earnings per Share $(0.13) $0.35 N.A. $(0.76) $0.63 N.A.
(1) As restated In the fourth quarter SSA also had its best ever cash collection quarter. At quarter end cash balances stood at over $38 million, up form $19 million at the beginning of the quarter. Accounts Receivable, net of reserves, declined by $23 million during the quarter. Days sales outstanding declined from 205 to 193. Finally, Mr. Covey concluded that: "SSA is brilliantly positioned to compete and grow in the global market for industrial sector enterprise systems. The recent strong marketplace acceptance of BPCS Client/Server version 6.0 validates both our product and technology strategies. Our worldwide pipeline of new business opportunities is far and away the largest in the history of the Company. We enter our new fiscal year with strong momentum and great confidence." The change in accounting method also affected the first three quarters of fiscal 1996 as follows:
January January April April July July 31, 31, 30, 30, 31, 31, 1996 as 1996 as 1996 as 1996 as 1996 as 1996 as reported adjusted reported adjusted reported adjusted --------------------------------------------------------------------------------------- Total Revenues $ 87.8 $ 76.6 102.1 $ 82.5 $ 75.3 $ 72.2 License Fees 59.3 48.1 71.5 51.9 48.2 45.1 Client Services & Other 28.5 28.5 30.6 30.6 27.1 27.1 Income Before Income Taxes and and Minority Interest 4.5 (.7) .4 (10.1) (29.9) (31.6) Net Income 2.9 (.4) .3 (6.4) (19.1) (20.2) Earnings per share $ 0.07 $(0.01) $0.01 $(0.15) $(0.44) $(0.47)
SYSTEM SOFTWARE ASSOCIATES, INC. CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data) Three Months Ended October 31, Year Ended (unaudited) October 31, -------------------- ------------------ As As Restated Restated 1996(A) 1995 1996(A) 1995 -------------------- ------------------ Revenues: License fees $ 81.5 $ 91.6 $ 226.7 $ 250.0 Client services and other 27.9 31.1 114.1 124.1 ------- ------- -------- -------- Total revenues 109.4 122.7 340.8 374.1 ------- ------- -------- -------- Costs and Expenses: Cost of license fees 23.5 18.4 66.9 64.9 Cost of client services and other 24.2 20.5 89.0 76.8 Sales and marketing 32.4 29.7 103.8 87.6 Research and development 16.2 11.2 54.4 40.2 General and administrative 27.8 19.6 85.5 63.5 ------- ------- -------- -------- Total costs and expenses 124.1 99.4 399.6 333.0 ------- ------- -------- -------- Operating income (loss) (14.7) 23.3 (58.8) 41.1 Gain on sale of available- for-sale securities 9.5 - 13.1 - Other non-operating income (expense), net (3.7) (0.1) (5.7) (0.2) -------- ------- -------- -------- Income (loss) before income taxes and minority interest (8.9) 23.2 (51.4) 40.9 Provision (benefit) for income taxes (3.2) 7.9 (18.6) 14.2 -------- ------- -------- -------- Income (loss) before minority interest (5.7) 15.3 (32.8) 26.7 Minority interest - - - (0.1) ------- ------- -------- -------- Net income (loss) $ (5.7) $ 15.3 $(32.8) $ 26.6 ======= ======= ======= ======= Earnings (loss) per share ($0.13) $ 0.35 ($0.76) $ 0.63 ======= ======= ======= ======= Dividends per share $ - $ - $ 0.10 $ 0.08 ======= ======= ======= ======= Weighted average common and equivalent shares outstanding 42.9 42.8 43.0 42.2 ======= ======= ======= ======= (A) After giving effect to change in accounting method retroactive to beginning of year. SYSTEM SOFTWARE ASSOCIATES, INC. CONSOLIDATED BALANCE SHEETS ASSETS (in millions) As Restated October 31, October 31, 1996 1995 ----------- ----------- CURRENT ASSETS Cash and equivalents $ 38.1 $ 57.1 Accounts receivable, less allowance for doubtful accounts of $16.5 and $12.5 163.6 184.6 Income taxes receivable 4.4 - Deferred income taxes 10.1 7.0 Prepaid expenses and other current assets 25.5 21.3 --------- --------- Total current assets 241.7 270.0 --------- --------- PROPERTY and EQUIPMENT: Data processing equipment 37.3 30.9 Furniture and office equipment 18.7 14.1 Leasehold improvements 9.0 7.8 Transportation equipment 2.3 2.8 --------- --------- 67.3 55.6 Less - Accumulated depreciation and amortization 39.5 31.3 --------- --------- Total property and equipment 27.8 24.3 --------- --------- OTHER ASSETS: Software costs, less accumulated amortization of $61.1 and $41.1 82.8 59.0 Cost in excess of net assets of acquired businesses, less accumulated amortization of $8.7 and $6.0 22.8 18.2 Deferred income taxes 1.2 - Investments in associated companies 2.2 16.5 Miscellaneous 5.9 5.2 --------- --------- Total other assets 114.9 98.9 --------- --------- TOTAL ASSETS $ 384.4 $ 393.2 ========= ========= SYSTEM