-----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, CC1j1Svn72jg+GK6wpmeR4Ia7lb8tuNwYFKyFPbgbJsgsa4fiQqF2pFcwvo4oufP 6Q3g05qiTDr57XpD0PCv/g== 0000950144-97-005707.txt : 19970515 0000950144-97-005707.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950144-97-005707 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROCK INTERNATIONAL INC CENTRAL INDEX KEY: 0000897078 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [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: 97604085 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 FORM 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 MARCH 31, 1997 COMMISSION FILE NUMBER 0-21202 BROCK INTERNATIONAL, 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 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding as of May 12,1997: ------------------------------ Common Stock, no par value 4,952,387 Shares 2 BROCK INTERNATIONAL, INC. FORM 10-Q For the quarter ended March 31, 1997 INDEX ----------------
Page No. -------- Part I. Financial Information Item 1. Financial Statements Balance Sheet - December 31, 1996 and March 31, 1997 3 Income Statement - For the Quarters Ended March 31, 1996 and March 31, 1997 4 Statement of Changes in Shareholders' Equity - For the Quarter Ended March 31, 1997 5 Statement of Cash Flows - For the Quarters Ended March 31, 1996 and March 31, 1997 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 10
- 2 - 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BROCK INTERNATIONAL, INC. BALANCE SHEET
DEC 31, MAR 31, 1996 1997 ------- ---------- (UNAUDITED) (IN THOUSANDS) ASSETS CURRENT ASSETS: CASH AND MARKETABLE SECURITIES $ 6,947 $ 4,781 ACCOUNTS RECEIVABLE, LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS OF $1,971 AND $1,790 RESPECTIVELY 4,120 2,947 OTHER ASSETS 964 1,049 ------- ------- TOTAL CURRENT ASSETS 12,031 8,777 PROPERTY AND EQUIPMENT, NET 2,906 2,628 DEFERRED INCOME TAX BENEFIT 1,922 1,922 SOFTWARE DEVELOPMENT COSTS, NET 1,508 1,466 ------- ------- $18,367 $14,793 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: ACCOUNTS PAYABLE $ 1,012 $ 922 ACCRUED RESTRUCTURING COSTS 1,111 726 DEFERRED REVENUE 1,464 1,525 ACCRUED EMPLOYEE COMPENSATION AND BENEFITS 680 646 BORROWINGS UNDER LINE OF CREDIT 2,058 0 OTHER ACCRUED LIABILITIES 475 281 ------- ------- TOTAL CURRENT LIABILITIES 6,800 4,100 LONG TERM LIABILITIES: NOTES PAYABLE 125 0 SHAREHOLDERS' EQUITY 11,442 10,693 ------- ------- $18,367 $14,793 ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - 3 - 4 BROCK INTERNATIONAL, INC. INCOME STATEMENT (UNAUDITED)
FOR THE QUARTER ENDED ------------------------- MARCH 31, MARCH 31, 1996 1997 --------- --------- (IN THOUSANDS, EXCEPT SHARE DATA) NET REVENUES SOFTWARE $ 3,223 $ 719 SERVICES 2,339 1,265 MAINTENANCE 1,351 1,264 OTHER 312 160 ------- ------- 7,225 3,408 ------- ------- COST AND EXPENSES COST OF REVENUES SOFTWARE 607 55 SERVICES 1,821 956 MAINTENANCE 536 460 OTHER 301 158 SALES AND MARKETING 2,879 933 PRODUCT DEVELOPMENT 514 524 GENERAL AND ADMINISTRATIVE 843 1,129 ------- ------- 7,501 4,215 ------- ------- OPERATING (LOSS) (276) (807) INTEREST EXPENSE (24) (40) INTEREST INCOME 35 48 ------- ------- (LOSS) BEFORE INCOME TAXES (265) (799) INCOME TAX BENEFIT 94 0 ------- ------- NET (LOSS) ($ 171) ($ 799) ======= ======= NET (LOSS) PER SHARE ($ 0.03) ($ 0.16) ======= ======= WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON SHARE EQUIVALENTS 5,000 4,951 ======= =======
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 QUARTER ENDED MARCH 31, 1997
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, 1996 4,936,555 $ 9 $18,909 $(14) $(7,462) $11,442 UNREALIZED (LOSS)/GAIN ON MARKETABLE SECURITIES 3 3 EMPLOYEE STOCK PURCHASE 3,112 0 11 11 EXERCISE OF COMMON STOCK OPTIONS 11,125 0 36 36 NET (LOSS) (799) (799) ---------- ----- ------- ---- ------- ------- BALANCE AT MARCH 31, 1997 4,950,792 $ 9 $18,956 $(11) $(8,261) $10,693 ========== ===== ======= ==== ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - 5 - 6 BROCK INTERNATIONAL, INC. STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE QUARTER ENDED --------------------------------------------- MARCH 31, 1996 MARCH 31, 1997 -------------- -------------- (IN THOUSANDS) CASH FLOWS (USED IN)/PROVIDED BY OPERATING ACTIVITIES 30 (30) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES SOFTWARE DEVELOPMENT COSTS (627) 0 PURCHASES OF PROPERTY AND EQUIPMENT (457) (3) ------- ------- NET CASH USED IN INVESTING ACTIVITIES (1,084) (3) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES BORROWINGS UNDER LINE OF CREDIT 600 0 REPAYMENTS OF BORROWINGS UNDER LINE OF CREDIT 0 (1,975) REPAYMENTS OF BORROWINGS UNDER NOTES PAYABLE 0 (208) PROCEEDS FROM EMPLOYEE STOCK PURCHASE PLAN 33 11 EXERCISE OF COMMON STOCK OPTIONS 51 36 ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 684 (2,136) ------- ------- UNREALIZED GAIN ON CASH EQUIVALENTS 117 3 ------- ------- INCREASE (DECREASE) IN CASH (253) (2,166) CASH AND MARKETABLE SECURITIES, BEGINNING OF PERIOD 8,137 6,947 ------- ------- CASH AND MARKETABLE SECURITIES, END OF PERIOD $ 7,884 $ 4,781 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION ------- ------- CASH PAID DURING THE PERIOD FOR INTEREST $ 45 $ 84 ======= =======
