-----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, EXxji/4f2EctLgWLPUh4iwdO0p+HyPyObMeqR9chTuNMQBVTyl4YkuY2dABVe4O+ 4jeDbAmU1hBJi8UUef47gg== 0000912057-96-021571.txt : 19961001 0000912057-96-021571.hdr.sgml : 19961001 ACCESSION NUMBER: 0000912057-96-021571 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960930 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYMIX SYSTEMS INC CENTRAL INDEX KEY: 0000872443 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 311083175 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19024 FILM NUMBER: 96637313 BUSINESS ADDRESS: STREET 1: 2800 CORPORATE EXCHANGE DR CITY: COLUMBUS STATE: OH ZIP: 43231 BUSINESS PHONE: 6145237000 MAIL ADDRESS: STREET 1: 2800 CORPORATE EXCHANGE DR CITY: COLUMBUS STATE: OH ZIP: 43231 10-K 1 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED JUNE 30, 1996. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM . Commission File Number: 0-19024 ------------------------ SYMIX SYSTEMS, INC. (Exact name of registrant as specified in its charter) OHIO 31-1083175 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2800 CORPORATE EXCHANGE DRIVE 43231 COLUMBUS, OHIO (Zip Code) (Address of principal executive offices)
Registrant's telephone number, including area code: (614) 523-7000 Securities registered pursuant to section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Shares No-Par Value Title of Class 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 ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant at September 24, 1996 was $16,808,572. The number of common shares outstanding at September 24, 1996 was 5,522,576. Documents Incorporated by Reference: (1) Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1996 are incorporated by reference into Part II of this Annual Report on Form 10-K. (2) The Registrant's Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on November 1, 1996 is incorporated by reference into Part III of this Annual Report on Form 10-K. Exhibit Index on Page Page 1 of Pages - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS GENERAL Symix Systems, Inc.("Symix" or the "Company") is a global provider of open, client server manufacturing software for mid-range discrete manufacturers. Symix designs, develops, markets and supports a fully integrated manufacturing, planning and financial software system that addresses the Enterprise Resource Planning (ERP) requirements of manufacturers. The SYMIX-Registered Trademark- solutions are developed for manufacturers who must optimize the rigorous demands of make-to-order and mixed-mode production requirements, including reducing time-to-market, shortening order cycles and reducing product costs. Among the key industries which use the Symix applications are industrial equipment, fabricated metals, electronic equipment and furniture/fixtures. Symix's primary ERP application product, Symix SyteLine, was released in March, 1996 and combines the robust functionality of a complex manufacturing system, including multi-site capabilities, with the speed and ease-of-use of graphical user interface products. Symix also continues to market, sell and enhance its heritage host terminal, character based ERP application product, SYMIX-Registered Trademark- Version 4.0, to customers not readily able to fully migrate to a client/server environment. The Symix applications are sold through both a direct sales channel and approximately 40 software and service partners in 17 countries. Symix focuses on consulting, implementation and education services as critical aspects of its business. These services are provided through either direct Symix consultants, third party software and service partners, system integrators or consulting/accounting firms. Symix was organized in 1979, incorporated under the laws of the State of Ohio in 1984 and became a public company trading on NASDAQ in 1991. As used in this Annual Report on Form 10-K, the term "Company" refers to Symix Systems, Inc. and its wholly-owned subsidiaries, unless the context otherwise requires. INDUSTRY BACKGROUND Manufacturers are increasingly under pressure to re-engineer their businesses to address expanding global competition. Today's competitive environment requires manufacturers to be flexible and responsive as customers are demanding high quality, low costs and short delivery cycles. Customer-driven manufacturers are producing smaller lots in less time, and are doing so much closer to the initiation of the demand for the products. Manufacturers must increase the efficiency of their operations by increasing the productivity of personnel and the efficient management of assets throughout the enterprise. In order to cost effectively achieve this objective, businesses will need to introduce and embrace new operating technologies and principles which will enable manufacturers to build the capacity to "informationalize" their operations. Manufacturers need an integrated information management system which can provide critical data on a regular basis-and as needed. The solution for this requirement can be found in open systems, client/server ERP systems which are quick to implement and do not demand large Information System ("IS") staff. ERP represents a broad spectrum of functions that encompass many different business entities. More specifically, ERP coordinates and connects a wide range of business disciplines across disparate, multiple manufacturing sites; providing functionality in the areas of customer orders, billing and shipping, integrated financials, scheduling, materials and capacity planning, bill of materials, integrated distribution and warehouse management. Material Requirements Planning ("MRP") systems were initially introduced in the 1970's by third party developers or internally developed by the manufacturers themselves. These MRP systems allowed manufacturers to manage the flow of materials at various stages of the manufacturing process. In the 2 1980's, Material Resource Planning ("MRPII") systems emerged into the manufacturing software marketplace providing manufacturers the ability to include labor and equipment as part of the materials planning process. Initially, most MRPII systems were based on proprietary platforms, using third generation languages (3GL) and hierarchical databases. Through the evolution over the past decade, MRPII systems have migrated to fourth generation languages (4GL) and open, non-proprietary systems. This evolution solved several basic technological problems, but still left manufacturers with many functionality issues and enterprise-wide technological needs which were not addressed. Today, the problem posed by most MRPII systems is the inability to support diverse manufacturing processes and limited flexibility in integrating new technologies. In response to the enterprise-wide functionality and technology issues, there has been a significant shift away from MRPII systems in favor of ERP systems which provide actual enterprise-wide management of resources, integration of more sophisticated forecasting and reporting, and the capability to measure quality level and delivery cycle responsiveness. ERP systems based on open systems, client/server platforms benefit manufacturers by providing access to information throughout the manufacturing enterprise on a timely basis and by providing distribution of various software applications, databases and new technologies. Manufacturers can generally be divided into two identifiable groups: discrete (Symix's target market) and process manufacturers. "Process" manufacturers mix, separate, heat and otherwise control ingredients in order to create finished products such as chemicals, paints and pharmaceuticals. "Discrete" manufacturers, which account for approximately 50% of the manufacturing facilities worldwide, produce products by assembling parts into finished product such as equipment, appliances and furniture. Discrete manufacturers can be further subdivided into three groups: "make-to-order" manufacturers, which engineer and manufacture products to meet specific customer needs; "make-to-stock" manufacturers, which assemble products to customer orders based on standard parts; and "repetitive" manufacturers, which produce standard products in large quantities. These different types of manufacturers face unique challenges in dealing with resource requirements and production and planning control issues. Historically, manufacturers exclusively used one of these manufacturing methods. Plant consolidation, vertical integration and technology are changing these practices requiring manufacturers today to produce under a "mixed-mode" environment. The ability to realize cost advantages gained by repetitive manufacturing and to satisfy customers with highly configured, customized specifications is becoming a strong competitive weapon. MARKETS AND CUSTOMERS Based on information from Advanced Manufacturing Research, Inc. ("AMR"), the worldwide ERP marketplace will grow to approximately $5.6 billion in revenue in 1996 from an estimated $4.1 billion in 1995. Market growth rates through the end of the century will approximate 20% to 40% per year, according to AMR. AMR estimates that there are over 40,000 discrete manufacturing sites each having over $20 million in sales in the United States with at least an equal amount of sites outside of the United States. AMR also has described the mid-range discrete market as a large untapped market with no clear market leader and has estimated that most mid-range manufacturers will replace their manufacturing solution over the next five years. The Company's target market includes primarily mid-range discrete manufacturing companies with sites having annual revenue between $10 and $350 million in revenue. The Company primarily focuses its sales and marketing efforts on four key industries within the mid-range market; industrial machinery, fabricated metals, electronic equipment and furniture/fixtures. Based on information internally developed from Dun & Bradstreet data, it appears there are approximately 14,000 companies in the United States alone that have at least $20 million in revenue and fall within the target market. Many of these companies have multiple site locations. 3 The ERP system is typically the most important application system for the mid-range manufacturer since it is the "backbone" of the manufacturer's operations. However, most mid-range manufacturers have small, if any, IS staff to plan, implement and manage software application systems. These mid-range manufacturers require an affordable system that incorporates a wide range and depth of functionality, is easy to install and maintain, and can be rapidly deployed. The Company's products and services are developed, marketed and sold with those needs in mind. The Company currently has 2,400 customer sites throughout the world, and although under the Company's standard maintenance and support agreement a customer can upgrade to the newer versions of the Company's software without any additional license fee charge, these current customers represent an excellent opportunity for selling additional software and consulting services. STRATEGY The Company underwent significant executive management changes in the early part of the 1996 fiscal year. Recognizing the strong foundation of the functionally rich product and strong customer base, the new management team has introduced these new strategic initiatives to grow the Company and to take advantage of excellent market opportunities: * MID-MARKET LEADER IN THE SELECTED VERTICAL MARKETS. The Company will focus most of its marketing, promotional and development efforts toward the industrial equipment, fabricated metals, electronic equipment, and furniture/fixture markets. The Company will strive to be the leader or to have the ability to become the leader in these vertical markets. * COMMITMENT TO CUSTOMER SERVICE. Efforts to improve customer service were initiated during the 1996 fiscal year including expanding coverage of hotline telephone and emergency level support, implementation of a new customer service and call tracking system, and introducing a special Web site on the Internet where customers can directly access support issues. * PROVIDING TARGET VERTICAL MARKETS WITH EXPANDED FUNCTIONALITY THROUGH ALLIANCE WITH THIRD PARTY SOFTWARE VENDORS. The Company will attempt to provide its existing customers and target markets with a broader breadth of functionality by interfacing with third party vendors. Additional functionality that could be provided through these type of relationships include field service, data warehousing, and improved sales order configuration. * PROFESSIONAL SERVICES CAPABILITY TO SUPPORT RAPID IMPLEMENTATION OF SYSTEMS. The ability to quickly install a system for a mid-range manufacturer is critical given the pressures caused by limited financial and technical resources of the customer. In addition to its existing professional services group, the Company has developed relationships with both national and regional accounting and consulting firms to support the customer's migration to Symix. * EMPHASIZING EASE OF USE THROUGH A COMMITMENT TO OPEN SYSTEMS AND FLEXIBLE TECHNOLOGY. The Company is committed to supporting state-of-the-art technology that works today and supports the customer's future growth through open systems, client/server architecture, graphical user interface ("GUI"), a strong fourth generation language, integrated databases, and Microsoft Windows compatibility. PRODUCTS & SERVICES Symix currently markets and supports Symix SyteLine and SYMIX-Registered Trademark- Version 4.0 ("Version 4.0"). Released in March, 1996, Symix SyteLine is the Company's robust client/server and GUI product that was rearchitected and developed from Version 4.0. Version 4.0, which targets manufacturers still using centrally located and controlled computer systems operating under UNIX and Windows NT, will continue to be enhanced by the Company for at least the next two fiscal years for those manufacturers not ready to embrace the newer client/server environment and international customers in countries such as China 4 where telecommunication networks limit the ability to fully implement client/server systems. The Company allows Version 4.0 and prior version customers who are current on maintenance to upgrade at no additional license fee charge to Symix SyteLine. Symix SyteLine encompasses all of the functionality of Version 4.0 but also provides the full client/server and GUI features, multi-site capabilities and enhanced international financial reporting. The preferred operating platform for Symix SyteLine is Windows NT, although it is compatible with UNIX and Novell. The Symix offerings include the above two products, third party products that interface to the application and provide a broader breadth of functionality, PROGRESS 4GL tools and Relational Data Base Management System ("RDBMS"), and implementation and education services to ensure successful and rapid deployment of the SYMIX-Registered Trademark- solutions. Although the Company's desire is to minimize the amount of customization required for an implementation, Symix also offers programming services to provide modifications to the standard product in order to address specific customer requirements. Symix's objective is to achieve the right mix of technology, functionality and services to enable its customers to rapidly implement an ERP solution that addresses the manufacturer's customer requirements while increasing staff productivity, improving operating efficiencies, minimizing lifetime cost of ownership and enabling a rapid return on investment. APPLICATION SOFTWARE Symix SyteLine and Version 4.0 consists of fully integrated functionality that comprehensively support a manufacturer's business process. The functional components of the core application packages include the following: CUSTOMER SERVICE PRODUCTION MANAGEMENT Estimating Work Orders Order Inquiry Production Scheduling Order Entry JIT/KANBAN Inventory Availability Routings Order Configurator Shop Floor Control Period Based/Work Order Costing PLANNING & ENTERPRISE ADMINISTRATION MATERIALS MANAGEMENT Inventory Control General Ledger Purchasing Reporting & Consolidation Bill of Materials Receivables Engineering Change Notice Fixed Assets Material Requirements Planning Payroll Capacity Planning Human Resources
