-----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, DtOme3OC8Q1XY3Ytx2i2Of9yRq6gLMDiMKYRUUi29jfoDqseVRnwjaMb02ckPYp0 tFvsqxUYnijDXeQXRTW0uw== 0001047469-97-000014.txt : 19971008 0001047469-97-000014.hdr.sgml : 19971008 ACCESSION NUMBER: 0001047469-97-000014 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19971007 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/A SEC ACT: SEC FILE NUMBER: 000-19024 FILM NUMBER: 97691732 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/A 1 FORM 10-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (AMENDMENT NO. 1) (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 1997. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ______________________. Commission File Number: 0-19024 ------- Symix Systems, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) OHIO 31-1083175 - ----------------------------------- ------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2800 Corporate Exchange Drive Columbus, Ohio 43231 - ---------------------------------------- ------------------------- (Address of principal executive offices) (Zip Code) 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 and non-voting common equity held by non-affiliates of the registrant at September 19, 1997 was $66,528,220. The number of common shares outstanding at September 19, 1997 was 5,857,556. Documents Incorporated by Reference: (1) The Registrant's Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on November 4, 1997 is incorporated by reference into Part III of this Annual Report on Form 10-K. PART II ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. For the years ended June 30, 1997, 1996 and 1995, the Company's revenue is derived primarily from (1) licensing Symix software and providing custom programming services; (2) providing installation, implementation, training, consulting and systems integration services; and (3) providing maintenance and support on a subscription basis. 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 44% to $65.8 million in fiscal 1997, compared to increases of 7% and 21% for the years ended June 30, 1996 and 1995, respectively. The strong growth in fiscal 1997 net revenue compared to previous years was the result of new software product offerings and an expanding international distribution channel. Both software revenue and service and support revenue contributed significantly to the net revenue increase in fiscal 1997. The increase in net revenue in fiscal 1996 and fiscal 1995 was primarily the result of increased service and support revenue. Service revenue increased $2.9 million and $7.4 million in fiscal 1996 and fiscal 1995, respectively. The revenue mix since 1995 is shown in the table below: REVENUE MIX Year ended June 30, (IN THOUSANDS, EXCEPT PERCENTAGES) 1997 1996 1995 --------------------------------------------------------- Software $36,477 55% $24,682 54% $24,677 58% Service and support 29,295 45% 21,077 46% 18,151 42% - -------------------------------------------------------------------------------- Total $65,772 100% $45,759 100% $42,828 100% - -------------------------------------------------------------------------------- Software license fees and related revenue increased 48% in fiscal 1997 compared to flat revenue growth in fiscal 1996 and fiscal 1995. The increase in software revenue in fiscal 1997 was primarily the result of (1) an expanding international distribution channel and (2) revenue from the Company's new client server ERP software product, Symix SyteLine-TM-, available for sale for a full year for the first time in fiscal 1997. During the past 15 months, the Company converted distributors in Australia, New Zealand and the Netherlands to subsidiary operations and acquired a French sales and distribution operation. Revenue from foreign operations accounted for approximately 25% of total revenue in fiscal 1997, compared to 18% in fiscal 1996 and 11% in fiscal 1995. The significant increase in revenue from foreign operations resulted primarily from the conversion of distributor operations and acquisitions completed during fiscal 1997. Symix SyteLine-TM- was released in March, 1996 and represents a large majority of new product sales to customers. In addition to Symix SyteLine-TM-, the Company released and sold complementary products during the second half of the most recent fiscal year that provided expanded features and functionality and enhanced sales of Symix SyteLine-TM-. The Company also purchased a Canadian company in January, 1997 that develops and distributes an application software product, FieldPro-TM-, which provides field service and warranty tracking capabilities for manufacturers and service organizations of computer and office equipment distributors. FieldPro-TM- is being marketed and distributed as a stand alone product under a newly established business operating unit, Symix CIT Division. FieldPro-TM- contributed more than $1.0 million in revenue during the second half of fiscal 1997. Service and support revenue increased 39% in fiscal 1997 to $29.3 million from $21.1 million in fiscal 1996 and $18.2 million in fiscal 1995. 