- 6 - 7 BROCK INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 1997 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 management, all adjustments (consisting only of normal occurring accruals) considered necessary for a fair presentation have been included. B. ACCOUNTING POLICIES NET LOSS PER SHARE Net loss per common share is computed by dividing the net loss by the weighted average common shares outstanding during each period. Common stock equivalents, consisting of common shares issuable upon the exercise of stock options (using the treasury stock method), are not included in the net loss per common share computation as their effect would be anti-dilutive. RECENT ACCOUNTING PRONOUNCEMENT In February 1997, the Financial Accounting Standards Board issued SFAS 128, Earnings per Share. SFAS 128 will be effective for financial statements for periods ending after December 15,1997, including interim periods, and establishes standards for computing and presenting earnings per share. In its consolidated financial statements for the year ending December 31, 1997, the Company will make the required disclosures of basic and diluted earnings per share, as applicable, and provide a reconciliation of the numerator and denominator of its basic and diluted earnings per share computations. All prior period earnings per share data will be restated by the Company in the period of adoption of SFAS 128, which is not expected to have a material effect on the presentation of the Company's earnings (loss) per common share data. - 7 - 8 BROCK INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - THE QUARTER ENDED MARCH 31, 1997 COMPARED TO THE QUARTER ENDED MARCH 31, 1996. Total revenues decreased 52.8% from $7,225,000 in the first quarter of 1996 to $3,408,000 in the first quarter of 1997 primarily as a result of decreased software and services revenues. Software revenues decreased 77.7% from $3,223,000 in the first quarter of 1996 to $719,000 in the corresponding quarter of 1997. Revenues from international licenses decreased 86.7% from $1,998,000 in the first quarter of 1996 to $266,000 in the corresponding quarter of 1997, and decreased as a percentage of total revenues from 27.6% to 7.8%. Two large international software licenses which totaled over $1,090,000 in the first quarter of 1996 which did not occur in first quarter 1997, and a 72% decrease in the sales force were the primary reasons for decreases in both international and domestic software revenue. Services revenues decreased 45.9% from $2,339,000 in the first quarter of 1996 to $1,265,000 in the first quarter of 1997 primarily due to prior decreases in domestic software license revenues and the reduction of service personnel by 57%. Maintenance revenues decreased 6.4% from $1,351,000 in the first quarter of 1996 to $1,264,000 in the corresponding quarter of 1997 as a result of a decrease in the Company's installed base of systems covered under maintenance agreements. Other revenues decreased 48.7% from $312,000 in the first quarter of 1996 to $160,000 in the first quarter of 1997 primarily due to decreases in certain reimbursable travel charges consistent with the decline in services revenue. During the first quarter of 1997, the Company completed the restructuring of operations initiated during the fourth quarter of 1996. This resulted in company wide decreases of personnel and related costs of $778,000 during first quarter 1997, which were on target with expected results. In addition, personnel declined in total (including restructuring) from 228 at the end of first quarter 1996 to 90 at the end of first quarter 1997, contributing to overall declines in expenses. Cost of software revenues decreased 90.9% from $607,000 in the first quarter of 1996 to $55,000 in the first quarter of 1997. This decrease is a result of a decrease in the amount of amortization of capitalized software from $541,000 in the first quarter of 1996 to $42,000 in the first quarter of 1997. This decrease in amortization resulted from the Company's 1996 write-down of capitalized software costs relating to versions of the Company's TakeControl and Brock Activity Manager product series to net realizable value at December 31, 1996. Third party software and documentation costs decreased 80.3% from $66,000 in the first quarter of 1996 to $13,000 in the first quarter of 1997, as a result of fewer software licenses sold. Cost 