CUSTOMER SERVICE enables manufacturers to estimate, configure and accept orders accurately and rapidly. The estimating capabilities help the manufacturer standardize all customer quoting activity, access it online and generate reports for analysis and customer reporting. The Order Configurator automatically configures the order for manufacturing which reduces engineering time and enhances the transition from order entry and manufacturing. The Customer Inquiry module enables manufacturers to handle online most customer inquiries such as product availability, order status, receivable status, or discounts. The Customer Service applications also enable the manufacturer to make extensive pricing and sales analysis. PLANNING AND MATERIALS MANAGEMENT enable the manufacturer to plan capacity and material availability for each manufacturing site, including conversion of customer orders into reliable bill of materials and routings, management of plant capacity to meet anticipated demand while minimizing expedited orders, 5 incorporation of changes from customers and product engineers in a timely manner, and inventory management to reduce carrying costs while ensuring material availability for scheduled productions. The components include various resource capacity planning tools, master production scheduling, multiple site coordination and integrated purchasing and inventory control modules. PRODUCTION MANAGEMENT enables manufacturers to select three manufacturing production control methods to match the level of control and diversity desired; work orders, production scheduling and JIT/ KANBAN. These three production environments can be maintained simultaneously providing the manufacturer with flexibility to mix and match different production methods. For example, a manufacturer may select production scheduling as the production method for the final assembly, but JIT/KANBAN for the subassemblies. ENTERPRISE ADMINISTRATION flows from the manufacturing and production modules described above. The comprehensive financial tools are tightly integrated with the operations and capture the required transactions in a form that supports flexible analysis across all business locations. The system provides various costing alternatives including work order costing and period-based costing and allows for actual and standard cost analysis. Through its enhanced multi-currency capabilities, the financial tools provide flexible consolidation modeling/analysis for multi-national manufacturers. THIRD PARTY SOFTWARE In addition to its core application software products, the Company sells other products that interface and supplement the functionality of the system. These additional products include Product Configuration (PRT), Automated Data Collection, Electronic Data Interchange (EDI), Computer Aided Design Interface (CAD), and external payroll interfaces. PRT is a rules-based order configurator that can support the make-to-order manufacturers who require more complex configuration to ensure rapid order entry, reduced engineering time and a smoother transition to manufacturing. Automated Data Collection introduces bar code technology to record movement of items from the plant floor, track receipt or shipment of items, perform cycle counting and generate physical inventories. In order to enable manufacturers to electronically transfer documents, the Company offers an interface with an integrated EDI solution available from Radley Corporation. To assist manufacturers using CAD, the Company offers an optional interface to popular third party CAD software packages, providing bi-directional import and export capabilities. PROGRESS Symix SyteLine and Version 4.0 are written in PROGRESS-Registered Trademark-, a leading fourth-generation language that provides manufacturers with reporting and development tools that have significant flexibility. PROGRESS-Registered Trademark- provides its own Relational Data Base Management System (RDBMS) as well as the ability to interface with the ORACLE-Registered Trademark- RDBMS. PROGRESS-Registered Trademark- is the proprietary product of the Progress Software Corporation. The Company has entered into a non-exclusive application partner agreement with Progress Software Corporation, pursuant to which the Company is authorized to market and distribute PROGRESS-Registered Trademark- in connection with sales of the Company's products. Under the terms of the agreement, the Company bears primary responsibility for assisting customers in developing applications with PROGRESS-Registered Trademark- and agrees to provide appropriate support to PROGRESS-Registered Trademark- customers. The initial term of the agreement expires in February, 1998 and will continue thereafter unless either party gives ninety (90) days' written notice of its intention to terminate. In addition, the agreement may be terminated immediately by either party if a material breach of the agreement by the other party continues after thirty (30) days' written notice. The Company's customers would then be required to license PROGRESS-Registered Trademark- directly from Progress Software Corporation or other resellers. If Progress Software Corporation should cease its product offerings for any reason, the Company believes that the established user base is large enough that momentum exists to port 6 to another development environment. The Company's move to PROGRESS-Registered Trademark- in 1984 was such a development effort. SERVICES AND SUPPORT The Company offers a full range of services that allow its customers to maximize the benefits of the Company's software products, including project management, implementation, product education, technical consulting, programming services, system integration, and maintenance and support. The Company's services are priced separately and fees for its services generally are not included in the price for its software product. Fees for maintenance and support services generally are billed a year or six months in advance while all remaining consulting, education and programming services generally are billed monthly as incurred. The Company considers its ability to rapidly implement its software solution a key competitive factor. The Company's professional services organization which employs approximately 60 consultants and managers uses a structured implementation methodology known as "FOCUS", which defines a customer's implementation into six distinct phases: planning and installation, education and business system simulations, development of operating procedures, conversion planning, end-user training and cutover and post implementation evaluation. The Company offers both on-site and classroom training. Classroom training is available in nine different Company operated facilities throughout the world. In addition to the consultants employed directly by the Company, customers can receive consulting services from the Company's 40 business partners throughout the world. The Company also has been active establishing relationships with accounting and consulting firms to provide additional support in project management, implementation and system integration services for customers. The Company views these relationships as an important source for future leads for prospective customers. Although the Company attempts to minimize the amount of customization of its software products, the Company does provide professional programming services to modify its software products to address specific customer requirements. These modifications may include designing and programming complete applications or integrating its software products with legacy systems. Maintenance and support services are available to all customers currently on an active release of the Company's software products. Maintenance and support services include product enhancements and updates, free upgrades to new versions, hotline telephone support during extended business hours, 24 hour/seven days a week emergency support and access to the Company's customer support module on the Company's WEB home page on the Internet (HTTP://www.symix.com). The price for maintenance and support services is based on a percentage of the list price of the Company's software product at the time the license is purchased. Since fees for maintenance and support services are billed typically a year or six months in advance, the revenue is deferred and recognized ratably over the term of the maintenance and support agreement. SALES AND DISTRIBUTION The Company currently licenses SyteLine and Version 4.0 based on a license fee for each additional concurrent session or concurrent execution of its software products. The Company receives additional license fee revenue whenever a customer increases the number of concurrent sessions, usually as a result of the growth of the customer's business or expansion to other sites. Both Symix Syteline and Version 4.0 use an encrypted key that allows the customer to use only the number of concurrent sessions for which the customer has received a license. Sales leads are generated through a combination of in-house telemarketing, advertising, trade shows, references from professional services and hardware vendor partners, and direct calling by sales staff. The Company sells its products and services through both a direct sales force and approximately 40 business 7 partners throughout the world. The Company currently maintains 15 sales and support offices worldwide: 7 in North America, 5 in Asia Pacific and 3 in Europe. During the fiscal year ended June 30, 1996, the Company's worldwide sales operation organization decreased from 145 to 139 employees. The Company's business partners in North America target the lower end of the mid-range market while its business partners in Asia Pacific and Europe are primarily responsible for a geographic region or country. The Company has begun to significantly expand its international operation during the past several months. The operations of two former business partners in Australia and the Netherlands, respectively, were recently acquired by the Company and converted to subsidiary operations, thus increasing the number of Company employees in each country by 15 and 7, respectively. On August 8, 1996, the Company completed the purchase of stock of a French company which will serve as a future sales and distribution operation for the Company. The French company currently has approximately 200 existing customers and 27 employees. The existing customers use a French localized version of a MRPII product that is no longer being enhanced by the software vendor. The French company has full rights to the localized product and currently realizes approximately $4.0 million annual revenue from services and support of those customers. It is expected that the new French subsidiary will market a localized version of Symix SyteLine and will target existing and new customers. Symix's relationship with Mitsui Co., Ltd., the Company's exclusive distributor in Japan, has resulted in a "Mitsui Symix Center" which is being established in Tokyo. The Center will serve as a training and support facility for Symix customers in Japan. The Company is optimistic as to future expansion in Japan with Mitsui in addition to Japanese multinational companies with subsidiaries throughout the world. For the fiscal year ended June 30, 1996, sales outside of North America accounted for approximately 12% of the total Company revenue. With new subsidiaries in France, Australia and the Netherlands combined with continued growth in key areas such as Japan, China and Singapore, the Company believes international sales will account for an increasing percentage of its total sales over the next several years. In addition to the business partners and third party consultants, an important source of leads continue to be hardware vendors. The Company has relationships with a number of hardware vendors, which include cooperative marketing programs with International Business Machines, Hewlett-Packard, Digital Equipment Corporation, Unisys Corporation and Data General Corporation. The Company bears sole responsibility for providing support for its software to its customers under each agreement and the various hardware vendors are ultimately responsible for their products, although the Company may provide some front line support. PRODUCT DEVELOPMENT The Company devotes a significant and growing percentage of its resources to identifying customer's needs, developing new features and enhancements to existing products and designing and developing new products. New products, updates and enhancements are developed by the Company's internal development staff. The Company's practice is to release updates and major enhancements on a regular basis. In connection with each release, the Company works closely with customers and business partners to define improvements and enhancements. Research and product development expenses, including amounts capitalized were $5,963,000, $5,163,000 and $3,768,000 for the fiscal years ended June 30, 1996, 1995 and 1994, respectively. Capitalized software expenditures were $2,290,000, $1,419,000, and $1,179,000 for the same respective periods and were capitalized in accordance with the Statement of Financial Accounting Standards No. 86. In addition to the software development costs capitalized this year is $1.0 million for a purchase of existing technology. Amortization of capitalized software costs are included in cost of revenue. The Company generally retains the right to remarket any specific customer modifications prepared by its programming services group in or with future product releases. 8 COMPETITION The computer software industry is highly competitive and the Company sells in a highly fragmented market consisting of a few large, multi-national vendors and a larger number of small, regional competitors. Some of the Company's existing competitors, as well as a number of potential competitors, have larger technical staffs, more established and larger marketing and sales organizations, and greater financial resources. However, no one competitor in the mid-range market has a significant portion of market share. The Company competes with a different group of software vendors with respect to each opportunity based upon size of the customer, specific niche product requirements, technology requirements, geographical location and anticipated investment by the customer. The Company believes its installed customer base of open systems and UNIX operating systems is an important competitive element. The open system segment of the market has grown significantly and is expected to continue to grow over the next several years. The Company anticipates that the most significant source of future competition will be from larger manufacturing software companies who tailor their products for this market or from software companies that have developed a product using newer state-of-the-art technology. The Company believes that the most important considerations for potential customers for its software products are product vision, open systems and client server technology, ease of use and graphical interface; Microsoft and desktop integration; rapid installations; reliability and quality of technical support, documentation and education; size of installed user base, competitive pricing and corporate reputation. The Company believes that it competes favorably in most of these areas. The Company's future success will depend significantly upon its ability to increase its share of its target market, to persuade existing customers to purchase additional concurrent sessions, products and product enhancements, and to persuade both new and existing customers to purchase additional consulting and other professional services from the Company. PRODUCT PROTECTION The Company regards its products as proprietary trade secrets and confidential information. The Company relies largely upon its license agreements with customers, distribution agreements with distributors, and its own security systems, confidentiality procedures and employee agreements to maintain the trade secrecy of its products. The Company seeks to protect its programs, documentation and other written materials under copyright law. There can be no assurance that these means of protection will be effective against unauthorized reproduction or "pirating". Policing unauthorized use of computer software is difficult, and software "piracy" is and can be expected to remain a persistent problem within the software industry. The Company believes that, due to the rapid pace of innovation within the computer industry, factors such as (i) technological and creative skill of personnel, (ii) knowledge and experience of management, (iii) name recognition, (iv) maintenance and support of software products, (v) the ability to develop, enhance, market and acquire software products and services, and (vi) the establishment of strategic relationships in the industry are more important for establishing and maintaining a leading position within the industry than are patent, copyright and other legal protection of its technology. SYMIX-Registered Trademark- is a registered trademark and Symix SyteLine is a trademark of the Company. None of the Company's software is patented. The Company believes that it has all necessary rights to market its products, although there can be no assurance that third parties will not assert infringement claims in the future. 