1
______________________________________________________________________
______________________________________________________________________
UNITED STATES
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 December 31, 1993
OR
___ 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 0-19538
IMRS INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization) 06-1326879
(I.R.S. Employer
Identification No.)
777 LONG RIDGE ROAD, STAMFORD, CONNECTICUT 06902
(Address of principal executive offices, including zip code)
(203) 321-3500
(Registrant's telephone number, including area code)
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 ____
As of January 31, 1994, there were 7,100,368 shares of the
Registrant's Common Stock, $.01 par value, outstanding.
______________________________________________________________________
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IMRS Inc. and Subsidiaries
Form 10-Q
CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheet - December 31, 1993
and June 30, 1993 2
Condensed consolidated statement of income - three months ended
December 31, 1993 and 1992; six months ended December 31, 1993
and 1992 3
Condensed consolidated statement of cash flows -
six months ended December 31, 1993 and 1992 4
Notes to condensed consolidated financial statements -
December 31, 1993 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
Fastar, FinalForm, Financial Intelligence, Hyperion, IMRS, IMRS
OnTrack, and Micro Control are registered trademarks, and Hyperion
Connect, Hyperion Financials, Hyperion SQL, IMRS Forms, and Visual
Information Access are trademarks of IMRS Inc. All other trademarks
and company names mentioned are the property of their respective
owners.
For further information, refer to the IMRS Inc. annual report on Form
10-K for the year ended June 30, 1993.
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IMRS Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(In thousands, except for share data)
DECEMBER 31, JUNE 30,
1993 1993
(Unaudited) (Note)
ASSETS
Current assets:
Cash and cash equivalents $28,100 $22,887
Accounts receivable-net of allowances of $1,200 19,852 23,205
Prepaid expenses and other current assets 1,674 787
Deferred income taxes 2,694 2,387
TOTAL CURRENT ASSETS 52,320 49,266
Property and equipment-at cost, less accumulated
depreciation and amortization of $5,825 and $4,504 8,503 7,353
Product development costs-at cost, less accumulated
amortization of $1,584 and $1,103 4,979 3,686
Other intangible assets-at cost, less accumulated
amortization of $2,690 and $2,408 937 1,205
Goodwill-at cost, less accumulated amortization
of $406 and $341 2,197 2,270
Deposits and other assets 829 791
Total assets $69,765 $64,571
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 5,042 $ 6,533
Accrued employee compensation and benefits 3,631 4,952
Income taxes payable 781
Deferred revenue 13,876 10,815
TOTAL CURRENT LIABILITIES 22,549 23,081
Deferred income taxes 1,416 971
Stockholders' equity:
Preferred stock-$.01 par value;
authorized-1,000,000 shares; none issued
Common stock-$.01 par value; authorized-15,000,000
shares; issued-9,259,963 and 9,074,384 shares 93 91
Additional paid-in capital 43,088 40,634
Retained earnings 16,253 13,400
Currency translation adjustments (601) (573)
Treasury stock, at cost-2,160,420 shares (13,033) (13,033)
TOTAL STOCKHOLDERS' EQUITY 45,800 40,519
Total liabilities and stockholders' equity $69,765 $64,571
<FN>
Note: The balance sheet at June 30, 1993 has been derived
from the audited financial statements at that date.
See accompanying notes.
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IMRS Inc. and Subsidiaries
Condensed Consolidated Statement of Income (Unaudited)
(In thousands, except for per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1993 1992 1993 1992
REVENUES
Software licenses $10,377 $ 7,490 $17,304 $12,264
License renewals and services 8,859 6,475 17,284 12,932
Total revenues 19,236 13,965 34,588 25,196
COSTS AND EXPENSES
Cost of revenues:
Software licenses 473 363 1,009 764
License renewals and services 5,249 3,989 10,182 7,659
Sales and marketing 5,789 4,227 10,675 7,812
Product development 1,960 1,542 4,199 2,893
General and administrative 2,389 1,705 3,894 3,008
15,860 11,826 29,959 22,136
OPERATING INCOME 3,376 2,139 4,629 3,060
Interest income 174 153 337 295
Interest expense (17) (29) (38) (64)
INCOME BEFORE INCOME TAXES 3,533 2,263 4,928 3,291
Provision for income taxes 1,490 880 2,075 1,290
NET INCOME $ 2,043 $ 1,383 $ 2,853 $ 2,001
EARNINGS PER SHARE
Primary $.26 $.18 $.37 $.27
Fully diluted $.26 $.18 $.37 $.27
AVERAGE NUMBER OF SHARES OUTSTANDING
Primary 7,746 7,537 7,662 7,456
Fully diluted 7,779 7,595 7,743 7,546
<FN>
See accompanying notes.
