UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JULY 31, 2000 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition from ____________________ to _________________________ Commission File Number 0-22823 ------- QAD INC. (Exact name of registrant as specified in its charter) Delaware 77-0105228 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 6450 Via Real, Carpinteria, California 93013 (Address of principal executive offices) (805) 684-6614 (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 filing requirements for the past 90 days. Yes X No ----- ----- The number of shares outstanding of the issuer's common stock as of the close of business on August 31, 2000 was 33,446,503. QAD INC. INDEX PAGE ---- PART I FINANCIAL INFORMATION ITEM 1 Financial Statements Condensed Consolidated Balance Sheets as of 1 July 31, 2000 and January 31, 2000 Condensed Consolidated Statements of Operations 2 for the Three and Six Months Ended July 31, 2000 and 1999 Condensed Consolidated Statements of Cash Flows 3 for the Six Months Ended July 31, 2000 and 1999 Notes to Condensed Consolidated Financial 4 Statements ITEM 2 Management's Discussion and Analysis of 6 Financial Condition and Results of Operations ITEM 3 Quantitative and Qualitative Disclosures 9 About Market Risk PART II OTHER INFORMATION ITEM 2 Changes in Securities 10 ITEM 4 Submission of Matters to a Vote of Security Holders 10 ITEM 6 Exhibits and Reports on Form 8-K 10 PART 1 ITEM 1 - FINANCIAL STATEMENTS QAD INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) JULY 31, JANUARY 31, 2000 2000 ---------------- --------------- (UNAUDITED) ASSETS Current assets: Cash and equivalents $ 27,215 $ 35,936 Accounts receivable, net 73,163 98,567 Other current assets 12,119 15,523 ---------------- --------------- Total current assets 112,497 150,026 Property and equipment, net 30,692 32,729 Capitalized software development costs, net 7,765 8,233 Other assets, net 21,897 23,383 ---------------- --------------- Total assets $ 172,851 $ 214,371 ================ =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and capital lease obligations $ 1,160 $ 1,240 Accounts payable 18,104 17,671 Accrued expenses 24,570 34,647 Deferred revenue and deposits 55,710 64,731 ---------------- --------------- Total current liabilities 99,544 118,289 Notes payable and capital lease obligations, less current portion 15,271 21,890 Other liabilities 187 200 Minority interest 475 563 Commitments and contingencies Stockholders' equity: Preferred stock, $0.001 par value. Authorized 5,000,000 shares; none issued or outstanding - - Common stock, $0.001 par value. Authorized 150,000,000 shares; issued and outstanding 33,446,503 and 33,012,210 shares at July 31, 2000 and January 31, 2000, respectively 33 33 Additional paid-in-capital 112,930 111,553 Accumulated deficit (52,497) (34,876) Unearned compensation - restricted stock (112) (146) Accumulated other comprehensive loss (2,980) (3,135) ---------------- --------------- Total stockholders' equity 57,374 73,429 ---------------- --------------- Total liabilities and stockholders' equity $ 172,851 $ 214,371 ================ =============== See accompanying notes to condensed consolidated financial statements. 1 QAD INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) THREE MONTHS ENDED SIX MONTHS ENDED JULY 31, JULY 31, ----------------------------- ----------------------------- 2000 1999 2000 1999 ------------ ----------- ------------ ----------- Revenue: License fees $ 18,235 $ 20,562 $ 33,320 $ 41,023 Maintenance and other 23,848 23,283 47,777 44,284 Services 11,165 14,469 23,748 26,345 ------------ ----------- ------------ ----------- Total revenue 53,248 58,314 104,845 111,652 Costs and expenses: Cost of license fees 2,675 4,345 6,426 9,900 Other cost of revenue 21,856 21,813 44,179 41,574 Sales and marketing 17,020 18,572 34,070 40,079 Research and development 9,153 8,457 18,844 17,463 General and administrative 5,858 5,632 11,519 11,609 Amortization of intangibles from acquisitions 1,251 965 2,344 1,901 Restructuring charge - 1,152 - 1,152 ------------ ----------- ------------ ----------- Total costs and expenses 57,813 60,936 117,382 123,678 ------------ ----------- ------------ ----------- Operating loss (4,565) (2,622) (12,537) (12,026) Other (income) expense: Interest income (338) (105) (758) (212) Interest expense 515 499 1,187 793 Other (income) expense 312 (189) 298 163 ------------ ----------- ------------ ----------- Total other (income) expense 489 205 727 744 ------------ ----------- ------------ ----------- Loss before income taxes (5,054) (2,827) (13,264) (12,770) Income tax expense 3,791 1,142 4,357 1,142 ------------ ----------- ------------ ----------- Net loss $ (8,845) $ (3,969) $ (17,621) $ (13,912) ============ =========== ============ =========== Basic and diluted net loss per share $ (.26) $ (.13) $ (.53) $ (.46) ============ =========== ============ =========== See accompanying notes to condensed consolidated financial statements. 