U.S. 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 MAY 31, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSISTION TO
Commission file number 0-23438
Effective Management Systems, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1292200
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12000 West Park Place
Milwaukee, WI 53224
(Address of principal executive offices,
including Zip Code)
414-359-9800
(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
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date.
Class Outstanding as of May 31, 1997
Common Stock, $.01 par value 4,054,783
EFFECTIVE MANAGEMENT SYSTEMS, INC.
Form 10-Q
May 31, 1997
INDEX
PART 1 - FINANCIAL INFORMATION PAGE
Item 1 Financial Statements
Consolidated Balance Sheets at
May 31, 1997 and November 30, 1996 3
Consolidated Statements of Income - Three
and Six Months Ended May 31, 1997 and
May 31, 1996 5
Consolidated Statements of Cash Flows - Six 6
Months Ended May 31, 1997 and May 31, 1996
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security
Holders 14
Item 6 Exhibits and Reports on Form 8-K 14
SIGNATURES 15
PART I Financial Information
Item 1 Financial Statements
EFFECTIVE MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited except for November 30, 1996 amounts)
ASSETS 31-May 30-Nov
1997 1996
CURRENT ASSETS
Cash $278 $866
Investments in available-for-sale
securities 1 505
Accounts Receivable:
Trade, less allowance for
doubtful accounts 10,000 11,146
Related Parties 830 693
Inventories 248 391
Refundable Income Taxes 0 159
Deferred Income Taxes 1,247 175
Prepaid Expenses and Other
Current Assets 347 288
------ -------
TOTAL CURRENT ASSETS 12,951 14,223
LONG TERM ASSETS
Computer Software, net 6,595 5,781
Investments in and Advances to
Unconsolidated Joint Ventures 199 199
Equipment and Leasehold
Improvements, net 4,260 3,961
Intangible Assets, net 2,576 2,690
Other Assets 616 592
------ -------
TOTAL LONG TERM ASSETS 14,246 13,223
------ -------
TOTAL ASSETS $27,197 $27,446
====== ======
The accompanying notes are an integral part of these consolidated
financial statements.
EFFECTIVE MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data) (unaudited except for November 30, 1996
amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY 31-May 30-Nov
1997 1996
CURRENT LIABILITIES
Accounts Payable $1,347 $2,026
Accrued Liabilities 1,600 2,846
Deferred Revenues 4,953 4,605
Customer Deposits 177 109
Current portion of
Long-term Obligations 128 127
------- -------
TOTAL CURRENT LIABILITIES 8,205 9,713
LONG TERM LIABILITIES
Deferred Revenue and Other
Long-term Liabilities 442 453
Long-term Obligations 4,577 2,123
Deferred Income Taxes 560 560
------- -------
TOTAL LONG TERM LIABILITIES 5,579 3,136
Commitments and Contingencies - -
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value;
authorized 3,000,000 shares; none
issued or outstanding - -
Common Stock, $.01 par value;
authorized 20,000,000 shares; issued
4,067,408 and 4,011,018 shares;
outstanding 4,054,783 and 4,008,393
shares 41 41
Common Stock Warrants 4 4
Additional Paid-in Capital 11,274 11,137
Retained Earnings 2,154 3,420
Cost of Common Stock in Treasury
(12,625 shares) (60) (5)
------- -------
TOTAL STOCKHOLDERS' EQUITY 13,413 14,597
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $27,197 $27,446
====== ======
The accompanying notes are an integral part of these consolidated
financial statements.