9 WORKING CAPITAL The Company maintains low levels of inventories. The Company believes that other software companies also maintain low levels of inventories. The Company's trade accounts receivable are a significant component of its working capital. The Company believes that trade accounts receivable are a significant component of working capital for other software companies as well. During the 1996 fiscal year, the Company obtained from Bank One, Columbus N.A., a $6 million unsecured revolving line of credit that expires in fiscal year 1998. The revolving line of credit can be converted into a five year term loan by the Company at any time prior to April, 1998. As of June 30, 1996, no amounts had been drawn on the revolving line of credit. PRODUCTION AND BACKLOG Master software media and duplication thereof is performed by the Company at its own facilities with the exception of some international distributors, who perform localizations and reproduction at their facilities in the local jurisdictions pursuant to an agreement with the Company. Printing of user manuals and the manufacture of related materials are performed to the Company's specifications by outside sources (or international distributors), and the completed packages are assembled by the Company (or its international distributors). Production can generally be increased rapidly to respond to increases in demand. In connection with the sale of software products only, the Company does not expect to have any significant levels of backlog in the future. REVENUES Information regarding total revenues attributable to software, hardware and services is incorporated herein by reference to page 12 of the Annual Report to Shareholders for the fiscal year ended June 30, 1996. SEASONALITY The Company's results of operations have fluctuated on a quarterly basis. However, the Company has not experienced significant seasonal fluctuations in net revenue over the past two years. EMPLOYEES As of June 30, 1996, the Company employed 336 persons, including 121 in North American sales and service operations, 96 in development and support, 58 in international operations and 61 in marketing and administration. None of the Company's employees are represented by a labor union. The Company has never experienced a work stoppage and believes that its employee relations are good. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS FORWARD-LOOKING STATEMENTS WHICH ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS. SUCH UNCERTAINTIES AND RISKS INCLUDE, BUT ARE NOT LIMITED TO, PRODUCT DEMAND AND MARKET ACCEPTANCE, THE IMPACT OF COMPETITIVE PRODUCTS, FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, THE COMPANY'S ABILITY TO RETAIN KEY TECHNICAL AND MANAGEMENT PERSONNEL, TIMING OF DEVELOPMENT, PRICING AND OTHER FACTORS DETAILED IN THIS ANNUAL REPORT AND IN OTHER FILINGS MADE BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION. 10 EXECUTIVE OFFICERS OF THE REGISTRANT The Company's executive officers are as follows:
NAME AGE POSITION - --------------------------------------- --- ------------------------------------------------------------------- Lawrence J. Fox........................ 40 Chairman of the Board, Chief Executive Officer and Member, Board of Directors Stephen A. Sasser...................... 46 President, Chief Operating Officer and Member, Board of Directors Stephen A. Yount....................... 41 Vice President America's Sales Lawrence W. DeLeon..................... 40 Vice President, Chief Financial Officer and Secretary Otto Offereins......................... 50 Vice President of Development and Support Robert D. Williams..................... 42 Vice President--Human Resources
LAWRENCE J. FOX founded the Company in 1979 as a sole proprietorship. He has held his present offices since the Company was incorporated in 1984. He also served as Treasurer until 1989. STEPHEN A. SASSER joined the Company in July, 1995, as President and Chief Operating Officer and also serves on the Symix Board of Directors. From October, 1994 to June, 1995, Mr. Sasser served as Vice President of International Operations for Trilogy Development Group, a provider of group client-server sales and marketing software. From August, 1992 to October 1994, Mr. Sasser was Group Vice President of the Systems Management Division and Pacific Rim Operations of Legent Corporation ("Legent"), a provider of systems management software products and services. From April, 1987 through its acquisition by Legent in 1992, Mr. Sasser served as President of the Data Center Management Division of Goal Systems International, Inc. ("Goal Systems"), which designed, developed, and marketed systems management software products. Mr. Sasser also is a director of Viaserve, Inc. STEPHEN A. YOUNT joined the Company in May, 1996 as Vice President of Sales for the Americas. From 1995 to 1996, he was Vice President of Sales at Tyecin Systems, a provider of client-server manufacturing software for the semi-contractor market. From 1993 to 1995, Mr. Yount served as Vice President of Sales and Services at Neuron Data, a client-server application development software company. From 1987 to 1993, he served in various senior sales positions at Legent, including Regional Vice President of Sales, Vice Presidennt of Sales, and Director of Sales, Western Region. LAWRENCE W. DELEON joined Symix in August, 1995 as Vice President, Chief Financial Officer and Secretary. From 1991 to 1995, Mr. DeLeon served in various capacities at Legent, including Treasurer for Goal Systems, Europe Vice President-Finance and Administration and Vice President--Central Europe. From 1988 to 1991, Mr. DeLeon was Chief Financial Officer for Thunderbird Products Corporation. OTTO OFFEREINS joined the Company in September, 1995 as Vice President of Development and Support. He was Vice President and General Manager of Client Product Server Division of Legent from July, 1994 to August, 1995. From July, 1992 to July, 1994, Mr. Offereins served as Vice President of Support and Development for the Systems Management Division of Legent. From March, 1991 to July, 1992, he served as Vice President of Development and Support--Research and Development Division of Legent. Prior to March, 1991, he was Executive Vice President of Operations for Syntelligence Corporation. ROBERT D. WILLIAMS joined the Company in September, 1995 as Vice President--Human Resources. Prior to that time, he served as Director, Human Resources/Associate Relations of Legent from August, 1992 to August, 1995. From March, 1990 to August, 1992 he was Executive Director of Human Resources and Administrative Services of Goal Systems. The executive officers of the Company are appointed by the Board of Directors and serve at the pleasure of the Board of Directors. There are no arrangements or understandings between any officer and any other person pursuant to which the officer was so appointed. 11 ITEM 2. PROPERTIES The Company's headquarters and principal administrative, product development, and sales and marketing operations are located in approximately 70,000 square feet of leased office space in Columbus, Ohio. The lease agreement commenced in July 1991 and will expire on June 30, 2001. The lease agreement provides for an annual base rental of approximately $1,032,000. Additionally, the Company has 15 leased sales and support offices throughout the United States and elsewhere. ITEM 3. LEGAL PROCEEDINGS On June 22, 1995, the Company filed an action in the Court of Common Pleas of Franklin County, Ohio styled as SYMIX SYSTEMS, INC. V. O. KENT LAROQUE III, ET AL. (Case No. 95CVH06-4279) against the former president and former senior vice president of the Company. The claims asserted in this litigation arise out of and relate primarily to the termination of the former president's employment with, and the resignation of the former senior vice president from, the Company. The former president has filed counterclaims seeking compensatory damages in excess of $2.3 million against the Company for, among other things, alleged breach of his employment agreement, abuse of process and defamation and libel. The former senior vice president has also filed counterclaims seeking compensatory damages in excess of $2 million against the Company for similar or related claims. In April,1996, the former president and former senior vice president amended their counterclaims to include claims relating to defamation and libel and to seek punitive damages in excess of $1 million against the Company. On the same day that the Company filed its action in the Court of Common Pleas of Franklin County, Ohio, the former president and former senior vice president filed an action against the Company in the United States District Court for the Southern District of Ohio, Eastern Division, styled as O. KENT LAROQUE, III V. SYMIX SYSTEMS, INC. (Case No. 2-95-CV632). The claims asserted in the district court litigation are similar to those asserted in the common pleas court case, and the district court litigation has been stayed pending resolution of the common pleas court case. This matter was first reported by the Company in a Form 8-K dated April 18, 1996 filed with the Securities and Exchange Commission. Management of the Company believes the claims and counterclaims asserted by the former president and former senior vice president are without merit. The Company is currently not involved in any other legal proceedings other than ordinary routine litigation incidental to the business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. A special meeting of shareholders of the Company was held on June 26, 1996 (the "Special Meeting"). The meeting was adjourned until July 8, 1996 prior to the submission of any matter to shareholders for their vote. At the reconvened meeting held on July 8, 1996, shareholders voted upon (i) a proposal to adopt an amendment to the Amended Articles of Incorporation of the Company which would increase the authorized number of shares of the Company from 6,000,000 to 21,000,000, of which 20,000,000 would be common shares, each without par value, and 1,000,000 would be preferred shares, each without par value, and (ii) a proposal to approve the Symix Systems, Inc. Employee Stock Purchase Plan, as amended and adopted by the Board of Directors of the Company. With respect to the proposals presented to the shareholders at the aforesaid reconvened meeting, the results of the voting were as follows:
SHARES VOTED SHARES VOTED BROKER "FOR" "AGAINST" ABSTENTIONS NON-VOTES ------------ ------------ ------------- ----------- Proposal No. 1 Amendment to Amended Articles................. 1,974,753 243,749 2,300 None Proposal No. 2 Approval of Employee Stock Purchase Plan...... 2,187,012 29,990 3,800 None
Definitive proxy materials relating to the Special Meeting were filed with the Securities and Exchange Commission on or about June 7, 1996. 12 PART II In accordance with General Instruction G(2), the information required by Items 5 through 8 are incorporated by reference from the indicated pages of the Company's Annual Report to Shareholders for the fiscal year ended June 30, 1996:
PAGES ---------------- ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................. 21 ITEM 6. SELECTED FINANCIAL DATA............................................................... 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 12 and 13 OPERATIONS............................................................................ ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................................... 14 through 19 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE............................................................................ None.
PART III In accordance with general instruction G(3), the information required by Items 10, 11, 12 and 13 is hereby incorporated herein by reference from the Registrant's definitive proxy statement for its annual meeting of shareholders to be held on November 1, 1996, as filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, except that certain information required by Item 10 with respect to executive officers of the Registrant is set forth in Part I hereof under "Item 1. Business--Executive Officers of the Registrant". PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) DOCUMENTS FILED AS PART OF THIS REPORT: 1 & 2 Financial Statements and Financial Statement Schedules: See Index to Financial Statements and Financial Statement Schedules beginning at page F-1 of this Report. 3 Exhibits: See Exhibit Index beginning at page E-1 of this Report. (b) REPORTS ON FORM 8-K: The Company filed a Report on Form 8-K dated April 18, 1996 reporting the legal matters discussed in Item 3 of this Report. No financial statements were filed as part of that report. (c) EXHIBITS: See Item 14(a)(3) above. (d) FINANCIAL STATEMENT SCHEDULES: See Item 14(a)(2) above. 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on the 30th day of September, 1996. SYMIX SYSTEMS, INC. By /s/ STEPHEN A. SASSER ----------------------------------------- Stephen A. Sasser PRESIDENT AND CHIEF OPERATING OFFICER Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, on the 30th day of September, 1996. SIGNATURE TITLE - ------------------------------ -------------------------- /s/ LAWRENCE J. FOX* Chairman of the Board, - ------------------------------ Chief Executive Officer Lawrence J. Fox and Director /s/ STEPHEN A. SASSER President and Chief - ------------------------------ Operating Officer and Stephen A. Sasser Director /s/ LAWRENCE W. DELEON* Vice President, Chief - ------------------------------ Financial Officer and Lawrence W. DeLeon Secretary /s/ JOHN T. TAIT* - ------------------------------ Director John T. Tait /s/ DUKE W. THOMAS* - ------------------------------ Director Duke W. Thomas /s/ LARRY L. LIEBERT* - ------------------------------ Director Larry L. Liebert /s/ JAMES A. RUTHERFORD * - ------------------------------ Director James A. Rutherford *By Power of Attorney /s/ STEPHEN A. SASSER - ------------------------------ Stephen A. Sasser (ATTORNEY-IN-FACT) 14 INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The following consolidated financial statements of Symix Systems, Inc. and Subsidiaries, included in the annual report of the registrant to its shareholders for the year ended June 30, 1996, are incorporated by reference in Item 8:
ANNUAL REPORT PAGE# ---------------- Consolidated Statements of Operations--Years ended June 30, 1996, 1995, and 1994....................................................................... 14 Consolidated Balance Sheets--June 30, 1996 and 1995......................... 15 Consolidated Statements of Cash Flows--Years ended June 30, 1996, 1995, and 1994....................................................................... 16 Consolidated Statements of Shareholders' Equity--Years ended June 30, 1996, 1995, and 1994............................................................. 17 Notes to Consolidated Financial Statements--June 30, 1996................... 17 through 19
The following consolidated financial statement schedule of Symix Systems, Inc. and Subsidiaries is included in Item 14(d):
10-K PAGE# ---------------- Schedule II--Valuation and qualifying accounts.............................. F-2
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. F-1 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS SYMIX SYSTEMS, INC. AND SUBSIDIARIES
COL. C ---------------------------- COL. B ADDITIONS ------------ ---------------------------- COL. D COL. E COL. A BALANCE AT CHARGED TO CHARGED TO ------------ ------------- - ---------------------------------------------- BEGINNING OF COSTS AND OTHER ACCOUNTS DEDUCTIONS - BALANCE AT DESCRIPTION PERIOD EXPENSES -DESCRIBE DESCRIBE(1) END OF PERIOD - ---------------------------------------------- ------------ ----------- --------------- ------------ ------------- Year ended June 30, 1996 Deducted from asset accounts: Allowance for doubtful accounts............. $ 550,000 $ 475,000 $ 0 $ 574,600 $ 450,400 -- -- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- Year ended June 30, 1995 Deducted from asset accounts: Allowance for doubtful accounts............. $ 500,000 $ 437,000 $ 0 $ 387,000 $ 550,000 -- -- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- Year ended June 30, 1994 Deducted from asset accounts: Allowance for doubtful accounts............. $ 622,500 $ 78,000 $ 0 $ 200,500 $ 500,000 -- -- ------------ ----------- ------------ ------------- ------------ ----------- ------------ -------------
