-----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, SkS+X5ETWOe83ZEMkjtroS742p4X5xMQbGvZFbXV1bBOXlI/pLn87UQY3bV6XawL pT1gfGHamnnJ0IOc/U6ciQ== 0000950144-96-005489.txt : 19960918 0000950144-96-005489.hdr.sgml : 19960918 ACCESSION NUMBER: 0000950144-96-005489 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROCK INTERNATIONAL INC CENTRAL INDEX KEY: 0000897078 STANDARD INDUSTRIAL CLASSIFICATION: 7372 IRS NUMBER: 581588291 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21202 FILM NUMBER: 96612521 BUSINESS ADDRESS: STREET 1: 2859 PACES FERRY RD STREET 2: STE 1000 CITY: ATLANTA STATE: GA ZIP: 30339 BUSINESS PHONE: 7704311200 MAIL ADDRESS: STREET 1: 2859 PACES FERRY RD STREET 2: STE 1000 CITY: ATLANTA STATE: GA ZIP: 30339 FORMER COMPANY: FORMER CONFORMED NAME: BROCK CONTROL SYSTEMS INC DATE OF NAME CHANGE: 19930208 10-Q 1 BROCK INTERNATIONAL, INC. 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1996 COMMISSION FILE NUMBER 0-21202 BROCK INTERNATIONAL, INC. (Formerly Brock Control Systems, Inc.) 7372 GEORGIA 58-1588291 (Primary Std. Ind. (State of incorporation) (IRS Employer Classification Code #) Identification #) 2859 PACES FERRY ROAD, SUITE 1000 ATLANTA, GEORGIA 30339 (Address of principal executive offices) (770-431-1200) (Telephone number of registrant) Indicate by check mark whether the registrant (1) has filed all reports required to be fil 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding as of August 12, 1996: Common Stock, no par value 4,931,083 Shares 2 BROCK INTERNATIONAL, INC. * FORM 10-Q For the quarter ended June 30, 1996
INDEX Page No. -------- Part I. Financial Information Item 1. Financial Statements Balance Sheet - December 31, 1995 and June 30, 1996 3 Income Statement - For the Three and Six Months ended June 30, 1995 and June 30, 1996 4 Statement of Changes in Shareholders' Equity - For the Six Months Ended June 30, 1996 5 Statement of Cash Flows - For the Six Months Ended June 30, 1995 and June 30, 1996 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis of 8 Financial Condition and Results of Operations Part II. Other Information 11
* Brock Control Systems, Inc. officially changed its name to Brock International, on February 7, 1996. - 2 - 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BROCK INTERNATIONAL, INC. BALANCE SHEET
DEC 31, JUN 30, 1995 1996 ------------- ------------- (UNAUDITED) (IN THOUSANDS) ASSETS CURRENT ASSETS: CASH AND MARKETABLE SECURITIES $ 8,137 $ 7,846 ACCOUNTS RECEIVABLE, LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS OF $1,415 AND $1,333 RESPECTIVELY 8,092 6,743 OTHER ASSETS 822 931 ------------- ------------- TOTAL CURRENT ASSETS 17,051 15,520 PROPERTY AND EQUIPMENT, NET 4,035 4,119 DEFERRED INCOME TAX BENEFIT 974 911 SOFTWARE DEVELOPMENT COSTS, NET 3,985 4,313 ------------- ------------- $ 26,045 $ 24,863 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: ACCOUNTS PAYABLE $ 957 $ 922 DEFERRED REVENUE 1,971 1,241 ACCRUED EMPLOYEE COMPENSATION AND BENEFITS 1,126 576 BORROWINGS UNDER LINE OF CREDIT 985 2,100 CURRENT PORTION OF NOTES PAYABLE 0 83 OTHER ACCRUED LIABILITIES 776 90 ------------- ------------- TOTAL CURRENT LIABILITIES 5,815 5,012 LONG TERM LIABILITIES: NOTES PAYABLE 0 167 SHAREHOLDERS' EQUITY 20,230 19,684 ------------- ------------- $ 26,045 $ 24,863 ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - 3 - 4 BROCK INTERNATIONAL, INC. INCOME STATEMENT (UNAUDITED)