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IMRS Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows (Unaudited)
SIX MONTHS ENDED
DECEMBER 31,
1993 1992
(In thousands)
CASH PROVIDED BY OPERATING ACTIVITIES $ 8,253 $ 1,146
INVESTING ACTIVITIES
Leasehold improvements and purchases of furniture,
equipment and software (2,471) (1,835)
Product development costs (1,774) (675)
Acquisition of business (1,442)
Security deposits and other assets (200)
Cash used by investing activities (4,245) (4,152)
FINANCING ACTIVITIES
Principal payments on capital lease/notes payable (84) (95)
Exercise of stock options by employees 1,317 1,559
Cash provided by financing activities 1,233 1,464
Effect of exchange rate changes (28) (238)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,213 (1,780)
Cash and cash equivalents at beginning of period 22,887 22,870
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,100 $ 21,090
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $2,076 $365
Interest 28 38
<FN>
See accompanying notes.
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IMRS Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
December 31, 1993
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they 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
recurring accruals, considered necessary for a fair presentation have
been included in the accompanying unaudited financial statements.
Operating results for the three and six-month periods ended December
31, 1993 are not necessarily indicative of the results that may be
expected for the full year ending June 30, 1994. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended June 30,1993.
Earnings per share ("EPS") are calculated by dividing net income by the
weighted average number of common and common equivalent shares
outstanding during the period. For primary EPS, common equivalent
shares are shares which would be issuable upon the exercise of
outstanding stock options, reduced by the number of shares assumed to
be purchased by the Company with the proceeds obtained thereby at the
average market price during the period. For the fully diluted EPS
calculation, shares are assumed to be purchased by the Company at the
higher of the average or period-end market price and, therefore, this
calculation may include additional equivalent shares.
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IMRS Inc. and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands)
OVERVIEW
- --------------------------------------------------------------------------
IMRS, incorporated in 1981, develops, markets and supports financial
management applications for enterprise client/server environments.
IMRS software addresses the diverse accounting, financial
consolidation, management reporting, and information access
needs of large corporations worldwide. The Company designs
products specifically for network implementation, providing fast,
multi-user access to centrally controlled and secure corporate data.
The Company derives revenues from licensing its software products and
providing related product installation, support and training services.
Customers are billed an initial license fee for the software upon
delivery and, subsequently, are billed an annual license renewal fee
entitling them to routine support and product updates. IMRS licenses
its products throughout the world primarily through a direct sales
force. In certain territories outside of North America, products are
licensed through independent distributors, including major accounting
firms. The Company recognizes its net share of revenues generated by
distributors.
The Company operates with a minimal software licensing backlog.
Therefore, quarterly revenues and operating results are quite
dependent on the volume and timing of the signing of license
agreements and product deliveries during the quarter, which are
difficult to forecast. The Company's future operating results may
fluctuate as a result of these and other factors, such as customer
buying patterns, the timing of new product introductions and product
upgrade releases, the Company's hiring plans, the scheduling of
sales and marketing programs, and new product development. The
Company generally has realized lower revenues in its first (September)
and third (March) fiscal quarters than in the immediately preceding
quarters. The Company believes that these revenue fluctuations are
caused by customer buying patterns, including traditionally slow
purchase activity in the summer months and low purchase activity in
the financial reporting and consolidation market during the March
quarter, as many potential customers are busy with their year-end
closing and financial reporting. Due to the relatively fixed nature
of certain costs, including personnel and facilities costs, the
decline in revenues in the first and third fiscal quarters typically
results in lower profitability or may result in losses in these
quarters. Total revenues and net income were $19,236 and $2,043,
respectively, for the second quarter of fiscal 1994, and $15,352 and
$810, respectively, for the first quarter of fiscal 1994.