- ------------------------ (1) Uncollectible Accounts written off and credits issued. F-2 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE - ----------- ------------------------------------------------- ------------------------------------------------- 3(a) Amended Articles of Incorporation of Symix Pages 19 through 22 Systems, Inc. 3(b) Amended Regulations of Symix Systems, Inc. Incorporated herein by reference to Exhibit 3(b) to the Registration Statement on Form S-1 of Registrant, filed February 12, 1991 (Registration No. 33-38878) 10(a)* Symix Systems, Inc. Non-Qualified Stock Option Incorporated herein by reference to Exhibit 10(a) Plan for Key Employees, As Amended to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1993 10(b)* Form of Employment Agreement Incorporated herein by reference to Exhibit 3(b) to the Registration Statement on Form S-1 of Registrant, filed February 12, 1991 (Registration No. 33-38878) 10(c)* Sasser Employment Agreement Incorporated herein by reference to Exhibit 10(b) to Registrant's Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 1996 10(d)* Stock Option Agreement between the Company and Incorporated herein by reference to Exhibit 10(c) Stephen A. Sasser dated January 17, 1996 to Registrant's Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 1996 10(e) Third Lease Amendment for office located at 2800 Incorporated herein by reference to Exhibit 10(c) Corporate Exchange Drive, Columbus, Ohio to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1994 10(f) Lease Agreement between Symix Computer Systems, Incorporated herein by reference to Exhibit 19 to Inc. and Society Equipment Leasing Company Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 1991 10(g) Progress Software Application Partner Agreement Incorporated herein by reference to Exhibit 10(e) dated February 8, 1995 to Registrant's Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 1995 10(h) Agreement between Hewlett-Packard and Symix Incorporated herein by reference to Exhibit 10(g) Computer Systems, Inc. to Registrant's Amendment to Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1993 10(i)* Summary of Bonus Plan Page 23
- ------------------------ *This Exhibit is an executive compensation plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K. E-1
EXHIBIT NO. DESCRIPTION PAGE - ----------- ------------------------------------------------- ------------------------------------------------- 10(j)* Symix Systems, Inc. Stock Option Plan for Outside Incorporated herein by reference to Exhibit 10(i) Directors of Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1993 10(k)* Symix Systems, Inc. Non-Qualified Stock Option Incorporated herein by reference to Exhibit 10(a) Plan for Key Executives, Inc. to Registrant's Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 1996 13 Annual Report to Security Holders Pages 24 through 48 22 Subsidiaries of the Registrant Pages 49 and 50 23 Consent of Independent Auditors Page 51 24 Powers of Attorney Pages 52 through 58 27 Financial Data Schedule Page 59
- ------------------------ * This Exhibit is an executive compensation plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K. E-2 EX-3.A 2 EXH 3-A EXHIBIT 3(a) CERTIFICATE OF AMENDMENT TO THE AMENDED ARTICLES OF INCORPORATION OF SYMIX SYSTEMS, INC. THE UNDERSIGNED, being the President and Secretary, respectively, of Symix Systems, Inc., an Ohio corporation (the "Company"), do hereby certify that at a meeting of the shareholders of the Company duly called for such purpose, held on July 8, 1996, at which a quorum of the shareholders of the Company was represented in person or by proxy, the following resolution was adopted to amend the Amended Articles of Incorporation of the Company by the affirmative vote of the holders of shares of the Company entitling them to exercise at least two-thirds of the voting power of the Company at such meeting. RESOLVED, that the first paragraph of Article FOURTH of the Amended Articles of Incorporation of the Company be amended to read in its entirety as follows: FOURTH: the authorized number of shares of the Corporation shall be 21,000,000, of which 20,000,000 shares shall be common shares, each without par value, and 1,000,000 shares shall be preferred shares, each without par value. IN WITNESS WHEREOF, the undersigned, being the President and Secretary, respectively, of Symix Systems, Inc., acting for and on behalf of said Company, have hereunto subscribed their names this 8th day of July, 1996. By: /s/ Stephen A. Sasser By: /s/ Lawrence W. DeLeon ------------------------------- ------------------------------------ Stephen A. Sasser Lawrence W. DeLeon President Secretary AMENDED ARTICLES OF INCORPORATION OF SYMIX SYSTEMS, INC. FIRST: The name of the corporation shall be Symix Systems, Inc. SECOND: The place in Ohio where the principal office of the corporation is to be located is in the City of Columbus, County of Franklin. THIRD: The purpose for which the corporation is formed is to engage in any lawful act or activity for which corporations may be formed under Sections 1701.01 to 1701.98 of the Ohio Revised Code. FOURTH: The authorized number of shares of the corporation shall be 6,000,000, of which 5,000,000 shares shall be common shares, each without par value, and 1,000,000 shares shall be preferred shares, each without par value. Each outstanding common share and each outstanding preferred share shall entitle the holder thereof to one vote on each matter properly submitted to the shareholders for their vote, consent, waiver, release or other action. No shareholder of the corporation shall have, as a matter of right, the right to cumulate his voting power. The directors of the corporation may adopt an amendment to the articles in respect of any unissued or treasury shares of any class and thereby fix or change: the division of such shares into series and the designation and authorized number of shares of each series; the dividend or distribution rate; the dates of payment of dividends or distributions and the dates from which they are cumulative; liquidation price; redemption rights and price; sinking fund requirements; conversion rights; and restrictions on the issuance of shares of any class or series. FIFTH: The directors of the corporation shall have the power to cause the corporation from time to time and at any time to purchase, hold, sell, transfer or otherwise deal with (A) shares of any class or series issued by it, (B) any security or other obligation of the corporation which may confer upon the holder thereof the right to convert the same into shares of any class or series authorized by the articles of incorporation, and (C) any security or other obligation which may confer upon the holder thereof the right to purchase shares of any class or series authorized by the articles of incorporation. The corporation shall have the right to repurchase, if and when any shareholder desires to sell, or on the happening of any event is required to sell, shares of any class or series issued by the corporation. The authority granted in this Article Fifth of these articles shall not limit the plenary authority of the directors to purchase, hold, sell, transfer or otherwise deal with shares of any class or series, securities, or other obligations issued by the corporation or authorized by its articles. SIXTH: A director or officer of the corporation shall not be disqualified by his office from dealing or contracting with the corporation as vendor, purchaser, employee, agent or otherwise. No contract or transaction shall be void or voidable with respect to the corporation for the reason that it is between the corporation and one or more of its directors or officers, or between the corporation and any other person in which one or more of its directors or officers are directors, trustees or officers, or have a financial or personal interest, or for the reason that one or more interested directors or officers participated in or voted at the meeting of the directors or a committee thereof which authorized such contract or transaction, if in any such case (A) the material facts as to the relationship or interest of such director, officer or other person and as to the contract or transaction are disclosed or are known to the directors or the committee, or such members thereof as shall be present at any meeting at which action upon any such contract or transaction shall be taken, and the directors or committee, in good faith reasonably justified by such facts, authorized the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors constitute less than a quorum; or (B) the material facts as to the relationship or interest of such director, officer or other person and as to the contract or transaction are disclosed or known to the shareholders entitled to vote thereon and the contract or transaction is specifically approved at a meeting of the shareholders held for such purpose by the affirmative vote of the holders of shares entitling them to exercise a majority of the voting power of the corporation held by persons not interested in the contract or transaction; or (C) the contract or transaction is fair as to the corporation as of the time it is authorized or approved by the directors, a committee thereof, or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at any meeting of the directors, or of a committee thereof, which authorizes the contract or transaction. SEVENTH: No shareholder of the corporation shall have, as a matter or right, the pre-emptive right to purchase or subscribe for shares of any class, now or hereafter authorized, or to purchase or subscribe for securities or other obligations convertible into or exchangeable for such shares or which by warrants or otherwise entitle the holders thereof to subscribe for or purchase any such share. EIGHTH: Section 1701.831 of the Ohio Revised Code does not apply to control share acquisitions of the corporation. NINTH: Chapter 1704. of the Ohio Revised Code does not apply to the corporation. TENTH: These Amended Articles supersede the Second Amended Articles of Micro Manufacturing Systems, Inc. existing at the effective date of these Amended Articles. EX-10.I 3 EXH 10-I EXHIBIT 10 (i) SUMMARY OF BONUS PLAN The executive officers named in the Symix Systems, Inc. ("Symix" or the "Company") Annual Report on Form 10-K for its fiscal year ended June 30, 1996 and other management employees of Symix ("Participants") participate in compensation plans based upon the performance of Symix. Annual target bonuses are established by the Symix Compensation Committee for executive officers and by executive officers for all other Participants. Total targeted compensation is determined based on average compensation (base compensation plus bonus) levels for the industry. Under the Company's fiscal year 1997 plan (the "Plan"), a Participant can earn a bonus based upon the performance of Symix as reflected by Symix's earnings per share and revenue achievements in relation to its targeted performance. Bonuses for revenue achievement are paid quarterly based upon year-to-date performance. Quarterly eligible components are pro -rated against targeted annual objectives. Bonuses are based on formulas which provide larger bonuses for higher earnings per share and/or revenue achievement. The revenues for a quarter and the annual earnings per share must be at least ninety percent (90%) of target before any bonuses are earned. Variable components of the compensation plan are self-correcting to reflect over or under achievement on a quarterly bonus. A maximum of 200% of the targeted bonus based on earnings per share and revenue objectives is payable under the compensation plans in the event actual performance of the Company exceeds 150% of targeted performance. In addition, individual bonus plans may contain other variable components related to management objectives, operating margins, and market or geographic revenue targets. The Company's Chief Executive Officer is not a participant in the Plan. EX-13 4 EXH 13 1996 Annual Report SYMIX SOFTWARE YOU CAN RUN WITH [photo: laptop computer] This 1996 ANNUAL REPORT OF SYMIX SYSTEMS, INC. (NASDAQ:SYMX) is formatted as an audio-visual presentation. It echoes the presentation we are making to members of the INVESTMENT COMMUNITY, telling them our GROWTH STORY. This non-traditional approach to our annual report reflects the non-traditional thinking that is the engine of our future. Inside is a fast-paced look at our NEW MANAGEMENT GROUP, products, services and marketing. It also tells about record sales, record profits and a return to profitability. PRESENTATION AGENDA: shareholders' letter, page 1; review of operations, page 4; selected financial data, page 11; management's discussion and analysis, page 12; audited financial statements and notes, page 14. [photo: notepad] PROFILE SYMIX POSITIONING - SYMIX is the world's leading provider of OPEN, client/server manufacturing software solutions in the MID-RANGE DISCRETE CONFIGURABLE market. - SYMIX solutions are designed and developed to optimize the ENTERPRISE RESOURCE PLANNING (ERP) requirements of discrete mixed-mode manufacturing companies. NOTES GREAT TO SEE SYMIX ON THE ROAD SPEAKING TO THE FINANCIAL COMMUNITY! PROFILE SYMIX POSITIONING - SYMIX is the world's leading provider of OPEN, client/server manufacturing software solutions in the MID-RANGE DISCRETE CONFIGURABLE market. - SYMIX solutions are designed and developed to optimize the ENTERPRISE RESOURCE PLANNING (ERP) requirements of discrete mixed-mode manufacturing companies. POSITIONED TO GROW--WORLDWIDE SALES AND SERVICE CAPABILITY AND STRATEGIC RELATIONSHIPS WITH THIRD PARTY SUPPORT PROVIDERS. corp96.ppt - 5/96 - 2 THE SYMIX ENTERPRISE RESOURCE PLANNING SOFTWARE SOLUTIONS are developed for manufacturers who must optimize the rigorous demands of make-to-order and mixed-mode production requirements. With more than 2,400 installations worldwide, Symix focuses on mid-size manufacturers operating in four key markets -- industrial equipment, fabricated metals, electronics and furniture/fixtures. Founded in 1979, Symix is headquartered in Columbus, Ohio employing more than 350 people, with direct sales and support offices in the AMERICAS, EUROPE and ASIA PACIFIC. Symix software encompasses both comprehensive functionality and leading technology. We support it with a full range of services provided through either direct Symix consultants, third party software and services partners, system integrators, or consulting/accounting firms. [photo: globe] GLOSSARY of key terms. MID-RANGE DISCRETE MANUFACTURING: Manufacturers with annual revenue between $10 and $350 million per manufacturing location that produce individual (discrete) items in lots or batches. ENTERPRISE RESOURCE PLANNING (ERP): Solutions for the effective planning and execution of all resources of a manufacturing company. MIXED MODE: A combination of manufacturing styles in a single enterprise -- engineer-to-order, make-to-order, make-to-stock and/or repetitive. FINANCIAL HIGHLIGHTS SYMIX YEAR ENDED JUNE 30 ($ IN MILLIONS EXCEPT PER SHARE DATA) 1996 1995 1994 ---------------------------------------------------------------------- - Total Revenues $45.8 $42.8 $35.5 - Operating Expenses 42.3 44.2 34.7 - Net Income (Loss) 2.3 (.6) .6 - Earnings (Loss) Per Share* 0.40 (0.12) 0.10 - Total Assets $30.5 $26.1 $24.5 - Shareholders' Equity 17.1 14.5 15.6 *REFLECTS ADJUSTMENT FOR 2:1 SHARE SPLIT APPROVED ON AUGUST 27, 1996 corp96.ppt - 5/96 - 2 IN ITS FIRST FULL YEAR, SYMIX'S NEW MANAGEMENT TEAM AND EMPLOYEES DELIVERED RECORD PROFITS. DEAR SHAREHOLDERS: Fiscal 1996 was, by every measure, a turnaround year, - - and A RECORD YEAR FOR PROFITS. Net income for the year improved to $2.3 million, or $0.40 per share from a prior year net loss of $638,000, or $(0.12) per share. Our new management team led Symix to profitability through accelerated revenue growth. Although total revenue improved only 7% in this transitional year, our emphasis on selling more profitable software licenses resulted in a 33% INCREASE IN LICENSE FEES in the second half (excluding third party software and customization services). It was also a year of IMPROVED PRODUCTIVITY, which reflects on the dedicated support of our employees. Without that support, the turnaround would not have been possible. We wish to express our appreciation to them, a number of whom are also shareholders. In March, 1996, we INTRODUCED SYMIX SYTELINE-TM-, our new client/server, graphical user interface ERP product. Building on previous versions of Symix, Symix SyteLineTM combines the robust functionality of a proven manufacturing system, including multi-site capabilities and enhanced international financial reporting, with the speed and ease-of-use of graphical user interface products. Symix SyteLine-TM- incorporates Microsoft-centric standards, supports Windows 95, Windows NT and UNIX and easily interfaces with desktop applications. This new product represented approximately 70% of Symix software sales for the Company in the fourth quarter. 