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 attributable to growth in licensed Symix installations worldwide and the Company's expanding service organization. Services revenue made up 45% of total revenue in fiscal 1997, compared to 46% and 42% in fiscal 1996 and fiscal 1995, respectively. Deferred revenue on the Company's balance sheet relating to maintenance and support contracts, increased from $5.8 million at June 30, 1996 to $9.7 million at June 30, 1997. Revenue on these maintenance and support contracts is recognized ratably over the contract period, which is typically twelve months. A key consideration in the customer's purchasing decision is the selection of the hardware vendor. The Company participates in joint marketing activities with various hardware manufacturers to promote new system sales. The customer usually purchases the hardware direct from the manufacturer or a third-party systems integrator. Consequently, hardware sales by the Company represent an insignificant portion of total revenue. COST OF REVENUE Total cost of revenue as a percentage of new revenue was 34% for the year ended June 30, 1997 compared to 34% and 35% for the years ended June 30, 1996 and 1995, respectively. License fee cost of revenue decreased to 27% of license fee revenue in fiscal 1997 from 28% in both fiscal 1996 and fiscal 1995, while service, maintenance and support cost of revenue was 43% of service, maintenance and support revenue in fiscal 1997 compared to 42% in fiscal 1996 and 44% in fiscal 1995. The decrease in license fee cost of revenue as a percentage of license fee revenue is the result of the increased volume of license fee sales. Partially offsetting the improved license fee margins was an increase in third-party royalties relating to the new complementary products for Symix SyteLine-TM- released during the year. The small increase in service cost of revenue as a percentage of related revenue in fiscal 1997 compared to the prior fiscal year was the result of increased costs relating to the hiring of experienced service personnel to support new system installations. In addition, lower margins in the developing international distribution channels also contributed to the increase in the cost percentage. Partially offsetting these lower margins was the increase in Symix installations and 2 corresponding service renewals, from which the Company was able to realize improved margins through growing maintenance and support revenue. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased 45% in fiscal 1997, compared to a decrease of 12% in fiscal 1996 and an increase of 31% in fiscal 1995. Selling, general and administrative expenses as a percent of net revenue were 50%, 49% and 60% for the same respective periods. The increase in expenses as a percent of revenue in fiscal 1997 was the result of significant increases in marketing and promotional activities relating to international sales. These increases were partially offset by improved productivity of the North American sales channel. The decrease in selling, general and administrative expenses in fiscal 1996 was the result of general expense controls, reorganization of the North American sales force and improved margins on international operations. In the first quarter of fiscal 1996, the Company recognized restructuring and other non-recurring charges of $506,000, which consisted of primarily severance payments related to personnel changes and costs associated with reorganizing the European sales channel. RESEARCH AND DEVELOPMENT Total research and product development expenses, including amounts capitalized, were $8.8 million or 13% of net revenue for the year ended June 30, 1997, compared to $6.0 million or 13% of net revenue in fiscal 1996 and $5.2 million or 12% of net revenue in fiscal 1995. The Company capitalized research and development costs of $3.1 million, $2.3 million and $1.4 million for the years ended June 30, 1997, 1996 and 1995, respectively. Software development costs capitalized in a given period are dependent upon the nature and state of the development process and are recorded in accordance with Statement of Financial Accounting Standards No. 86. Upon general release of a product, related capitalized costs are amortized over three years and recorded as license fee cost of revenue. In addition to the $2.3 million of software development costs capitalized in fiscal 1996, the Company capitalized $1.0 million relating to the purchase of existing technology. The increase in overall research and development expense is due to staff expansion relating to the Company's development of future releases of Symix SyteLine-TM-, increased development focus on interfacing with third-party software products and research involving new technologies and products. PROVISION FOR INCOME TAXES The effective tax rates for the years ended June 30, 1997, 1996 and 1995 were 37%, 38% and (39%), respectively. The reduced effective tax rate in fiscal 1997 and fiscal 1996 respectively, compared to the previous year 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. 