EFFECTIVE MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data) (unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
31-May 31-May 31-May 31-May
1997 1996 1997 1996
NET REVENUES:
Software license fees $5,317 $4,255 $9,528 $7,930
Services 4,020 3,780 8,266 7,397
Hardware 1,045 1,668 2,063 4,019
------- ------- ------- -------
Total net revenues $10,382 $9,703 $19,857 $19,346
COST OF PRODUCTS AND
SERVICES
Software license fees 1,485 803 2,662 1,665
Services 3,496 2,915 7,197 5,651
Hardware 724 1,275 1,606 3,088
------- ------- ------- -------
Total cost of
products and
services $5,705 $4,993 $11,465 $10,404
Selling and marketing
expenses 3,463 3,417 6,844 6,514
General and
administrative expenses 1,297 961 2,362 1,794
Product development expenses 492 490 1,196 967
------- ------- ------- -------
Total costs and
operating expenses $10,957 $9,861 $21,867 $19,679
------- ------- ------- -------
LOSS FROM OPERATIONS $(575) $(158) $(2,010) $(333)
Other (Income)/Expense
Equity (earnings)/loss of
unconsolidated joint
ventures (4) 0 (2) (3)
Interest (income) (13) (28) (28) (50)
Interest expense 92 23 167 37
------- ------- ------- -------
75 (5) 137 (16)
------- ------- ------- -------
LOSS BEFORE INCOME TAXES $(650) $(153) $(2,147) $(317)
Income Tax Benefit (269) (66) (883) (139)
------- ------- ------- -------
NET LOSS $(381) $(87) $(1,264) $(178)
======= ======= ======= =======
Loss per share ($0.09) ($0.02) ($0.31) ($0.05)
Weighted average common
and equivalent shares
outstanding 4,041 3,950 4,031 3,941
The accompanying notes are an integral part of these consolidated
financial statements.
EFFECTIVE MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
SIX MONTHS ENDED
31-May 31-May
1997 1996
OPERATING ACTIVITIES
Net Loss ($1,264) ($178)
Adjustments to reconcile net
income(loss) to net cash
provided(used) by operating
activities:
Depreciation and amortization 570 551
Amortization of capitalized computer
software development costs 1,348 943
Equity in earnings of joint ventures - -
Goodwill Amortization 113 133
Changes in operating assets and
liabilities:
Accounts Receivable 1,112 754
Inventories and other current
assets (661) 97
Accounts payable and other
liabilities (1,792) (1,531)
------ ------
Total adjustments 690 947
Net cash provided by(used in) in
operating activities (574) 769
INVESTING ACTIVITIES
Additions to equipment and leasehold
improvements (870) (634)
Proceeds from sale (purchase) of
securities 504 (237)
Software development costs capitalized (2,162) (1,617)
Other (23) (35)
------ ------
Net cash used in investing activities (2,551) (2,523)
FINANCING ACTIVITIES
Proceeds on long-term debt and other
notes payable 2,455 1,594
Additional paid in capital 82 (34)
------ ------
Net cash provided by financing
activities 2,537 1,560
------ ------
Net decrease in cash ($588) ($194)
Cash-beginning of period 866 335
Cash-end of period 278 141
====== ======
The accompanying notes are an integral part of these consolidated
financial statements.
EFFECTIVE MANAGEMENT SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1997
(Unaudited) (In Thousands)
Note 1 - Basis of Presentation
The accompanying consolidated interim financial statements included
herein have been prepared by Effective Management Systems, Inc. (the
"Company"), without an audit, in accordance with generally accepted
accounting principles for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures
made are adequate to make the information presented not misleading.
In the opinion of management, the information furnished for the
three-month and six-month periods ended May 31, 1997 and May 31, 1996
includes all adjustments, consisting solely of normal recurring accruals,
necessary for a fair presentation of the financial position and results of
the operations for the interim periods. The results of operation for the
three-month and six-month periods ended May 31, 1997 are not necessarily
indicative of the results of operations to be expected for the entire
fiscal year ending November 30, 1997. It is suggested that the interim
financial statements to read in conjunction with the audited consolidated
financial statements for the year ended November 30, 1996 included in the
Company's Form 10-KSB filed with the Securities and Exchange Commission.