2 QAD INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) SIX MONTHS ENDED JULY 31, ----------------------------- 2000 1999 ----------- ------------ Net cash provided by (used in) operating activities $ 4,830 $ (2,402) Cash flows from investing activities: Purchase of property and equipment (3,580) (2,621) Investment in software development (1,293) (1,915) Proceeds from sale of short-term investments - 3,000 Investment in equity securities - (500) Acquisition of business, net of cash acquired (574) (81) Other, net - 85 ----------- ------------ Net cash used in investing activities (5,447) (2,032) Cash flows from financing activities: Proceeds from notes payable - 16,059 Reduction of notes payable (7,555) (12,585) Issuance of common stock for cash 1,259 891 Other, net (40) (41) ----------- ------------ Net cash provided by (used in) financing activities (6,336) 4,324 Effect of exchange rates on cash and equivalents (1,768) (676) ----------- ------------ Net decrease in cash and equivalents (8,721) (786) Cash and equivalents at beginning of period 35,936 16,078 ----------- ------------ Cash and equivalents at end of period $ 27,215 $ 15,292 =========== ============ See accompanying notes to condensed consolidated financial statements. 3 QAD INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary (consisting only of reclassifications and normal recurring adjustments) to present fairly the financial information contained therein. These statements do not include all disclosures required by generally accepted accounting principles and should be read in conjunction with the audited financial statements and related notes included in our Form 10-K for the year ended January 31, 2000. The results of operations for the six months ended July 31, 2000 are not necessarily indicative of the results to be expected for the year ending January 31, 2001. Certain prior period financial statement items have been reclassified to conform to current period presentation. 2. COMPREHENSIVE LOSS Comprehensive loss includes changes in the balances of items that are reported directly in a separate component of stockholders' equity on the Condensed Consolidated Balance Sheets. The components of comprehensive loss are as follows: THREE MONTHS ENDED SIX MONTHS ENDED JULY 31, JULY 31, --------------------------- ----------------------------- 2000 1999 2000 1999 ----------- ---------- ------------ ----------- (In thousands) Net loss $ (8,845) $ (3,969) $ (17,621) $ (13,912) Foreign currency translation adjustments (210) (415) 155 (676) ----------- ---------- ------------ ----------- Comprehensive loss $ (9,055) $ (4,384) $ (17,466) $ (14,588) =========== ========== ============ =========== 3. PER SHARE INFORMATION Net income (loss) per share is computed in accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share. Basic income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is computed using the weighted average number of common and dilutive common stock equivalents outstanding during the period. Common stock equivalents consist of the shares issuable upon the exercise of warrants and stock options using the treasury stock method. The following table sets forth the computation of basic and diluted income (loss) per share: THREE MONTHS ENDED SIX MONTHS ENDED JULY 31, JULY 31, --------------------------- ----------------------------- (In Thousands, Except Per Share Amounts) 2000 1999 2000 1999 ----------- ---------- ------------ ----------- Numerator: Net loss $ (8,845) $ (3,969) $ (17,621) $ (13,912) =========== ========== ============ =========== Denominator: Weighted average basic shares outstanding 33,402 30,169 33,285 30,052 Effect of dilutive common stock equivalents - - - - ----------- ---------- ------------ ----------- Weighted average diluted shares outstanding 33,402 30,169 33,285 30,052 =========== ========== ============ =========== Basic and diluted loss per share $ (.26) $ (.13) $ (.53) $ (.46) =========== ========== ============ =========== 4 Common stock equivalent shares of approximately 421,000 and 979,000 for the three months and six months ended July 31, 2000, and 143,000 and 169,000 for the three months and six months ended July 31, 1999, respectively, were not included in the diluted calculations because, due to the net loss positions, they were anti-dilutive. 4. RESTRUCTURING CHARGE In response to changes in customers' manufacturing capital software spending patterns during fiscal year 1999, we undertook a restructuring program that more closely aligned costs with sales expectations. The program included the consolidation of certain facilities and an approximate reduction of 230 positions across a broad cross-section of QAD. This program was continued in fiscal year 2000 with a $1.2 million charge recorded in the second quarter. As of July 31, 2000, $5.3 million of the total $5.5 million restructuring charge was utilized, and we expect to pay the remaining balance by January 31, 2001. 