FOR THE QUARTER ENDED FOR THE SIX MONTHS ENDED ------------------------- ---------------------------- JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1995 1996 1995 1996 -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) NET REVENUES SOFTWARE $ 2,558 $ 2,377 $ 4,589 $ 5,600 SERVICES 2,217 1,875 4,993 4,214 MAINTENANCE 1,321 1,310 2,558 2,661 OTHER 319 256 808 568 ------- -------- -------- -------- 6,415 5,818 12,948 13,043 ------- -------- -------- -------- COST AND EXPENSES COST OF REVENUES SOFTWARE 628 511 1,319 1,118 SERVICES 1,938 1,609 4,309 3,430 MAINTENANCE 523 510 1,018 1,046 OTHER 318 194 786 495 SALES AND MARKETING 3,141 2,393 5,808 5,272 PRODUCT DEVELOPMENT 446 576 864 1,090 GENERAL AND ADMINISTRATIVE 1,035 1,051 2,981 1,894 ------- -------- -------- -------- 8,029 6,844 17,085 14,345 ------- -------- -------- -------- OPERATING (LOSS) (1,614) (1,026) (4,137) (1,302) INTEREST EXPENSE (1) (44) (1) (68) INTEREST INCOME 128 79 251 114 ------- -------- -------- -------- INCOME BEFORE INCOME TAXES (1,487) (991) (3,887) (1,256) INCOME TAX BENEFIT 549 387 1,441 481 ------- -------- -------- -------- NET (LOSS) ($938) ($604) ($2,446) ($775) ======= ======= ======= ======= NET (LOSS) PER SHARE ($0.19) ($0.12) ($0.50) ($0.16) ======= ======= ======= ======= WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON SHARE EQUIVALENTS 4,900 4,950 4,900 5,000 ======= ======= ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. -4- 5 BROCK INTERNATIONAL, INC. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 UNREALIZED COMMON STOCK ADD'L (LOSS)/GAIN ON ------------------------- PAID-IN MARKETABLE RETAINED SHARES AMOUNT CAPITAL SECURITIES EARNINGS TOTAL ---------- ---------- ----------- -------------- ------------ --------- (IN THOUSANDS, EXCEPT SHARE DATA) BALANCE AT DECEMBER 31, 1995 4,908,815 $9 $18,744 ($121) $1,598 $20,230 UNREALIZED (LOSS)/GAIN ON MARKETABLE SECURITIES 107 107 EMPLOYEE STOCK PURCHASE 9,578 0 63 63 EXERCISE OF COMMON STOCK OPTIONS 9,242 0 59 59 NET (LOSS) (775) (775) ---------- ---------- ----------- -------------- --------- ------- BALANCE AT JUNE 30, 1996 4,927,635 $9 $18,866 ($14) $823 $19,684 ========== ========== =========== ============== ========= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - 5 - 6 BROCK INTERNATIONAL, INC. STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED ------------------------------------ JUN 30, 1995 JUN 30, 1996 -------------- -------------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES NET (LOSS) ($2,446) ($775) -------------- -------------- ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES DEPRECIATION AND AMORTIZATION 1,447 1,659 PROVISION FOR BAD DEBT 480 131 DEFERRED INCOME TAX (60) 63 CHANGES IN ASSETS AND LIABILITIES (INCREASE) DECREASE IN ACCOUNTS RECEIVABLE 2,316 1,218 (INCREASE) DECREASE IN OTHER ASSETS 372 (109) INCREASE (DECREASE) IN ACCOUNTS PAYABLE (486) (35) INCREASE (DECREASE) IN DEFERRED REVENUE (404) (730) INCREASE (DECREASE) IN ACCRUED EMPLOYEE COMPENSATION AND BENEFITS (14) (550) INCREASE (DECREASE) IN OTHER ACCRUED LIABILITIES (1,375) (686) -------------- -------------- TOTAL ADJUSTMENTS 2,276 961 -------------- -------------- NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES (170) 186 -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES SOFTWARE DEVELOPMENT COSTS (1,286) (1,332) PURCHASES OF PROPERTY AND EQUIPMENT (998) (739) -------------- -------------- NET CASH USED IN INVESTING ACTIVITIES (2,284) (2,071) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES BORROWINGS UNDER LINE OF CREDIT 200 1,515 REPAYMENTS OF BORROWINGS UNDER LINE OF CREDIT 0 (400) BORROWINGS UNDER NOTES PAYABLE 0 250 PROCEEDS FROM EMPLOYEE STOCK PURCHASE PLAN 31 63 EXERCISE OF COMMON STOCK OPTIONS 6 59 -------------- -------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 237 1,487 -------------- -------------- UNREALIZED GAIN ON CASH EQUIVALENTS 60 107 -------------- -------------- INCREASE (DECREASE) IN CASH (2,157) (291) CASH AND MARKETABLE SECURITIES, BEGINNING OF PERIOD 11,705 8,137 -------------- -------------- CASH AND MARKETABLE SECURITIES, END OF PERIOD $9,548 $7,846 ============== ============== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -------------- -------------- CASH PAID DURING THE PERIOD FOR INTEREST $0 $69 ============== ==============
