-----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, KR4Ao2TVxZOe8n15NryZ4TFfnPvHRbSKiKwK0E+32Fvf+Jds0BmzZV911PYu8CsT KRQJWlRuXiNfzsk9e68KoQ== 0000930661-96-000432.txt : 19960517 0000930661-96-000432.hdr.sgml : 19960517 ACCESSION NUMBER: 0000930661-96-000432 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: USDATA CORP CENTRAL INDEX KEY: 0000943895 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MAILING, REPRODUCTION, COMMERCIAL ART & PHOTOGRAPHY [7330] IRS NUMBER: 752405150 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25936 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 2435 NORTH CENTRAL EXPRESSWAY CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 2146809700 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 Commission File Number 0-25936 USDATA Corporation (Exact name of registrant as specified in its charter) DELAWARE 75-2405150 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2435 N Central Expressway, Richardson, TX, 75080 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (214) 680-9700 ------------------------------ 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 twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such 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 April 30, 1996 Class Number of Shares Outstanding Common Stock, Par Value $.01 Per Share 11,021,354 shares Note: This is Page 1 of a document consisting of 13 pages. USDATA CORPORATION FORM 10-Q QUARTER ENDED MARCH 31, 1996 TABLE OF CONTENTS Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets at March 31, 1996 and December 31, 1995 3 Consolidated Statements of Income for the Three Months Ended March 31, 1996 and 1995 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 2 USDATA CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) - ------------------------------------------------------------------------------
March 31, December 31, 1996 1995 --------- ------------ ASSETS Current Assets Cash and cash equivalents $ 9,322 $ 1,504 Accounts receivable, net of allowance for doubtful accounts of $480 and $467, respectively 8,400 9,203 Notes receivable from related party - 7,040 Inventories 2,087 2,122 Deferred income 267 267 taxes Other current assets 854 706 --------- ---------- Total current assets 20,930 20,842 --------- ---------- Property and equipment, net 2,449 2,099 Other assets 732 555 Total assets $ 24,111 $ 23,496 ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 1,802 $ 2,115 Deferred revenue 2,267 2,136 Accrued compensation and benefits 737 1,185 Accrued income taxes 252 - Other accrued liabilities 979 605 Current portion of capital lease obligations 37 52 --------- ---------- Total current liabilities 6,074 6,093 --------- ---------- Capital lease obligations, less current portion 72 72 Stockholders' equity Preferred stock, par value, 2,200,000 shares authorized; none issued or outstanding - - Common stock, $.01 par value, 22,000,000 shares authorized; 14,343,550 shares issued 143 143 Additional paid-in capital 16,259 16,306 Subscription receivable from officer (1,039) (1,021) Retained earnings 14,040 13,665 Treasury stock, 3,335,321 and 3,450,484 shares at cost, respectively (11,438) (11,762) -------- ---------- Total stockholders' equity 17,965 17,331 -------- ---------- Total liabilities and stockholders' equity $ 24,111 $ 23,496 ======== ==========
3 USDATA CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT INCOME PER COMMON SHARE DATA) - --------------------------------------------------------------------------
Three Months Ended March 31, 1996 1995 ------------------ Net sales Software $ 6,912 $ 6,094 Systems 4,089 4,272 ------------------ Total sales 11,001 10,366 Cost of sales 2,741 2,705 ------------------ Gross profit 8,260 7,661 Operating expenses Selling 5,550 4,460 Product development 1,224 1,229 General and administrative 1,031 1,025 ------------------ Total operating expenses 7,805 6,714 ------------------ Income from operations 455 947 Interest income (expense) 120 (61) ------------------ In come before income taxes 575 886 Income tax provision (200) (300) ------------------ Net income $ 375 $ 586 ================== Income per common share $0.03 $0.07 ================== Weighted average number of shares outstanding 12,424 8,443 ==================
4 USDATA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) - --------------------------------------------------------------------------------
Three months ended March 31, 1996 1995 ---------------------------- Cash flows from operating activities: Net Income $ 375 $ 586 Adjustments to reconcile net income to cash flow from operating activities: Depreciation and amortization 313 245 Changes in operating assets and liabilities: Accounts receivab le 803 (103) Inventories 35 (19) Deferred income taxes - - Accounts payable (313) 183 Defer red revenue 131 101 Accrued income taxes 252 40 Other - net (272) 119 ---------------------------- Net cash provided by operating activities 1,324 1,152 ---------------------------- Cash flows from investing activities: Capital expenditures (619) (290) Related party note receivable 7,040 - Capitalized software development costs (190) (80) ---------------------------- Net cash provided by (used in) in vesting activities 6,231 (370) ---------------------------- Cash flow from financing activities: Payments on long-term debt - (1,050) Proceeds from issuance of common shares 278 51 Payments on capital lease obligations (15) (23) ---------------------------- Net cash provided by (used in) financing activities 263 (1,022) ---------------------------- Net increase (decrease) in cash and cash equivalents 7,818 (240) Cash and cash equivalents, beginning of period 1,504 939 ---------------------------- Cash and cash equivalents, end of period $9,322 $ 699 ============================