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 47.5% from $1,821,000 in the first quarter of 1996 to $956,000 in the first quarter of 1997 due to decreases in the number of service personnel and related costs. In the first quarter of 1996 service staff numbered 79 employees compared to 34 employees during first quarter of 1997. Costs of revenues for maintenance decreased 14.2% from $536,000 in the first quarter of 1996 to $460,000 in the first quarter of 1997. The decrease is primarily due to decreases in support personnel and personnel related costs. -8- 9 Cost of other revenues decreased 47.5% from $301,000 in the first quarter of 1996 to $158,000 in the first quarter of 1997 due to a decrease in reimbursable travel charges consistent with the decline in services revenue. Sales and marketing expense decreased 67.6% from $2,879,000 in the first quarter of 1996 to $933,000 in the first quarter of 1997 primarily due to a decrease in commissions associated with the decrease in software sales revenues, along with decreases related to the reduction of sales and marketing personnel including payroll, payroll associated costs, and travel expenses. The Company's product innovation and development expenditures decreased 54.1% from $1,141,000 in the first quarter of 1996 to $524,000 in the first quarter of 1997. The capitalized portions of these amounts were $627,000 in the first quarter of 1996 and none during the first quarter of 1997. During the first quarter of 1997 development activities qualifying for capitalization under FAS 86 decreased to an immaterial amount. Product development expense, net of costs capitalized, increased 1.9% from $514,000 in the first quarter of 1996 to $524,000 in the first quarter of 1997 due to the combination of an immaterial amount of costs capitalized and decreases in development personnel, contract services and related costs. General and administrative expenses increased 33.9% to $1,129,000 in the first quarter of 1997 from $843,000 in the first quarter of 1996. The increase resulted primarily from increases in professional services related to a settlement of a dispute with one customer and litigation with another customer that went to trial in the first quarter of 1997. The Company received a favorable judgment at trial, which is being appealed by the customer. These increases were offset by decreases in personnel and related costs including telephone and insurance. The above factors combined to result in an increase of approximately 367.3% in net loss for the first quarter of 1997, from a loss of $171,000 in the first quarter of 1996 to a loss of $799,000 in the first quarter of 1997. Net loss per share for the period increased from a loss of $.03 per share for the first quarter of 1996 to a loss of $.16 for the first quarter of 1997. BALANCE SHEET Accounts receivable decreased 28.5% from $4,120,000 at December 31, 1996, to $2,947,000 at March 31, 1997, as a result of the decrease in sales volume. During the first quarter, accrued restructuring cost declined 34.7% from $1,111,000 at December 31, 1996 to $726,000 at March 31, 1997 as a result of payments made. The remaining accrual includes $169,000 in severance payable through the end of year, and $557,000 in costs associated with non-cancelable leases which will amortize over the remaining life of the leases. The line of credit, short term note, and long term note all decreased 100% with the March 21, 1997 payoff of all outstanding balances. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1997, the Company had cash and marketable securities of $4,781,000, and believes that its present liquidity position is sufficient to finance the Company's operations during 1997. During the first quarter of 1997, the Company paid off, in full, its outstanding line of credit and note payable, and related interest for a total of $2,199,657. This accounts for the decrease in cash and marketable securities from $6,947,000 at December 31, 1996 compared to $4,781,000 at March 31, 1997. The line of credit has been closed. -9- 10 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 Not applicable Item 6. Exhibits and Reports on form 8-K (a) Exhibits 27 Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K No reports on Form 8-K were filed during the period -10- 11 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: May 12, 1997 /s/ Judith A. Vitale -------------------- Judith A. Vitale Director of Finance and Administration -11- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR QUARTER ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 687 4,094 2,947 0 0 8,777 2,628 0 14,793 4,100 0 0 0 9 10,684 14,793 719 3,408 55 1,629 2,586 204 40 (799) 0 (799) 0 0 0 (799) (.16) (.16) REPRESENT NET AMOUNTS. REPRESENT NET AMOUNTS.
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