-----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, TYuAcfjinxOeqg3g4D0trTvnrsulkXyLggGThp2TsMjzIQxnSEplrfemYIXxfWWT gIiE3iN1o10EjYZ08BYiTA== 0000930661-97-002670.txt : 19971117 0000930661-97-002670.hdr.sgml : 19971117 ACCESSION NUMBER: 0000930661-97-002670 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 000-25936 FILM NUMBER: 97720081 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 X Quarterly Report pursuant to Section 13 or 15(d) of the Securities - ---- Exchange Act of 1934. For the quarterly period ended September 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 October 31, 1997: Class Number of Shares Outstanding Common Stock, Par Value $.01 Per Share 10,906,531 shares USDATA CORPORATION FORM 10-Q QUARTER ENDED SEPTEMBER 30, 1997 TABLE OF CONTENTS
Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets at September 30, 1997 and December 31, 1996 3 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 1997 and 1996 4 Consolidated Statements of Cash Flows for the Nine Months Ended September 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 6. Exhibits and Reports on Form 8-K 11 Signatures 12 Computation of Per Share Earnings 13
2 USDATA Corporation and Subsidiaries
USDATA Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) - --------------------------------------------------------------------------------------------------------------------- September 30, 1997 December 31, 1996 ------------------ ----------------- ASSETS Current assets: Cash and cash equivalents $ 4,334 $ 6,398 Accounts receivable, net of allowance for doubtful Accounts of $1,374 and $605, respectively 6,828 10,088 Inventories 880 1,067 Income tax receivable -- 1,050 Deferred income taxes 2,838 1,375 Other current assets 334 638 -------- -------- Total current assets 15,214 20,616 Property and equipment, net 3,277 3,164 Other assets 2,313 1,273 -------- -------- Total assets $ 20,804 $ 25,053 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,601 $ 3,516 Deferred revenue 2,238 2,749 Accrued compensation and benefits 671 682 Other accrued liabilities 1,584 948 -------- -------- Total current liabilities 6,094 7,895 Deferred income taxes 510 510 -------- -------- Total liabilities 6,604 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 16,315 16,282 Subscription receivable from officer -- (1,095) Retained earnings 9,832 12,609 Treasury stock at cost, 3,438,394 shares in 1997 and 3,288,021 shares in 1996 (12,090) (11,291) -------- -------- Total shareholders' equity 14,200 16,648 -------- -------- Total liabilities and shareholders' equity $ 20,804 $ 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 Nine Months Ended September 30, September 30, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Net sales: Software $ 4,859 $ 4,807 $ 16,439 $ 17,070 Systems 2,341 4,875 10,430 13,317 -------- -------- -------- -------- Total sales 7,200 9,682 26,869 30,387 Cost of sales 1,780 3,922 8,687 9,361 -------- -------- -------- -------- Gross profit 5,420 5,760 18,182 21,026 Operating expenses: Selling 4,679 5,857 15,051 16,739 Product development 871 1,133 2,817 3,437 General and administrative 1,942 1,158 4,735 2,817 -------- -------- -------- -------- Total operating expenses 7,492 8,148 22,603 22,993 Loss from operations (2,072) (2,388) (4,421) (1,967) Interest income 46 105 214 342 -------- -------- -------- -------- Loss before income taxes (2,026) (2,283) (4,207) (1,625) Income tax benefit 688 696 1,430 482 -------- -------- -------- -------- Net loss $ (1,338) $ (1,587) $ (2,777) $ (1,143) ======== ======== ======== ======== Loss per common share $ (0.12) $ (0.14) $ (0.25) $ (0.10) ======== ======== ======== ======== Weighted average number of shares outstanding 10,852 11,037 11,105 11,004 ======== ======== ======== ========
See accompanying notes to consolidated financial statements. 4 USDATA Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
- ---------------------------------------------------------------------------------------------------- Nine months ended September 30, ------------------------------- 1997 1996 -------------- ------------- Cash flows from operating activities: Net loss $ (2,777) $ (1,143) Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 1,301 989 Changes in operating assets and liabilities: Accounts receivable 3,260 1,834 Inventories 187 648 Income tax receivable 1,050 (1,190) Accounts payable and accrued liabilities (1,120) 330 Deferred revenue (511) 8 Other - net (953) (725) ------------ ----------- Net cash provided by operating activities 437 751 ------------ ----------- Cash flows from investing activities: Capital expenditures (1,220) (1,819) Related party note receivable - 7,040 Capitalized software development costs (1,422) (719) ------------ ----------- Net cash provided by (used in) investing activities (2,642) 4,502 ------------ ----------- Cash flows from financing activities: Proceeds from issuance of common shares 193 387 Payments on capital lease obligations (52) (45) ------------ ----------- Net cash provided by financing activities 141 342 ------------ ----------- Net increase (decrease) in cash and cash equivalents (2,064) 5,595 Cash and cash equivalents, beginning of period 6,398 1,504 ------------ ----------- Cash and cash equivalents, end of period $ 4,334 $ 7,099 ============ ===========