1 CRITICAL ISSUES SYMIX FISCAL YEAR 1996 OVERVIEW - Record profits, improved productivity - New management team/renewed focus - New product, Symix SyteLine-TM-, well received - Increased investment in development and marketing - Expansion to 2,400 customer sites - Momentum corp96.ppt - 5/96 - 2 AMONG OUR FY 1996 CUSTOMER SERVICE INITIATIVES WAS OUR WEB SITE. VISIT IT AT http://www.Symix.Com Through the development of our professional services organization and ALLIANCES with national and regional consulting firms, we are able to address the key requirements of the mid-range manufacturer; rapid deployment of an easy- to-use, flexible, highly integrated manufacturing system. We launched SEVERAL NEW CUSTOMER SERVICE INITIATIVES including expanding hotline telephone and emergency support capabilities and implemented a new customer service and call tracking system. We also introduced OUR INNOVATIVE WEB SITE on the Internet. We are particularly excited about our prospects in the international markets. Our RELATIONSHIP WITH MITSUI & CO., LTD. is developing where we now have a "Mitsui Symix Center" in Tokyo providing local training and support for our customers. Our operations continue to expand in China, the Pacific Rim, and Europe. We recently converted two distributors in Australia and The Netherlands to subsidiary operations; and on August 8, 1996, we acquired the French manufacturing software specialist, GSI Industrie, which will provide a full sales, service and support operation for Symix SyteLineTM in France. We anticipate that revenue outside of North America will increase to 25% of total revenue, approximately double this year's percentage. [photo: Larry Fox] 2 CURRENT OOUTLOOK SYMIX KEY OBJECTIVES - Mid-market leader in selected vertical markets - Commitment to open systems/flexible technology - Focus on customer service initiatives - Expansion of third party software & services alliances - Continued expansion of international presence corp96.ppt - 5/96 - 2 EUROPE, AUSTRALIA AND THE PACIFIC RIM WILL ACCOUNT FOR ROUGHLY 25% OF SYMIX REVENUE IN THE YEAR TO COME. Our strategy for 1997 is to FOCUS on our target market, and initiate new alliances that will increase the functionality of our product. We will continue to invest in people and technologies to BETTER SERVICE OUR CUSTOMERS. We entered the past fiscal year with our primary objective to return the Company to acceptable levels of PROFITABILITY and to position ourselves for future growth. With record profits and ACCELERATING REVENUE GROWTH, we believe we met those goals. We enter the new fiscal year well-positioned as the leading supplier to the rapidly expanding mid-range Enterprise Resource Planning (ERP) marketplace. Our ability to GROW OUR BUSINESS at a rate that reflects the rapidly expanding ERP market will determine our success. We are enthusiastic about our prospects. [photo: Steve Sasser] /s/Lawrence J. Fox /s/Stephen A. Sasser - ------------------------- --------------------------- Lawrence J. Fox Stephen A. Sasser CHAIRMAN OF THE BOARD PRESIDENT AND AND CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER 3 MARKETS & PRODUCTS SYMIX ENTERPRISE RESOURCE PLANNING MARKETPLACE ($ IN BILLIONS) 15 $15.1 10 5 $2.8 $4.1 $5.6 0 1994 1995 1996 2001 ERP MARKET EXPECTED TO EXCEED $15 BILLION IN FIVE YEARS SOURCE: ADVANCED MANUFACTURING RESEARCH, INC. corp96.ppt - 5/96 - 2 OUR CUSTOMERS DO NOT HAVE LARGE INFORMATION SERVICES STAFFS OR BUDGETS. OUR INTEGRATED AND OPEN SYSTEM IS A PERFECT FIT. TODAY'S COMPETITIVE ENVIRONMENT requires manufacturers to be FLEXIBLE AND RESPONSIVE as customers are demanding high quality, low costs and short delivery cycles. Customer-driven manufacturers must increase the efficiency of their operations by increasing the productivity of personnel and the efficient management of assets throughout the enterprise. Manufacturers need an INTEGRATED INFORMATION MANAGEMENT SYSTEM which can provide critical data as needed. Our OPEN SYSTEMS, CLIENT/SERVER ERP systems solutions provide the market with the right combination of technology and functionality. ERP solutions help manufacturers manage the flow of product information through all phases of the business cycle from quotation and order entry through materials procurement, capacity and production management to distribution and financial reporting. According to Advanced Manufacturing Research, Inc., a market analysis and consulting firm servicing the manufacturing industry, the worldwide ERP MARKETPLACE will reach approximately $5.6 BILLION in revenue in 1996 and will grow 20% to 40% per year over the next five years as manufacturers look to technology to increase competitive advantage. [photo: discrete manufacturing environment] 4 MARKETS & PRODUCTS SYMIX THE MARKET - ERP software is "mission critical" - New technology is enabling manufacturers to realize faster delivery times, lower costs, and increase revenues - Mid-range manufacturers want proven solutions in their industries and markets - expertise is critical corp96.ppt - 5/96 - 2 THE COMPANY'S TARGET MARKET is mid-range discrete manufacturing sites with annual revenue between $10 and $350 million. The ERP system is typically the most important application system for the mid-range manu-facturer since it is the "BACKBONE" OF THE MANUFACTURER'S OPERATION. However, most mid-range manufacturers have a small, but important, information systems staff to plan, implement and manage software application systems. The system must be affordable, but incorporate a wide range and depth of functionality, be easy to install and maintain, and be rapidly deployed. Our customers are realizing the benefits of successful, fast implementations as evidenced by numerous customer testimonials reflecting improved sales and profits after implementing Symix within six to nine months. Symix continues to support its customers after implementation through on-going education classes, technical support and upgrades. AN ERP SYSTEM GOES RIGHT TO THE HEART OF THE MID-RANGE MANUFACTURER. THEY NEED SPEED OF INSTALLATION AND EASE OF OPERATION -- WE DELIVER IT! [photo: desk chair] 5 MARKETS & PRODUCTS SYMIX SYMIX SYTELINE-TM- INTRODUCED MARCH, 1996 "IN THIS NEW PRODUCT, SYMIX HAS DONE A PARTICULARLY GOOD JOB SUPPORTING DISTRIBUTED MANUFACTURING COMPANIES. SYMIX SYTELINE-TM- OFFERS AN EXCELLENT SCHEME FOR CENTRALIZED ORDER ENTRY WITH DISTRIBUTED MANUFACTURING AND DISTRIBUTION," SAID JAMES C. SHEPARD, VICE PRESIDENT OF RESEARCH OF ADVANCED MANUFACTURING RESEARCH. corp96.ppt - 5/96 - 2 [photo: computer disk] SYMIX SYTELINE-TM- HAS BEEN ACCEPTED WITH ENTHUSIASM, ALLOWING CUSTOMERS TO MANAGE THEIR ENTIRE ENTERPRISE AND MAXIMIZE ROI. Marking A SIGNIFICANT MILESTONE in its history, Symix released a major ERP application, Symix SyteLineTM, in March, 1996. Symix SyteLineTM was developed from previous versions of Symix applications and features multi-site and distributed manufacturing capabilities, a substantially improved customer service interface and expanded international financial reporting features. The enhanced multi-site capabilities allow both centralized and decentralized organizations to manage manufacturing and financial operations. Order entry functions allow full visibility into inventory at multiple plants and real-time financial accountability across the company. Symix SyteLine-TM- is written in PROGRESS, an EXTREMELY SCALABLE and powerful FOURTH-GENERATION LANGUAGE. As a Microsoft Solution Provider, Symix incorporated Microsoft-centric standards in Symix SyteLineTM, which supports both Windows 95 and Windows NT. Because of its open, client/server architecture, Symix SyteLineTM also supports multiple platforms including UNIX servers and PROGRESS or ORACLE relational databases. 6 MARKETS & PRODUCTS SYMIX SYMIX SYTELINE-TM- OVERVIEW Manufaacturing Planning & Production Enterprise Project Materials Capacity Administration Control Management Requirements Planning Cash Management Customer Purchasing Accounts Payable Service Scheduling ORDER CONFIGUR- ATION Order Inventory Shop Floor Accounts Entry Control Receivable ESTIMATING Order MRP Work Orders/Jobs Payroll Inquiry Pricing Distribution Production Human Schedules Resources Inventory Just-In-Time/ Availability Engineering Kanban Product Fixed Assets Configuration Marketing/ Costing Multinational Sales Quality Manage- Business ment RMA General Ledger Financial Statements Management Reports corp96.ppt - 5/96 - 2 "WE EXPECT TO CAPITALIZE ON SIGNIFICANT PRODUCTIVITY GAINS WHILE OUR CUSTOMERS REAP THE BENEFITS OF FASTER AND MORE RESPONSIVE SERVICE" SYMIX SYTELINE-TM- CUSTOMER SYMIX SYTELINE-TM- consists of FULLY INTEGRATED FUNCTIONALITY that comprehen- sively supports a manufacturer's business process including key areas such as customer service, manufacturing and materials planning, production management, and finance and administration. Symix SyteLine-TM- SUPPORTS THIRD-PARTY SOFTWARE PRODUCT INTEGRATIONS that further expand the functionality of Symix SyteLineTM. These include Order and Product Configuration, Automated Data Collection, Electronic Data Interchange, Computer Aided Design Interface and external payroll interfaces. Several new product integrations are planned for 1997. Our industry leading order and product configurator allows manufacturers to capture customer requirements at order time, automatically transfer the specifications to planning and production, and monitor order status through the entire process. This tight integration increases order accuracy, reduces time-to-delivery and reduces costs. The results are increased revenues and customer satisfaction. [photo: computer monitor] 7 COMPETITIVE ADVANTAGES SYMIX TARGETED FOR MID-RANGE MANUFACTURERS - INTEGRATED, ROBUST FUNCTIONALITY - FAST TIME-TO-BENEFIT, INSTALLATIONS IN 6 TO 9 MONTHS - ADVANCED OPEN TECHNOLOGY - GRAPHICAL, CLIENT SERVER - SUPERIOR SUPPORT AND SERVICES - SYMIX TAKES RESPONSIBILITY - TOP-TIER PARTNERS - THIRD PARTY PRODUCTS, BIG SIX, MAJOR REGIONAL CONSULTANTS, HARDWARE corp96.ppt - 5/96 - 2 COMPETITIVE ADVANTAGE is created when an organization understands its market, focuses on delivering market requirements and is maniacal about execution. Symix is FOCUSING ON WHAT MATTERS to mid-range manufacturers and using innovation and technology to deliver the right solutions to our customers. With more than 16 years of experience with mid-range manufacturing, Symix is uniquely qualified to deliver what matters, ROBUST FUNCTIONALITY ON CURRENT, YET PROVEN TECHNOLOGY. The ability to quickly install a system is critical given the pressures of limited financial and technical resources of the mid-range manufacturer. In addition to its significant internal consulting and services capabilities, Symix continues to develop ALLIANCES WITH SYSTEM INTEGRATORS, CONSULTING AND ACCOUNTING FIRMS to support the customer's migration to Symix. Symix can also support multi-national companies with local sales and support operations throughout the world including Asia Pacific and Europe. [photo: Human Resources person] AS WELL AS LOCAL SALES, SUPPORT AND SERVICES ORGANIZATIONS INTERNATIONALLY, SYMIX FORMS ALLIANCES WITH SYSTEM INTEGRATORS, CONSULTING AND ACCOUNTING FIRMS. 8 CUSTORMER RESULTS SYMIX SPEED! - This year our customers have been able to: - realize 90% return on system investment in nine months - compress order processing time by 75% - cut lead time on raw materials by 50% - improve inventory turns by 20% - cut missed shipments by 50% corp96.ppt - 5/96 - 2 SYMIX, WITH ITS PARTNERS, DELIVERS THE TOTAL ERP PACKAGE. RESULTS are what it is all about. Our customers have realized the benefits of increased productivity of personnel, shortened order cycles, reduced production costs, and improved margins. The opportunities for savings and improved RESPONSIVENESS TO THE CUSTOMER can be achieved in a number of ways; whether by managing the plant's capacity to meet anticipated demand while minimizing expediting, ensuring that changes from customers and engineering get incorporated in a timely manner, or reducing carrying costs while ensuring material availability for scheduled productions. Customers want a vendor who can deliver NOT JUST SOFTWARE, BUT ALSO SERVICES AND SUPPORT for a reasonable price. Now more than ever, manufacturers must respond to changing customer requirements and SPEED IS CRITICAL. SYMIX DELIVERS functionality, technology, expertise, partners and confidence to manufacturers -- FAST. This recipe will lead to success for both customers and Symix. [photo: foot race] 9 FINANCIAL RESULTS SYMIX IMPROVED PRODUCTIVITY - REVENUE PER EMPLOYEE $150,000 $120,000 $106,300 $109,100 $109,900 $119,600 $144,400 $90,000 1992 1993 1994 1995 1996 corp96.ppt-5/96-10 Cost Control and improved productivity-played a major role in the record profitability in 1996. Our RECORD EARNINGS and significant financial improvement from the prior year have been the result of FOCUSING ON MORE PROFITABLE, LESS CUSTOMIZED SOFTWARE SALES, improving productivity and ensuring investment only in areas that are critical to the future success of the Company. Although we have opportunities for further improvement, average REVENUE PER EMPLOYEE IMPROVED 21% from the previous year to $145,000. We also reduced recur- ring operating expenses, excluding cost of revenue, by 11% from the previous year despite increasing spending for product development, customer support and promotional programs. Our CASH POSITION REMAINS STRONG and we currently have no bank debt outstanding. During the fiscal year, we were pleased to sign with Bank One, Columbus, N.A. a two year $6.0 million unsecured revolving line of credit to further ensure access to capital if the need arises. Based on our accelerating revenue growth, improved margins and solid balance sheet, we are posi- tioned to ensure current and future shareholder value. /s/ Lawrence W. DeLeon Lawrence W. DeLeon Vice President and Chief Financial Officer 10 SELECTED FINANCIAL DATA The following table summarizes certain consolidated financial data for each of the five years presented. The selected consolidated data presented below have been derived from, and should be read in conjunction with, the Company's audited consolidated financial statements, and the notes thereto.
Year Ended June 30, (IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1994 1993 1992 - -------------------------------------------------------------------------------------------------------------- OPERATING STATEMENT DATA: Net revenue $45,759 $42,828 $35,486 $30,006 $26,686 Cost of revenue 15,678 14,882 12,600 11,560 10,258 - -------------------------------------------------------------------------------------------------------------- Gross margin 30,081 27,946 22,886 18,446 16,428 Operating expenses Selling, general, and administrative 22,411 25,564 19,505 15,779 13,356 Research and product development 3,673 3,744 2,589 1,562 1,004 Restructuring and other unusual charges 506 -- -- -- -- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 26,590 29,308 22,094 17,341 14,360 - -------------------------------------------------------------------------------------------------------------- Operating income (loss) 3,491 (1,362) 792 1,105 2,068 Other income, net 221 314 122 56 125 - -------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes 3,712 (1,048) 914 1,161 2,193 Provision (benefit) for income taxes 1,404 (410) 330 448 856 - -------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ 2,308 $ (638) $ 584 $ 713 $ 1,337 - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- Earnings (loss) per share $ 0.40 $ (0.12) $ 0.10 $ 0.12 $ 0.23 Weighted average common and common share equivalents outstanding 5,706 5,424 5,742 5,802 5,782 BALANCE SHEET DATA: Working capital $ 7,538 $ 6,363 $ 9,466 $11,458 $10,921 Total assets 30,463 26,069 24,473 21,743 19,331 Total long-term debt and lease obligations - 138 335 559 767 Total shareholders' equity 17,102 14,508 15,641 15,615 14,186 - -------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------
*Note: Where appropriate, all share data and references in this report have been adjusted for the 2:1 share split, effected in the form of a share distribution of one share for each share outstanding, approved by the Board of Directors on August 27, 1996.