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IMRS Inc. and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
(Dollars in thousands)
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------
REVENUES
Second Quarter Ended Six Months Ended
December 31, 1993 CHANGE 1992 1993 CHANGE 1992
- -------------------- ------------------------ -----------------------
Software licenses $10,377 38.5% $7,490 $17,304 41.1% $12,264
% of total revenues 53.9% 53.6% 50.0% 48.7%
- -------------------- ------------------------- ------------------------
License renewals and
services $ 8,859 36.8% $6,475 $17,284 33.7% $12,932
% of total revenues 46.1% 46.4% 50.0% 51.3%
- -------------------- ------------------------- ------------------------
Software license revenues rose primarily as a result of an increase in
the number of licenses sold. Demand for the Company's Windows-based
products rose sharply. In the first half of 1994, Windows-based
products licenses comprised 87.9% of the Company's total software
license revenues, up from 36.5% for the corresponding period of fiscal
1993. While the Company intends to continue enhancing its DOS-based
product, Micro Control, it expects this trend toward the Windows
market to continue. Accordingly, the Company is extending its suite
of integrated Windows-based, client/server products, including: IMRS
Forms, form building and forms management software; Hyperion 1.8
("Hyperion SQL") which allows for the use of Sybase SQL Server or
Microsoft SQL Server for the Hyperion database, providing open access
and scalability of hardware for server processing; and Hyperion
Financials, a line of transaction-based accounting applications
scheduled to be tested extensively by several customers beginning in
the fourth quarter of fiscal 1994. IMRS Forms and Hyperion SQL were
delivered in December 1993.
The increase in license renewal and service revenue is mainly
attributable to the year to year growth of the Company's installed
customer base.
Revenues generated from markets outside the United States for the
first half of fiscal 1994 and 1993 were $8,688 and $8,845, or 25.1%
and 35.1% of total revenues, respectively. The 1993 figure includes,
among other typical size sales, a particularly large license sale
from the UK market.
COST OF REVENUES
Second Quarter Ended Six Months Ended
December 31, 1993 CHANGE 1992 1993 CHANGE 1992
- -------------------- ------------------------ -----------------------
Software licenses $ 473 30.3% $ 363 $ 1,009 32.1% $ 764
Gross profit % 95.4% 95.2% 94.2% 93.8%
- -------------------- ------------------------ -----------------------
License renewals and
services $5,249 31.6% $3,989 $10,182 32.9% $7,659
Gross profit % 40.7% 38.4% 41.1% 40.8%
- -------------------- ------------------------- ------------------------
Cost of software license revenues consist primarily of: the cost of
product packaging and documentation materials; amortization of
capitalized software costs; amortization of certain intangible assets
related to business acquisitions; and royalty expenses. The increase
in the cost of software license revenues resulted principally
from the amortization of capitalized costs related to Hyperion version 1.5
and IMRS OnTrack
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IMRS Inc. and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
(Dollars in thousands)
for Hyperion, which commenced upon the general release of
the products to customers in the third and fourth quarters of fiscal
1993, respectively.
The increase in the cost of license renewal and service revenues was
due primarily to additional staffing expense for both installation and
ongoing support services.
OPERATING EXPENSES
Second Quarter Ended Six Months Ended
December 31, 1993 CHANGE 1992 1993 CHANGE 1992
- -------------------- ------------------------ -----------------------
Sales & marketing $5,789 37.0% $4,227 $10,675 36.6% $7,812
% of total revenues 30.1% 30.3% 30.9% 31.0%
- -------------------- ------------------------ -----------------------
Product development $1,960 27.1% $1,542 $ 4,199 45.1% $2,893
% of total revenues 10.2% 11.0% 12.1% 11.5%
- -------------------- ------------------------ -----------------------
General and
administrative $2,389 40.1% $1,705 $ 3,894 29.5% $3,008
% of total revenues 12.4% 12.2% 11.3% 11.9%
- -------------------- ------------------------ -----------------------
The increase in sales and marketing expenses is primarily due to a net
increase of sales personnel, greater overall marketing initiatives and
an increase in commission costs directly associated with the
significant increase in software license revenues.