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) 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 September 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 14.3% and 12.0% of Software Operations' net sales during the quarters ended September 30, 1997 and 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 nine months 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. The Company has also restructured its European operations and hired a new managing director based in the United Kingdom. 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 is currently implementing a new strategic plan with plans for investment spending over the next several quarters. Under the new strategy, the Company will be evaluating each of its business lines and how each line will fit with its new strategic direction. 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 Nine Months Ended September 30, September 30, 1997 1996 1997 1996 --------- -------- ---------- -------- Net Sales: Software 67.5 % 49.6 % 61.2 % 56.2 % Systems 32.5 50.4 38.8 43.8 --------- -------- ---------- -------- Total sales 100.0 100.0 100.0 100.0 Cost of sales 24.7 40.5 32.3 30.8 --------- -------- ---------- -------- Gross profit 75.3 59.5 67.7 69.2 Operating expenses: Selling 65.0 60.5 56.0 55.1 Product development 12.1 11.7 10.5 11.3 General and administrative 27.0 12.0 17.6 9.3 --------- -------- ---------- -------- Total operating expenses 104.1 84.2 84.1 75.7 --------- -------- ---------- -------- Loss from operations (28.8) (24.7) (16.5) (6.5) Interest income .6 1.1 .8 1.1 --------- -------- ---------- -------- Loss before income taxes (28.2)% (23.6)% (15.7)% (5.4)% ========= ======== ========== ========
Comparison of Three Months Ended September 30, 1997 and 1996 - ------------------------------------------------------------ Net sales for the quarter ended September 30, 1997 decreased 26% compared to the same period in 1996. Software Operations net sales increased 1% compared to the third quarter of 1996. The increase in software sales is a result of a 14% increase in sales in the United States offset by a 12% decrease in international sales. International software sales represented 44% of Software Operations net sales for the quarter ended September 30, 1997, compared to 51% for the same quarter in 1996. Systems Operations net sales decreased 52% compared to the third quarter of 1996 primarily due to increased competition, turnover in sales staff and shipping backlog created in September 1997, while converting to a new integrated accounting system. Gross profit margin for the quarter ended September 30, 1997 increased to 75% compared to 59% in the comparable quarter of 1996. The increase in gross margin is a result of higher third quarter 1997 software sales, which carry a higher margin, as a percent of total third quarter 1997 sales. Selling expenses increased to 65.0% of net sales for the quarter ended September 30, 1997 compared to 60.5% in the comparable period in 1996. The increase is a result of lower total sales in 1997 compared to 1996. Selling expenses in absolute dollars decreased $1.2 million when compared to the third quarter of 1996. The decrease is a result of the Company's efforts to reduce expenses based upon reductions in revenue. 8 Product development expenses as a percent of net sales for the quarter ended September 30, 1997 increased to 12.1% of total sales compared to 11.7% in the third quarter of 1996. The increase is a result of lower total sales in 1997 compared to 1996. Actual gross product development costs were 1.7 million, including capitalized development costs of $840,000, for the third quarter of 1997 compared to $1.4 million, including capitalized development costs of $282,000 in the quarter ended September 30, 1996. This increase is due to development efforts on the Company's next generation of FactoryLink products. A portion of the continuing development costs will be capitalized throughout the remainder of 1997 and into 1998. General and administrative expenses increased as a percent of net sales and in absolute dollars for the quarter ended September 30, 1997 compared to the comparable period in 1996. The increase is due to higher information technology costs, consulting fees and an increase in allowance for doubtful accounts. Comparison of Nine Months Ended September 30, 1997 and 1996 - ----------------------------------------------------------- Net sales for the nine months ended September 30, 1997 decreased 12% compared to the same period in 1996. Software Operations net sales decreased 4% compared to the nine months ended September 30, 1996. The decrease in software