SOFTWARE ASSOCIATES, INC. CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY (in millions, except share data) As Restated October 31, October 31, 1996 1995 ----------- ------------ CURRENT LIABILITIES: Short term borrowings and current maturities of senior notes payable $ 72.4 $ 4.0 Accrued commissions and royalties 26.3 28.7 Accounts payable and other accrued liabilities 62.5 46.9 Accrued compensation and related benefits 23.8 23.5 Deferred revenue 58.8 61.7 Income taxes payable - 12.9 --------- -------- Total current liabilities 243.8 177.7 --------- -------- LONG-TERM OBLIGATIONS 2.7 33.9 --------- -------- DEFERRED REVENUE 27.7 27.3 --------- -------- DEFERRED INCOME TAXES - 9.9 --------- -------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES - 1.0 --------- -------- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 100,000 shares authorized, none issued or outstanding - - Common stock, $.0033 par value, 60,000,000 shares authorized, 42,577,000 and 42,094,500 shares issued 0.1 0.1 Capital in excess of par value 32.8 26.1 Retained earnings 78.5 115.5 Unrealized gain on available-for- sale securities - 2.5 Cumulative translation adjustment (1.2) (0.8) --------- -------- Total stockholders' equity 110.2 143.4 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 384.4 $ 393.2 ======== ======== The industry leader in the continuing evolution of distributed object software, SSA is the top provider of cost-effective business enterprise information systems to the industrial sector worldwide. SSA's product line BPCS Client/Server provides business process re-engineering and integration of all operations, including multi-mode manufacturing processes, supply chain management, and global financial solutions. The BPCS client/Server solution delivers unparalleled agility, interoperability and reconfigurability to meet changing market demands in its comprehensive product suite. The distributed object computing architecture of BPCS Client/Server provides the benefits of next generation technology in conformance with industry standards. SSA and its business partners provide full implementation support for BPCS Client/Server in over 70 countries. CONTACT: System Software Associates, Inc., Chicago Investor Relations: Joseph J. Skadra, 312/258-6000 Facsimile: 312/474-7500 Corporate: Roger E. Covey, 312/258-6000 Facsimile: 312/474-7500 rec@ssax.com EX-99.2 3 PRESS RELEASE EXHIBIT 99.2 [Logo of System Software Associates, Inc. Appears Here] NEWS RELEASE - ---------------------------------------------------------------------------- Corporate Headquarters 500 West Madison - Chicago, Illinois, U.S.A. 60661 - Telephone: (312)258-6000- Facsimile: (312) 474-7500 SSA Announces Restated Financial Results for 1994, 1995 CHICAGO--Jan. 7, 1997--System Software Associates, Inc. (NASDAQ: SSAX) announced today the restatement of its 1994 and 1995 results. The restatement of fiscal 1994 reflects the reversal of $10.1 million in revenues from a software contract originally recognized by the Company in the third quarter of fiscal 1994. The fiscal 1995 financial statements have been restated to reflect the reversal of revenues primarily with respect to two items. The first item involved $5.0 million in revenues originally recognized in the third quarter of fiscal 1995 from the final two installment payments of a four installment payment contract. $1.6 million of the revenue from these installments has been recognized in fiscal 1996. The second item involved $15.0 million in revenue originally recognized in the third and fourth quarters of fiscal 1995 from two related Latin America reseller agreements. Revenues reversed in 1995 and not recorded in 1996 will be booked in subsequent periods. The Company has restated its fiscal 1994 and 1995 financial statements after lengthy discussions between the Company and Price Waterhouse LLP ("PW"), the Company's former independent public accountants. The restatements reflect the resolution of disagreements between the Company and PW as to the appropriate accounting with respect to the items in question. As a result of the restatement of fiscal 1994, the Company reported revenues of $324.3 million and net income of $10.0 million in fiscal 1994, compared to revenues of $334.4 million and net income of $15.4 million, as originally reported. As a result of the restatement of fiscal 1995, the Company reported revenues of $374.1 million and net of $26.6 million in fiscal 1995, compared to revenues of $394.4 million and net income of $34.1 million as originally reported.