Note 2 - Additional Financial Disclosure
Equipment and leasehold improvements consisted of the following:
5-31-97 11-30-96
Gross $9,044 $8,169
Less: Accumulated Depreciation <4,784> <4,208>
------ ------
Net $4,260 $3,961
Allowance for doubtful accounts consisted of the following:
5-31-97 11-30-96
Balance $380 $346
Provision for doubtful accounts consisted of the following:
5/31/97 11/30/96
Balance $45 $113
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company recorded an increase in total revenues (7.0%) and a net loss
of $381,000 for the second quarter of 1997 compared with a net loss of
$87,000 for the second quarter of 1996. Overall revenues were under
budgeted levels reflecting both a delay in the release of a new version
of the Company's software product and a corresponding decrease in the
anticipated level of new account sales. Software revenues increased by
25.0% over the comparable quarter of 1996 reflecting a growing customer
interest in the Company's products. For the first half of fiscal 1997,
the Company recorded an increase in total revenues (2.6%) and a net loss
of $1,264,000 compared with a net loss of $178,000 for the first half of
fiscal 1996. In addition to the reasons for the revenue shortfall
mentioned above, revenues also reflect a continued delay in the
finalization of a large contract. Although the Company currently expects
such contract to be finalized, to date it has been unsuccessful in
completing the sale. The increased net loss for all periods presented
resulted mainly from the expense of building the infrastructure necessary
to support higher levels of revenues which did not materialize. These
expenses related to strategic investments in product development and field
service infrastructure, which were related to personnel costs which the
Company views as fixed in nature.
In light of the losses incurred in recent quarters, the Company has
reallocated various oversight responsibilities among the members of its
management team. One of the primary goals of this action is to increase
the speed at which new technological developments are incorporated into
the Company's software products. Management is prepared to consider
additional actions if the Company's financial performance does not show
near-term improvement.
Results of Operations
Total Revenues
Net revenues increased to $10,382,000 for the three months ended May 31,
1997, which was an increase of 7.0% from the $9,703,000 for the same
quarter in the previous year. The mix of revenues comparing software,
services, and hardware revenues as a percentage of total revenues improved
to 51.2%, 38.7%, and 10.1%, respectively, in the second quarter of 1997 as
compared with 43.9%, 39.0%, and 17.1% , respectively, in the second
quarter of 1996. The overall increase in revenues for the three months
ended May 31, 1997, was attributable to a $1,062,000 increase in the level
of relatively high margin software revenues, and a $623,000 decrease in
relatively low margin hardware revenues.
Net revenues increased to $19,857,000 for the first half of 1997, which
was a increase of 2.6% from the $19,346,000 for the same period in the
previous year. The increase in revenues was attributable to a
$1,598,000 increase in the level of high margin software revenues, and a
$1,956,000 decrease in low margin hardware revenues. The mix of revenues
comparing software, services, and hardware revenues as a percentage of
total revenues improved to 48.0%, 41.6%, and 10.4%, respectively, in the
first half of 1997 as compared with 41.0%, 38.2%, and 20.8% ,
respectively, in the first half of 1996.
International revenues represented less than 10% of total revenues for
all periods presented.
The Company's operating revenues can vary substantially from quarter to
quarter based on the size and timing of customer orders and market
acceptance of new products. The Company has historically operated with
little backlog because software orders are generally shipped as orders are
received. As a result, product revenue in any quarter is substantially
dependent on orders booked and shipped during that quarter.
Software License Fees
Software license fees are customer charges for the right to use the
Company's software products. Software license fees increased 25.0% to
$5,317,000 in the second quarter of 1997 from $4,255,000 in the second
quarter of 1996. Software license fees increased 20.2% to $9,528,000 in
the first half of 1997 from $7,930,000 in the first half of 1996. The
increase in software license fees was attributable to higher software
sales per system unit of product sold. The Company also continued its
strategic plan to undertake efforts to incorporate new technologies into
its products and to integrate certain products into its product lines from
its acquisition of Intercim Corporation in fiscal 1995. These activities
are intended to be completed at various times in the future, and
management believes that the successful completion of these efforts will
ultimately provide the Company with significant competitive
differentiation and advantage.