The increase in product development expenses reflects additional
personnel associated with expanded research and development
activities. In the first half of fiscal 1994 and 1993, the Company
capitalized $1,774 and $675 of software development costs,
respectively, in accordance with Statement of Financial Accounting
Standards, No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed" ("FAS-86"). The amounts
capitalized by the Company in 1994 and 1993 primarily relate to the
Company's development of Microsoft Windows-based financial management
applications for client/server environments and represented 29.7% and
18.9%, respectively, of total product development expenditures. In
addition to IMRS Forms, Hyperion SQL and Hyperion Financials as
mentioned above, various other development and major product
enhancement projects, which costs are required to be capitalized under
FAS-86, were in process during the six-month period ended December 31,
1993. Currently, Hyperion Financials represents the Company's largest
development project. It began in February 1993 with the technology
acquisition from MAI Systems Corporation. Capitalized software costs
are amortized over the estimated useful life of the product, but not
more than four years.
The increase in general and administrative expenses resulted from
increases in personnel and professional services costs incurred to
support the growth of the Company's overall operations, as well as an
increase in the provision for doubtful accounts directly associated
with the significant increase in revenues.
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IMRS Inc. and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
(Dollars in thousands)
PROVISION FOR INCOME TAXES
The Company's effective income tax rate increased from approximately
39% to 42% as a greater portion of the Company's profits were earned
in certain jurisdictions where the income tax rates are higher.
NET INCOME
As a result of the above factors, net income for the three and
six-month periods ended December 31, 1993 increased to $2,043 or by
47.7% from $1,383 and $2,853 or by 42.6% from $2,001, respectively,
for the corresponding periods of 1992.
The Company believes that inflation has not had a material effect on
its results of operations.
Recently issued Financial Accounting Standards Board Statements, Nos.
106 and 112 regarding accounting for postretirement and postemployment
benefits, will not have a material effect on the financial statements
as the Company generally does not offer its employees such benefits.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has financed its business principally through
positive cash flow from operations, long-term and short-term
borrowings and sales of its Common Stock. For fiscal years 1991,
1992, and 1993 and for the six months ended December 31, 1993, the
Company generated positive cash flow from operations of $5,845, $7,890,
$7,343, and $8,253, respectively.
Cash used by investing activities amounted to $4,245 for the first
half of fiscal 1994-$2,471 for leasehold improvements and purchases of
equipment and software and $1,774 for product development costs.
Financing activities in the first half of fiscal 1994, including stock
options exercised by employees and payment of short-term debt,
generated cash of $1,233. In connection with the stock options
exercised by certain of its employees (for a total of 185,579 common
shares), the Company recognized (as a credit to additional paid-in
capital) an income tax benefit of $1,140 for the six months ended
December 31, 1993.
As of December 31, 1993, the Company had cash and cash equivalents of
$28,100 and working capital of $29,771, no long-term debt, and its
ratio of current assets to current liabilities was 2.3 to 1. The
Company has long-term credit availability of $10,000 under a revolving
credit facility. The Company anticipates capital expenditures of
approximately $8,500 for its 1994 fiscal year, including $4,000 of
capitalized product development costs.
The Company believes that funds generated from operations, existing
cash balances and its available credit facility will be sufficient to
finance the Company's operations for at least the next two years.
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IMRS Inc. and Subsidiaries
Part II. Other Information
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At IMRS's Annual Meeting of Stockholders held on November 10, 1993,
the following proposals were adopted by the margins indicated:
1.To elect two members to the Board of Directors to serve for a three-
year term or until their successors are duly elected and qualified.
Number of Shares
For Withheld
Marco Arese Lucini 4,682,625 35,200
William W. Helman IV 4,682,625 35,200
2.To ratify the selection of the firm of Ernst & Young as independent
auditors of the Company for the fiscal year ending June 30, 1994.
For 4,714,825
Against 200
Abstain 2,800
3.To approve an amendment to the Company's 1991 Stock Plan increasing
the number of shares of Common Stock authorized for issuance under
the plan from 700,000 to 1,200,000 shares.
For 3,049,245
Against 1,017,746
Abstain 4,178
Broker Non-Votes 646,656
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits are required.
The Company did not file any reports on Form 8-K during the three
months ended December 31, 1993.
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IMRS Inc. and Subsidiaries
Form 10-Q
for the three-month period ended December 31, 1993
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.
IMRS Inc.
S/LUCY RAE RICCIARDI 2/11/94
---------------------------------------------
Lucy Rae Ricciardi Date
Vice President-Finance
(principal financial and accounting officer)
S/JAMES A. PERAKIS 2/11/94
---------------------------------------------
James A. Perakis Date
Chief Executive Officer
(authorized officer)