5. BUSINESS SEGMENT INFORMATION QAD operates in geographic regions. The North America region includes the United States and Canada. The EMEA region includes Europe, the Middle East and Africa. The Asia Pacific region includes Asia and Australia. The Latin America region includes South America, Central America and Mexico. Operating income attributable to each business segment is based upon the management assignment of revenue and costs. Regional cost of revenue includes the cost of goods produced by QAD's manufacturing operations at the transfer price charged to the distribution operation. Income from manufacturing operations is included in the Corporate operating segment. Research and development costs are also included in the Corporate operating segment. Identifiable assets are assigned by region based upon the location of each legal entity. During the latter part of fiscal year 2000, management changed the composition of our reportable segments for operating income (loss), in order to disclose components related to the corporate segment. Prior period segment information has not been restated to separately disclose corporate segment data, as it is impracticable to do so. (In Thousands) THREE MONTHS ENDED SIX MONTHS ENDED JULY 31, JULY 31, ---------------------------- ---------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- REVENUE North America $ 20,310 $ 25,026 $ 41,401 $ 45,900 EMEA 21,674 21,034 42,081 42,119 Asia Pacific 9,358 9,318 17,282 17,236 Latin America 1,906 2,936 4,081 6,397 ----------- ----------- ----------- ----------- $ 53,248 $ 58,314 $ 104,845 $ 111,652 =========== =========== =========== =========== OPERATING INCOME (LOSS): North America $ 1,836 $ 309 $ 3,041 $ (5,819) EMEA (502) (918) (1,390) (2,881) Asia Pacific (1,737) (203) (4,004) (1,517) Latin America (1,573) (658) (2,662) (657) Corporate (2,589) - (7,522) - Restructuring charge - (1,152) - (1,152) ----------- ----------- ----------- ----------- $ (4,565) $ (2,622) $ (12,537) $ (12,026) =========== =========== =========== =========== JULY 31, JANUARY 31, 2000 2000 ----------- ------------ IDENTIFIABLE ASSETS: North America $ 60,374 $ 96,853 EMEA 77,136 84,233 Asia Pacific 27,194 24,575 Latin America 8,147 8,710 =========== ============ $ 172,851 $ 214,371 =========== ============ 5 6. BUSINESS ACQUISITIONS In July 2000, we acquired certain assets and liabilities of an Italy-based distributor, Atos Italy S.p.A. The cost of the acquisition totaled $1.7 million. The acquisition was accounted for using the purchase method. Goodwill related to the acquisition of $1.0 million is being amortized over ten years. Results of operations have been included in the financial statements since the acquisition date. The historical operations of the acquired company are not material to our consolidated operations or financial position. Therefore, supplemental pro forma information has not been presented. 7. SUBSEQUENT EVENTS On August 22, 2000, we announced an initiative to sharpen the focus of our e-business and business intelligence solutions for multinational customers. In connection with this shift, we expect to take a restructuring charge in the third quarter ending October 31, 2000. Our initial estimate of this charge is between $3.0 million and $5.0 million. The charge will primarily relate to costs associated with the reduction of personnel and facilities consolidation. On September 8, 2000, we entered into a five-year secured credit facility ("the facility") with Foothill Capital Corporation ("Foothill"). The maximum available amount of borrowings under the credit facility is $30.0 million. The facility is secured by certain assets of QAD Inc. The facility includes a $15.0 million term loan with a five-year amortization schedule. The term loan may be re-loaded to $15.0 million on an annual basis. Borrowings under the term loan portion of the facility bear interest at prime rate plus 3.75%. The maximum borrowings under the revolving portion of the facility are subject to the borrowing base less the amount of term loan outstanding and bear interest based on a floating rate of either LIBOR or prime rate plus the corresponding margin. We pay an annual commitment fee of 0.375% calculated on the average unused portion of the $30.0 million credit line. On September 11, 2000, we drew $15.0 million on the term portion of the facility and $10.0 million of these proceeds were used to retire the existing debt with Bank One in its entirety. As of September 11, 2000, approximately $4.8 million was available and unused on the revolving portion of the Foothill credit facility. ITEM 2 - MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENT In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements. These statements typically are preceded or accompanied by words like "believe," "anticipate," "expect" and words of similar meaning. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as other factors detailed in our Annual Report on Form 10-K for the year ended January 31, 2000. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. QAD undertakes no obligation to revise, update or publicly release the results of any revision or update to these forward-looking statements. Readers should carefully review the risk factors described in other documents QAD files from time to time with the Securities and Exchange Commission, including future Quarterly Reports on Form 10-Q to be filed by QAD in fiscal year 2001. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. 