Service Revenues
The Company offers a number of optional services to its customers
including such services as a telephone support program, systems
integration, custom software development, implementation consulting, and
formal classroom and on-site training. Service revenues increased 6.4% to
$4,020,000 for the three months ended May 31, 1997 from $3,780,000 for the
same period of the prior year. Service revenues increased 11.8% to
$8,266,000 for the six months ended May 31, 1997 from $7,397,000 for the
same period of the prior year. The increase in service revenues was
mainly the result of new customers, as well as requirements of the
established customer base.
Hardware Revenues
Hardware revenues decreased 37.4% to $1,045,000 in the second quarter of
1997 compared with $1,668,000 for the corresponding period of 1996.
Hardware revenues decreased 48.7% to $2,063,000 in the first half of 1997
compared with $4,019,000 for the corresponding period of 1996. The
decrease was due to increased sales of software on platforms for which
the Company does not supply hardware and a higher percentage of sales to
established customers for which hardware was sold in a prior period.
Hardware revenues are generally impacted by three major influences.
First, and most significant, management has decided to focus its efforts
on sales of higher margin software and services. The Company offers its
software on a "software only basis" (no hardware) for those customers who
already have hardware or who may wish to purchase it from other vendors.
Second, as the volume of business grows, hardware revenues can increase
correspondingly. Finally, hardware revenues are related to the number of
hardware manufacturers represented at any one time by the Company. These
three factors in combination can work to increase or decrease hardware
revenues in any given period. To date, however, they have generally
resulted in a long-term decline in hardware sales as a percentage of total
revenue.
Cost of Software License Fees
The cost of software license fees as a percentage of related revenue was
27.9% for the second quarter of 1997, an increase from 18.9% for the
corresponding period of 1996. The cost of software license fees as a
percentage of related revenue was 27.9% for the first half of 1997, an
increase from 21.0% for the corresponding period of 1996. Cost of
software license fees is composed of both amortization of past investment
in software development and the third party costs associated with the
software revenues. Software amortization is related to past investment in
software development and does not vary consistently with variations in
software revenues. Due to this relationship, software amortization
accounted for an increase of 2.3% and 2.2% in the cost of software license
fees as a percent of software license fee revenues for the second quarter
and first half of 1997, respectively. Software amortization will cause
the cost of software license fees as a percentage of related revenue to
increase in future fiscal periods as the Company continues to increase its
investment in capitalized product development. The cost of software
license fees is also dependent on the level of third party costs
associated with certain software revenues and include such items as
purchased licenses and other components. The remaining increases in the
cost of software license fees as a percentage of related revenue was due
to these third party costs.
Cost of Services
The cost of services as a percentage of related revenue increased to 87.0%
for the three months ended May 31, 1997 as compared with 77.1% for the
same quarter in the previous year. The cost of services as a percentage of
related revenue increased to 87.1% for the six months ended May 31, 1997
as compared with 76.4% for the same period in the previous year. The
increase was mainly due to reduced growth in new account business, the
startup and training costs associated with newly hired personnel,
allocation of resources to perform warranty work, and additional costs
related to the building of a service infrastructure ($86,000 additional
for the second quarter of 1997 and $191,000 additional for the first half
of 1997) for both ongoing business growth and the establishment of new
third party selling relationships. The Company hired a net of 8 new
service personnel between May 31, 1996 and May 31,1997, most which related
to the building of the service infrastructure and additional field service
personnel for the Intercim division products. The service infrastructure
costs include investments to strengthen the support of national and
international third party suppliers of service in conjunction with the
continued expansion of distribution channels.
Cost of Hardware
The cost of hardware as a percentage of related revenue decreased from
76.4% in the second quarter of 1996 to 69.3% in the second quarter of
1997. The cost of hardware as a percentage of related revenue increased
from 76.8% in the first half of 1996 to 77.9% in the first half of 1997.
