-----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, Ma3sMPCtrh/EUFN0yAEUB2gHhOnPOJMD+1dsPLQr3zKYvlq0lf0DvEuLPYAbGlKd LOswex2qRP+0Iux8cld3eA== 0000930661-97-001936.txt : 19970814 0000930661-97-001936.hdr.sgml : 19970814 ACCESSION NUMBER: 0000930661-97-001936 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 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: 97658401 BUSINESS ADDRESS: STREET 1: 2435 NORTH CENTRAL EXPRESSWAY CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 2146809700 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q X Quarterly Report pursuant to Section 13 or 15(d) of the Securities - ----- Exchange Act of 1934. For the quarterly period ended June 30, 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 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 July 31, 1997: Class Number of Shares Outstanding Common Stock, Par Value $.01 Per Share 10,836,744 shares USDATA CORPORATION FORM 10-Q QUARTER ENDED JUNE 30, 1997 TABLE OF CONTENTS Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets at June 30, 1997 and December 31, 1996 3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1997 and 1996 4 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 Computation of Per Share Earnings 13 2 USDATA Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) - --------------------------------------------------------------------------------
June 30, 1997 December 31, 1996 ------------- ----------------- ASSETS Current assets Cash and cash equivalents $ 5,540 $ 6,398 Accounts receivable, net of allowance for doubtful accounts of $990 and $605, respectively 8,906 10,088 Inventories 858 1,067 Income tax receivable -- 1,050 Deferred income taxes 2,251 1,375 Other current assets 596 638 -------- -------- Total current assets 18,151 20,616 Property and equipment, net 3,370 3,164 Other assets 1,661 1,273 ======== ======== Total assets $ 23,182 $ 25,053 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 2,594 $ 3,516 Deferred revenue 2,307 2,749 Accrued compensation and benefits 730 682 Other accrued liabilities 1,506 948 -------- -------- Total current liabilities 7,137 7,895 Deferred income taxes 510 510 -------- -------- Total liabilities 7,647 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; 14,343,550 shares issued 143 143 Additional paid-in capital 16,314 16,282 Subscription receivable from officer -- (1,095) Retained earnings 11,170 12,609 Treasury stock at cost, 3,507,556 shares in 1997 and 3,288,021 shares in 1996 (12,092) (11,291) -------- -------- Total shareholders' equity 15,535 16,648 -------- -------- Total liabilities and shareholders' equity $ 23,182 $ 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 Six Months Ended June 30, June 30, 1997 1996 1997 1996 ----------- ----------- ------------ ----------- Net sales Software $ 5,583 $ 5,351 $ 11,580 $ 12,263 Systems 4,060 4,353 8,089 8,442 ---------- --------- --------- -------- Total sales 9,643 9,704 19,669 20,705 Cost of sales 3,446 2,698 6,907 5,439 ---------- --------- --------- --------- Gross profit 6,197 7,006 12,762 15,266 Operating expenses Selling 4,695 5,332 10,372 10,882 Product development 1,062 1,080 1,946 2,304 General and administrative 1,483 628 2,793 1,659 ---------- ---------- --------- --------- Total operating expenses 7,240 7,040 15,111 14,845 ---------- ---------- --------- --------- Income (loss) from operations (1,043) (34) (2,349) 421 Interest income 118 117 168 237 --------- ---------- --------- --------- Income (loss) before income taxes (925) 83 (2,181) 658 Income tax (provision) benefit 323 (14) 742 (214) --------- ---------- --------- --------- Net income (loss) $ (602) $ 69 $ (1,439) $ 444 ========= ========== ========= ========= Income (loss) per common share $ (.05) $ .01 $ (.13) $ .04 ========= ========== ========= ========= Weighted average number of shares outstanding 11,380 12,482 11,233 12,455 ========= ========== ========= =========
See accompanying notes to consolidated financial statements. 4 USDATA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) - --------------------------------------------------------------------------------
Six months ended June 30, ------------------------------ 1997 1996 ------------- ------------- Cash flows from operating activities: Net income (loss) $ (1,439) $ 444 Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation and amortization 733 665 Changes in operating assets and liabilities: Accounts receivable 1,182 1,084 Inventories 209 61 Income tax receivable 1,050 - Deferred income taxes (876) - Accounts payable and accrued liabilities (146) (1,840) Deferred revenue (442) (10) Other - net 110 (1,148) ------------ ------------ Net cash provided by (used in) operating activities 381 (744) ------------ ------------ Cash flows from investing activities: Capital expenditures (795) (1,241) Related party note receivable - 7,040 Capitalized software development costs (582) (437) ------------ ----------- Net cash provided by (used in) investing activities (1,377) 5,362 ------------ ----------- Cash flows from financing activities: Proceeds from issuance of common shares 190 376 Payments on capital lease obligations (52) (30) ------------ ----------- Net cash provided by financing activities 138 346 ------------ ----------- Net increase (decrease) in cash and cash equivalents (858) 4,964 Cash and cash equivalents, beginning of period 6,398 1,504 ------------ ----------- Cash and cash equivalents, end of period $ 5,540 $ 6,468 ============ ===========