5 USDATA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (A) BASIS OF PRESENTATION --------------------- The accompanying unaudited interim consolidated financial statements were prepared in accordance with generally accepted accounting principles for interim financial statements. These financial statements do not include all disclosures associated with annual financial statements. Accordingly, these statements should be read in conjunction with the Company's financial statements and notes thereto contained in the Company's Form 10-K for the year ended December 31, 1995. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made. Interim results are not necessarily indicative of results expected for the full year. (B) EARNINGS PER SHARE ------------------- Earnings per common share were computed by dividing net income by the weighted average number of shares outstanding during each period. Weighted average common and common equivalent shares include common shares, stock options and warrants using the treasury method. Stock options and warrants granted with exercise prices below the initial offering price during the twelve-month period preceding the initial filing date of the offering have been included in the calculation of common stock equivalents using the treasury stock method, assuming an offering price of $5.00 per share, as if they were outstanding for all periods presented. (C) RELATED PARTY TRANSACTIONS -------------------------- Effective January 1, 1996, the Company and Safeguard Scientifics, Inc. ("Safeguard"), a stockholder of the Company, renewed an administrative services agreement whereby Safeguard provides the Company with day-to-day business and organizational strategy, legal, financial, investment management, merchant and investment banking services. The agreement provides for the payment of an administrative services fee of $30,000 per month and will expire on December 31, 1996, and will be renewable for one year terms thereafter by mutual agreement between the parties. In August 1995, Safeguard and the Company entered into an agreement whereby the Company would lend to Safeguard a portion of its excess cash and receive a negotiated interest rate which was higher than the rate the Company might realize by independently investing the funds, but which was less than Safeguard's cost of funds. The loan was fully repaid to the Company on March 8, 1996. 6 USDATA CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW - -------- USDATA Corporation (the "Company") provides a wide range of software components, hardware systems and services, design, consulting, and maintenance support used by its customers to improve the overall productivity of their businesses and to monitor their automated processes. Specifically, the Company produces automation software tools, marketed under the name FactoryLink(R), that enable an organization's information systems to supervise, monitor and control manufacturing and other automated processes and to interface with management information systems (the "Software Operations"). The Company is also engaged in the sale of automatic identification (auto ID) equipment, distributed management software and related integration services that allow remote, real-time data collection using a variety of automatic identification techniques (the "Systems Operations"). The Company currently derives all of its net sales from the Software Operations and the Systems Operations. The Software Operations' net sales are generated substantially from licenses of the FactoryLink family of products and also from related integration services, training classes and customer support and service agreements, which are generally one-year, renewable contracts entitling a customer to certain software upgrades and technical support. Support and service revenue represented 4% and 3% of Software Operations' net sales during the quarters ended March 31, 1996 and March 31, 1995, respectively. The System Operations' net sales are generated from sales of third-party automated data collection equipment and related repair and integration services. In late 1994, the Company determined that in order to increase awareness of its products, to accelerate growth, to obtain a larger share of a rapidly growing market and to position the Company for future revenue growth, it should substantially increase expenditures on sales, marketing and product development. The Company increased spending in these areas throughout 1995 and into the first quarter of 1996. As a result of these significant expenditures, which include expenditures for the development and rollout of the Company's most recent version of its FactoryLink software, FactoryLink-Enterprise Control System (ECS), earnings for the quarter ended March 31, 1996, were slightly lower than the comparable period in 1995, even though the Company had a 6.1% increase in revenue. In the first quarter of 1996, the Company released FactoryLink ECS for PC platforms and expects to release the product on UNIX platforms during the second quarter of 1996. FactoryLink ECS represents a significant upgrade of FactoryLink that adds important additional features, power and "ease of use" to the Company's products. Consequently, the Company expects that net sales from Software Operations will increase during 1996, and, as the Company's Software Operations generally carry a higher gross profit margin than Systems Operations, that its gross profit margins will improve. These statements are, of course, forward-looking statements and may be adversely affected by a number of important factors including market acceptance of the new product, the response of the Company's competitors (e.g. price decreases, new product introductions), the effectiveness of the Company's sales and marketing efforts and the efficiency of the Company's distribution channels. 7 USDATA CORPORATION RESULTS OF OPERATIONS - --------------------- The following table sets forth the periods indicated selected statements of income data as a percentage of net sales:
Quarter Ended March 31, 1996 1995 ---------------- Net sales Software 62.8% 58.8% Systems 37.2 41.2 --------------- Total sales 100.0 100.0 Cost of sales 24.9 26.1 --------------- Gross profit 75.1 73.9 Operating expenses Selling 50.4 43.0 Product development 11.1 11.9 General and administrative 9.4 9.9 --------------- Total operating expenses 70.9 64.8 --------------- Income from operations 4.2 9.1 Interest income (expense) 1.1 -0.6 --------------- Income before income taxes 5.3% 8.5% ===============
