-----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, F9NHYooUMyhTvB/v1Gp9URPrrwNNK7S6il8ab6j7Ql1QYT5qv/Og0nmAELFtHDWJ 6IxxKYh9aRFQ46m1YfY72Q== 0000930661-97-001282.txt : 19970515 0000930661-97-001282.hdr.sgml : 19970515 ACCESSION NUMBER: 0000930661-97-001282 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: USDATA CORP CENTRAL INDEX KEY: 0000943895 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 752405152 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: 97604983 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 (Mark One) X Quarterly Report pursuant to Section 13 or 15(d) of the Securities ----- Exchange Act of 1934 For the quarterly period ended March 31, 1997 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 0-25936 USDATA Corporation (Exact Name of Registrant as Specified in Its Charter) DELAWARE 75-2405152 - -------------------------------------------------------------------------------- (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: (972) 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 12 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, 1997 Class Number of Shares Outstanding Common Stock, Par Value $.01 Per Share 11,104,529 shares USDATA CORPORATION FORM 10-Q QUARTER ENDED MARCH 31, 1997 TABLE OF CONTENTS Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets at March 31, 1997 and December 31, 1996 3 Consolidated Statements of Operations for the Three Months Ended March 31, 1997 and 1996 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1996 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 6. Exhibits and Reports on Form 8-K 10 Signatures 11 Computation of Per Share Earnings 12 2 USDATA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) - --------------------------------------------------------------------------------
March 31, 1997 December 31, 1996 --------------- ------------------ ASSETS Current assets Cash and cash equivalents $ 6,749 $ 6,398 Accounts receivable, net of allowance for doubtful accounts of $580 and $605, respectively 9,621 10,088 Inventories 1,017 1,067 Income tax receivable - 1,050 Deferred income taxes 1,928 1,375 Other current assets 883 638 ----------- ---------- Total current assets 20,198 20,616 Property and equipment, net 3,124 3,164 Other assets 1,734 1,273 ----------- ---------- Total assets $ 25,056 $ 25,053 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 3,897 $ 3,516 Deferred revenue 2,660 2,749 Accrued compensation and 712 682 benefits Other accrued liabilities 1,320 948 ---------- ---------- Total current liabilities 8,589 7,895 Deferred income taxes 510 510 ---------- ---------- Total liabilities 9,099 8,405 ---------- ---------- Shareholders' equity Preferred stock, $.01 par value, 2,200,000 shares authorized; none issued or outstanding - - Common stock, $.01 par value, 22,000,000 shares authorized; 143 143 14,343,550 shares issued Additional paid-in capital 16,311 16,282 Subscription receivable from officer (1,120) (1,095) Retained earnings 11,772 12,609 Treasury stock at cost, 3,239,122 shares in 1997 and 3,288,021 shares in 1996. (11,149) (11,291) ---------- ---------- Total shareholders' equity 15,957 16,648 ---------- ---------- Total liabilities and shareholders' equity $ 25,056 $ 25,053 ========== ==========
See accompanying notes to consolidated financial statements. 3 USDATA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) - ------------------------------------------------------------------------------
Three Months Ended March 31, ------------------ 1997 1996 ------- ------- Net sales Software $ 5,997 $ 6,912 Systems 4,029 4,089 ------- ------- Total sales 10,026 11,001 Cost of sales 3,461 2,741 ------- ------- Gross profit 6,565 8,260 ------- ------- Operating expenses Selling 5,677 5,550 Product development 884 1,224 General and administrative 1,310 1,031 ------- ------- Total operating expenses 7,871 7,805 ------- ------- Income (loss) from operations (1,306) 455 Interest income 50 120 ------- ------- Income (loss) before income taxes (1,256) 575 Income tax (provision) benefit 419 (200) ------- ------- Net income (loss) $ (837) $ 375 ======= ======= Income (loss) per common share $ (0.08) $ 0.03 ======= ======= Weighted average number of shares outstanding 11,085 12,424 ======= =======
See accompanying notes to consolidated financial statements. 4
USDATA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) - ------------------------------------------------------------------------------- Three months ended March 31, ---------------------------- 1997 1996 ------------ ------------- Cash flows from operating activities: Net Income (loss) $ (837) $ 375 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 365 313 Changes in operating assets and liabilities: Accounts receivable 467 803 Inventories 50 35 Income tax receivable 1,050 - Deferred income taxes (553) - Accounts payable and 770 (313) accrued liabilities Deferred revenue (89) 131 Accrued income taxes - 252 Other - net (18) (272) ------- ------- Net cash provided by operating activities 1,205 1,324 ------- ------- Cash flows from investing activities: Capital expenditures (471) (619) Related party note receivable - 7,040 Capitalized software development costs (524) (190) ------- ------- Net cash provided by (used in) investing activities (995) 6,231 ------- ------- Cash flows from financing activities: Proceeds from issuance of common shares 171 278 Payments on capital lease obligations (30) (15) ------- ------- Net cash provided by financing activities 141 263 ------- ------- Net increase in cash and cash equivalents 351 7,818 Cash and cash equivalents, beginning of period 6,398 1,504 ------- ------- Cash and cash equivalents, end of period $ 6,749 $ 9,322 ======= =======