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 consolidated 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) RESTRICTED STOCK GRANT ---------------------- During the second quarter of 1997, the Company agreed to cancel the outstanding subscription receivable due from a former officer in exchange for the shares of restricted common stock that secured this receivable. As a result of this transactions 273,910 shares of common stock were put into treasury and the subscription receivable was eliminated. (3) 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 June 30, 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. Also, during 1997, the FASB issued pronouncements relating to the presentation and disclosure of information related to the Company's capital structure, comprehensive income and segment data. The Company is required to adopt the provisions of these pronouncements, if applicable, for the year ending December 31, 1998. The adoption of the pronouncements will not have an impact on the Company's financial position and results of operations but may change the presentation of certain of the Company's financial statements and related notes and data thereto. 6 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 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. 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 13.7% and 15.6% of Software Operations' net sales during the quarters ended June 30, 1997 and June 30, 1996 respectively. The System Operations' net sales are generated from sales of third-party automated data collection equipment, warehouse management software and related repair, installation and integration services. During the first half of 1997, the Company released 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. The Company also announced the worldwide release of FactoryLink ECS WebClient, which has received significant interest and the Company expects this product to increase net sales during 1997. The Company has also \restructured its European operations and hired a new managing director based in London. In addition, effective July 30, 1997 the Company announced the appointment of Robert A. Merry as its new president and chief executive officer. 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 June 30, 1997 and 1996, represented 24% and 30%, 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 RESULTS OF OPERATIONS - --------------------- The following table sets forth, for the periods indicated, selected statement of operations data as a percentage of net sales:
Three Months Ended Six Months Ended June 30, June 30, 1997 1996 1997 1996 -------- -------- -------- -------- Net Sales Software 57.9% 55.1% 58.9% 59.2% Systems 42.1 44.9 41.1 40.8 -------- -------- -------- -------- Total sales 100.0 100.0 100.0 100.0 Cost of sales 35.7 27.8 35.1 26.3 -------- -------- -------- -------- Gross profit 64.3 72.2 64.9 73.7 Operating expenses Selling 48.7 54.9 52.7 52.6 Product development 11.0 11.1 9.9 11.1 General and administrative 15.4 6.5 14.2 8.0 -------- -------- -------- -------- Total operating expense 75.1 72.5 76.8 71.7 -------- -------- -------- -------- Income (loss) from operations (10.8) (.3) (11.9) 2.0 Interest income 1.2 1.2 .9 1.1 -------- -------- -------- -------- Income (loss) before income taxes (9.6)% 0.9% 11.0% 3.1% ======== ======== ======== ========
Comparison of Three Months Ended June 30, 1997 and 1996 - ------------------------------------------------------- Net sales for the quarter ended June 30, 1997 decreased 1% compared to the same period in 1996. Software Operations net sales increased 4% compared to the second quarter of 1996. The increase is a result of a 33% increase in sales in the United States offset by a 20% decrease in international sales. International sales represented 41% of Software Operations net sales for the quarter ended June 30, 1997, compared to 54% for the same quarter in 1996. Systems Operations net sales decreased 7% compared to the second quarter of 1996 primarily due to increased competition. Gross profit margin for the quarter ended June 30, 1997 decreased to 64.3% compared to 72.2% in the comparable quarter of 1996. The decrease in gross margin is a result of competitive pressures on margins in the Systems Operations. Selling expenses decreased to 48.7% of net sales for the quarter ended June 30, 1997 compared to 54.9% in the comparable period in 1996. The decrease is a result of the Company's efforts to reduce expenses in the second quarter of 1997, and higher 1996 expenditures to promote FactoryLink ECS. These expenditures include sales seminars throughout the U.S., advertising, international and domestic trade shows, sales collateral material, demonstration CD's, sales videos, travel and training expenses for new salespeople. 