-6- 7 BROCK INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 A. BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of manage- ment, all adjustments (consisting only of normal occurring accruals) considered necessary for a fair presentation have been included. B. ACCOUNTING POLICIES NET INCOME (LOSS) PER SHARE Net income (loss) per share is computed using the weighted average number of common shares and common share equivalents outstanding. Common share equivalents consist of the Company's common shares issuable upon the exercise of stock options using the treasury stock method. -7- 8 BROCK INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - THE QUARTER ENDED JUNE 30, 1996 COMPARED TO THE QUARTER ENDED JUNE 30, 1995, AND THE SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995. Total revenues decreased 9.3% from $6,415,000 in the second quarter of 1995 to $5,818,000 in the second quarter of 1996 as a result of decreased software, services, maintenance, and other revenues. For the first six months of 1996, total revenues increased 0.7% to $13,043,000 from $12,948,000 in 1995. Software revenues for the quarter decreased 7.1% from $2,558,000 in 1995 to $2,377,000 in 1996 as a result of fewer licenses sold to new and existing customers as well as decreases in third party software licenses sold. For the first six months of 1996 software revenues have increased 22.0% to $5,600,000 from $4,589,000 in 1995, primarily as a result of increased licenses sold to international customers. Software revenues from international licenses for the quarter increased 18.0% to $806,000 in 1996 from $683,000 in 1995. For the first six months of 1996 compared to the first six months of 1995, international license revenues increased 95.0% to $2,804,000 from $1,438,000, and increased as a percentage of total revenues to 21.5% in 1996 from 11.1% in 1995. The increases resulted from additional penetration of international markets. Services revenues decreased 15.4% from $2,217,000 in the second quarter of 1995 to $1,875,000 in the second quarter of 1996 primarily due to prior decreases in software licenses and the Company's commitment to enhance customer satisfaction, which in certain instances, resulted in providing services free of charge or at reduced rates. Year to date, services revenues decreased 15.6% from $4,993,000 in 1995 to $4,214,000 in 1996. Maintenance revenues decreased 0.8% to $1,310,000 in the second quarter of 1996 from $1,321,000 during the same period of 1995. For the first six months of 1996, maintenance revenues increased 4.0% to $2,661,000 from $2,558,000 for the first six months of 1995, primarily as a result of increases in international installations. Other revenues decreased 19.7% from $319,000 in the second quarter of 1995 to $256,000 in the second quarter of 1996. Year to date, other revenues decreased 29.7% to $568,000 in 1996 from $808,000 in 1995, primarily due to decreases in certain reimbursable travel charges. -8- 9 Cost of software revenues decreased 18.6% from $628,000 in the second quarter of 1995 to $511,000 in the second quarter of 1996 primarily as a result of decreased third party software revenues. Year to date, software revenue costs decreased 15.2% from $1,319,000 in 1995 to $1,118,000 in 1996 as a result of decreased third party software costs offset by a slight increase in amortization of capitalized software costs. Costs of software revenues include costs of third party software, amortization of capitalized software costs, and costs of packaging and documentation materials and related media costs. Cost of revenues for services decreased 17.0% from $1,938,000 in the second quarter of 1995 to $1,609,000 in the second quarter of 1996 due to decreases in the number of service personnel, and personnel related costs. For the six months ended June 30, 1996, costs of revenues for services decreased 20.4% to $3,430,000 from $4,309,000 during the same period of 1995. Cost of revenues for maintenance decreased 2.5% from $523,000 in the second quarter of 1995 to $510,000 in 1996. Year to date, costs of revenues for maintenance