6 RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the percentage of total revenue represented by certain items reflected in our statements of operations: THREE MONTHS ENDED SIX MONTHS ENDED JULY 31, JULY 31, ---------------------------- --------------------------- 2000 1999 2000 1999 ------------ ----------- ----------- ----------- Revenue: License fees 34% 35% 32% 37% Maintenance and other 45 40 45 40 Services 21 25 23 23 ------------ ----------- ----------- ----------- Total revenue 100 100 100 100 Costs and expenses: Cost of license fees 5 8 6 9 Other cost of revenue 41 37 42 37 Sales and marketing 32 32 33 36 Research and development 17 14 18 16 General and administrative 11 10 11 10 Amortization of intangibles from acquisitions 3 2 2 2 Restructuring charge 0 2 0 1 ------------ ----------- ----------- ----------- Total costs and expenses 109 105 112 111 ------------ ----------- ----------- ----------- Operating loss (9) (5) (12) (11) Other expense 1 0 1 0 ------------ ----------- ----------- ----------- Loss before income taxes (10) (5) (13) (11) Income tax expense 7 2 4 1 ------------ ----------- ----------- ----------- Net loss (17)% (7)% (17)% (12)% ============ =========== =========== =========== TOTAL REVENUE. Total revenue for the second quarter of fiscal year 2001 was $53.2 million, a decline of $5.1 million, or 9% from $58.3 million in the second quarter of fiscal year 2000. Total revenue for the six months ended July 31, 2000 was $104.8 million, a decline of 6% or $6.8 million from $111.7 million in the comparable prior year period. This decrease in total revenue on both a quarter-to-quarter and year-to-year basis was primarily due to declines in license fee and services revenues. Although the Year 2000 capital spending lock-down is substantially over, customers have not yet resumed former buying levels. They are instead taking the time to evaluate their e-business strategies before investing in associated software, resulting in our license revenue decline. The decrease in services revenue relates to decreased utilization of our service consultants in conjunction with lower license sales. Maintenance revenue continues to grow due to expansion of our installed base. As a result of these factors, our revenue mix has shifted away from higher margin license revenue, from 37% of total revenue in the first six months of fiscal year 2000 to 32% in the first six months of fiscal year 2001, toward lower margin maintenance and other revenue. TOTAL COST OF REVENUE. Total cost of revenue (combined cost of license fees and other cost of revenue) as a percentage of total revenue increased slightly from 45% in the second quarter of fiscal year 2000 to 46% in the second quarter of fiscal year 2001. Total cost of revenue also increased slightly from 46% in the first six months of fiscal year 2000 to 48% in the first six months of fiscal year 2001. These increases were primarily due to the shift in revenue mix away from the higher margin license business and toward lower margin maintenance and other revenue. SALES AND MARKETING. Sales and marketing expense decreased 8% to $17.0 million for the second quarter of fiscal year 2001 from $18.6 million in the comparable prior year period. On a year-to-date basis, sales and marketing expense declined $6.0 million or 15% to $34.1 million compared to the first six months of fiscal year 2000. The decline in spending was primarily due to continued cost control measures, as well as lower commission expense on decreased revenue. 7 RESEARCH AND DEVELOPMENT. Research and development expense increased 8% to $9.2 million for the second quarter of fiscal 2001 from $8.5 million in the second quarter of fiscal 2000. During the six months ended July 31, 2000, research and development expense increased 8% to $18.8 million from $17.5 million in the same prior year period. These changes were primarily due to increased investment in QAD eQ and our web-enabled ERP products. GENERAL AND ADMINISTRATIVE. General and administrative expense remained relatively flat for both the three-month and six-month periods of fiscal years 2001 and 2000 at $5.9 million and $5.6 million for the quarter ended July 31, 2000 and 1999 and $11.5 million and $11.6 million for the six-month period ended July 31, 2000 and 1999, respectively. RESTRUCTURING CHARGE. In response to changes in customers' manufacturing capital software spending patterns, we undertook a restructuring program in October 1998 that more closely aligned costs with sales expectations. This program was continued in fiscal year 2000 with an additional charge of $1.2 million recorded in the second quarter. On August 22, 2000, we announced an initiative to sharpen the focus of our e-business and business intelligence solutions for multinational customers. In connection with this shift, we expect to take a restructuring charge in the third quarter ending October 31, 2000. Our initial estimate of this charge is between $3.0 million and $5.0 million. The charge will primarily relate to costs associated with the reduction of personnel and facilities consolidation. INCOME TAXES. We recorded income tax expense of $4.4 million for the six months ended July 31, 2000. This includes $1.2 million for taxes in the jurisdictions that were profitable for the first six months and a $3.2 million valuation allowance on U.S. deferred tax assets recorded in the second quarter. This compares to income tax expense of $1.1 million for the first six months of fiscal year 2000, representing taxes for the jurisdictions that were profitable