8 Product development expenses as a percent of net sales for the quarter ended June 30, 1997 approximated the comparable period in 1996. Actual product development expenses, including capitalized development costs of $58,000 and $247,000 in the quarter ended June 30, 1997 and 1996, respectively, were lower, as compared to the second quarter of 1996. This decrease is due to a decrease in the number of engineers on staff. The decrease in capitalized software development costs related to the completion of development efforts on FactoryLink ECS for Asia and Japan and FactoryLink ECS WebClient in the first quarter of 1997. General and administrative expenses increased as a percent of net sales for the quarter ended June 30, 1997 compared to the comparable period in 1996. The increase is due to higher information technology costs and an increase in allowance for doubtful accounts. Comparison of Six Months Ended June 30, 1997 and 1996 - ----------------------------------------------------- Net sales for the six months ended June 30, 1997 decreased 5% compared to the same period in 1996. Software Operations net sales decreased 6% compared to the six months ended June 30, 1996. The decrease is a result of a 24% increase in sales in the United States offset by a 33% decrease in international sales. International sales represented 36% of Software Operations net sales for the six months ended June 30, 1997, compared to 52% for the six months ended June 30, 1996. Systems Operations net sales decreased 4% compared to the six months ended June 30, 1996 primarily due to increased competition. Gross profit margin for the six months ended June 30, 1997 decreased to 64.9% compared to 73.7% in the comparable 1996 period. The decrease in gross margin is a result of competitive pressures on margins in the Systems Operations. Selling expenses remained consistent at 52.7% of net sales for the six months ended June 30, 1997 compared to 52.6% in the comparable period in 1996. As a percent of net sales, product development expenses for the six months ended June 30, 1997 of 9.9% were below the comparable period in 1996, at 11.1%, primarily due to a decrease in the number of engineers on staff and higher capitalized software development costs. Actual product development expenses, including capitalized development costs of $582,000 and $437,000 in the six months ended June 30, 1997 and 1996, respectively, were lower, as compared to the six months ended June 30, 1996. This decrease is due to a decrease in the number of engineers on staff. The increase in capitalized software development costs related to development efforts on FactoryLink ECS for Asia and Japan and FactoryLink ECS WebClient. General and administrative expenses increased as a percent of net sales for the six months ended June 30, 1997 compared to the comparable period in 1996. The increase is due to lower net sales in for the first six months of 1997 compared to 1996, higher information technology costs and an increase in allowance for doubtful accounts. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's operating activities provided $381,000 of cash during the six months ended June 30, 1997. Offsetting the net loss for the six months ended June 30, 1997 was the collection of an income tax receivable of approximately $1.1 million, decreased accounts receivable and inventory reductions. During the six months ended June 30, 1997, the Company invested $795,000 in capital equipment, primarily computers, and capitalized $582,000 in software development costs. During June of 1997, the Company's previous $5 million revolving credit facility expired. The Company did not make any borrowings under this facility and intends on securing a similar facility during the second half of 1997. 9 The Company believes cash on hand and cash generated from operations will be sufficient to satisfy its operating cash needs into the first half of 1998. In addition, the Company could consider seeking additional public or private debt or equity financing to fund future growth opportunities or acquisitions. 10 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Shareholders on June 24, 1997. At this meeting, the shareholders voted in favor of electing as directors the six nominees named in the Proxy Statement dated May 28, 1997. One nominee named in the Proxy Statement resigned from the Board of Directors for personal reasons prior to the Annual Meeting of Shareholders. The number of votes cast were as follows: I. ELECTION OF DIRECTORS FOR WITHHELD --- -------- Arthur R. Spector 8,281,691 155,196 Gary J. Anderson, M.D. 8,281,741 155,146 James W. Dixon 8,281,841 155,046 Max D. Hopper 8,281,591 155,296 Jerry L. Johnson 8,262,324 174,563 Jack L. Messman 8,094,929 341,958 ITEM 6. EXHIBITS (a) Exhibits (filed as part of this report). Number Description ------ ----------- 11 Computation of Income Per Common Share 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 June 30, 1997 11 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: August 12, 1997 /s/ Robert A. Merry -------------------------------------------------- Robert A. Merry President and Chief Executive Officer Date: August 12, 1997 /s/ Freddy L. Holder -------------------------------------------------- Freddy L. Holder Controller (Principal Financial and Accounting Officer) 12 EX-11 2 COMPUTATIONS OF PER SHARE HOLDING USDATA CORPORATION AND SUBSIDIARIES EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS (in thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, ------------------------ ----------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Net income (loss) $ (602) $ 69 $ (1,439) $ 444 ========= ========= ========= ========= Average common shares outstanding 11,380 11,024 11,233 10,990 Average common share equivalents - 1,458 - 1,465 --------- --------- --------- --------- Average number of common shares and common share equivalents outstanding 11,380 12,482 11,233 12,455 ========= ========= ========= ========= Income (loss) per common share $ (.05) $ 0.01 $ (.13) $ 0.04 ========= ========= ========= =========
13 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 5,540 0 9,896 990 1,578 18,151 9,129 5,759 23,182 7,137 0 0 0 143 15,392 23,182 19,669 19,669 6,907 15,111 0 0 0 (2,181) (742) 0 0 0 0 (1,439) (0.13) (0.13)
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