The cost of hardware as a percentage of related revenue varies with the
size of the system, the manufacturer of the equipment, and the competitive
pressure of the customer sale. Additionally, the cost of hardware as a
percentage of hardware revenues can vary due to the amount of lower margin
sales (cost plus 11%) to the Company's joint ventures, which were $205,000
and $443,000 in the second quarter of 1997 and 1996, respectively, and
which were $395,000 and $812,000 in the first half of 1997 and 1996,
respectively.
Selling and Marketing Expenses
Selling and marketing expenses increased $46,000 or 1.4% from $3,417,000
in the second quarter of 1996 to $3,463,000 in the second quarter of 1997.
Selling and marketing expenses increased $330,000 or 5.1% from $6,514,000
in the first half of 1996 to $6,844,000 in the first half of 1997. The
growth in selling and marketing expenses was at a slower pace than the
growth in software license fees, mainly as a result of higher software
sales per system unit of product sold.
General and Administrative Expenses
General and administrative expenses increased $336,000 or 35.0%, from
$961,000 in the second quarter of 1996 to $1,297,000 in the second quarter
of 1997. General and administrative expenses increased $568,000 or 31.7%,
from $1,794,000 in the first half of 1996 to $2,362,000 in the first half
of 1997. The increase was mainly due to rising expenses for both
telephone ($69,000, $175,000), reclassification of the salary and expenses
of the general manager of the Intercim division from sales to general
expense ($54,000, $116,000), and costs for internal systems support
($71,000, $91,000) in the second quarter and first half of 1997 as
compared to the second quarter and first half of 1996, respectively. As a
percentage of total revenues, general and administrative expenses were
12.5% and 9.9% in the second quarter of 1997 and 1996, respectively, as
compared with 11.9% and 9.3% in the first half of 1997 and 1996,
respectively. The Company also provides office space, accounting and
administrative services, computer processing time, and other miscellaneous
services to EMS Solutions, Inc., an affiliated entity. The amounts
received by the Company for these items were $45,000 in the second quarter
of 1997, as compared with $56,000 in the second quarter of 1996 and were
$91,000 in the first half of 1997, as compared with $138,000 in the first
half of 1996. Amounts received from EMS Solutions, Inc. are recorded as a
reduction of general and administrative expenses.
Product Development Expense
Product development expense increased only marginally from $490,000 in the
second quarter of 1996 to $492,000 in the second quarter of 1997. Product
development expense increased 23.7% from $967,000 in the first half of
1996 to $1,196,000 in the first half of 1997. The Company capitalizes
costs in accordance with Statement of Financial Accounting Standard (SFAS)
No. 86. The Company capitalized $1,224,000 of product development costs
in the second quarter of 1997 compared to $847,000 in the second quarter
of 1996 and $2,162,000 in the first half of 1997 compared to 1,617,000 in
the first half of 1996. As a percent of software license fees, the total
amount invested in software development was 32.3% and 31.4% in the second
quarter of 1997 and 1996, respectively, and was 35.2% and 32.6% in the
first half of 1997 and 1996, respectively. This increase was focused
mainly on the incorporation of various new technologies into the Company's
software products. Effective during the third quarter of 1997, the
Company will reassign two of its key managers in order to improve both the
time-to-market and the quality of its products. Subject to improved
financial performance, management expects to continue the level of
investment in product development at or slightly above the levels recorded
in the first half of 1997.
Other Income\Expense-Net
Other income\expense-net was $5,000 of income for the second quarter of
1996 compared to $75,000 of expense for the second quarter of 1997. Other
income\expense-net was $16,000 of income for the first half of 1996
compared to $137,000 of expense for the first half of 1997. This decrease
was mainly the result of a reduction in interest income and an increase in
interest expense as a result of increased borrowings under the Company's
bank line of credit.
Income Tax
The effective income tax rate provided a benefit of 41.4% for the second
quarter of 1997 compared to a benefit of 43.1% for the second quarter of
1996. The effective income tax rate provided a benefit of 41.1% for the
first half of 1997 compared to a benefit of 43.8% for the first half of
1996. The change in the effective rate was mainly the result of
investments in tax-exempt securities.