during that period. We have not provided benefit for the jurisdictions in loss positions due to management's determination regarding the uncertainty of the realization of these benefits in the current year. LIQUIDITY AND CAPITAL RESOURCES We have historically financed our operations and met our capital expenditure requirements through cash flows from operations, sale of equity securities and borrowings. We had working capital of $13.0 million and $31.7 million as of July 31, 2000 and January 31, 2000, respectively. Cash and equivalents were $27.2 million and $35.9 million at July 31, 2000 and January 31, 2000, respectively. Accounts receivable, net of allowances, decreased to $73.2 million at July 31, 2000 from $98.6 million at January 31, 2000. Accounts receivable days sales outstanding decreased to 124 days at July 31, 2000 from 125 days at January 31, 2000. We are continuing our focus on sales terms and collection processes to further improve cash flows and working capital. Net cash provided by (used in) operating activities was $4.8 million and $(2.4) million for the six months ended July 31, 2000 and 1999, respectively. The year-over-year improvement relates primarily to higher accounts receivable collections. Net cash used in investing activities primarily relates to the purchase of property and equipment and the sale of short-term cash investments in the six months ended July 31, 1999, and aggregated $5.4 million and $2.0 million in the six months ended July 31, 2000 and 1999, respectively. At July 31, 2000 we had no material commitments for capital expenditures. Net cash provided by (used in) financing activities totaled $(6.3) million and $4.3 million for the six months ended July 31, 2000 and 1999, respectively, and was composed of net proceeds and repayments of borrowings and issuance of common stock. On September 8, 2000, we entered into a five-year secured credit facility with Foothill Capital Corporation. The maximum available amount of borrowings under the credit facility is $30.0 million. The facility includes a $15.0 million term loan with a five-year amortization schedule. The term loan may be re-loaded to $15.0 million on an annual basis. The maximum borrowings under the revolving portion of the facility are subject to the borrowing base less the amount of term loan. On September 11, 2000, we drew $15.0 million on the term portion of the facility and $10.0 million of these proceeds were used to retire the existing debt with Bank One in its entirety. As of September 11, 2000, approximately $4.8 million was available and unused on the revolving portion of the Foothill credit facility. 8 We believe that the cash on hand, net cash provided by operating activities and the available borrowings under our new credit facility will provide us with sufficient resources to meet our current and long-term working capital requirements, debt service and other cash needs. RECENT ACCOUNTING STANDARDS In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation" (FIN 44). FIN 44 provides guidance for issues arising in applying APB Opinion No. 25, "Accounting for Stock Issued to Employees." FIN 44 applies specifically to new awards, exchanges of awards in a business combination, modification to outstanding awards, and changes in grantee status that occur on or after July 1, 2000, except for the provisions related to repricings and the definition of an employee, which apply to awards issued after December 15, 1998. Application of FIN 44 did not have an effect on our financial reporting. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information concerning market risk is contained on Page 26 of our annual report on Form 10-K for the year ended January 31, 2000 and is incorporated by reference to such annual report. 9 PART II ITEM 2 - CHANGES IN SECURITIES During the quarter, we issued an aggregate of 290,205 shares of our common stock upon the exercise of outstanding options to purchase our common stock. A portion of those shares were issued pursuant to an exemption by reason of Rule 701 under the Securities Act of 1933. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the annual meeting of stockholders held on June 8, 2000, the following proposals were adopted: (1) To elect two directors to hold office for a term of three years until the annual meeting of stockholders in the year 2003 (Class II Directors): VOTES FOR VOTES WITHHELD ---------- -------------- Karl F. Lopker 30,702,077 280,332 Pamela M. Lopker 30,838,222 144,187 (2) Ratification of appointment of KPMG LLP as the Company's independent auditors for the Company's 2001 fiscal year: VOTES FOR VOTES AGAINST ABSTENTIONS ---------- ------------- ----------- 30,888,821 35,162 58,426 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits 27 Financial Data Schedule b) Reports on Form 8-K No reports on Form 8-K were filed during the three months ended July 31, 2000. 10 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. QAD INC. (Registrant) Date: September 13, 2000 By /s/ KATHLEEN M. FISHER ------------------------------ Kathleen M. Fisher Chief Financial Officer (on behalf of the registrant) By /s/ CHERYL M. SLOMANN ------------------------------ Cheryl M. Slomann Chief Accounting Officer (Principal Accounting Officer) 11