See accompanying notes to consolidated financial statements. 5 USDATA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) 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, 1996. 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. (2) RELATED PARTY TRANSACTIONS -------------------------- Effective January 1, 1995, the Company and Safeguard entered into an administrative services agreement whereby Safeguard provides the Company with business and organizational strategy, legal and investment management, and merchant and investment banking services. The agreement provides for the payment of an administrative services fee of $30,000 per month. The initial agreement expired on December 31, 1995, and is renewed annually on a year to year basis. (3) CREDIT ARRANGEMENTS ------------------- In June 1996, the Company negotiated a $5 million line of credit which is renewed on a yearly basis with interest payable on the unpaid balance at the LIBOR rate plus 2.0%. The credit facility contains restrictions on the Company's ability to pay dividends on its common stock and also contains a number of financial covenants, including certain working capital requirements. The Company does not have any borrowing under the facility. (4) RECENT ACCOUNTING PRONOUNCEMENTS -------------------------------- In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings per Share" (FAS 128) was issued. FAS 128 specifies the computation, presentation and disclosure requirements for earnings per share (EPS) for entities with publicly held common stock or potential common stock. FAS 128 simplifies the standards for computing EPS previously found in Accounting Principles Board Opinion No. 15, "Earnings per Share" (APB 15) and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and dilutive EPS on the face of the statement of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the dilutive EPS computation. FAS 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods; earlier application is not permitted. FAS 128 requires restatement of all prior-period EPS data presented. The Company plans to adopt FAS 128 in its financial statements as of and for the year ended December 31, 1997. Based on current circumstances, the adoption of this pronouncement would not have had a material effect on the March 31, 1997 and 1996 EPS amounts reported. Pro forma basic EPS and pro forma dilutive EPS computed assuming FAS 128 had been adopted are equivalent to the historical amounts reported. 6 USDATA CORPORATION AND SUBSIDIARIES 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, hardware, consulting services, and technical 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 corporate information systems (the "Software Operations"). The Company is also engaged in the sale of automatic identification (Auto ID) equipment, warehouse management software and related integration services (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 consulting services, training classes and technical support and services agreements. These support and services agreements are generally one-year, renewable contracts entitling a customer to certain software upgrades and technical support. Support and service revenue represented 10% and 4% of Software Operations' net sales during the quarters ended March 31, 1997 and March 31, 1996, respectively. The Systems Operations' net sales are generated from sales of third-party automated data collection equipment, warehouse management software and related repair, installation and integration services. In the first quarter of 1997, the Company released or announced several significant new products, including the international release of FactoryLink ECS 6.0.3, which introduced double-byte functionality supporting the complex character sets of the Japanese, Chinese and Korean languages. Additionally, the Company released French and German language development and run-time versions of FactoryLink ECS. During the first quarter of 1997, the Company also announced the worldwide release of FactoryLink ECS WebClient, which was released on May 1, 1997. The Company has received significant interest in WebClient and expects this product to increase net sales during 1997. Additionally, the Company restructured its European operations during the first quarter and hired a new managing director based in London. The Company employs multiple channels of distribution which combine the Company's direct sales and support resources with qualified third-party remarketers. The Company currently has 14 sales locations in the United States. The Company also sells internationally through nine field locations and a network of distributors and value added resellers. Export sales are a significant element of the Company's activities and, in the quarters ended March 31, 1997 and 1996, represented 19% and 31%, respectively, of total net sales. The statements made above regarding WebClient are forward-looking statements that involve risks and uncertainties. Potential risks and uncertainties include market acceptance, promotional programs and the possible introduction of competitive products. 7 USDATA CORPORATION AND SUBSIDIARIES ----------------------------------- RESULTS OF OPERATIONS - --------------------- The following table sets forth, for the periods indicated, selected statements of income data as a percentage of net sales:
Three Months Ended March 31, ---------------------------- 1997 1996 ------------ ------------ Net sales Software 59.8% 62.8% Systems 40.2 37.2 ------- ------ Total sales 100.0 100.0 Cost of sales 34.5 24.9 ------- ------ Gross profit 65.5 75.1 ------- ------ Operating expenses Selling 56.6 50.4 Product development 8.8 11.1 General and administrative 13.1 9.4 ------- ------ Total operating expenses 78.5 70.9 ------- ------ Income (loss) from operations (13.0) 4.2 Interest income 0.5 1.1 ------- ------ Income (loss) before income taxes (12.5)% 5.3% ======== ======
Net sales for the quarter ended March 31, 1997 decreased 9% compared to the same period in 1996. Software Operations, net sales for the quarter ended March 31, 1997 decreased 13% compared to the same period in 1996. The decrease is primarily a result of weak international sales in Asia, the Middle East and Europe offset by a 21% increase in the Americas. International sales represented 31% of Software Operations sales for the quarter ended March 31, 1997, as compared to 50% for the same quarter last year. Systems Operations, net sales for the quarter ended March 31, 1997 decreased 1% compared to the same period in 1996. Gross profit as a percentage of net sales for the quarter ended March 31, 1997 decreased to 65.5%. Contributing to this decrease was the increase in the Systems Operation's net sales as an overall percent of net sales, which have lower gross margins than software sales. Additionally, the Systems business experienced lower gross margins in the first quarter of 1997 versus the first quarter of 1996 due to increased competition. 8 USDATA CORPORATION AND SUBSIDIARIES Selling expenses increased to 56.6% of net sales for the quarter ended March 31, 1997 compared to 50.4% in the comparable period in 1996. The increase in absolute dollars primarily related to additional integrators and consultants on staff as the Company continued to build its consulting and integration capacity, as well as overall salaries and benefit increases. During the quarter ended March 31, 1997, the Company employed 22 integrators and consultants versus 12 in the comparable period of 1996. This increase was offset by lower spending in marketing and promotional activities. The increase as a percent of net sales is a result of lower than anticipated net sales. As a percent of net sales, product development expenses for the quarter ended March 31, 1997 of 8.8% was below the comparable period of 1996, at 11.1% primarily due to a decrease in the number of engineers on staff. Actual product development expenditures, including capitalized development costs of $524,000 and $190,000 in the quarter ended March 31, 1997 and 1996, respectively, were approximately the same at $1.4 million. The increase in capitalized development costs in the quarter ended March 31, 1997 compared to March 31, 1996 related to development efforts on FactoryLink ECS for Asia and Japan and FactoryLink ECS WebClient. These development efforts were effectively completed in the first quarter of 1997. As a result, capitalized development costs will be significantly reduced in the second quarter, resulting in an increase in net product development expenses. General and administrative expenses increased to 13.1% of net sales for the quarter ended March 31, 1997 compared to 9.4% in the quarter ended March 31, 1996. The increase as a percent of net sales is due to lower than expected net sales in the first quarter of 1997. The increase in absolute dollars of $279,000 is due to increased salaries, benefits and taxes in 1997 versus 1996. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's operating activities generated $1.2 million of cash during the quarter ended March 31, 1997. Offsetting the net loss for the quarter ended March 31, 1997 was the collection of an income tax receivable of approximately $1.1 million, decreased accounts receivable, inventory reductions and increased accounts payable. During the quarter ended March 31, 1997, the Company invested $471,000 in capital equipment, primarily computers, and $524,000 in capitalized software development costs as described above. 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 1997. 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 AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (filed as part of this report). Number Description ------ ----------- 11 Computation of Per Share Earnings 27 Financial Data Schedule (EDGAR Version only) (b) Reports on Form 8-K No reports on Form 8-K have been filed by the Registrant during the quarter ended March 31, 1997. 10 USDATA CORPORATION AND SUBSIDIARIES 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 12, 1997 /s/ Bill E. Newell ------------------------------------- Bill E. Newell President and Chief Executive Officer Date: May 12, 1997 /s/ Jay B. Shipowitz ------------------------------------- Jay B. Shipowitz Senior Vice President Finance & Administration, Chief Financial Officer Treasurer and Secretary (Principal Financial and Accounting Officer) 11 EX-11 2 COMPUTATION OF PER SHARE HOLDING EXHIBIT 11 USDATA CORPORATION AND SUBSIDIARIES EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS (in thousands, except per share data)
Three Months Ended March 31, ------------------ 1997 1996 -------- -------- Net income (loss) $ (837) $ 375 ======== ======== Weighted average common shares outstanding 11,085 10,961 Common share equivalents - 1,463 -------- -------- Weighted average number of common shares outstanding and common share equivalents 11,085 12,424 ======== ======= Income (loss) per common share $ (0.08) $ 0.03 ======== =======
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1997 (UNAUDITED) 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 6,749 0 10,201 580 1,017 20,198 8,251 5,127 25,056 8,589 0 0 0 143 15,814 25,056 10,026 10,026 3,461 7,871 0 0 0 (1,256) (419) 0 0 0 0 (837) (0.08) (0.08)
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