Liquidity and Capital Resources
At May 31, 1997, the Company had cash and marketable securities
aggregating $279,000. During the first half of 1997, the Company's
operating activities used $574,000 of cash compared to providing $769,000
of cash for the same period of the prior year. This increase in the use
of cash was mainly attributable to the Company's operating losses.
Investing activities used cash of $2,551,000 in the first half of 1997
compared to $2,523,000 of cash in the first half of 1996. The principal
uses of the cash in the first half of 1997 included $2,162,000 for
capitalized product development and $870,000 for purchases of equipment
and furniture. The principal uses of the cash in the first half of 1996
included $1,617,000 for capitalized product development and $634,000 for
purchases of equipment and furniture. Management expects a decrease in
the current level of capital expenditures in conjunction with the
anticipated lower level of new employee hires.
Financing activities provided $2,537,000 of cash in the first half of 1997
compared with $1,560,000 in the first half of 1996. The cash provided in
1997 reflected borrowings under the Company's bank line of credit. As of
May 31, 1997, the Company had both $628,000 available under its
$5,000,000 line of credit, which is based on the level of the eligible
accounts receivable, and $500,000 available under a temporary extension to
that line of credit.
During fiscal 1997, the Company has entered into several amendments
to its bank line of credit to remain in compliance with certain
financial covenants. In the event that the Company's performance does not
improve in the near term, the Company will need to secure additional
amendments and\or alternative sources of financing. Although management
believes that additional amendments and\or alternative financing can be
obtained, no assurance can be given that either additional financing or
covenant relief will be available to the Company on acceptable terms.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders held on April 30,
1997, Thomas M. Dykstra was elected as a director of the Company for a
term expiring at the annual meeting in 2000. The following table sets
forth certain information with respect to Mr. Dykstra's election as a
director at the annual meeting:
Name of Nominee Shares Voted For Shares Withholding
Authority
Thomas M. Dykstra 3,806,878 5,827
The following table sets forth the other directors of the Company
whose terms of office continued after the 1997 annual meeting:
Name of Director Term Expires
Helmut M. Adam 1998
Michael D. Dunham 1998
Scott J. Mermel 1999
Robert E. Weisenberg 1999
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(4.1) Seventh Amendment to Loan and Security Agreement, dated
February 27, 1997, by and between Bank One, Milwaukee,
National Association, and Effective Management Systems,
Inc., and certain affiliates.
(4.2) Eighth Amendment to Loan and Credit Agreement, dated
July 11, 1997, by and between Bank One, Milwaukee,
National Association, and Effective Management Systems,
Inc., and certain affiliates.
(10.1) Distributor Agreement with Pioneer Standard
Electronics, Inc.
(27) Financial Data Schedule [EDGAR version only]
(99) Press release - dated May 29, 1997 - relating to the
strategic alliance between Effective Management Systems,
Inc. and International Business Machines.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated March 6, 1997,
reporting under Item 5 a delay in the finalization of a significant
contract.
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.
EFFECTIVE MANAGEMENT SYSTEMS, INC.
July 14, 1997 By: /s/ MICHAEL D. DUNHAM
Michael D. Dunham
President (principal executive officer)
By: /s/ JEFFREY J. FOSSUM
Jeffrey J. Fossum
Chief Financial Officer and Assistant
Treasurer (principal financial and
accounting officer)
EXHIBIT INDEX
Exhibit No. Description
(4.1) Seventh Amendment to Loan and Security Agreement, dated February
27, 1997, by and between Bank One, Milwaukee, National
Association, and Effective Management Systems, Inc., and certain
affiliates.
(4.2) Eighth Amendment to Loan and Credit Agreement, dated
July 11, 1997, by and between Bank One, Milwaukee, National
Association, and Effective Management Systems, Inc., and certain
affiliates.
(10.1) Distributor Agreement with Pioneer Standard Electronics, Inc.
(27) Financial Data Schedule [EDGAR version only]
(99) Press release - dated May 29, 1997 - relating to the strategic
alliance between Effective Management Systems, Inc. and
International Business Machines.