increased 2.8% from $1,018,000 in 1995 to $1,046,000 in 1996 due to increases in international maintenance costs which are directly related to increases in international maintenance revenue. Cost of other revenues decreased 39.0% from $318,000 in the second quarter of of 1995 to $194,000 in the second quarter of 1996; and, year to date, decreased 37.0% from $786,000 in 1995 to $495,000 in 1996 due to decreases in certain reimbursable travel charges. Sales and marketing expenses decreased 23.8% from $3,141,000 in the second quarter of 1995 to $2,393,000 in the second quarter of 1996. For the six months of 1996, sales and marketing expense decreased 9.2% to $5,272,000 from $5,808,000 in 1995. The decreases were due to decreases in personnel and personnel associated costs, and decreased advertising campaigns, offset by increases in international distributor commissions which are directly related to increases in international software revenue. The Company's product innovation and development expenditures increased 15.2% from $1,112,000 in the second quarter of 1995 to $1,281,000 in the second quarter of 1996. The capitalized portions of these amounts were $666,000 and $705,000 respectively. Product development expense increased 29.1% from $446,000 in the second quarter of 1995 to $576,000 in the second quarter of 1996 due to increased product development activities for new and existing products. For the six months ended June 30, 1996, product development expense increased 26.2% to $1,090,000 from $864,000 during the same period of 1995. -9- 10 General and administrative expenses increased 1.5% from $1,035,000 in the second quarter of 1995 to $1,051,000 in the second quarter of 1996 primarily due to increases in provision for doubtful receivables and professional fees, offset by decreases in personnel related costs of insurance. Year to date, general and administrative expenses decreased 36.5% from $2,981,000 in 1995 to $1,894,000 in 1996. The decrease resulted from the fact that the provision for doubtful receivables was less during the first quarter of fiscal 1996 than for the first quarter of the prior year. The above factors combined to result in a decrease of 35.6% in net loss for the second quarter of 1996, from a net loss of $938,000 in the second quarter of 1995 to a net loss of $604,000 in the second quarter of 1996. Net loss per share for the period decreased 36.8% from a loss of $.19 per share for the second quarter of 1995 to a loss of $.12 per share for the second quarter of 1996. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1996, the Company had cash and marketable securities of $7,846,000, and believes that its present liquidity position is sufficient to finance the Company's operations during 1996. -10- 11
PART II. OTHER INFORMATION Item 1. Legal Proceedings Not applicable Item 2. Changes in Securities Not applicable Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of Matters to a Vote of Security Holders Not applicable Item 5. Other Information July 12, 1996 - Brock International announced the promotion of Michael Kohlsdorf to President and Chief Operating Officer. Mr. Kohlsdorf joined Brock in March 1993 as Chief Financial Officer. Item 6. Exhibits and Reports on Form 8-K Exhibit 27 - Financial Data Schedule (for SEC use only) No reports on Form 8-K were filed during the period.
-11- 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BROCK INTERNATIONAL, INC. DATE: August 12, 1996 /s/ Judith A. Vitale ----------------- ---------------------------------- Judith A. Vitale Director Finance and Adminstration -12- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q FOR QUARTER ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 474 7,372 6,743 0 0 15,520 4,119 0 24,863 5,012 0 0 0 9 19,675 24,863 5,600 13,043 1,118 6,089 8,256 131 68 (1,256) (481) (775) 0 0 0 (775) (.16) (.16) A/R AND PPE ASSET VALUES REPRESENT NET AMOUNTS.
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