3 LIQUIDITY AND CAPITAL RESOURCES Cash provided by operations decreased to $2.5 million in fiscal 1997 from $6.9 million in fiscal 1996 and $3.0 million in fiscal 1995. An increase in earnings in fiscal 1997 was offset by an increase in trade accounts receivable. Trade accounts receivable days sales outstanding were 95 days at June 30, 1997 in comparison to 76 days and 97 days at June 30, 1996 and 1995, respectively. For all three years presented, cash provided by operations was used to purchase computer equipment and to fund software development costs. In 1997, cash provided by operations also was used in connection with the Company's acquisition activities. Cash at June 30, 1997 decreased to $2.3 million from $6.8 million at June 30, 1996 and $4.5 million at June 30, 1995. Working capital was $7.9 million at June 30, 1997 compared to $7.5 million and $6.4 million at June 30, 1996 and 1995, respectively. The increase in working capital in fiscal 1997 is primarily attributable to the increase in trade accounts receivable resulting from the 44% revenue growth and increase in days sales outstanding. The increase in working capital in fiscal 1996 was primarily due to the positive cash flow for the year. For both fiscal 1997 and fiscal 1996, the increase in current assets was partially offset by the 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 1999. As of June 30, 1997, no amounts were drawn under the line of credit. 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 may raise additional capital through the sale of Company securities during the next 12 months to fund certain internal product development projects and/or future acquisitions. However, the exact details of such fundraising efforts have not been determined. Subject to the foregoing, the Company anticipates that existing sources of liquidity, cash flow from operations and the bank line of credit will be sufficient to satisfy expected cash needs for the next 12 months. 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/or major currencies 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 in the two year period ended June 30, 1997. This information has been prepared by the Company on the same basis as its 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. 4 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's plans and commitments of resources are 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.
QUARTERLY RESULTS Three months ended (IN THOUSANDS, EXCEPT PER SHARE DATA) June 30, Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 1997 1997 1996 1996 1996 1996 1995 1995 ----------------------------------------------------------------------------------------- Net revenue $21,187 $15,358 $16,537 $12,690 $13,204 $11,165 $11,571 $ 9,819 Cost of revenue 7,097 5,405 5,395 4,543 4,553 3,758 3,568 3,799 - ---------------------------------------------------------------------------------------------------------------------- Gross margin 14,090 9,953 11,142 8,147 8,651 7,407 8,003 6,020 Operating expenses Selling, general, and administrative 9,953 7,994 8,099 6,555 6,514 5,410 5,757 4,730 Research and product development 1,705 1,501 1,353 1,100 1,086 968 762 857 Restructuring and other unusual charges -- -- -- -- -- -- -- 506 - ---------------------------------------------------------------------------------------------------------------------- Total operating expenses 11,658 9,495 9,452 7,655 7,600 6,378 6,519 6,093 - ---------------------------------------------------------------------------------------------------------------------- Operating income (loss) 2,432 458 1,690 492 1,051 1,029 1,484 (73) Other income (loss), net (16) 18 33 72 60 46 62 53 - ---------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes 2,416 476 1,723 564 1,111 1,075 1,546 (20) - ---------------------------------------------------------------------------------------------------------------------- Provision (benefit) for income taxes 865 183 651 217 364 430 618 (8) - ---------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 1,551 $ 293 $ 1,072 $ 347 $ 747 $ 645 $ 928 $ (12) - ---------------------------------------------------------------------------------------------------------------------- Earnings per share $ 0.24 $ 0.04 $ 0.18 $ 0.06 $ 0.12 $ 0.11 $ 0.17 $ 0.00 Weighted average common and common share equivalents outstanding 6,554 6,600 6,066 5,989 6,008 5,714 5,556 5,450 - ----------------------------------------------------------------------------------------------------------------------
5 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 6th day of October, 1997. SYMIX SYSTEMS, INC. By: /s/ Lawrence W. DeLeon ----------------------------------- Lawrence W. DeLeon Vice President, Chief Financial Officer and Secretary -----END PRIVACY-ENHANCED MESSAGE-----