Selected Financial Data Original Presentation (in millions, except per share data) Three Months Ended Year Ended 1994 January 31 April 30 July 31 October 31 October 31 ---------- -------- ------- ---------- ---------- Revenues License Fees $45.4 $49.2 $63.1 $81.8 $239.5 Client Services and other 21.0 22.8 23.1 28.0 94.9 ---------- -------- ------- ---------- ---------- Total Revenue $66.4 $72.0 $86.2 $109.8 $334.4 ========== ======== ======= ========== ========== Income Before Income Taxes and Minority Interest $1.7 $3.8 $8.1 $10.2 $23.8 Net Income $1.2 $2.6 $5.4 $6.2 $15.4 Earnings Per Share $0.03 $0.07 $0.13 $0.15 $0.38 Stockholders Equity $98.9 $101.7 $107.3 $114.7 $114.7 Selected Financial Data Restated Presentation (in millions, except per share data) Three Months Ended Year Ended 1994 January 31 April 30 July 31 October 31 October 31 ---------- -------- ------- ---------- ---------- Revenues License Fees $45.4 $49.2 $53.3 $81.8 $229.7 Client Services and other 21.0 22.8 22.8 28.0 94.6 ---------- -------- ------- ---------- ---------- Total Revenue $66.4 $72.0 $76.1 $109.8 $324.3 ========== ======== ======= ========== ========== Income Before Income Taxes and Minority Interest $1.7 $3.8 (0.3) $10.2 $15.4 Net Income $1.2 $2.6 $ -0- $6.2 $10.0 Earnings Per Share $0.03 $0.07 $0.00 $0.15 $0.25 Stockholders Equity $98.9 $101.7 $101.9 $109.3 $109.3
Selected Financial Data Original Presentation (in millions, except per share data) Three Months Ended Year Ended 1995 January 31 April 30 July 31 October 31 October 31 ---------- -------- ------- ---------- ---------- Revenues License Fees $49.0 $52.1 $72.3 $96.6 $270.0 Client Services and other 28.4 32.2 32.7 31.1 124.4 ---------- -------- ------- ---------- ---------- Total Revenue $77.4 $84.3 $105.0 $127.7 $394.4 ========== ======== ======= ========== ========== Income Before Income Taxes and Minority Interest $2.9 $6.5 $17.3 $25.7 $52.4 Net Income $1.8 $4.2 $11.2 $16.9 $34.1 Earnings Per Share $0.05 $0.10 $0.27 $0.39 $0.81 Stockholders Equity $114.1 $120.0 $133.2 $156.3 $156.3 Selected Financial Data Restated Presentation (in millions, except per share data) Three Months Ended Year Ended 1995 January 31 April 30 July 31 October 31 October 31 ---------- -------- ------- ---------- ---------- Revenues License Fees $49.0 $52.1 $57.3 $91.6 $250.0 Client Services and other 28.4 32.2 32.4 31.1 124.1 ---------- -------- ------- ---------- ---------- Total Revenue $77.4 $84.3 $89.7 $122.7 $374.1 ========== ======== ======= ========== ========== Income Before Income Taxes and Minority Interest $2.9 $6.5 $8.3 $23.2 $40.9 Net Income $1.8 $4.2 $5.3 $15.3 $26.6 Earnings Per Share $0.05 $0.10 $0.13 $0.35 $0.63 Stockholders Equity $108.7 $114.6 $121.9 $143.4 $143.4
The industry leader in the continuing evolution of distributed object software, SSA is the top provider of cost-effective business enterprise information systems to the industrial sector worldwide. SSA's product line BPCS Client/Server provides business process re-engineering and integration of all operations, including multi-mode manufacturing processes, supply chain management, and global financial solutions. The BPCS Client/Server solution delivers unparalleled agility, interoperability and reconfigurability to meet changing market demands in its comprehensive product suite. The distributed object computing architecture of BPCS Client/Server provides the benefits of next generation technology in conformance with industry standards. SSA and its business partners provide full implementation support for BPCS Client/Server in over 70 countries. CONTACT: System Software Associates, Inc. Investor Relations: Joseph J. Skadra, 312/258-6000 Corporate Contact: Roger E. Covey, 312/258-6000 rec@ssax.com -----END PRIVACY-ENHANCED MESSAGE-----