sales is a result of a 14% increase in sales in the United States offset by a 20% decrease in international sales. International software sales represented 42% of Software Operations net sales for the nine months ended September 30, 1997, compared to 51% for the nine months ended September 30, 1996. Systems Operations net sales decreased 22% compared to the nine months ended September 30, 1996 primarily due to increased competition and turnover in sales staff. Gross profit margin for the nine months ended September 30, 1997 decreased to 68% compared to 69% in the comparable 1996 period. Selling expenses increased to 56.0% of net sales for the nine months ended September 30, 1997 compared to 55.1% in the comparable period in 1996. The slight decrease is due to lower total sales in 1997 compared to 1996. Selling expenses in absolute dollars decreased $1.7 million when compared to the third quarter of 1996. The decrease is a result of the Company's efforts to reduce expenses based upon reductions in revenue. Product development expenses as a percent of net sales for the nine months ended September 30, 1997 decreased to 10.5% of total sales compared to 11.3% in the first nine months of 1996. The decrease is primarily due to higher capitalized software development costs in 1997. Actual gross product development costs were $4.2 million, including capitalized development costs of $1.4 million for the nine months ended September 30, 1997, compared to $4.2 million, including $.7 million in capitalized development costs in the nine months ended September 30, 1996. A portion of the continuing development costs will be capitalized throughout the remainder of 1997 and into 1998. General and administrative expenses increased as a percent of net sales and in absolute dollars for the nine months ended September 30, 1997 compared to the comparable period in 1996. The increase is due to lower net sales in for the first nine 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 $437,000 of cash during the nine months ended September 30, 1997. Offsetting the net loss for the nine months ended September 30, 1997 was the collection of an income tax receivable of approximately $1.1 million and decreased accounts receivable. During the nine months ended September 30, 1997, the Company invested $1.2 million in capital equipment, primarily computers, and capitalized $1.4 million 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 is in the process of securing a similar facility. 9 The Company believes cash on hand and cash generated from operations will be sufficient to satisfy its operating cash needs into the future. In addition, the Company could consider seeking additional public or private debt or equity financing to fund future growth opportunities or acquisitions. FORWARD LOOKING STATEMENTS - -------------------------- This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this report, including without limitation, certain statements in this Item 2 under the captions "Results of Operations" and "Liquidity and Capital Resources" may constitute forward looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations ("cautionary statements") are disclosed in this report and the Company's Annual Report on Form 10-K for the year ended December 31, 1996 (under the caption "Business Risk Factors" and elsewhere). All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. 10 PART II. OTHER INFORMATION 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 September 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: November 14, 1997 /s/ Robert A. Merry ------------------- Robert A. Merry President and Chief Executive Officer Date: November 14, 1997 /s/ Freddy L. Holder -------------------- Freddy L. Holder Controller (Principal Financial and Accounting Officer) 12 EX-11 2 COMPUTATION OF PER SHARE EARNINGS USDATA CORPORATION AND SUBSIDIARIES EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS (in thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, -------------------------------- ------------------------------- 1997 1996 1997 1996 ------------- ------------- ------------- ------------- Net loss $ (1,338) $ (1,587) $ (2,777) $ (1,143) ============= ============= ============= ============= Average common shares outstanding 10,852 11,037 11,105 11,004 Average common share equivalents - - - - ------------- ------------- ------------- ------------- Average number of common shares and Common share equivalents outstanding 10,852 11,037 11,105 11,004 ============= ============= ============= ============= Loss per common share $ (.12) $ (.14) $ (.25) $ (.10) ============= ============= ============= =============
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 JUNE 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 4,334 0 8,202 1,374 880 15,214 8,758 5,481 20,804 6,094 0 0 0 143 14,057 14,200 26,869 26,869 8,687 22,603 0 0 0 (4,207) (1,430) 0 0 0 0 (2,777) (0.25) (0.25)
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