NET REVENUE NET INCOME (LOSS) TOTAL SHAREHOLDERS' EQUITY (IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS) $45,759 $2,308 $17,102 $42,828 $15,615 $15,641 $14,186 $14,508 $35,486 $30,006 $1,337 $26,686 $713 $584 $(638) 1992 1993 1994 1995 1996 1992 1993 1994 1995 1996 1992 1993 1994 1995 1996
11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994. The Company's revenue is derived primarily from (i) licensing Symix software and providing custom programming services, and (ii) providing installation, implementation, training, consulting and systems integration services along with providing software product support and maintenance on a subscription basis. Historically, the Company has resold other manufacturer's computer hardware but has transitioned from reselling, because of low margins, to establishing cooperative marketing programs with hardware vendors. Revenue for all periods presented is accounted for in accordance with AICPA Statement of Position 91-1 on Software Revenue Recognition. REVENUE Net revenue increased 7% to $45.8 million in fiscal 1996, compared to increases of 21% and 18% for the years ended June 30, 1995 and 1994, respectively. Increased service and support revenue was the primary contributor to the overall net revenue increase. Service revenue increased $2,926,000, $7,401,000 and $4,156,000 in 1996, 1995, and 1994, respectively. The revenue mix since 1994 is shown in the table below: REVENUE MIX: Year Ended June 30, (IN THOUSANDS, EXCEPT PERCENTAGES) 1996 1995 1994 - -------------------------------------------------------------------------------- Software $24,682 54% $24,583 58% $22,917 65% Hardware -- -- 94 -- 1,819 5% Service and Support 21,077 46% 18,151 42% 10,750 30% - -------------------------------------------------------------------------------- Total $45,759 100% $42,828 100% $35,486 100% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Software license fees and related revenue remained flat in 1996 compared to increases of 7% and 11% in 1995 and 1994, respectively. License fees decreased as a percentage of total revenue from 58% and 65% in 1995 and 1994, respectively, to 54% of total revenue in 1996. Management anticipates software license fee growth to improve and, therefore, no longer decrease as a percentage of total revenue. Fourth quarter software and license fee revenue in 1996 increased 24% and was 57% of total revenue. International revenue accounted for approximately 18% of net revenue in fiscal 1996 in comparison to 11% and 10% in 1995 and 1994, respectively. Development of international markets has taken longer than the Company originally anticipated. However, with the recent conversion of distributors to subsidiary operations in Australia and the Netherlands and the acquisition of a French sales and distribution operation in August, 1996, management continues to believe international markets represent significant growth opportunities for the Company and remains committed to the continued development of its international sales distribution channels. Service and support revenue increased 16% in 1996 to $21.1 million from $18.2 million in 1995 and $10.8 million in 1994. Service and support revenue is comprised of installation, implementation, training, consulting, systems integration and software product maintenance and support. The continued increase in service and support revenue is primarily attributable to the growth in licensed Symix installations worldwide and the Company's expanding service organization. Service revenue made up 46% of total revenue in 1996, compared to 42% and 30% in 1995 and 1994, respectively. Deferred revenue on the Company's balance sheet relating to support and maintenance contracts, increased from $5,571,000 at June 30, 1995 to $5,786,000 at June 30, 1996. Revenue on these contracts is recognized ratably over the contract period. With management's emphasis on growing future software license fee revenue, the Company does not expect the service revenue to continue to increase as a percentage of total revenue. The Company has continued to de-emphasize its hardware sales in 1996 due to low margins on hardware. The Company, however, continues to participate in joint marketing activities with UNIX hardware manufacturers. This shift from hardware selling has not had a significant impact on the Company's ability to market Symix software and services. COST OF REVENUE Total cost of revenue as a percentage of net revenue decreased to 34% for the year ended June 30, 1996 from 35% and 36% for the years ended June 30, 1995 and 1994, respectively. License fee and turnkey systems cost of revenue was 28% of license fee and turnkey revenue in 1996 compared to 28% in 1995 and 30% in 1994, while service, support and maintenance costs of revenue decreased to 42% of service, support and maintenance revenue in 1996 compared to 44% in 1995 and 47% in 1994. The decrease in license fee cost of revenue is primarily due to a shift of field programming resources from specific customer needs development to the Company's overall development program. The decrease in service cost of revenue as a percentage of related revenue in 1996 compared to prior years is primarily due to the increase in Symix installations and corresponding customer service renewals, from which the Company was able to realize increased benefit on primarily fixed costs of providing these services. SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES Selling, general, and administrative expenses decreased 12% in 1996 compared to increases of 31% and 24% in 1995 and 1994, respectively. Selling, general, and administrative expenses as a percent of net revenue were 49%, 60% and 55% for the same respective periods. The decrease in selling, general, and administrative expenses in 1996 was the result of general expense controls, improved productivity of the North American sales force and improved margins on international operations as the Company continues to expand in newer markets, particularly in Asia Pacific. In the first quarter of fiscal year 1996, the Company recognized restructuring and other non-recurring charges of $506,000 which consisted of primarily severance payments related to operational changes and costs associated with reorganizing the European sales channel. RESEARCH AND DEVELOPMENT Total research and product development expenses, including amounts capitalized, were $5,963,000 and 13% of net revenue for the year ended June 30, 1996 in comparison to $5,163,000 and 12% of net revenue in 1995 and $3,768,000 and 11% of net revenue in 1994. The Company capitalized $2,290,000, $1,419,000, and $1,179,000 for the years ended June 30, 1996, 1995 and 1994, respectively. Software development costs capitalized in a given period are dependent upon the nature and stage of the development process and are capitalized in accordance with Statement of Financial Accounting Standards No. 86. In addition to the software development costs capitalized in fiscal 1996 is $1.0 million for a purchase of existing technology. The increase in overall research and development expenditures is due to planned staff expansion and re-allocation of programming resources relating directly to the Company's development of Symix SyteLineTM (a new client/server, graphical user interface product developed from previous versions of the Company's core product and introduced in March, 1996), and the increased development focus on interfacing with third party software products. PROVISION FOR INCOME TAXES The effective tax rates for the years ended June 30, 1996, 1995 and 1994 were 38%, (39%) and 36%, respectively. The reduced effective tax rate in 1994 compared to the other years was primarily due to the amount of foreign taxable earnings in countries with considerably lower effective rates, thereby reducing the Company's overall tax rate. 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS (continued) LIQUIDITY AND CAPITAL RESOURCES The Company's financial position remains strong. Cash provided by operations increased to $6.9 million in 1996 from $3.0 million in 1995 and $3.5 million in 1994. The increase in cash from operations in 1996 resulted primarily from the substantial improvement in earnings over the previous year. Trade accounts receivable days sales outstanding were 76 days at June 30, 1996 in comparison to 97 days at June 30, 1995. The increase in cash provided by operations in 1996 was partially offset by increased additions to purchased and capitalized software, resulting in an increase in cash from $4.5 million at June 30, 1995 to $6.8 million at June 30, 1996. Working capital was $7.5 million at June 30, 1996 compared to $6.4 million and $9.5 million at June 30, 1995 and 1994, respectively. The increase in working capital in 1996 is primarily attributable to the positive cash flow for the year. The decrease in working capital in 1995 was the result of an increase in deferred revenue due to the increased Symix customer base and renewed service contracts. In addition to its present working capital, the Company has, with a bank, a $6.0 million unsecured revolving line of credit that expires in fiscal year 1998. To date, no amounts have been drawn under the line. It is expected that the Company's continued expansion of its operations and products will result in additional requirements for cash in the future. The Company, however, anticipates that existing sources of liquidity, cash flow from operations, and the bank credit line will be sufficient to satisfy anticipated cash needs for the next twelve months. QUARTERLY RESULTS
Three months ended June 30, Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, (IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1996 1995 1995 1995 1995 1994 1994 - ---------------------------------------------------------------------------------------------------------------------------------- NET REVENUE $13,204 $11,165 $11,571 $9,819 $11,207 $10,613 $12,819 $(8,189 Cost of revenue 4,553 3,758 3,568 3,799 3,441 4,037 4,122 3,282 - ---------------------------------------------------------------------------------------------------------------------------------- Gross margin 8,651 7,407 8,003 6,020 7,766 6,576 8,697 4,907 Operating Expenses Selling, general, and administrative 6,514 5,410 5,757 4,730 6,526 6,101 6,714 6,223 Research and product development 1,086 968 762 857 1,066 945 1,035 698 Restructuring and other unusual charges -- -- -- 506 -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Total operating expenses 7,600 6,378 6,519 6,093 7,592 7,046 7,749 6,921 - ---------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1,051 1,029 1,484 (73) 174 (470) 948 (2,014) Other income net 60 46 62 53 81 148 55 30 - ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes 1,111 1,075 1,546 (20) 255 (322) 1,003 (1,984) - ---------------------------------------------------------------------------------------------------------------------------------- Provision (benefit) for income taxes 363 430 618 (8) 99 (123) 411 (797) - ---------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ 748 $ 645 $ 928 $ (12) $ 156 $ (199) $ 592 $(1,187) - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- EARNINGS (LOSS) PER SHARE $ 0.12 $ 0.11 $ 0.17 $ 0.00 $ 0.03 $ (0.04) $ 0.11 $ (0.21) Weighted average common and common share equivalents outstanding 6,008 5,714 5,556 5,450 5,480 5,392 5,536 5,698 - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------
The Company believes that inflation has not had a material effect on its operations. The Company's sales are primarily denominated in U.S. dollars and other foreign currency risk is considered minimal. QUARTERLY RESULTS The following table sets forth certain unaudited operating results for each of the eight quarters ended June 30, 1996. This information has been prepared by the Company on the same basis as the audited, consolidated financial statements, and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly this information when read in conjunction with the Company's audited, consolidated financial statements and the notes thereto. The Company's results of operations have fluctuated on a quarterly basis. The Company's expenses, with the principal exception of sales commissions and certain components of cost of revenue, are generally fixed and do not vary with revenue. As a result, because the Company plans and commits its resources in advance of its planned revenue level, any shortfall of actual revenue in a given quarter would adversely affect net earnings for that quarter by a significant portion of the shortfall. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements in this Annual Report to Shareholders which are not historical fact are forward looking statements that involve important assumptions, risks, uncertainties and other factors which could cause the Company's actual results for fiscal year 1997 and beyond to differ materially from those expressed in such forward looking statements. These important factors include, without limitation, product demand and market acceptance, the effect of economic conditions, the impact of competitive products, foreign currency fluctuations, pricing and other assumptions, risks, uncertainties and factors disclosed in the Company's filings with the Securities and Exchange Commission. 13 REPORT OF MANAGEMENT The integrity of the consolidated financial statements and other financial information contained in this Annual Report is the responsibility of the management of the Company. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles, and reflect the effects of certain estimates and judgments made by management. The Company maintains an effective system of internal accounting controls that is designed to provide reasonable assurance that transactions are properly recorded and executed in accordance with management's authorization, and that the assets of the Company are safeguarded. The system is continuously monitored by management, and includes segregation of duties, appropriate selection and training of personnel, and communication of policies and procedures consistent with the highest principles of business ethics and conduct. The Audit Committee of the Board of Directors, which includes two outside directors, meets periodically with management and the independent auditors to review accounting, reporting, and auditing matters. The Committee approves the selection of the independent auditors. The Company's consolidated financial statements have been audited by Ernst & Young LLP, independent auditors. /s/ Lawrence J. Fox /s/ Stephen A. Sasser Lawrence J. Fox Stephen A. Sasser CHAIRMAN OF THE BOARD AND PRESIDENT AND CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER REPORT OF INDEPENDENT AUDITORS Board of Directors Symix Systems, Inc. We have audited the accompanying consolidated balance sheets of Symix Systems, Inc. and Subsidiaries as of June 30, 1996 and 1995, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended June 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Symix Systems, Inc. and Subsidiaries at June 30, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 1996, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Columbus, Ohio July 30, 1996, except for Note C and Note J, as to which the date is August 27, 1996 CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended June 30, (IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1994 - -------------------------------------------------------------------------------- License fees and turnkey systems $24,682 $24,677 $24,736 Service, maintenance and support 21,077 18,151 10,750 - -------------------------------------------------------------------------------- Net revenue 45,759 42,828 35,486 License fees and turnkey systems 6,840 6,845 7,525 Service, maintenance and support 8,838 8,037 5,075 - -------------------------------------------------------------------------------- Cost of revenue 15,678 14,882 12,600 - -------------------------------------------------------------------------------- Gross margin 30,081 27,946 22,886 Selling, general, and administrative 22,411 25,564 19,505 Research and product development 3,673 3,744 2,589 Restructuring and other unusual charges - Note G 506 -- -- - -------------------------------------------------------------------------------- Total operating expenses 26,590 29,308 22,094 - -------------------------------------------------------------------------------- Operating income (loss) 3,491 (1,362) 792 Other income, net 221 314 122 - -------------------------------------------------------------------------------- Income (loss) before income taxes 3,712 (1,048) 914 Provision (benefit) for income taxes - Note F 1,404 (410) 330 - -------------------------------------------------------------------------------- Net Income (loss) $ 2,308 $ (638) $ 584 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Earnings (loss) per share $ 0.40 $ (0.12) $ 0.10 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Weighted average number of common and common equivalent shares outstanding 5,706 5,424 5,742 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- See notes to consolidated financial statements. 