Net sales for the quarter ended March 31, 1996 increased 6.1% compared to the same period in 1995. Software Operations, net sales for the quarter ended March 31, 1996 increased 13.4% compared to the same period in 1995. The increase is primarily a result of international sales growth, increased sales leads from marketing and trade show activity, larger average sales prices and the increased activity of new sales personnel. International sales represented 49.8% of Software Operations sales for the quarter ended March 31, 1996, as compared to 47.3% the same quarter last year. Systems Operations, net sales for the quarter ended March 31, 1996 decreased 4.3% compared to the same period in 1995. reflecting primarily slowdown in the overall hardware reseller industry and the turnover of sales personnel in the quarter. Gross profit as a percentage of net sales for the quarter ended March 31, 1996 improved to 75.1% compared to 73.9% in the comparable quarter of 1995. This is primarily due to the increased sales of the Company's software products which carry higher gross profit margins than System Operations. 8 USDATA CORPORATION Selling expenses increased to 50.4% of net sales for the quarter ended March 31, 1996 compared to 43.0% in the comparable period in 1995. This increase is a result of the Company's expenditures in sales seminars to promote FactoryLink ECS, advertising, international and domestic trade shows, sales collateral material, demonstration CD's, sales videos, travel and training expenses for new salespeople. As a percent of net sales, product development expenses for the quarter ended March 31, 1996 of 11.1% were slightly below the comparable period of 1995, at 11.9% primarily the effect of increased net sales. General and administrative expenses decreased to 9.4% of net sales for the quarter ended March 31, 1996 compared to 9.9% in the comparable period in 1995, as the Company leveraged its existing infrastructure to support the higher sales. The Company's interest income in 1996 is a result of investing the proceeds of its public offering in July 1995. Interest expense in 1995 was a result of a bank term loan which was paid off with the proceeds of the Company's public offering. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's operating activities generated $1.3 million of cash during the quarter ended March 31, 1996, primarily a result of a decrease in outstanding accounts receivable. The Company's accounts receivable balance was at a high level at the end of 1995 as a result of strong year-end sales volumes. Management anticipates that capital expenditures for 1996 will be higher than 1995 due to computer system upgrades in the product development area and the expansion of the corporate computer system and database. The outstanding principal balance plus accrued interest due to the Company from Safeguard was repaid in the first quarter of 1996. The Company believes cash on hand and cash generated from operations together with the existing bank line of credit will be sufficient to satisfy its operating cash needs in 1996. In addition, the Company could consider seeking additional public or private debt or equity financing or increased bank credit lines to fund future growth opportunities. 9 USDATA CORPORATION PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION In January 1996 as previously announced, the Company entered into a new master cooperation agreement with long-term partner AEG Schneider Automation ("ASA") during the first quarter of 1996. Under this agreement, ASA is expected to expand its purchase and resale of the Company's FactoryLink product. Although the new agreement will not obligate ASA to meet any minimum purchase requirements, ASA will be entitled to certain volume discounts and other rights if it meets the sales targets specified in the agreement. ASA will begin purchasing products under the new agreement once the terms and conditions of certain significant subagreements are finalized, which is expected to be during the second quarter of 1996. ASA and its predecessors have been purchasing products from the Company since 1989 and, for the year ended December 31, 1995, accounted for $1,833,000 or 4% of total net sales. Purchases by ASA under the new agreement are not expected to exceed 10% of total net sales. ITEM 6. EXHIBITS (a) Exhibits (filed as part of this report). Number Description 11 Computation of Per Share Earnings 27 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K have been filed by the Registrant during the quarter ended March 31, 1996. 10 USDATA CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned thereunto duly authorized. USDATA CORPORATION, INC. Date: May 5, 1996 /s/ William G. Moore, Jr. ------------------------------------------ William G. Moore, Jr. President and Chief Executive Officer Date: May 5, 1996 /s/ P. Michael Sullivan ------------------------------------------ P. Michael Sullivan Vice President of Finance, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Principal Accounting Officer) 11 EX-11 2 COMPUTATION OF INCOME PER COMMON SHARE EXHIBIT 11 USDATA CORPORATION COMPUTATION OF INCOME PER COMMON SHARE (in thousands, except income per common share data)
Three Months Ended March 31, --------------------------------- 1996 1995 --------------- --------------- Net income $ 375 $ 586 =============== =============== Average common shares outstanding 10,961 7,644 Average common share equivalents 1,463 799 --------------- --------------- Average number of common shares and common share equivalents outstanding 12,424 8,443 =============== =============== Income per common share $ 0.03 $ 0.07 =============== ===============
EX-27 3 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING MARCH 31, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1995 JAN-01-1996 MAR-31-1996 9,322 0 8,400 480 2,087 854 6,561 4,112 24,111 6,074 0 0 0 143 17,822 24,111 11,001 11,001 2,741 7,805 120 0 0 575 (200) 0 0 0 0 375 .03 .03
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