14 CONSOLIDATED BALANCE SHEETS June 30, June 30, (IN THOUSANDS) 1996 1995 - -------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 6,774 $ 4,498 Trade accounts receivable, less allowance for doubtful accounts of $450 in 1996 and $550 in 1995 11,429 10,917 Inventories 312 272 Prepaid expenses 522 296 Other receivables 117 153 Refundable income taxes -- 237 Deferred income taxes 230 337 - -------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 19,384 16,710 - -------------------------------------------------------------------------------- OTHER ASSETS: Capitalized software, net of accumulated amortization of $4,311 in 1996 and $3,150 in 1995 4,660 2,531 Deferred income taxes 1,004 892 Deposits and other assets 472 552 - -------------------------------------------------------------------------------- 6,136 3,975 - -------------------------------------------------------------------------------- EQUIPMENT AND IMPROVEMENTS: Furniture and fixtures 2,294 2,235 Computer and other equipment 8,078 6,713 Leasehold improvements 1,187 1,190 - -------------------------------------------------------------------------------- 11,559 10,138 Less allowance for depreciation and amortization 6,616 4,754 - -------------------------------------------------------------------------------- 4,943 5,384 - -------------------------------------------------------------------------------- TOTAL ASSETS $30,463 $26,069 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses - Note H $ 5,163 $ 3,908 Customer deposits 242 670 Deferred revenue 5,786 5,571 Income-tax payable 518 -- Current portion of lease obligations 137 198 - -------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 11,846 10,347 LEASE OBLIGATIONS, less current portion - Note B -- 137 DEFERRED INCOME TAXES 1,515 1,077 SHAREHOLDERS' EQUITY - NOTE C Common stock, authorized 20,000 shares; issued 5,826 shares at June 30, 1996, and 5,750 shares at June 30, 1995, respectively; at stated capital amounts of $.01 per share 58 58 Preferred stock, authorized 1,000 shares; none issued and outstanding Capital in excess of stated value 10,985 10,614 Retained earnings 7,379 5,156 - -------------------------------------------------------------------------------- 18,422 15,828 Less: Common stock in treasury: 304 shares in 1996 and 1995, at cost 1,320 1,320 - -------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 17,102 14,508 - -------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $30,463 $26,069 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- See notes to consolidated financial statements. 15 CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30, (IN THOUSANDS) 1996 1995 1994 - ---------------------------------------------------------------------------------------------------- Increase (decrease) in cash OPERATING ACTIVITIES Net income (loss) $ 2,308 $ (638) $ 584 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization and write down of intangible assets 3,064 2,755 1,811 Provision for losses (recoveries) on accounts receivable (100) 50 (122) Provision for deferred income taxes 433 (390) 148 Changes in operating assets and liabilities: Trade accounts receivable (467) (1,986) (1,172) Prepaid expenses and other receivables (190) 97 (122) Inventories (40) 40 (69) Deposits and other assets 80 (112) (319) Accounts payable and accrued expenses 1,255 865 518 Customer deposits (428) 70 294 Deferred revenues 215 1,810 1,875 Income taxes payable/refundable 755 406 37 - ---------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 6,885 2,967 3,463 INVESTING ACTIVITIES Net purchases of equipment and improvements (1,463) (2,519) (2,180) Additions to purchased and capitalized software (3,290) (1,573) (1,178) - ---------------------------------------------------------------------------------------------------- NET CASH USED BY INVESTING ACTIVITIES (4,753) (4,092) (3,358) FINANCING ACTIVITIES Proceeds from issuance of shares on exercise of stock options 371 89 21 Principal payments on long-term obligations (197) (224) (208) Purchases of treasury stock -- (767) (553) - ---------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES 174 (902) (740) Effect of exchange rate changes on cash (30) (5) (36) Net increase (decrease) in cash 2,276 (2,032) (671) Cash and cash equivalents at beginning of period 4,498 6,530 7,201 - ---------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,774 $4,498 $ 6,530 - ---------------------------------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash paid (received) during the period for: Interest $ 49 $ 49 $ 62 Income taxes (net of refunds) 189 (499) 78 - ---------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------
See notes to consolidated financial statements. 16 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Cumulative Common Stock Capital in Excess Retained Translation Treasury (IN THOUSANDS) Shares Amount of Stated Value Earnings Adjustment Stock - ---------------------------------------------------------------------------------------------------------------------------------- BALANCES AT JULY 1, 1993 5,604 $56 $10,327 $5,336 $(104) Issuance of shares on exercise of stock options 26 21 Tax benefit on stock options exercised 36 Purchase of treasury stock $ (553) Equity adjustment from foreign currency translation (62) Net income 584 - ---------------------------------------------------------------------------------------------------------------------------------- BALANCES AT JUNE 30, 1994 5,630 56 10,384 5,920 (166) (553) Issuance of shares on exercise of stock options 120 2 88 Tax benefit on stock options exercised 142 Purchase of treasury stock (767) Equity adjustment from foreign currency translation 40 Net (loss) (638) - ---------------------------------------------------------------------------------------------------------------------------------- BALANCES AT JUNE 30, 1995 5,750 58 10,614 5,282 (126) (1,320) Issuance of shares on exercise of stock options 76 306 Tax benefit on stock options exercised 65 Equity adjustment from foreign currency translation (85) Net income 2,308 - ---------------------------------------------------------------------------------------------------------------------------------- Balances at June 30, 1996 5,826 $58 $10,985 $7,590 $(211) $(1,320) - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION: The accompanying financial statements include the accounts of Symix Systems, Inc., and its wholly owned subsidiaries and its proportionate share of a joint venture, after elimination of intercompany accounts and transactions. ORGANIZATION: Symix Systems, Inc. designs, develops, markets and supports a fully integrated manufacturing, planning and financial software system. The software was developed for make-to-order and mixed-mode production manufacturers. Among the key industries which use the Symix applications are industrial equipment, fabricated metals, electronics and furniture/fixtures. Founded in 1979, Symix is headquartered in Columbus, Ohio, employing more than 350 people, with direct sales and support offices in the Americas, Europe, and Asia Pacific. Refer to the back cover for a complete listing of Symix corporate and regional headquarter locations. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. REVENUE RECOGNITION: Revenue for all periods presented are accounted for in accordance with AICPA Statement of Position 91-1, "Software Revenue Recognition." Revenue is derived principally from the sale of internally produced software products and short-term maintenance and support agreements from software sales. Revenue from software license fees and turnkey systems is generally recognized upon shipment of product to the customer. Revenue from maintenance and support agreements is billed periodically, deferred, and recognized ratably over the life of the agreements. Revenue from consulting, education, and other services is recognized as the services are provided. The Company establishes allowances to provide for uncollectible trade receivables and anticipated adjustments to amounts previously billed. CAPITALIZED SOFTWARE: Capitalized software is stated at the lower of cost or net realizable value. The Company capitalizes the cost of purchased software and the qualifying internal cost of developing its software products in accordance with Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed." Capitalized software costs are amortized by the straight-line method using estimated useful lives of three years. Amortization expense was $1,161,000, $874,000, and $629,000 for the years ended June 30, 1996, 1995 and 1994, respectively. INVENTORIES: Inventories consist primarily of software products that are held for resale. The Company values inventory at the lower of cost or market. Cost is determined using the specific identification method. EQUIPMENT AND IMPROVEMENTS: Equipment and improvements are stated on the basis of cost. Provisions for depreciation and amortization are computed by the straight-line method over the estimated lives of the related assets. Depreciation expense was $1,895,000, $1,600,000, and $1,176,000 for the years ended June 30, 1996, 1995 and 1994, respectively. FOREIGN OPERATIONS: The Company's international operations constitute 18% and 11% of consolidated net revenue, and 14% and 13% of consolidated identifiable assets as of and for the years ended June 30, 1996 and 1995, respectively. FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at year-end rates of exchange. Revenues and expenses are translated at the average exchange rates for the periods and capital accounts have been translated using historic rates. The resulting translation adjustments are recorded as an adjustment to shareholders' equity. INCOME TAXES: The Company accounts for income taxes under the liability method pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). Under the liability method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. EARNINGS PER SHARE: Earnings per share is computed using the weighted average number of common shares outstanding during each period plus dilutive common stock equivalents (stock options) using the treasury stock method. Fully diluted earnings per share have not been presented as the differences are insignificant. 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) STOCK-BASED COMPENSATION: During 1995 the Financial Accounting Standards Board issued Statement 123, "Accounting for Stock-based Compensation". This Statement sets forth standards for accounting for stock-based compensation or allows companies to continue using Accounting Principles Board Opinion APB No. 25 with additional disclosures in the notes to the consolidated financial statements. It is the Company's intention to continue using APB No. 25 with additional disclosures in the notes beginning in fiscal 1997. PREFERRED STOCK: The Company's Articles of Incorporation authorize 1,000,000 shares of preferred stock at no par value. The Board of Directors will determine the rights and preferences of these shares. Presently, no preferred shares are issued and outstanding. CASH AND CASH EQUIVALENTS: The Company considers all demand deposits and highly liquid investments with a maturity of three months or less as cash equivalents. Reclassification: Certain reclassifications have been made to conform to the 1996 presentation. NOTE B - LEASES The Company has entered into certain operating lease agreements for the rental of office facilities and computer equipment. The facility leases provide for annual rentals which are subject to escalation for increased operating costs. Amounts expensed under all operating lease agreements were: $1,884,000, $1,735,000, and $1,707,000 for the years ended June 30, 1996, 1995 and 1994, respectively. The Company has several capital lease agreements for certain office furniture and equipment with an aggregate cost of $1,082,000. Related accumulated amortization on these assets aggregated $1,050,000 and $859,000 at June 30, 1996 and 1995, respectively. Amortization on these assets is included in the Company's depreciation expense. The following is a schedule of future minimum lease payments required under these capital and operating leases that have initial or remaining noncancelable lease terms in excess of one year as of June 30, 1996: (IN THOUSANDS) Capital Operating Fiscal Years Leases Leases - -------------------------------------------------------------------------------- 1997 $140 $1,725 1998 1,758 1999 1,565 2000 1,338 2001 1,178 - -------------------------------------------------------------------------------- Total minimum payments $140 $7,564 Less amount representing interest 3 - ------------------------------------------------------------ Present value of future minimum lease payments $137 - ------------------------------------------------------------ - ------------------------------------------------------------ NOTE C - COMMON STOCK AND STOCK OPTIONS On July 8, 1996, shareholder approval was obtained to amend the Company's Amended Articles of Incorporation to increase its authorized shares from 6,000,000 to 21,000,000, of which 20,000,000 will be common shares and 1,000,000 will be preferred shares. On August 27, 1996 the Board of Directors approved a 2-for-1 share split, effected in the form of a share distribution of one share for each share outstanding, effective on a September 10, 1996 record date. All share data and references to Symix common stock have been retroactively restated to reflect the increased number of Symix common shares outstanding. The Company has a non-qualified stock option plan ("the Plan") that provides for the granting of options to officers and other key employees for shares of common stock at purchase prices of not less than the fair market value on the date of the grant as determined by the Board of Directors. The maximum number of common shares which may be optioned under the Plan was 2,653,070 as of June 30, 1996. Options under the Plan generally vest over periods of up to four years and must be exercised within ten years of the date of grant. The Company also has a non-qualified stock option plan for Key Executives ("Key Executives Plan"). A total of 400,000 shares of common stock are designated for issuance under the Key Executives Plan. The Compensation Committee of the Board of Directors is authorized to set the price and terms and conditions of the options granted under the Key Executives Plan. Options under the Key Executives Plan must be exercised within ten years of the date of the grant. The Company also has a Stock Option Plan for Outside Directors ("Outside Directors Plan"). The Outside Directors Plan provides for the issuance of options for 20,000 shares of stock to each Outside Director upon his/her election to the Board of Directors. A total of 200,000 shares of common stock may be issued under the Outside Directors Plan. Options under the Outside Directors Plan vest immediately and must be exercised within ten years of the date of grant. Information with respect to options granted under the three Plans is as follows: Exercise Number of Price Shares Per Share - -------------------------------------------------------------------------------- Outstanding at July 1, 1993 653,464 $0.25 - 7.50 Granted 352,000 4.13 - 4.88 Cancelled (173,798) 1.78 - 6.50 Exercised (25,730) .53 - 1.78 - -------------------------------------------------------------------------------- Outstanding at June 30, 1994 805,936 .25 - 7.50 Granted 262,000 3.63 - 5.13 Cancelled (285,004) 3.38 - 6.50 Exercised (119,844) .25 - 3.38 - -------------------------------------------------------------------------------- Outstanding at June 30, 1995 663,088 1.16 - 7.50 Granted 813,000 3.82 - 7.22 Cancelled (188,938) 3.63 - 7.50 Exercised (77,648) 1.78 - 5.63 - -------------------------------------------------------------------------------- OUTSTANDING AT JUNE 30, 1996 1,209,502 $1.16 - 7.22 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- At June 30, 1996, options for 301,750 shares were exercisable, and 712,396 shares remained available for grant. NOTE D - EMPLOYEE BENEFITS PLAN The Company has a 401 (k) plan that covers substantially all employees over 21 years of age. The Company contributes to the plan based upon employee contributions and may make additional contributions at the discretion of the Board of Directors. The Company made contributions to this plan of approximately $196,000, $118,000 and $88,000 for the years ended June 30, 1996, 1995 and 1994, respectively. NOTE E - LINE OF CREDIT In May 1996, the Company negotiated a $6.0 million unsecured revolving line of credit with a bank that expires in fiscal year 1998, convertible to a five year term loan at any time on or before April 30, 1998. As of June 30, 1996, there were no borrowings on the line of credit. 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE F - INCOME TAXES SFAS 109 requires recognition of deferred tax liabilities and assets for the expected future consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. For the years ended June 30, 1996, 1995 and 1994, domestic operations contributed approximately $4.0 million, $184,000 and $1.5 million to pre-tax earnings, respectively, while foreign affiliates generated losses of $348,000, $1.2 million, and $549,000 for the same periods. Income taxes are summarized as follows: Year Ended June 30, (IN THOUSANDS) 1996 1995 1994 - -------------------------------------------------------------------------------- Current: Federal $1,772 $(136) $232 State and local 149 4 40 Foreign 242 73 (71) - -------------------------------------------------------------------------------- 1,163 (59) 201 Deferred: Federal, state and local 546 141 277 Foreign (305) (492) (148) - -------------------------------------------------------------------------------- 241 (351) 129 - -------------------------------------------------------------------------------- $1,404 $(410) $330 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- During the years ended June 30, 1996, 1995, and 1994 the Company recorded a tax benefit of approximately $65,000, $142,000, and $36,000, respectively, in connection with the exercise of stock options. The benefit, which was due to the difference in the fair market value and the exercise price of the options at the date of exercise, was recorded as an increase in capital in excess of stated value. The sources of significant timing differences which give rise to deferred taxes are as follows: Year Ended June 30, (IN THOUSANDS) 1996 1995 1994 - -------------------------------------------------------------------------------- Depreciation/amortization $338 $105 $151 Allowance for doubtful accounts 39 (20) 40 Adjustments for accruals 74 (29) 4 Leases 77 88 82 Losses related to investment in foreign affiliates (305) (492) (148) Other, net 18 (3) -- - -------------------------------------------------------------------------------- $241 $(351) $129 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Significant components of the Company's deferred tax assets and liabilities as of June 30, 1996 and 1995 are as follows: June 30, (IN THOUSANDS) 1996 1995 - -------------------------------------------------------------------------------- Current deferred tax assets: Allowance for doubtful accounts $ 177 $ 216 Customer deposits 3 Accrued liabilities 50 121 - -------------------------------------------------------------------------------- Total current deferred tax assets $ 230 $ 337 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Long-term deferred tax assets: Foreign losses $1,004 $ 892 - -------------------------------------------------------------------------------- Total $1,004 $ 892 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Long-term deferred tax liabilities: Capitalized software $1,347 $ 903 Capitalized leases 371 294 - -------------------------------------------------------------------------------- Total long-term deferred liabilities 1,718 1,197 Long-term deferred tax assets: Book over tax depreciation 201 98 Accrued liabilities 2 22 - -------------------------------------------------------------------------------- Total long-term deferred assets 203 120 - -------------------------------------------------------------------------------- Net long-term deferred liabilities $1,515 $1,077 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The long-term deferred tax assets pertaining to foreign losses are net operating loss carryforwards for certain foreign subsidiaries which the Company believes will be utilized in future tax periods. The Company's effective tax rate differs from the statutory U.S. federal income tax rate as follows: Year Ended June 30, (IN THOUSANDS) 1996 1995 1994 - -------------------------------------------------------------------------------- Federal income tax statutory rate 34% (34%) 34% State and local income taxes net of federal tax benefit 4 1 5 Foreign operations taxed at rates different from U.S. federal statutory rate 1 (4) (2) Other (1) (2) (1) - -------------------------------------------------------------------------------- 38% (39%) 36% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE G - RESTRUCTURING AND OTHER UNUSUAL CHARGES During the first quarter of fiscal 1996, the Company incurred restructuring and other non-recurring charges of $506,000 consisting primarily of severance payments related to operational changes and costs associated with reorganizing the European sales channel. NOTE H - ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses are summarized as follows: June 30, (IN THOUSANDS) 1996 1995 - -------------------------------------------------------------------------------- Accounts payable $2,065 $1,254 Accrued commissions & bonus 1,455 834 Third party payables 525 856 Other 1,118 964 - -------------------------------------------------------------------------------- $5,163 $3,908 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE I - LITIGATION On June 22, 1995, the Company filed an action in the Court of Common Pleas of Franklin County, Ohio against the former president and former senior vice president of the Company. The claims asserted in this litigation arise out of and relate primarily to the termination of the former president's employment with, and the resignation of the former senior vice president from, the Company. These individuals have filed counterclaims against the Company seeking total damages in excess of $5.3 million. Management of the Company believes the claims and counterclaims asserted by the former president and former senior vice president are without merit. The Company believes it has valid defenses against the claims and counterclaims and intends to vigorously defend its position. No liability has been recorded in connection with this contingency. The Company does not believe that the ultimate resolution of the matter will have a material adverse effect on its financial condition or results of operations. The Company is currently not involved in any other legal proceedings. NOTE J - SUBSEQUENT EVENT On August 8, 1996, the Company acquired a French company, GSI Industrie, for $1.64 million of which $820,000 was paid in cash at closing with the remaining balance being payable in three equal annual installments beginning August 1997. GSI Industrie is a manufacturing software specialist which will serve as a sales, service and support operation for the Company in France. Total assets acquired were $2.8 million with annual revenues approximating $4.0 million. 19 BOARD OF DIRECTORS LAWRENCE J. FOX CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER Symix Systems, Inc. STEPHEN A. SASSER PRESIDENT AND CHIEF OPERATING OFFICER Symix Systems, Inc. LARRY L. LIEBERT CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER L Corporation JAMES RUTHERFORD PRESIDENT Wingset, Inc. JOHN T. TAIT MANAGING GENERAL PARTNER B.P.A. Consultants DUKE W. THOMAS PARTNER Vorys, Sater, Seymour and Pease [PHOTO] Standing (left to right): Lawrence W. DeLeon, Otto Offereins, Robert J. McLaughlin and Robert D. Williams. Seated: Stephen A. Yount and Catherine K. DeRosa. Inset Photos (left to right): Simon Gainsford and Trevor Smith. COMPANY OFFICERS LAWRENCE J. FOX CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER STEPHEN A. SASSER PRESIDENT AND CHIEF OPERATING OFFICER LAWRENCE W. DELEON VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY CATHERINE K. DEROSA VICE PRESIDENT OF MARKETING ROBERT J. MCLAUGHLIN VICE PRESIDENT OF PROFESSIONAL SERVICES OTTO OFFEREINS VICE PRESIDENT OF DEVELOPMENT AND SUPPORT ROBERT D. WILLIAMS VICE PRESIDENT - HUMAN RESOURCES STEPHEN A. YOUNT VICE PRESIDENT AMERICAS SALES SIMON GAINSFORD VICE PRESIDENT - ASIA/PACIFIC TREVOR SMITH VICE PRESIDENT EUROPE REGION 20 STOCK INFORMATION MARKET PRICE INFORMATION The table below presents the high and low prices for Symix Systems, Inc., common shares as reported by NASDAQ for fiscal 1996 and 1995. 1996 High Low - -------------------------------------------------------------------------------- FIRST QUARTER 6-5/16 3-13/16 SECOND QUARTER 5-3/4 5 THIRD QUARTER 7-7/16 5 FOURTH QUARTER 8-5/8 7 1995 High Low - -------------------------------------------------------------------------------- First Quarter 5-3/8 4-5/8 Second Quarter 5 3-3/8 Third Quarter 4-3/8 3-7/16 Fourth Quarter 4-3/8 3-3/4 The closing price on June 30, 1996 was 7-7/8. As of June 30, 1996, there were approximately 94 shareholders of record, and the Company believes there are more than 1,700 beneficial shareholders. The Company has not declared or paid cash dividends on its capital stock. The Company currently intends to retain any earnings for its use in its business and, therefore, does not anticipate paying any cash dividends in the foreseeable future. ANNUAL MEETING The 1996 Annual Meeting of Shareholders will be held at 9:00 a.m., local time, on November 1, 1996, at Corporate Headquarters, 2800 Corporate Exchange Drive, Columbus, Ohio. NASDAQ SYMBOL The Company's common stock is traded on the NASDAQ National Market System under the symbol "SYMX". TRANSFER AGENT AND REGISTRAR The Huntington National Bank Huntington Center 41 South High Street Columbus, OH 43287 INVESTOR CONTACT Analysts and investment professionals seeking financial information about the Company should contact: Lawrence DeLeon Vice President Chief Financial Officer and Secretary Symix Systems, Inc. 2800 Corporate Exchange Drive Columbus, Ohio 43231 614-523-7379 fax: 614-895-2972 email: lardel(AT)symix.com MEDIA AND OTHER INQUIRIES Media representatives, and persons seeking general information about the Company should contact the Marketing Communications Manager or access the Company's home web page on the Internet. Mark Wallinger Marketing Communications Manager Symix Systems, Inc. 2800 Corporate Exchange Drive Columbus, Ohio 43231 614-523-7243 fax: 614-895-2504 http://www.symix.com REQUESTS FOR FORM 10-K INFORMATION AND INDIVIDUAL SHAREOWNER QUESTIONS REGARDING STOCK OWNERSHIP Copies of the Company's Form 10-K, filed with the Securities and Exchange Commission for the most recent fiscal year, provide additional information and are available to shareholders at no charge, upon written request to: Symix Systems, Inc. Attention: Cathy Smith 2800 Corporate Exchange Drive Columbus, Ohio 43231 614-523-7178 fax: 614-895-2972 email: catsmi(AT)symix.com 21 SYMIX -REGISTERED TRADEMARK- SYSTEMS, INC. SYMIX CORPORATE AND REGIONAL HEADQUARTERS CORPORATE HEADQUARTERS Symix Systems, Inc. 2800 Corporate Exchange Drive Columbus, Ohio 43231 614-523-7000 Fax: 614-895-2504 http://www.symix.com ASIA/PACIFIC Symix Computer Systems (Singapore) Pte. Ltd. 24 Raffles Place #26-05 Clifford Centre Singapore 048621 011-75-737-4680 Fax: 011-75-736-4596 CANADA Symix Computer Systems, Inc. 2700 Matheson Boulevard East Suite 201, East Tower Mississauga, Ontario L4W 4V9 EUROPE Symix Computer Systems, Inc. 25 Amber Business Village Amington, Tamworth Staffordshire B77 4RP England 011-44-1827-310960 Fax: 011-44-1827-310961 [photo: laptop computer and coffee cup] EX-22 5 EXH 22 EXHIBIT 22 SUBSIDIARIES OF REGISTRANT NAME JURISDICTION % OWNERSHIP Symix Computer Systems, Inc. Ohio 100 Symix Systems, B.V. The Netherlands 100 RDD, SA France 100* SUBSIDIARIES OF SYMIX COMPUTER SYSTEMS, INC. Symix Computer Systems Canada 100 (Canada) Inc. Symix Computer Systems The United Kingdom 100 (UK) Ltd. Symix Asia Company Ltd. Thailand 100* Symix Computer Systems Hong Kong 100* (Hong Kong) Ltd. Symix Computer Systems Singapore 100 (Singapore) Pte. Ltd. Symix Computer Systems Australia 100* (Australia) Pty. Ltd. Symix Computer Systems Mexico 100* (Mexico) S. De R.L. De C.V. SUBSIDIARIES OF SYMIX SYSTEMS, B.V. Symix (U.K.) Ltd. The United Kingdom 100 SUBSIDIARIES OF RDD, SA GSI Industrie, SA France 100* - ------------------------ * Less than 1% of outstanding shares held by Symix Systems, Inc. or employees of Symix Systems, Inc. or its subsidiary on behalf of Symix Systems, Inc. EX-23 6 EXH 23 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Symix Systems, Inc. of our report dated July 30, 1996 (except for Notes C and J, as to which the date is August 27, 1996) included in the 1996 Annual Report to Shareholders of Symix Systems, Inc. Our audits also included the financial statement schedule of Symix Systems, Inc. listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 33-40546, No. 33-45416, No. 33-73014, No. 33-73016, No. 333-660, No. 333-10631 and No. 333-10633) of Symix Systems, Inc. dated June 25, 1991, January 30, 1992, December 16, 1993, December 16, 1993, January 29, 1996, August 22, 1996 and August 22, 1996, respectively, of our report dated July 30, 1996 (except for Notes C and J, as to which the date is August 27, 1996), with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Symix Systems, Inc. ERNST & YOUNG LLP Columbus, Ohio September 24,1996 EX-24 7 EXH 24 POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 1996, hereby constitutes and appoints Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 16th day of September, 1996. Lawrence J. Fox -------------------- Lawrence J. Fox POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox and Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 11th day of September, 1996. Stephen A. Sasser -------------------- Stephen A. Sasser POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox and Stephen A. Sasser, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 16th day of September, 1996. Lawrence W. DeLeon -------------------- Lawrence W. DeLeon POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox, Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 16th day of September, 1996. Larry L. Liebert -------------------- Larry L. Liebert POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as emended, an Annual Report on Form 10-K for the fiscal year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox, Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 16th day of September, 1996. James A. Rutherford -------------------- James A. Rutherford POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox, Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 13th day of September, 1996. John T. Tait -------------------- John T. Tait POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Symix Systems, Inc., an Ohio corporation which is about to file with the Securities and Exchange Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended June 30, 1996, hereby constitutes and appoints Lawrence J. Fox, Stephen A. Sasser and Lawrence W. DeLeon, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign such Annual Report on Form 10-K, and to file the same with all exhibits and financial statements and schedules thereto, and other documents in connection therewith, including any amendment thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunder set his hand this 11th day of September, 1996. Duke W. Thomas -------------------- Duke W. Thomas EX-27 8 EXHIBIT 27 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF SYMIX SYSTEMS, INC. IN ITS ANNUAL REPORT (FORM 10-K) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR JUN-30-1996 JUL-01-1995 JUN-30-1996 6,774 0 11,879 450 312 19,384 11,559 6,616 30,463 11,846 0 0 0 58 17,044 30,463 24,682 45,759 6,840 15,678 26,590 (100) 49 3,712 1,404 2,308 0 0 0 2,308 0.40 0
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